Housing Authority of the TOWN OF WELSH Welsh, Louisiana. Annual Financial Report As of and for the Year Ended June 30, 2016

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1 Housing Authority of the TOWN OF WELSH Annual Financial Report As of and for the Year Ended June 30, 2016

2 HOUSING AUTHORITY OF THE TOWN OF WELSH Basic Financial Statements As of and for the Year Ended June 30, 2016 With Supplemental Information Schedules CONTENTS Exhibit Page Independent Auditor's Report 3 Required Supplementary Information Management's Discussion and Analysis 6 Basic Financial Statements: Statement of Net Position A 13 Statement of Revenues, Expenses and Changes in Net Position B 15 Statement of Cash Flows C 16 Notes to the Financial Statements 17 Supplemental Information Financial Data Schedule 26 Schedule of Compensation, Benefits and Other Payments to Agency Head or Chief Executive Officer 31 Schedule of Compensation Paid Board Members 32 Other Reports 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 33 Schedule of Audit Findings 35 Schedule of Prior Audit Findings 36

3 William Daniel McCaskill, CPA A Professional Accounting Corporation 415 Magnolia Lane Mandeville, Louisiana Telephone Fax danny@highperformer.net Member of Louisiana Society of CPA's American Institute of CPA's Board of Commissioners Housing Authority of the Town of Welsh Report on the Financial Statements INDEPENDENT AUDITOR'S REPORT I have audited the accompanying financial statements of the Housing Authority of the Town of Welsh (the authority) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which 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 My responsibility is to express opinions on these financial statements based on my audit. I conducted my audit in accordance with 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. Those standards require that I 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, I 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.

4 HOUSING AUTHORITY OF THE TOWN OF WELSH Independent Auditor's Report, 2016 Page Two I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions. Opinions In my opinion, the financial statements referred to above present fairly in all material respects, the respective financial position of the Housing Authority of the Town of Welsh as of June 30, 2016, and the respective changes in financial position and 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 as listed in the table of contents 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. I 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 my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide any assurance. Other Information My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the authority's basic financial statements. The Financial Data Schedule and the Schedule of Compensation, Benefits and Other Payments to Agency Head or Chief Executive Officer are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Financial Data Schedule and the Schedule of Compensation, Benefits and Other Payments to Agency Head or Chief Executive Officer are the responsibility of management and were derived from and relate 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 my opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

5 HOUSING AUTHORITY OF THE TOWN OF WELSH Independent Auditor's Report, 2016 Page Three The Schedule of Compensation of Board Members has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, I do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, I have also issued my report dated September 20, 2016 on my consideration of the authority's internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my 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 on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the authority's internal control over financial reporting and compliance. Wiffiam Q^aniefMcCas^ff William Daniel McCaskill, CPA A Professional Accounting Corporation September 20, 2016

6 Welsh Housing Authority Management's Discussion and Analysis For the Year Ended June 30, 016 introduction This Management's Discussion and Analysis (MD&A) of the Welsh Housing Authority (Authority) provides an introduction and overview to the financial statements of the Welsh Housing Authority for the fiscal year ended June 30, The Welsh Housing Authority presents this discussion and analysis of its financial performance during the fiscal year ended June 30, 2016, to assist the reader in focusing on significant financial issues. The primary focus of the Authority's financial statements is on the statements of its single enterprise fund encompassing all programs administered by the Welsh Housing Authority. This information contained herein this MD&A should be considered in conjunction with the Authority's financial statements and related notes to the financial statements. The Authority has two individual programs. They include the Low Rent Public Housing Program and the Capital Fund Program. The Low Rent Program consists of 36 dwelling units. Funding is provided based on dwelling rents paid by the tenants and operating fund payments received by the Department of Housing & Urban Development based on a formula. The Capital Fund Program is also a formula based program from HUD. The purpose of this program is to provide funding for the modernization and improvement of the Low Rent Public Housing Program. These resources allow the Housing Authority to provide capital improvements for the current dwelling structures and assist in their operations. Overview of the Financial Statements This overview of the financial statement is intended to inform and introduce the reader to the Authority's financial statements. The financial statements are comprised of three individual statements. These statements include: The Statement of Net Position The Statement of Revenues, Expense, and Changes in Net Position The Statement of Cash Flows

7 Management's Discussion and Analysis-Cant. The Statement of Net Position presents information on the assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the differences between them being reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial situation of the Authority is improving or deteriorating. Net position is comprised of three individual components: Investment in Capital Assets consists of capital asset balances net of accumulated depreciation less any outstanding balances of related debt associated with these assets. Restricted component of net position consists of resources that are restricted by limitations placed on these resources by an external source or imposed by law through constitutional provisions. Unrestricted component of net position represents the remaining resources available that do not meet the definition of the above categories. The unrestricted component of net position is basically the amount of resources available for future year appropriations. The Statement of Revenues, Expenses, and Changes in Net Position reports the operating revenues, operating expenses, non-operating revenues, and non-operating expenses of the Authority for the fiscal year ended June 30, 2016 to determine the change in net position for the fiscal year. The Statement of Cash Flows reports cash activities for the fiscal year resulting from operating activities, investing activities, non-capital financing activities, and capital and related financing activities. The net result of these activities represents the increase or decrease of the cash equivalent account balance for the year ended June 30, Financial Highlights The Welsh Housing Authority's total net position decreased from $547,728 in 2015 to $504,940 in 2016, for a decrease of $42,788. The total assets decreased by $22,004 or 4% from the previous year. The unrestricted component of net position's balance is reported as $85,272 at June 30, This represents an increase of $16,470, or 24% from the previous year. Total revenues decreased from $246,672 in 2015 to $201,448 in 2016, representing a decrease of $45,224 or 18%. Total expenses decreased by $46,071 from $290,307 to $244,236 for the current year.

8 Management's Discussion and Analysis-Cant. Housing'Authority Activities & Hi^hli^hts The Housing Authority's overall financial position and operations for the past two years are summarized below based on the information in the current and prior financial statements. The table below lists the asset and liability comparisons for the year ended June 30, 2016 Mid June 30,2015. Summary Statement of Net Position Years Ended June 30, 2016 and 2015 Cateaorv 6/30/2016 6/30/2015 Change $ Change % Current Assets $ 119,433 $ 82,179 $ 37,254 45% Fixed Assets (Net of Depreciation) $ 419,668 $ 478,926 $ (59,258) -12% Total Assets $ 539,101 $ 561,105 $ (22,004) -4% Current Liabilities $ 31,607 $ 12,007 $ 19, % Non Current Liabilities S 2,554 $ 1,370 $ 1,184 86% Total Liabilities $ 34,161 $ 13,377 $ 20, % Unrestricted $ 85,272 $ 68,802 $ 16,470 24% Net Investment in Capital Assets $ 419,668 $ 478,926 $ (59,258) -12% Total Net Position $ 504,940 $ 547,728 $ (42,788) -8% Current Assets Current assets increased by $37,254, from $82,179 in 2015 to $119,433 in Total cash balances increased by $40,369 due to an excess of operating revenues over expenses. Fixed Assets (Net of Depreciation) Noncurrent assets decreased by $59,258, from $478,926 in 2015 to $419,668 in The primary reason for the decrease is due to the charging of depreciation expense exceeding capital purchases in the current fiscal year and the disposition of assets. Additional information related to the analysis of noncurrent assets is presented in a later section. Current Liabilities The Authority's current liabilities increased from $12,007 to $31,607, an increase of $19,600 or 163% for the current year. The primary reason was due to an increase in accounts payable other government in the amount of $8,737, due to an increase in PILOT liability. Unearned revenue capital funds increased, by $11,475. These funds have been projected to be used on an A/C project.

9 Management's Discussion and Analysis-Cant. Noncurrent Liabilities The Authority had accrued leave compensated absences classified as a long-term liability in the amount of $2,554 as of June 30, Net Position The Authority's total net position decreased by $42,788 or 8% from the previous year. The Authority's unrestricted component of net position increased from $68,802 to $85,272, an increase of $16,470, or 24% for the current year. The unrestricted component of net position is the amount available for future appropriations. This balance is subject to program specific guidelines. Summary Statement of Revenues & Expenses and Changes in Net Position Years Ended June 30, 2016 and 2015 Cateaorv 6/30/2016 6/30/2015 Change $ Change % Program Revenues: Tenant Revenue $ 104,222 $ 97,904 $ 6,318 6% Government Operating Grants $ 91,891 $ 128,036 $ (36,145) -28% Capital Grants $ 4,564 $ 8,000 $ (3,436) -43% Other Revenue $ 749 $ 12,732 $ (11,983) -94% Interest Income $ 22 $ $ % Total Revenue $ 201,448 $ 246,672 $ (45,224) -18% Expenses: Administration $ 60,379 $ 78,953 $ (18,574) -24% Tenant Services $ 488 $ $ % Utilities $ 14,346 $ 16,216 $ (1,870) -12% Ordinary Maintenance $ 68,623 $ 87,476 $ (18,853) -22% Protective Services $ 375 $ $ % GeneralTnsurance Expense $ 36,204 $ 41,789 $ (5,585) -13% Depreciation $ 63,821 $ 65,873 $ (2,052) -3% Total Expenses $ 244,236 $ 290,307 $ (46,071) -16% Change in Net Position $ (42,788) $ (43,635) $ 847-2% Net Position, Beginning of Year $ 547,728 $ 591,363 $ (43,635) -7% Net Position, End of Year $ 504,940 $ 547,728 $ (42,788) -8% Results of Operations Revenues of the Authority are generated principally from dwelling rents and HUD grants (including Operating and Capital Funds). The Authority's revenue decreased by $45,224 diu"ing the current fiscal year. Significant changes in revenues are as follows:

10 Management's Discussion and Analysis-Cant. Tenant Revenue increased by $6,318 primarily due to an increase in the average rent from S247 in 2015, to S249 in 2016 and unit months leased increased from 397 in 2015, to 409 in HUD Operating Grants decreased by S36,145 primarily due to increased operating funding during the current year. Low Rent operating subsidy increased SI,000 while Capital Fund operating grants decreased by $37,145. Capital Grants decreased by S3,436 primarily due to decreased capital activity during the current year. The Authority's total expenses decreased by $46,071 from the previous year. Significant changes in expenses are as follows: Administration decreased from $78,953 to $60,379 a decrease of $18,574 or 24%. The primary reason for the decrease was due to admin salaries and benefits reduction in the amount of $9,967. Admin sundry also decreased in the amount of $6,906. Ordinary maintenance decreased by $18,853 or 22% during the current year. This is primarily due to a decrease in maintenance materials and maintenance contract costs in the current year. Maintenance materials decreased by $7,679. Unit turnaround contracts decreased by $3,519, plumbing contracts by $4,186, and extermination contracts by $1,112. Miscellaneous contract costs also decreased by $4,881 from the previous year. These decreases are primarily due to administration taking an aggressive initiative to improve apartments in the previous year that was not needed in the current year. General expenses decrease by $5,585 or 13% during the current year. The primary reason for the decrease was due to other general expenses decreasing by $6,260 during the current year. 10

11 Management's Discussion and Analysis-Cant. We have provided the following presentations to demonstrate the revenues and expenses by summarized account category: Housing Authority of the Town of Welsh Analysis of Revenue 6/30/2016 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 FYE 16/30/ /30/2015 $- Tenant Revenue Gov. Operating Grants Capital Grants Interest/Other Houslna Authoritv of the Town of Welsh Analysis of Expenses 6/30/2016 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $_ 11

12 Management's Discussion and Analysis-Cant. Net Fixed Assets As of June 30, 2016, the Welsh Housing Authority's investment in capital assets was $419,668. This investment includes land, buildings, and equipment. Cateqoiv 6/30/2016 6/30/2015 Change $ Change % Land $ 35,951 $ 35,951 $ 0% Buildings $ 2,431,038 $ 2,431,038 $ 0% Equipment $ 39,419 $ 39,419 $ 0% Construction in Progress $ 4,564 $ $ 4, % Accumulated Depreciation $ (2,091,304) $ (2,027,482) $ (63,822) 3% Total Net Fixed Assets $ 419,668 $ 478,926 $ (59,258) -12% The increase in construction in progress is due to and HVAC project funded by the 2014 and 2015 Capital Fund awards. Subsequent Event Due to the 2016 Congressional Appropriations, the Authority's operating subsidy provided by HUD for the Low Rent Housing Program was prorated to 89% for the calendar year Request for Information This financial report is designed to provide a general overview of the Authority's accountability for all those interested. If you should have additional questions regarding the financial information, you can contact our office in writing at the following address: Welsh Housing Authority Calena Boullard, Executive Director PO Box 430 Welsh, LA

13 Housing Authoritty of Welsh Welsh, Louisisna Statement of Net Position As of June 30, 2016 Exhibit A ASSETS Current assets Cash and cash equivalents Receivables: HUD Tenant rents, net of allowance Accrued interest receivable Prepaid expenses Inventory, net of allowance Restricted assets - cash and cash equivalents Total current assets 93, , , ,433 Noncurrent assets Capital assets: Nondepreciable capital assets: Land Construction in progress Total nondepreciable capital assets Depreciable capital assets: Buildings and improvements Furniture and equipment Less accumulated depreciation Total depreciable capital assets, net of accumulated depreciation Total capital assets, net of accumulated depreciation Total assets 35,951 4,564 40,515 2,431,038 39,419 (2,091,304) 379, , ,101 TOTAL ASSETS 539,101 (continued) 13

14 Housing Authoritty of Welsh Welsh, Louisisna Statement of Net Position As of June 30, 2016 Exhibit A LIABILITIES AND NET POSITION Current Liabilities Accounts payable 469 Payable to other governments 8,737 Accrued wages payable 1,258 Accrued compensated absences 976 Unearned revenue 11,547 Security deposit liability 8,620 Total current liabilities 31,607 Noncurrent liabilities Accrued compensated absences 2,554 Total noncurrent liabilities 2,554 TOTAL LIABILITIES 34,161 NET POSITION Net Investments in Capital Assets 419,668 Restricted - Unrestricted 85,272 TOTAL NET POSITION $ 504,940 The accompanying notes are an integral part of these financial statements. 14

15 Housing Authoritty of Welsh Welsh, Louisisna Statement of Revenues, Expenses, and Changes In Net Position For the Year ended June 30, 2016 Exhibit B Operating Revenues HUD Operating Grants $ 91,891 Dwelling Rental 101,714 Other Operating 2,508 Total operating revenues 196,113 Operating Expenses General and administrative 96,583 Repairs and maintenance 68,623 Utilities 14,346 Tenant seivices 488 Protection seivices 375 Depreciation and amortization 63,821 Total operating expenses 244,236 Operating income (loss) (48,123) Nonoperating Revenues (Expenses): Interest revenue 22 Miscellaneous revenues 749 Total nonoperating revenues (expenses) 771 Income (loss) before other revenues, expenses, gains, losses and transfers (47,352) Capital contributions (grants) 4,564 Increase (decrease) in net position (42,788) Net position, beginning of year 547,728 Net position, end of year _$ 504,940 The accompanying notes are an integral part of these financial statements. 15

16 Housing Authoritty of Welsh Statement of Cash Flows For the Year ended June 30, 2016 Exhibit C CASH FLOWS FROM OPERATiNG ACTiViTiES Receipts from federal subsidies Receipts from tenants Payments to suppliers Payments to employees Net cash provided by operating activities CASH FLOWS FROM NONCAPiTAL FiNANCiNG ACTiViTiES Miscellaneous revenues Net cash provided by noncapitai financing activities CASH FLOWS FROM CAPiTAL AND RELATED FiNANCiNG ACTiViTiES Proceeds from capital grants Purchase and construction of capital assets 92, ,717 (115,250) ( , ,564 (4,564) Net cash (used in) capitai and reiated financing activities CASH FLOWS FROM investing ACTiViTiES interest received Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning of year Cash and Cash equivalents - unrestricted Cash and Cash equivalents - restricted Totai Cash and Cash Equivalents - end of year ,387 62,133 93,900 8, ,520 Reconciiiation of operating income (loss) to net cash provided by operating activities: Operating (loss) Adjustments to reconcile operating (loss) to net cash provided by operating activities: Depreciation and amortization Changes in assets and iiabiiities: HUD receivable Tenant rents, net of allowance Miscellaneous receivables Prepaid insurance inventories Accounts payable Accrued wages payable PILOT Payable Accrued compensated absences Unearned revenue Other liability Security deposit liability Net cash provided by operating activities $ (48,123) 63,821 1, (449) 1,446 (851) (1,746) 8,737 1,165 11,462 (356) 2,370 39,616 The accompanying notes are an integral part of the financial statements 16

17 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Basic Financial Statements June 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying basic financial statements of the authority have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. (1) Reporting Entitv The Housing Authority of The Town of Welsh (the authority) was chartered as a public corporation under the laws of the State of Louisiana for the purpose of providing safe and sanitary dwelling accommodations for the residents of the Town of. This formation was contingent upon the approval of the town. The authority is governed by a Board of Commissioners (Board), which is composed of five members appointed by the town and serve five-year staggered terms. The Board of the authority exercises all powers granted to the authority. GASB Statement No. 14, as amended by GASB statement No. 39 and GASB Statement No. 61, establishes criteria for determining the governmental reporting entity. Under provisions of this statement, the authority is considered a primary government, since it is a special purpose government that has a separately elected governing body, is legally separate, and is fiscally independent of other state and local governments. As used in the GASB statements, fiscally independent means that the authority may, without the approval or consent of another governmental entity, determine or modify its own budget, control collection and disbursements of funds, maintain responsibility for funding deficits and operating deficiencies, and issue bonded debt. The authority has no component units, defined by the GASB statements as other legally separate organizations for which the elected authority members are financially accountable. 17

18 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Financial Statements, Continued The authority is a related organization of the Town of since the town appoints a voting majority of the authority's governing board. The town is not financially accountable for the authority as it cannot impose its will on the authority and there is no potential for the authority to provide financial benefit to, or impose financial burdens on, the town. Accordingly, the authority is not a component unit of the financial reporting entity of the town. (2) Funds The accounts of the authority are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. All funds of the authority are classified as proprietary. The general fund accounts for transactions of all of the authority's programs. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the authority's enterprise fund are HUD operating grants and subsidies and tenant dwelling rents. Operating expenses include General and Administrative expenses, repairs and maintenance expenses, utilities and depreciation and amortization on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The accompanying basic financial statements of the authority have been prepared in conformity with governmental accounting principles generally accepted in the Unites States of America. The GASB is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The accompanying basic financial statements have been prepared in conformity with GASB statement No. 34. Basic Financial Statements and Managements discussion and Analysis for State and Local Governments, which was unanimously approved in June 1999 by the GASB. (3) Measurement focus and basis of accounting Proprietary finds are accounted for on the flow of economic resources measurement focus and the accrual basis of accounting. Under this method. 18

19 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Financial Statements, Continued revenues are recorded when earned and expenses are recorded at the time the liabilities are incurred. With this management focus all assets and all liabilities associated with the operation of these funds are included on the statement of net position. (4) Assets, liabilities, and net position (a) Deposits The authority's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. HUD regulations, state law and the authority's investment policy allow the housing authority to invest in collateralized certificates of deposit and securities backed by the federal government. (b) Inventory and prepaid items All inventories are valued at cost on a first-in first-out (FIFO) basis. Inventories consist of expendable building materials and supplies held for consumption in the course of the authority's operations. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. (c) Restricted Assets Cash equal to the amount of tenant security deposits is reflected as restricted. (d) Capital assets Capital assets of the authority are included in the statement of net position and are recorded at actual cost. The capitalization threshold is $500. Depreciation of all exhaustible fixed assets is charged as an expense against operations. Property, plant, and equipment of the Authority is depreciated using the straight line method over the following estimated useful lives: Buildings Modernization and improvements Furniture and equipment 33 years 15 years 3-7 years 19

20 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Financial Statements, Continued (e) Due from/to other governments or agencies Amounts due from/to the authority to/by other governments or agencies are generally for grants or programs under which the services have been provided by the authority. The authority also records an amount due to the various taxing districts within the region for payments in lieu of taxes. (f) Allowance for doubtful accounts The authority provides an allowance for doubtful accounts, as needed, for accounts deemed not collectible. At June 30, 2016, the management of the authority established an allowance for doubtful accounts of approximately $406. (g) Compensated absences It is the authority's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. In accordance with the provisions of GASB Statement No. 16, "Accounting for Compensated Absences," vacation and sick pay is accrued when incurred and reported as a liability. Employees may accumulate an unlimited number of annual leave hours. Depending on their length of service, employees receive payment for up to 300 annual leave hours upon termination or retirement at their then current rate of pay. The cost of current leave privileges, computed in accordance with GASB Codification Section C60 is recognized as a current year expense when leave is earned. (h) Restricted net position Restricted net positions are reported as restricted when constraints placed on net positions use are either: Externally imposed by creditors (such as debt covenants), grantors, contributors or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Restricted resources are used first when an expense is incurred for purposes for which both restricted and unrestricted resources are available. 20

21 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Financial Statements, Continued (i) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the government-wide financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE B-DEPOSITS Deposits are stated at cost, which approximates fair value. Under state law and/or federal regulation, these deposits, or the resulting bank balances, must be in Federal Securities, secured by federal deposit insurance or the pledge of federal securities. The fair value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. As of June 30, 2016, the authority's carrying amount of deposits was $102,520 which includes the following: Cash and cash equivalents-unrestricted $93,900 Cash and cash equivalents- restricted 8,620 Total $102,520 Interest Rate Risk The authority's policy does not address interest rate risk. Credit Rate Risk Since all of the authority's deposits are federally insured and/or backed by federal securities, the authority does not have credit rate risk. Custodial Credit Risk This is the risk that in the event of a bank failure, the authority's deposits may not be returned to it. The authority does not have a policy for custodial credit risk. $106,816 of the authority's total deposits were covered by federal depository insurance, and do not have custodial credit risk. The bank balances at June 30, 2016 totaled $106,

22 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Financial Statements, Continued NOTE 0 - CAPITAL ASSETS Capital assets activity for the year ended June 30, 2016 was as follows: Nondepreciable Assets: Additions Deletions Land 35,951 35,951 Construction in Progress Depreciable Assets: 4,564 4,564 Building and improvements 2,431,038 2,431,038 Furniture and equipment 39,419 39,419 Total 2,506,408 4,564 2,510,972 Less accumulated depreciation Building and improvements 1,993,991 61,447 2,055,438 Furniture and equipment Total accumulated depreciation 33,492 2,027,483 2,374 63,821 35,866 2,091,304 Net Capital Assets 478,925 (59,257) 419,668 NOTED - COMPENSATED ABSENCES At June 30, 2016, employees of the authority have accumulated and vested $3,530 of employee leave benefits, which was computed in accordance with GASB Codification Section C60. The leave payable is recorded in the accompanying financial statements. $2,554 is reported in long-term debt. 22

23 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Financial Statements, Continued NOTE E- LONG TERM OBLIGATIONS As of June 30, 2016, long term obligations consisted of compensated absences in the amount of $2,554. The following is a summary of the changes in the long term obligations for the year ended June 30, Compensated Absences Balance as of July 1, 2015 $2,365 Additions 2,515 Deductions (1,350) Balance as of June 30, ,530 Long Term Portion 2,554 Amount due in one year (Short term) $976 NOTE F - POST EMPLOYMENT RETIREMENT BENEFITS The authority does not provide any post employment retirement benefits. Therefore the authority does not include any entries for unfunded actuarial accrued liability, net OREB expense, or annual contribution required. NOTE G - RETIREMENT PLAN The authority participates in the Housing Agency Retirement Trust plan, administered by Mercer, which is a defined contribution plan. The plan consists of employees of various local and regional housing authorities, urban renewal agencies, and other similar organizations. Through this plan, the authority provides pension benefits for all of its full-time employees. All regular and fulltime employees are eligible to participate in the plan on the first day of the month after completing six months of continuous and uninterrupted employment. Plan provisions and changes to the plan contributions are determined by the Board of the authority. Under a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The employer is required to make monthly contributions equal to 8.5% percent of each participant's basic (excludes overtime) compensation. Employees are required to contribute 5% percent of their annual covered salary. 23

24 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Financial Statements, Continued The authority's contribution for each employee and income allocated to the employee's account are fully vested after five years of continuous service. The authority's contributions and interest forfeited by employees who leave employment before five years of service are used to offset future contributions of the authority. No payments were made out of the forfeiture account. Normal retirement date shall be the first day of the month following the employee's sixty-fifth birthday or after ten years of participation in the plan. The authority's total payroll for the year ended June 30, 2016, was $45,757. The authority's contributions were calculated using the base salary amount of $29,952. The authority made the required contributions of $2,544 for the year ended June 30, NOTE H - RISK MANAGEMENT The authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions, injuries to employees; and natural disasters. The authority's risk management program encompasses obtaining property and liability insurance. The authority transfers risk of loss by participating in a public entity risk pool and contracting with a commercial insurance carrier for all major categories of exposed risk. This includes coverage of property, general liability, public liability, and workers compensation. The risk pool and insurance contracted are obligated to meet settlements up to the maximum coverage, after the authority's deductions are met. There has been no significant reduction in insurance coverages from coverages in the prior year. In addition, there have been no significant claims that have exceeded commercial insurance coverages in any of the past three fiscal years. NOTE I - FEDERAL COMPLIANCE CONTINGENCIES The authority is subject to possible examinations by federal regulators who determine compliance with terms, conditions, laws and regulations governing grants given to the entity in the current and prior years. These examinations may result in required refund by the entity to federal grantors and/or program 24

25 HOUSING AUTHORITY OF THE TOWN OF WELSH Notes to the Financial Statements, Continued beneficiaries. The authority is subject to HDD's consideration of reducing grants in order to have the authority utilize authority Equity to fund expenses. NOTE J - SUBSEQUENT EVENTS Events that occur after the balance sheet date but before the financial statements were issued must be evaluated for recognition or disclosure. The effects of subsequent events that provide evidence about conditions that existed at the balance sheet date are recognized in the accompanying financial statements. Subsequent events, which provide evidence about conditions that existed after the balance sheet date, require disclosure in the accompanying notes. Management evaluated the activity of the authority through September 20, 2016 and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. NOTE K- ECONOMIC DEPENDENCE Statement of Financial Accounting Standard (SFAS) No. 14 requires disclosure in financial statements of a situation where one entity provides more than 10% of the audited entity's revenues. The Department of Housing and Urban Development provided $96,455 to the authority, which represents approximately 48% of the authority's total revenue for the year. 25

26 Financial Data Schedule Housing Authority of the Town of Welsh (LA039) Welsh, LA Entity Wide Balance Sheet Summary Submission Type: Audited/Non Single Audit Fiscal Year End: 06/30/2016 Project Total Sutifotal ELIM Total 111 Cash - Unrestricted $93,900 $93,900 $0 $93, Cash - Restricted - Modwnization and Development SO $0 $0 $0 113 Cash - Other Restricted $0 $0 $0 $0 114 Cash - Tenant Security Deposits $8,620 $8,620 $0 $8, Cash - Restricted for Payment of Current Liabilities $0 $0 $0 $0 100 Total Cash $102,520 $102,520 $0 $102, Accounts Receivat5le - PHA Projects $0 $0 $0 $0 122 Accounts Receivat)le - HUD Other Projects $400 $400 $0 $ Accounts Receivat)le - Other Govemment SO $0 $0 125 Accounts Receivat)le - Miscellaneous $0 $0 $0 $0 126 Accounts Receivat)le - Tenants $1,300 $1,300 $0 $1, Allow^ce for Doubtful Accounts -Terrants -$406 -$406 $0 $10>i Allow^ce for Doubtful Accounts - Other $0 $0 $0 $0 127 Notes, Loans, & Mortgages Receivable - Current $0 $0 $0 $0 128 Fraud Recovery $0 $0 $0 $ Allow^ce for Doubtful Accounts - Fraud $0 $0 $0 $0 129 Accrued Intwest Receivable $5 $5 $0 $5 120 Total Receivables, Net of Allowances for Doubtful Accounts $1,299 $1,299 $0 $1, Investments - Unrestricted $0 $0 $0 $0 132 Investments - Restricted $0 $0 $0 $0 135 Investments - Restricted for Payment of Current Lialality $0 $0 $0 $0 142 Prepaid Expenses and Other Assets $14,705 $14,705 $0 $14, InventcMies $1,010 $1,010 $0 $1, Allowance for Obsolete Inventories 101 -$101 $0 -$ Inter Program Due From $0 $0 $0 $0 145 Assets Held for Sale $0 $0 $0 $0 150 Total Current Assets $119,433 $119,433 so SI104.ii nil Idiid $35,951 S3:.,'l'.t SO $35, Buildings $2,431,038 $2,431,038 $0 $2,431, Furniture, Equipment & Machinery - Dwellings $18,783 $18,783 $0 $18, Furniture, Equipment & Machinery - Administration $20,636 $20,636 $0 $20, Leasehold Improvements $0 $0 $0 $0 166 Accumulated Depreciation -$2,091,304 -$2,091,304 $0 -$2,091, Construction in Progress $4,564 $4,564 $0 $4, Infrastructure $0 $0 $0 $0 160 Total Capital Assets, Net of Accumulated IDepreciation $419,668 $419,668 $0 $419, Notes, Loans and Mortgages Receivable - Non-Current $0 $0 $0 $0 172 Notes, Loans, & Mortgages Receivable - Non Cunent - Past Due $0 $0 $0 $0 173 Grants Receivable - Non Current $0 $0 $0 $0 174 Other Assets $0 $0 $0 $0 176 Investments in Joint Vwitures $0 1 $0 i $0 1 $0 180 Total Non-Current Assets $419,668 $419,668 $0 $419, Deferred Outflow of Resources $0 $0 $0 $0 290 Total Assets and Deferred Outflow of Resources $539,101 $539,101 $0 $539,101 26

27 Financial Data Schedule Housing Authority of the Town of Welsh (LA039) Welsh, LA Entity Wide Baiance Sheet Summaty Submission Type: Audited/Non Singie Audit Fiscai Year End: 06/30/2016 Project Total Subtotal ELIM Total 311 Bank Overdraft I $0 $0 $0 $0 312 Accounts Payable <= 90 Days $469 $469 $0 $ Accounts Payable >90 Days Past Due $0 $0 $0 $0 321 Accrued Wage/Payroll Taxes Payable $1,258 $1,258 $0 322 Accrued Compensated Absences - Currenl Porllon $976 $976 $0 $ Accrued Contingency Liability $0 $0 $0 $0 325 Accrued Interest Payable $0 $0 $0 $0 331 Accounts Payable - HUD PHA Programs $0 $0 $0 $0 332 Account Payable - PHA Projects $0 $0 $0 $0 333 Accounts Payat)le - Ottrer Govemment $8,737 $8,737 $0 $8, Twiant Security Deposits $8,620 $8,620 $0 $8, Unearned Revenue $11,547 $11,547 $0 $11, Current Portion of Long-term Debt - Capital Projects/Mortgage Revenue $0 $0 $0 $0 344 Current Portion of Long-term Debt - Operating Bonowtngs $0 $0 $0 $0 345 Ottrer Currwit Liabilities $0 $0 $0 $0 346 Accrued Liabilities - Ottrer $0 $0 $0 $0 347 Inter Program - Due To $0 $0 $0 $0 348 Loan Liability - Current $0 $0 $0 $0 310 Total Current Liabilities $31,607 $31,607 $0 $31, Long-term Debt, Net of Current - Capital Projects/Mortgage Revenue $0 $0 $0 $0 352 Long-term Debt, Net of Current - Operating Borrowings $0 $0 $0 $0 353 Non-currwit Liabilities - Ottier $0 $0 $0 $0 354 Accrued Compensated Absences - Non Current $2,554 $2,554 $0 $2, Loan Liability - Non Current $0 $0 $0 $0 356 FASB 5 Liabilities $0 $0 $0 $0 357 Accrued Pension and OPEB Liabilities $0 $0 $0 $0 350 Total Non-Current Liabilities $2,554 $2,554 $0 $2, Total Liabilities $34,161 $34,161 $0 $34, Defened Inflow of Resources Net Investment in Capital Assets $419,668 $419,668 $419, Restricted Net Position Unrestricted Net Position $85,272 $85,272 $85, Total Equity - Net Assets / Position $504,940 $504,940 $0 $504, Total Liabilities, Deferred InflovR of Resources and Equity - Net $539,101 $539,101 $0 $539,101 27

28 Financial Data Schedule Housing Authority of the Town of Welsh (LA039) Welsh, LA Entity Wide Revenue and Expense Summary Submission Type; Audited/Non Single Audit Fiscal Year End: 06/30/2016 Project Total Subtotal ELIM Total Net Tenant Rental Revenue $101,714 $101,714 $0 $101, Tenant Revenue - Oltier $2,508 $2,508 $0 $2,508 " Total Tenant Revenue $104,222 $104,222 $0 $104, HUD PHA Operating Grants $91, ,891 $0 $91, Capital Grants $4,564 $4,564 $0 $4,564,70710 IVtanagement Fee $0 $0 $ Asset Management Fee $0 $0 $ Book Keeping Fee $0 $0 $ Front Line Service Fee $0 $0 $0 ' Ottier Fees $0 $0 $ Total Fee Revenue SO $0 $0, Ottier Government Grants $0 $0 $0 SO Investment Income - Unrestiicted $22 $22 $0 $ Mortgage interest income $0 $0 $0 $0 " Proceeds from Disposition of Assets Held for Sale $0 $0 $0 $0 '71310 Costof Sale of Assets $0 $0 $0 $0 i Fraud Recovery $0 $0 $0 $ Ottier Revenue $749 $749 $0 $749, Gain or Loss on Sale of Capital Assets $0 $0 $0 $ Investment income - Restricted $0 $0 $0 $ Total Revenue $201,448 $201,448 $0 $201,448 ' Administrative Salaries $31,662 $31,662 $0 $31, Auditing Fees $7,985 $7,985 $0 $7, Management Fee $0 $0 $0 $0, Book-keeping Fee $0 $0 $0 $ Advertising and Marketing $332 $332 $0 $ Em[^oyee Benefit contributions - Administrative $5,202 $5,202 $0 $5,202 " Office Expenses $8,545 $8,545 $0 $8,545 ' Legal Expense $0 $0 $0 $ Travel $3,651 $3,651 $0 $3, Allocated Cvertiead $0 $0 $0 $0, Ottier $3,002 $3,002 $0 $3, Total Operating-Administrative $60,379 $60,379 $0 $60,379 " Asset Management Fee $0 $0 $0 $0 ' Tenant Services - Salaries $0 $0 $0 $ ReJocafion Costs $0 $0 $0 $ Em[^oyee Benefit Contributions - Tenant Services $0 $0 $0 $0, Tenant Services - Other $488 $488 $0 $ Total Tenant Services $488 $488 $0 $488 28

29 Financial Data Schedule Housing Authority of the Town of Welsh (LA039) Welsh, LA Entity Wide Revenue and Expense Summary Submission Type; Audited/Non Single Audit Fiscal Year End: 06/30/2016 Project Total Water $4,461 $4,461 $0 $4, Electricity $5,404 $5,404 $0 $5, Gas $249 $249 $0 $ Fuel $0 $0 $0 $ l-abor $0 $0 $0 $ Sewer $4,232 $4,232 $0 $4, Employee Benefit Contributions - Utilities $0 $0 $0 $ Ottier Utilities Expense $0 $0 $0 $ Total Utilities $14,346 $14,346 $0 $14, Ordinary Maintenance and Operations - Labor $14,095 $14,095 $0 $14, Ordinary Maintenance and Operations - Materials and Otfier $21,816 $21,816 $0 $21, Ordinary Maintenance and Operations Contracts $31,568 $31,568 $0 $31, Employee Benefit Contributions - Ordinary Maintenance $1,144 $1,144 $0 $1, Total Maintenance $68,623 $68,623 $0 $68, Protective Services - LatKir $0 $0 $0 $ Protective Services - Other Contract Costs $0 $0 $0 $ Protective Services - Other $375 $375 $0 $ Employee Benefit Contributions - Protective Services $0 $0 $0 $ Total Protective Sen/ices $375 $375 $0 $ Property Insurance $16,363 $16,363 $0 $16, Liability Insurance $2,377 $2,377 $0 $2, Workmen's Compensation $647 $647 $0 $ All Other Insurance $2,239 $2,239 $0 $2, Total insurance Premiums $21,626 $21,626 $0 $21, Other Gen^l Expenses $0 $0 $0 $ Compensated Absences $2,515 $2,515 $0 $2, Payments in Lieu of Taxes $8,737 $8,737 $0 $8, Bad debt - Tenant Rents $3,326 $3,326 $0 $3, Bad debt - Mortgages $0 $0 $0 $ Bad debt - Other $0 $0 $0 $ Severance Expense $0 $0 $0 $ Total Other General Expenses $14,578 $14,578 $0 $14, Interest of Mortgage (or Bonds) Payable $0 $0 $0 $ Interest on Notes Payable (Short and Lorrg Term) $0 $0 $0 $ Amortization of Bond Issue Costs $0 $0 $0 $ Total Interest Expense and Amortization Cost $0 $0 $0 $ Total Operating Expenses $180,415 $180,415 $0 $180, Excess of Operating Revenue over Operating Expenses $21,033 $21,033 $0 $21,033 29

30 Financial Data Schedule Housing Authority of the Town of Welsh (LA039) Welsh, LA Entity Wide Revenue and Expense Summary Submission Type; Audited/Non Single Audit Fiscal Year End: 06/30/2016 Project Total Subtotal ELIM Total '97100 Extraordinary Maintenance $0 $0 $0 $ Casualty Losses - Non-capitaiized $0 $0 $0 $ Housing Assistance Payments $0 $0 $0 $0, HAP Portat>ility-ln $0 $0 $0 $ D^reciation Expense $63,821 $63,821 $0 $63,821 " Fraud Losses $0 $0 $0 $0 ' Capital Outlays - Govemmental Funds '97700 Debt Principal Payment-Governmental Funds Dwelling Units Rent Expense $0 SO $0 $ Total Expenses $244,236 $244,236 $0 $244, Operating Transfer In $3,645 $3,645 -$3,645 $0 ' Operating transfer Out -$3,645 -$3,645 $3,645 $0 ' Operating Transfers from/to Primary Government $0 $0 $0 $0 i Operating Transfers from/to Component Unit $0 $0 $0 $ Proceeds from Notes, Loans and Bonds,10060 Proceeds from Property Sales Extraordinary items, Net GalrVLoss $0 $0 $0 $ Special Items {Net Gain/Loss) $0 $0 $0 $0 " Inter Project Excess Cash Transfer In $0 $0 $0 $0 ' Inter Project Excess Cash Transfer Out $0 $0 $0 $ Transfers between Program and Project - In $0 $0 $0 $ Transfers between Project and Program - Out $0 $0 $0 $0, Total Other financing Sources (Uses) $0 $0 $0 so Excess (Deficiency) of Total Revenue Over (Under) Total Expenses -$42,788 -$42,788 $0 -$42,788 ' Required Annual Debt Principal Payments $0 $0 $ Beginning Equity $547,728 $547,728 $0 $547, Prior Period Adjustments, Equity Transfers arrd Correction of Enors $0 $0 $0 SO,11050 Changes in Compensated Absence Balance Changes in Contingent Liability Balance Changes in Unrecognized Pension Transition Liability '11080 Changes in Special Term/Severance Benefits Liability i ChangesinAllowanceforDoubtfulAccounts-DwellingRents Changes in Allowance for Doutitful Accounts - Other Administrafrve Fee Equity Housing Assistance Payments Equity ' Unit Mrxrths Available ' Number of Unit Months Leased i Excess Cash $57,595 $57,595 $57, Land Purchases $0 $0 SO, Building Purchases $4,564 $4,564 $4, Fumiture & Equipment - Dwelling Purchases $0 $0 $ Fumiture & Equipment - Administrative Purchases $0 $0 $0 " Leasehold Improvements Purchases $0 $0 $0 ' Infrastructure Purchases $0 $0 $ CFFP Debt Service Payments $0 $0 $ Replacement Housing Factor Funds $0 $0 SO 30