ndependenta uditor's Report Statem entofm odernization Costs -Uncom pleted

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2 EXH IBIT.PAG E Sum m ary ofauditor's Results and Schedule offindings and Q uestioned C osts ndependenta uditor's Report Com bined Statem entofnetassets -Enterprise Fund Com bined Statem entofrevenues,expenses,and C hanges in NetAssets -Enterprise Fund C om bined Statem entofcash Flow s -Enterprise Fund Com parison ofactualh U D Revenue and Expenses to HUD Budgeted N otes to FinancialStatem ents A B C D Statem entofm odernization Costs -Uncom pleted Schedule ofexpenditures offederalaw ards Reporton Com pliance w ith Requirem ents A pplicable to Each MajorProgram and InternalControlOverCompliance in Accordance w ith O M B CircularA-133 Reporton Com pliance and on InternalControlOverFinancial Reporting Based on an AuditofFinancialStatem ents Perform ed in Accordance w ith G overnm entala uditing Standards Schedule offindings and Q uestioned Costs Schedule ofauditjournalentries FinancialData Schedule

3 HO USING A UTHO RITY O F LA KE A RTHUR SU M M A RY O F A U D ITO R'S R ESULTS A N D SCHEDULE O F FIND ING S A ND Q UESTIO NED CO STS A W e issued an unqualified opinion on the Louisiana for the audit of its com bined ended Septem ber30,2000. Housing A uthority of Lake A rthur, financial statem ents for the year B C D The com bined financialstatem ents are prepared on the Enterprise M ethod See Auditor's Reportand Note A. No reportable conditions in internalcontrolw ere disclosed by ourauditofthe financialstatem ents. The audit did not disclose any noncom pliance w hich is m aterial to the financialstatem ents. E. No reportable conditions in internalcontrolw ere disclosed by ourauditover majorprograms. F. W e issued an unqualified opinion on com pliance formajorprograms G. O urauditdisclosed three auditfindings thatw e are required to report under 510(a)ofOMB CircularA-133, H. Majorprogram s are as folows,and see Schedule offederalexpenditures forc FDA num bers and am ounts: 1. Low Incom e Housing 2. C la P

4 HO USING A UTHO R ITY O F LAKE ARTHUR SUM M ARY O F A UDITO R'S RESULTS A ND SC HEDULE O F FIN D ING S AND Q UESTIO NED CO STS The do lar threshold to distinguish Type A and Type B program s is $300,000. J. The Housing A uthority of Lake A rthur,louisiana did notqualify forthe year ended Septem ber30,2000 as a low -risk auditee. ~ nhp.dul~.of Findinas and C)uestioned C osts K. There are no findings in these financialstatem ents that are required to be reported in accordance w ith G AG AS. L. There are three auditfindings orquestioned costs forfederalaw ards w hich sha linclude auditfindings as described in 510a ofo M B CircularA-133.

5 M I~ B ~ TES,CPA/PFS,CFP M IK E E ST ES, P.C. A PR O FESSIO NAL AC CO UN TIN G CO RPO RATIO N 4200 A IR PO RT FRE EW AY.SU ITE 100 FO RT W O RTH.TEXA S (811) M ETRO (817) FAX (817) M EM BER AM ER~C~ BOAI~I~cF.RTIFIED PUB~ C ACCOUNTA NTS ndeeendenta uditc~r's R eeort Board ofcom m issioners Housing Authority oflake A rthur Lake Arthur,Louisiana RegionalInspectorG eneralfora udit O fice ofinspectorg eneral Departm entofhousing and Urban Developm ent W e have audited the accom panying general-purpose com bined financialstatem ents of the Housing A uthority of Lake A rthur,louisiana atand forthe yearended Septem ber 30,2000,as listed in the table ofcontents. These general-purpose com bined financial statem ents are the responsibility ofthe Housing Authority of Lake A rthur,louisiana's m anagem ent. O ur responsibility is to express an opinion on these general.purpose com bined financialstatem ents based on ouraudit. W e conducted ourauditin accordance w ith genera ly accepted auditing standards and the standards applicable to financjaj audits contained in Governm ent A uditing Standards,issued by the Com ptro ler G eneralofthe United States,and provisions of the Louisiana G overnm entala udit G uide. Those standards require thatw e plan and perform the audit to obtain reasonable assurance about w hether the financial statem ents are free of m aterialm isstatem ent. An auditincludes exam ining,on a test basis, evidence supporting the am ounts and disclosures in the financialstatem ents. A n audit also includes assessing the accounting principles used and significant estim ates m ade by m anagem ent,as w e las evaluating the overallfinancialstatem ent presentation. W e believe thatourauditprovides a reasonable basis forouropinion. In our opinion,the general-purpose com bined financialstatem ents referred to above presentfairly,in a lm aterialrespects,the financialposition ofthe Housing A uthority of Lake A rthur, Louisiana as of Septem ber 30, 2000, the results of its operations, changes in its totalnetassets and statem entofcash flow s forthe yearthen ended,in conform ity w ith ger~eralty accepted accounting principles. As described in Note A to the financial statem ents, the PHA changed from the G overnm entalfunds to the Enterprise Funds m ethod for the year ended Septem ber

6 In accordance w ith G overnm ent A uditing Standards,w e have also issued a report dated M arch 1,2001 on ourconsideration ofhousing A uthority oflake A rthur's internal controloverfinancialreporting and ourtests ofits com pliance w ith certain provisions of law s, regulations, contracts and grants. That report is an integral part on an audit perform ed in accordance w ith G overnm enta uditing Standards and should be read in conjunction with this report in considering the results ofouraudit. O ur audit w as conducted for the purpose of form ing an opinion on the com bined general-purpose financial statem ents of the Housing A uthority of Lake A rthur, Louisiana taken as a w hole. The accom panying Schedule ofexpenditures of Federal A w ards, FinancialData Schedule and other supplem entary schedules are presented for purposes of additional analysis as required by U.S. O fice of M anagem ent and Budget C ircular A-133, A udits of States, Local G overnm ents, and N on-profit Organizations, and is not a required part of the basic financial statem ents. Such information had been subjected to the auditing procedures applied in the auditofthe com bined general-purpose financialstatem ents and,in ouropinion,is fairly stated in a l m aterialrespects in relation to the general-purpose financialstatem ents taken as a w hole. This report is intended solely for the inform ation and use of the Board of Com m issioners ofthe PHA,and forfiling w ith the Departm entofhud and should not be used forany otherpurpose. Fort W orth,texas M arch

7 EX H IBIT A HO USING AUTHO RITY O F LAKE A RTHUR CO M BINED STATEM ENT O F NET ASSETS -ENTERPRISE FUND SEPTEM BER A ssets C urrentassets Cash and cash equivalents Receivables -netofalowance.$1145 Inventories -netofa low ance Prepaid Insurance Totalcurrentassets ,515 Fixed assets -netof accum ulated depreciation -Note E 868,887 Noncurrentassets O therassets Totalnoncurrentassets Totalassets Liabilities C urrentliabilities Retainage payable Accrued payrolltaxes & com p,absences -Note J Tenantsecurity deposits Accrued PILO T Totalcurrentliabilities , ,664 5,389 3, ,167 NetAssets Retained earnings Contributed capital TotalNetA ssets -ExhibitB , TotalLiabilities and NetA ssets The Notes to FinancialStatem ents are an integralpartofthese statem ents

8 HO USING.AUTHO RITY O F LA KE ARTHUR CO M BINED STATEM ENT O F REV EN UES,EXPENSES,A ND C HA NG ES IN NET ASSETS -ENTERPR ISE FUND YEAR EN DED SEPTEM BER EXH IBIT B LA -041 R evenues Ter~antrevenue H U D subsidy -Low Rent H U D C la P softcosts grant Interestincom e O therrevenue TotalO perating Revenue $ 59,944 65, O perating expenses Adm inistrative Utilities M aintenance G eneralexpense C la P softcosts Totaloperating expenses Extraordinary M aintenance Depreciation Totalexpenses Netoperating (loss) Retained earnings,9/30/99 47,717 17,229 46,557 32, , ,250 (111,056) Retained earnings,9/30/00 C ontributed capital, 9/30/99 C urrentyearadditions Contributed capital,9/30/00 TotalNetA ssets, ExhibitA $ 2, , The Notes to FinancialStatem ents are an integralpartofthese statem ents

9 EX H IB IT C HO U S IN G A UTHO R ITY O F LA KE A RTH U R CO M BINED STATEM ENT O F CASH FLO W S -ENTERPRISE FUND YEAR END ED SEPTEM BER 30,2000 LA -041 C ash flow s from operating activities Tenantrevenue O perating subsidies O theroperating revenue O perating expenses Extraordinary m aintenance Netcash (used)in operating activities $ 59,944 72,120 5,050 (151,341) (4,396) (18,623) C ash flow s from capitaland related financing activities H U D C la P hard costadvances Equipm entand C la P additions Netcash provided (required)by capita and financing activities C ash flow s from investing activities Interestincom e 349,870 (350,320) (450) 80 Netcash provided (used)from investing activities 80 The Notes to FinancialStatem ents are an integralpartofthese statem ents 7

10 EX H IBIT C HO U S ING A UTHO R ITY O F LA KE A RTH U R COMBINED STATEM ENT OF CASH FLOW S -ENTERPRISE FUND (continued) Y EA R EN D ED SEPTEM BER Adjustments LA -041 C hanges in currentassets and liabilities Increase in accounts receivable Increase in inventories Increase in prepaid insurance Increase in retainage payable Increase in security deposits Decrease in accounts payable -other Increase in com p absences and payro ltaxes Increase in accrued pilot Totaladjustm ents (57) (194) (1,267) 23, (3,469) 2, C hange in cash and equivalents C ash and equivalents beginning ofyear Cash and equivalents end ofyear-exhibita 6,278 10,236 16,514 The Notes to FinancialStatem ents are an integralpartofthese statem ents

11 H O U SIN G A UTH O R ITY O F LAKE A RTH U R CO M PA RISO N O F ACTUAL HUD REV EN UE A ND EXPENSES TO HUD BUDG ETED Y EAR EN D ED SEPTEM BER 30,2000 EX H IBIT D LA -041 HU D Budget Actua O ver (Under) Budget Revenues Tenantrevenue H UD subsidy -Low Rent H U D C la P softcosts grant Interestincom e O therrevenue Totaloperating revenue 138,910 59,944 $ 65,146 6, , (950) (950) (1,716) O perating expenses Adm inistration Tenantservices Utilities M aintenance G eneralexpense Depreciation C la P softcosts Extraordinary m aintenance 39, ,350 46,020 42, ,974 3,700 47, ,229 46,557 32,864 92,513 6, ,357 (500) (9,486) 92, Totaloperating expenses $ 155,254 $ 248,250 $ 92,996 Excess (deficient)revenues Add: D epreciation -notbudgeted by H U D Deduct: Capitalexpenditures -budgeted by H UD Excess (deficiency)of overexpenses (16,344) (111,056) (94,712) ,513 5, ,150 (21,494)$ (18,543)$ 2,951 The Notes to FinancialStatem ents are an integralpartofthese statem ents 9

12 HO USING AUTHO RITY O F LA KE A RTHU R NO TES TO FINANC IAL STATEM ENTS SEPTEM BER 30,2000 NO TE A - SUM M A RY O F SIG NIFICANT ACCO UNT PO LIC IES AND C HA NG E O F A C C O U NTIN G PR INC IPLE The Housing Authority oflake Arthur,Louisiana (the Authority),a public corporate body, was organized for the purpose of providing decent, safe, and sanitary dw e ling accom m odations forpersons oflow incom e. The Authority is engaged in the acquisition,m odernization,and adm inistration of low -rent housing, The Authority is adm inistered by a governing Board of Com m issioners (the Board),whose members are appointed by the Mayorofthe C ity oflake Arthur,Louisiana. Each m em berserves a five-yearterm on a rotating basis. Substantia ly a lofthe Authority's revenue is derived from subsidy contracts with the U.S.DepartmentofHousing and Urban Development(HUD).The Annual Contributions C ontracts entered into by the Authority and H U D provide operating subsidies for A uthority-ow ned public housing facilities and housing assistance paym ents foreligible individuals. G enerally accepted accounting principles require that the financial statem ents present the accounts and operations of the A uthority and its com ponent units, entities for w hich the A uthority is considered to be financia ly accountable. Blended com ponent units, although legally separate entities,are,in substance,part ofthe Authority's operations and data from these units,ifany,are com bined w ith data ofthe A uthority. Each discretely presented com ponentunit,ifany,w ould be reported in a separate colum n in the com bined financialstatem ents to em phasize thatitis lega ly separate from the A uthority. As ofseptem ber 30,2000,and for the fiscal yearthen ended,the Authority had no discretely presented com ponentunits or any com ponent units required to be blended in these financial statem ents. 10

13 HO US ING A UTHO R ITY O F LA KE A RTH U R NO TES TO FINA NC IA L STATEM ENTS (continued) SEPTEM BER NO TE A - SUM M A RY O F SIG N IFICA NT ACC O UNT PO LIC IES AND C HANG E O F ACCOUNTING PRINCIPLE (continued) (2] For the year ended Septem ber 30, 1999, the PHA changed from the G overnm ent Funds M ethod to the Enterprise M ethod. This change w as strongly recommended by the RealEstate AssessmentCenter(REAC)of the Departm entofhousing and Urban Developm ent. The Enterprise Funds M ethod accounts foroperations in a m annersim ilarto a private business. Under this m ethod,a lassets, including fixed assets, and a lliabilities are in one fund.and one financialstatem ent. The Enterprise Fund recognizes revenues and expenses on the fu laccrual basis. Revenues are recognized w hen earned and becom e m easurable. Expenses are recognized in the period incurred,ifm easurable. In the prior m ethod used, the G overnm ental Funds M ethod, the m odified accrual m ethod w as necessary. Depreciation expense m ust be recognized for the Enterprise Fund. Under the G overnm entalfunds M ethod,depreciation w as optionaland the PHA elected notto recognize it. The PHA applies a l G A SB pronouncem ents as w e l as the Financial Accounting Standards Board pronouncem ents issued on or before Novem ber 30, 1989, unless those pronouncem ents conflict w ith or contradictg A SB pronouncem ents. At 9/30/99 soft costs from developm ent and m odernization w ere deleted from fixed assets and charged to HU D CapitalContributions.

14 HO U S ING A UTHO R ITY O F LA KE A RTH U R NO TES TO FINA NC IA L STATEM ENTS (continued) SEPTEM BER 30,2000 N O TE A - SU M M A RY O F SIG N IFICA NT AC C O U NT PO LIC IES A N D C HA N G E O F ACCOUNTING PRINCIPLE (continued) (3), J~jjdgetary Data The A uthority is required by its H U D A nnual Contributions Contracts to adoptannualbudgets forthe Low -Rent Housing Program. A nnualbudgets are not required for C la P grants as their budgets are approved for the length ofthe project. The Authority is under a lim ited budget review from H U D w ith the contro category oftotaloperating expenditures. Ifthere are no overruns ofthe tota operating expenditures,then H U D does not require budget revisions other than w hen there are substantial additions to nonroutine expenditures. Budgeted am ounts are as origina ly adopted or as am ended by the Board and H U D. The budgetis prepared on a statutory (HUD)basis and does notcontain a provision for unco lectible tenant receivables,or depreciation. The budget does reflectfurniture and equipm entadditions from operations. (4) C ash and C ash Eauivalents The entity defines cash and cash equivalents to include certificates of deposit,m oney m arketfunds,savings accounts,and dem and deposits. 12

15 HO U SING A UTHO R ITY O F LA KE A RTH U R NO TES TO FINA NC IAL STATEM ENTS (continued) S EPTEM BER 30,2000 NOTE A - SUM M ARY O F SIG NIFICANT ACCO UNT PO LICIES AND CHANG E O F ACCOUNTING PRINCIPLE (continued) Receivables for rentals and service charges are reported in the G enera Fund,netofa low ances fordoubtfulaccounts. NO TE B - CASH D EPO S ITS W ITH FINA N C IA L INSTITUTIO NS It is the entity's policy for deposits to be secured by co lateralvalued at m arketor par, w hichever is low er, less the am ount of the Federal Deposit Insurance C orporation insurance. The entity's deposits are categorized to give an indication ofthe levelof risk assum ed by the entity atseptem ber30,2000. The categories are described as foljow s: Category 1 - Category 2 - Category 3 - Insured orco lateralized w ith securities held by the entity orby its agentin the entity's nam e. Co lateralized w ith securities held by the pledging financia institution's trustdepartm entoragentin the entity's nam e. Unco lateralized,uninsured and unregistered,butw ith securities held by the bank,its trustdepartm ent,orits agent,pledged to the PHA,butnotin the PHA 's nam e. 13

16 HO USING AUTHO RITY O F LAKE A RTHUR NO TES TO FINA NC IA L STATEM ENTS (continued) SEPTEM BER 30,2000 NOTE B -CASH DEPOSITS W ITH FINANCIAL INSTITUTIONS (continued) Cash Deposits,categorized by levelofrisk,(atcost,which approximates market)are Total Bank Balance C ategory ,514 $ 16,514 $ NO TE C -AC'IIV ITIES O F THE PHA AtSeptem ber30,2000,the PHA was managing 49 units oflow-rentin three projects underprogram F-W NO TE D -C O NTIN G ENC IES The entity is subjectto possible examinations by federalregulators who determine com pliance w ith term s,conditions,law s and regulations governing grants given to the entity in the currentand prioryears. These exam inations m ay resultin required refund by the entity to federalgrantors and/orprogram beneficiaries. 14

17 HO U SIN G A UTHO R ITY O F LA KE A RTH U R NOTES TO FINANCIAL STATEM ENTS (continued) SEPTEM BER N O TE E -FIX Er) ASSETS As noted in Note A,softcosts form erly capitalized have been w ritten of and fixed assets are now depreciated on the straight-line m ethod over their estim ated useful lives as fo low s: Site im provem ents Buildings Buildings im provem ents Nondw e ling structures Equipm ent 15 Y ears 33 Y ears 15 Y ears 15 Y ears 3 to 7 Years 09/30/00 Cost 09/30/99 A ccum ulated Depreciation C urrent Depreciation 09/30/00 Accum ulated Depreciation Land $ Buildings and Im provem ents Equipm ent $ 19,151 2,123,937 70, ,218, , ,302, The capitalization lim itis $ A lland and buildings are encum bered by a Declaration of Trust in favor of the U nited States ofa m erica as security forobligations guaranteed by the governm entand to protect otherinterests ofthe governm ent. NO TE F -RETIR EM ENT PLA N The PHA approved a retirem ent plan in O ctober,2000. Contributions by the em ployee and the em ployerw ilbe 3% each. 15

18 HO USING A UTHO RITY O F LAKE A RTHUR NO TES TO FINA NC IAL STATEM ENTS (continued) SEPTEM BER 30,2000 NO TE G -DISC LO SURES A BO UT FAIR VA LUE O F FINA NC IAL INSTRUM ENTS The fo low ing m ethods and assum ptions w ere used to estim ate the fairvalue ofeach class offinancialinstrum ents forw hich itis practicable to estim ate thatvalue: C ash and Investm ents The carrying am ount approxim ates fair value because of the short m aturity of these instrum ents. NO TE H -AC C O U NTING FO R TH E IM PA IR M ENT O F LO N G -LIV ED ASSETS The fu lam ount of the carry ing value of buildings and land im provem ents are deem ed recoverable from future cash flow s. N O TE I-USE O F ESTIM ATES in TH E PR EPA RA TIO N O F FINA N C IA L STATEM ENTS The preparation of financialstatem ents in conform ity w ith genera ly accepted accounting principles requires m anagem ent to m ake estim ates and assum ptions that afect certain reported am ounts and disclosures. Accordingly, actual results could difer from those estim ates. NO TE J -C O M PEN SATED A BSEN C ES Em ployees earn annualleave based upon years of service,and m ay accrue up to 300 hours. Sick tim e is earned but not accrued since it is dependent upon a future event. Upon term ination a laccrued vacation tim e is paid. At9/30/00 the PHA had a liability of $4,374. Of the aforem entioned am ount,$2,267 pertained to the prior year. Only the $2,107 increase is recognized as a currentyearexpense in these financialstatem ents. 16

19 S U PPLEM ENTA RY IN FO R M A TIO N

20 HO US IN G A UTH O R ITY O F LA KE A RTHU R EX H IB IT E STATEM ENT A N D C ERTIFICATIO N O F A CTUA L M O D ER N IZATIO N C O ST A N N UA L C O NTR IBUTIO N C O NTRA CT LA The ActualM odernization Costs are as fo low s Pr~ect 1998 Prq ect 1999 Funds A pproved Funds Expended Excess offunds A pproved $ 419, , Funds A dvanced Funds Expended Excess offunds Advanced $ 419, , The distribution ofcosts by projectas shown on the FinalStatementofModernization Cost dated 2/25/00 and 9/15/00 accom panying the Actual M odernization Costs Certificates subm ited to H U D forapprovalare in agreem entw ith the PHA's records. 3.A l m odernization costs have been paid and allrelated liabilities have been discharged through paym ent. The Notes to FinancialStatem ents are an integralpartofthese statem ents 17

21 HO US IN G A UTH O R ITY O F LA KE A RTH U R SC H EDULE O F EXPEND ITURES O F FED ERAL AW ARDS Y EA R END ED SEPTEM BER FED ERA L G RA NTO R PRO G RA M TITLE C D FA NO. U.S.Departm entofhousing and Urban Developm ent D irectprogram s: Low -Incom e Housing O perating Subsidy MajorProgram Total PRO G RA M EX PEN D ITU R ES C om prehensive Im provem ent Assistance Program MajorProgram Total 356, TotalH U D 421,990 18

22 M IICE EST ES, P.C. A PR O FESSIO N A L A C CO UN TIN G C O RPO RATIO N 4200 A IR PO RT FR EEW AY ~SU ITE 100 FO RT W O RTH,TEXA S M IKE ESTES CPA/PFS,CFP (817) M ETRO (817) FAX (S17) omail:estes3@ megapathdsl.net MEM BER AM ERIC,LN BOARD CERTIFIED PUBLIC ACCOUNTANTS Ac.c.c~rdance w ith O M B C irctllara-133 Housing A uthority oflake A rthur Lake Arthur.Louisiana W e have audited the com pliance of the Housing Authority of Lake Arthur, Louisiana w ith the types ofcom pliance requirem ents described in the U.S.O fice ofm anagem ent and Budget(OMB)CircularA-133 Compliance Supplement thatare applicable to each ofits majorfederalprograms forthe yearended Septem ber30,2000. The Housing Authority of Lake Arthur, Louisiana's major federalprogram s are identified in the sum m ary of auditor's results section of the accom panying schedule of findings and questioned costs. C om pliance w ith the requirem ents of law s, regulations,contracts and grants applicable to each ofits majorfederalprograms is the responsibility ofthe Housing Authority of Lake Arthur, Louisiana's M anagem ent. O ur responsibility is to express an opinion on the Housing A uthority of Lake Arthur, Louisiana's com pliance based on ouraudit. W e conducted ourauditofcom pliance in accordance w ith generally accepted auditing standards; the standards applicable to financial audits contained in Govern m ent A uditing Standards,issued by the Com ptro lergeneralofthe United States;and O M B C ircular A-133,A udits of States, Local G overn m ents, and N on-profit O rganizations. Those standards and ~ M B C irculara-133 require thatw e plan and perform the auditto obtain reasonable assurance about w hether noncom pliance w ith the types of com pliance requirem ents referred to above thatcould have a directand m aterialefect on a majorfederalprogram occurred. An auditincludes examining,on a testbasis, evidence about the Housing A uthority of Lake A rthur, Louisiana's com pliance w ith those requirem ents and perform ing such otherprocedures as w e considernecessary in the circum stances. W e believe that our audit provides a reasonable basis for our opinion. O ur auditdoes not provide a legaldeterm ination on the Housing A uthority of Lake Arthur,Louisiana's com pliance w ith those requirem ents. 19

23 In ouropinion,the Housing Authority oflake A rthur,louisiana com plied,in a lm aterial respects,w ith the requirem ents referred to above that are applicable to each of its major federalprograms forthe year ended September 30,2000. W e noted three instances ofnoncom pliance. They are the three auditfindings. ntc,rn~lq rm frnlo v~.rc om nliance The m anagem entofthe Housing Authority oflake Arthur,Louisiana is responsible for establishing and m aintaining internal control over com pliance w ith requirem ents of law s,regulations,contracts and grants applicable to federalprogram s. In planning and perform ing ouraudit,w e considered the Housing A uthority oflake Arthur,Louisiana's internalcontrolovercom pliance w ith requirem ents thatcould have a directand m aterial efecton a majorfederalprogram in orderto determ ine ourauditing proceduresforthe purpose of expressing our opinion on com pliance and to test and report on internal controlovercom pliance in accordance w ith O M B C irculara-133. O ur consideration of the internal oontrat over com pliance w outd not necessarily disclose all m a ters in the internal control that m ight be m aterial w eaknesses. A m aterialw eakness is a condition in w hich the design oroperation ofone orm ore ofthe internal control com ponents does not reduce to a relatively low level the risk that noncom pliance w ith applicable requirem ents oflaws,regulations,contracts and grants thatwould be materialin relation to a majorfederalprogram being audited may occur and not be detected w ithin a tim ely period by em ployees in the norm al course of perform ing theirassigned functions. W e noted no m atters involving the internalcontrol overcom pliance and its operation thatw e considerto be m aterialw eaknesses. This report is intended for the inform ation of the audit com m ittee, m anagem ent and federalaw arding agencies and pass-through entities. How ever,this report is a m atter ofpublic record and its distribution is notlim ited. FortW orth,texas M arch The Notes to FinancialStatem ents are an integralpart ofthese statem ents 20

24 M II(2E ESTES,CPA/PFS,CFP M IK E EST E S, P.C. A PR O FESSIO N AL A C CO U N TIN G C O RPO RATIO N 4200 A IR PO RT FREEW A Y -SU ITE I00 FO RT W O RTH,TEXAS (817) M ETRO (817) FAX (817)831o3560 e-m arl: M EM BER AM ERICAN BOAR D CERTIFIED PUBLIC ACCOUNTANTS Based on an A uditoffinancfalstatem ents Perform ed in Housing Authority oflake A rthur Lake Arthur,Louisiana W e have audited the financial statem ents of the Housing A uthority of Lake A rthur, Louisiana as of and for the year ended Septem ber 30, 2000, and have issued our report thereon dated M arch 1, W e conducted our audit in accordance w ith generally accepted auditing standards and the standards applicable to fnancialaudits contained in G overnm entala uditing Standards,issued by the Com ptroller G eneralof the U nited States,and provisions ofthe Louisiana G overnm entala uditg uide. A s part of obtaining reasonable assurance about w hether the Housing A uthority of Lake A rthur, Louisiana's financial statem ents are free of m aterial m isstatem ent, w e perform ed tests ofits com pliance w ith certain provisions oflaw s,regulations,contracts and grants,noncom pliance w ith w hich could have a directand m aterialefecton the determ ination of financial statem ent am ounts. How ever, providing a opinion on compliance with those provisionswas notan objective ofourauditand,accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncom pliance that are required to be reported under G overnm ental A uditing Standards,orthe Louisiana G overnm entala uditg uide. 21

25 nt~rn~lc:.nntr~lo ver FinannialR enortina In planning and perform ing our audit,w e considered the Housing A uthority of Lake A rthur, Louisiana's internalcontrolover financialreporting in order to determ ine our auditing procedures for the purpose of expressing our opinion on the financial statem ents and notto provide assurance on the internalcontroloverfinancialreporting. O urconsideration ofthe internalcontroloverfinancialreporting would notnecessarily disclose a lm atters in the internalcontroloverfinancialreporting thatm ightbe m aterial w eaknesses. A m aterialw eakness is a condition in w hich the design oroperation of one or m ore of the internalcontrolcom ponents does not reduce,to a relatively low level,the risk that m isstatem ents in am ounts thatw ould be m aterialin relation to the financial statem ents being audited m ay occur and not be detected w ithin a tim ely period by em ployees in the norm alcourse ofperform ing theirassigned functions. W e noted no m atters involving the internalcontroloverfinancialreporting and its operation thatw e considerto be m aterialw eaknesses. This reportis a m atterofpublic record and its distribution is notlim ited FortW orth,texas M arch The Notes to FinancialStatem ents are an integralpart ofthese statem ents

26 H O U S ING A UTHO R ITY O F LA KE A RTH U R SC H ED U LE O F FIN D IN G S A N D Q U ESTIO N ED C O STS SEPTEM BER 30,2000 None C.urm nfa uditfindinas W aiting LLs_t~. 1) HUD regulations requires thata PHA maintain a waiting listthatincludes the date and tim e ofapplication. O n a m anuallistsuch as this PHA m aintains, applicants should be listed in the orderthey apply. O n the 1 and 2 bedroom list,how ever,inoted one individualapplied on The next application date below w as 1/28/00. Later,three vertical entries(top to bottom)were 2/28/00,3/31/00,and 2/17/00,respectively. The PHA clerk told m e she took the applications in bunches overa several day period and listed them a latone tim e on the waiting list. She did not realize they w ere outoforder. The PHA adm its by tim e and date of application. The PHA does not recognize localpreferences. Recom m endation The PHA should enter applicants im m ediately onto the waiting list w hen they apply. This elim inates the possibility thatapplicants w ilnotbe entered in the properorderonto the w aiting list. W e note that the PHA properly housed applicants in accordance w ith the order they actua ly applied, and not in accordance w ith the im proper sequence thatthey w ere listed on the w aiting list,as noted previously. Reply W e w ilcom ply w ith the above 23

27 HO USING AUTHO RITY O F LAKE ARTH UR SCHEDULE O F FIND ING S AN D Q UESTIO NED CO STS SEPTEM BER C.IA P Bid NotO btained 2) On the 1999 CLAP,the PHA did notobtain a generalcontractor. The PHA purchased the m aterials and hired out the labor to one carpenter to substantia ly renovate 3 units. The PHA could not provide m e w ith any other bids forthis labor. The totalprice forthe labor paid to the carpenter was $26, Recom m endatiq.q In the future, the PHA should adhere to its procurrent policy and obtain otherbids w hen necessary. The low estbid does notnecessarily have to be taken. The PHA should review with HUD,however,before itrejects the low est,responsible bid. R eply W e w ere dissatisfied w ith the w ork of the last generalcontractorw e used, w ho w as not a local O ur Executive Director has supervised com m ercial renovation jobs and knows the price we obtained and paid to the carpenter w as reasonable. The Executive Director and the Board m onitored the construction job in question and the carpenterhired did good work. Also,w e attem pted to obtain quotes from otherlocalcarpenters. They said they w ere too busy. Nexttim e we face this situation,w e'lcontacth U D before w e proceed 3) Answers were incorrectly calculated forsub-indicator#i,v128,129 and 130,Average num berofcalendardays units were in dow n tim e,m ake ready tim e and lease up tim e. V 131,average unitturnaround days,w as correctly com puted 24

28 H O U S ING A UTH O R ITY O F LA KE A RTH U R SC HED ULE O F FIN D ING S A N D Q UESTIO NED CO STS SEPTEM BER Recom m endation The PHA keeps good records thatdocum entvarious answ ers form ASS. I discussed the correct w ay to com pute the above averages. The PHA should correctly com pute in the future. Reply W e w illcom ply w ith the above 25

29 HO US ING A UTHO R ITY O F LA KE A RTH U R SC HED U LE O F A U D IT JO U R NAL ENTR IES Y EA R EN D ED SEPTEM BER LA -041 A C CT.# FO R A UD IT PURPO SES DR CR A CCT.# FO R PO STIN G TO PHA BO O KS <1> Bad debtexpense A low ance -bad debts Perfee accountant To increase a low ance to am ountequalto 9/30/00 balance ofvacated tenants 26

30 Page 1of PHA:LA 041 FYED:09130/2000 Line Item# 1 ash-unrestncted AcountOeschDtion [LowRentPublic/PublicHousingComprehensiveImprovement Housin~3,42~ $1 AsistancePro~lram $0 Total $13.42E 114 " ~Cash*TenantSecuntyDeposits I 53,068[ E 100 JTotalCash $ ,1 I 125 [&ccountsreceivable.miscelaneous [ $134~ $0 $ [,AccountsReceivable-Tenants-Dwelin9Rents [ 51,469~ 50[ $1,46c ~AIowance forooubtfulaccounts-dwelin~lrents I $'1,144 $131 $ [AlowanceforDoubtfulAccounts-Other $0[ 50[ $0 126 ITotalReceivables.netofalowancesfordoubtfulaccounts $ $458 I t42 [PreoaidExbensesandOtherAssets $10,91~ 50~ Ilnventohes I ~ lowanceforobsoleteinventones I 5C 50t ]TotalCurentAsets I $28,51~ ,51~ 161 llano [ $19,161~ 501 $19.151' 162 1Buildings [ $1.552,064 $445.10~$1,997,17e 163 IFumlture,E~uiDment& Machinery-DWelings [ El 56.50t $ IFurniture.Equipment& Machinery-Administration I 519,13~ $18.4T, ~ 165.easeholdimprovements I 5114,524( $12.23~ ~,ccum ulated Depreciation 5-1, $~35.94~ 1.344, rotalfixedasets.netofacumulatedoedreciapon 1 542,512[ $446.37~J5668,87 i J174 ~OtherAssets 52.58~" S0~ ITotalNon-CurentAssets $425.39; $ $453,91~ 54~ PHA:LA041 FYED:09/30/2000 ILineItem No. 21 LcruedWageiPa!/rolTaxesPayable AcountDescnotion LowRentPublicI Housind ~ PuBlicHousing_ComprehensiveImprovement AsistanceProgram $0$1,0151 Total / 1322 JAccruedComDensaledAbsences 54,374 50~ $4.374~ 1333 [AccountsPavaNe-OtherGovernment $4.02E~ $0l 54.02E p41 ~TenantSecurityO ts ~ $0 $3,0881 ~345 }OtherCurentI~-iaDilitJes $23,664~ $01523,6641 ~10 ~350 lrota,c ~otatnoncurentliabilities Liabilities 536,16~ $ ] 5C,~,.~,~ otailiabilities J. $ ]1Long-lermDeDt-HUDGuaranteed ~N ~ 50~$35,53~ ethud PHA Contributions I [$825.72~ 508 ITolalConlrlbuIedCaoltal ~ $446.37~$86126El h~t~s://huda~ps~hud~g~v/h U D ~ System s/faspha~reacl ~rintfd S.cfm ~?datecreated=m ar% 2~% 2~6% 2~2~ 3/6/'0

31 Page 2 of I ll ~rotalreservedfundbalance $01 $01 S / I ITotal g Eoultv Fund Balance/Retained Earn ings $2,8 $ $01 $446,37~$864,12d I ITotalLiabilitiesandEouitv $453.91~ $446.37~$900.28"A PHA:LA 041 FYED :09/30/2000 flineitem No. 03 NetTenantRentalRevenue AcountDeSCbDtion IL~w~en'~u~cj Housinq $57.49 RublicHousing_ComprehensiveImprovement AsistanceProgram $0~$574gO ITotal ~704 ~enantrevenue-other ~ $2,454~ $0~ $2.45,~ ~05 ]706 ~'otalt IHUOPHAGrants R! $59.94~ $65.14~ $6.974$72.12[ $ , J711 ]InvestmentIncome-Unrestricted J $80l $0J $8C ] j $5.05q 00 {Totm Revenue ~ S130,22ci $01 $5,05E $6.974~$137 ~9, il~m s:,rludavvs.lm d.aow H L D Svstcm s/fasphajrea~l PrintFD S.ofm '.datcc rca~cd=m ~tr,o~o /o2oo /o20_ool

32 Page 3 of PHA:LA 041 FYED:09130/2000 ~ineiteml No.1 dminlstrativesalariesacoun,descrimion L~wRentPublicIPublicH~using-ComP Housing528,48(l AsistanceProgramiVeImp '/ S01$25.48(;I Total i " 18 IherOperatin -Administrative $6,97, $3,715 S( 3 33 ~,octr as V - - ]" $1.08E 83.'91 ~8 ]OtherUtilitiesExoense j $&92g~ SC ~ S~,~41 ]OrdinaryMaintenanceandOperations.Labor J C~ $0~$19.91C~ ~ 12 {Ordinal-/Maintenancean0OperationsA.latenalsandOther I 57,431~ ~ $7431 S~ [943 IOrdinantMaimenance andoperationscontractcosts [ $13,22~ $0~ $13.~!221 ~ 5 ~[EmDIoyeeBenefitContributions-Ordinary.Mainlenance ] $5,994(, 5C~ S5.9~4~ 61 InsurancePremiums L ~. $c ~ Pavmen{sinLieuofTaxes $4.02~i~ ~ ~ ents 573~ ~CJ $72~ 1969 JTotalOeeralngExpenses t $ $6.97~5'15134;t ~"70 I{ExcesODeratinqRevenueoverO~eratinqExpenses { $-14.14~ 7"i IExtrao(dinaryMam{enance $CSC i ] $3.70C~ $q. s3.704 p7:~ {Casua,yLosses-Non-Capitalized [ $696~ S0~ $696~ [974 IO iatione ] S57.401~ $35.11;~ ~92.51~ 1900 [I-otalExpenses [ $ ~ $42.08~ S248.25C~ [1010 I~otalOtherFi qs Uses) I 501 $a $ol Deficiency)o i eover(under) I $-78.g4 $-35.!1~ 1.05$1~ 1000 E PHA:LA 041 FYED : LineItemI No.. AcountDescription RentPuolicI PUOliCt4OUslngComprenenswetmprovemem [!!01 '.lcamta~outlaysemer0rlsefund $0! $349.87C~349.87Q ]1!02 IDealPrincipalP E Funas ( $0! $0i SO ]1103 IBec~Innlnc~EQUaV ~ S13161~t$625.30a [1112 [DepreciationAddBack I S35.t1~ lundmonthsavailable J fi6~,3! 560~ 121 JNuml3ero1UnitMonthsLeased J [ 5081 hnps:'vhudapps'hud'g~v/h U D - System s/faspha/reacl PrintFD S.cfm?dateCreated=M ar% 20% 206% /6/0