Release Date AP~ 12 ~000

Transcription

1 . [[4 :~/ i','" /"~ITI3R otli(:~m OOW!I~31 /d;9:~14 H O U SIN G A U TH O R ITY O I:TH E C ITY O F B A TO N R O U G E B A TO N R O U G E,LO U ISIA N A Underprovisionsofst,~te law,this reportis a public docum ent.a copy ofthe reporthasbeen _~;ubm itted to the entity and otherapprop(iate public officials.the report is av~i~able forpublic m.-3pection atthe tlaton Rouge office ofthe [egislative Auditorant;,w here appropriate,attl~e ofice elthc~,parish clerk ofcourt. Release Date AP~ 12 ~000 W ILLIAM DAkTEL M C('ASKILL ('PA A I,ROFESSIO NAL ACCO UN TING CO RPORA "lion 415M AGN O LIA LA N E M AN D EV ILLE,LO U ISIA N A 70471

2 TABLE OF CO N TEN TS IN DEPEN D EN T A U D ITO R 'S REPO RT O N G ENERAL PURPO SE FIN AN CIAL STA TEM EN TS AN D SUPPLEM EN TARY SCH ED ULE OF EXPEN D ITUR ES OF FED ERA L A W ARD S EX H IB IT S---G EN ERA L PU RPO SE FIN AN C IA l_.sta TEM EN TS CO M BIN ED B A LAN CE SHE ET A T SEPTEM BER 30,1999,ALl_,FIYN D S CO M BIN ED STA TEM EN T O F R~;VEN U ES,EX PEN D ITU R ES A N D CttA N G ES IN RETA IN ED EA RN IN G S---A LL FUN D S FO R TH E Y EAR EN I)F,D SEPTEM BER 30,1999 C D CO M BIN ED STA TEM EN T O F CA SH FLO W S-ALL FUN D S CO M BINE D STA TEM E N T O F REV EN U E S.EXPEN D ITU RES AN D CH A N G E IN RE TA INED EAR N IN G S-B U D G ET V S.ACTU A L N O TES TO TltE FINAN CIA l. STATEM EN TS AN D A CCOM PAN YIN G IN FO RM ATION SU PPLEM EN TA R Y IN FO RM A TIO N SCH ED ULE S- G A A P B A SIS SCtIED ULF.O F EX PEN D ITURE S O F FED ERA L AW ARD S COM BININ G BAL AN CE SH EET-ALL FU N D S COM BIN IN G STA TEM E N T O F REVEN UE S,EXPEN SES,AN D CH AN G ES IN RETA IN ED EARN IN G S-ALL FU N D S lv COM BIN IN G SCHE D UL E OF REV EN UE S,EX PEN D ITURES AN D FUN D BA 1,AN CE-C O M PRE H EN SIV E G RA N T PRO G RA M FU N D SU PPLEM EN 'FARY IN FO RM ATION SCHED ULES- STA TU TORY BA SIS V PH A 'S STA TEM E N T AND CERTIFICATION O F ACTUAL CO STS REPORT ON COM PLIAN CE AND ON IN TERN AL CO N TRO L O VER F1N AN ICAL REPORTIN G BA SED ON AN AU D IT O F FIN AN CIAL STATEM EN TS PERFO RM ED IN A C CO RD AN CE W ITH G O V ERN M EN T A U D ITIN G STA N D A RD S

3 REPORT ON COM PLIANCE W ITH REQUIREM ENTS APPLICABLE TO EACH M A JO R PRO G RA M AN D IN TERN AL CON TRO L O V ER CO M PLIAN CE 1N A CCORD AN CE W ITH OM B CIRCUL AR A -133 SU M M A RY SCH E D U LE O F PRIO R AU D IT FIND IN G S SCHED ULE OF A DJU STIN G JO URN AL EN TK 1ES-N ON E SCHEDULE OF CURRENT FINDINGS AND Q[YESTIONED COSTS CO RRE('TIVE ACTION PLAN

4 W IL L IA M D A N IEL M C C A SKILL,C PA A PRO FESSIO NA L A C C O UNT IN G C O R PO RA TIO N 415 M A G N O LIA LA N E M A N DEV ILLE,LO U ISIAN A "leli.,pilo NE 504~ FAN CEI,I,LI,'d~.504-g07Fo,198 E-M All, MISM I~ER LOUISIANA SOCIETY OF CPA'S M ISSISSIPPIS(N-2[I'TY O1:CPA'S " tm ERICAN INS'HTL-II~OF CPA'S BO A RD O F CO M M ISSIO N ER S H O U SIN G A U TH O RITY O F CITY O F B ATO N RO U G E BA TO N RO U G E,LO U ISIA N A INDEPENDENT A UI)ITO R'S REPO RT I;NQI;.~,LHd ED OPIN O N O ~ GENE1L~L PU RI'OSE )F E'G't~L~,~)ITURES OI;'I~Z~EIM I,A WARI)~ I have audited the accom panying general purpose financial statem ents of the ttousingauthority of the City of Baton Rouge (PHA)as of and for the year ended Septem ber 30, 1999,as listed in the table of contents. These generalpurp ose financial statem ents are the responsibility of the PH A 's m anagem ent. M y responsibility is to expressan ()pinion on these generalpurpose financialstatem entsbased on m y audit. 1conducted m y auditin accordance w ith generally accepted auditing standardsapplicable to financial audits contained in G overv _ m ej at A uditing Sta j _ard.~ issued by the _ C om ptroller G eneralof the U nited States,and provisions of the Louisiana G overnm ental Audit G uide. Those standards required that 1 plan and perform the audit to obtain reasonable assurance about w hether the generalpurpose financialstatem ents are free of m aterialm isstatem ent. A n audit includesexam ining,on a testbasis,evidence supporting the am ounts and disclosures in the generalpurpose financialstatem ents. An audit also includes assessing the accoum ing principles used and the significant estim ates m ade by m anagem ent, as w ell as evaluating the overall general purpose financial statem ent presentation. Ibelieve thatm y auditprovidesa reasonable basisform y opinion. In m y opinion,the generalpro 'pose financialstatem ents referred to above presentfairly in allm aterialrespects,the financialposition of the IIousing Authority of the City of Baton R ouge as of Septem ber 30, 1999,and the results of its operations and changes in its total equity forthe yearended in conform ity w ith generally accepted accounting principles. A s described in N ote A to the financial statem ents, the PH A has changed from the G overnm entalfunds to the Enterprise Funds m ethod for the year ended Septem ber 30, 1999.

5 In accordance with G overnm ent Auditing _ Standa _ rd~s Ihave also issued a reportdated February 14, 2000 on m y consideration of the PH A 's internal control over financial reporting and m y tests of its com pliance w ith certain law s, regulations, contracts, and grants. M y auditw as conducted forthe purpose of forming an opinion on the generalpurp ose financial statem ents of the PH A taken as a w hole. The com bining and individualfund financialstatem entsand schedules,asw elasthe accom panying schedule of expenditures offederalawardsand thefinancialdataschedules(i1and 11I)arepresented forpurposes of additionalanalysis as required by the U.S.O fi ce of M anagem entand BudgetCircular A -133,Audits of Slates LocalG overnm ents and N on Profitorganization, and is nota required part of the general purp ose financial statem ents. Such inform ation has been subjected to theauditing proceduresapplied in the auditofthegeneralpurposefinancial statem entsand,in m y opinion,is fairly presented in alm aterialrespectsin relation to the financialstatem entsand any otherincluded supplem entary inform ation taken asa w hole. ]'his reportis intended solely forthe inform ation and use of the PH A,and for filing w ith the D epartm entof H U D otherpurp ose SsIoncrs for any W illiam D anielm ccaskill,cpa A ProfessionalA ccounting Corporation February 14,2000

6 Housing A uthority ofthe City ofbaton Rouge CO M BINED BALANC E SHEET -.ALL FUNDS Septem ber EXH IBIT A ALL FUNDS ASSETS C urrentassets: Cash and cash equivalents Tenantsrents receivable(net) A ccounts and notes receivables Prepaid expenses and otlerassets Inventories Interprogram due from Totalcurrentassets N oncurrentassets: Fixed assets (net) Undistributed debits Totalassets 628, , , , , , ,947, A BILITIES AND FUND EQ UtTY C urrentliabilities: Accounts Payable and accrued liabilities Deferred revenues Currentportion oflong-term debtcapitalprojects Security deposits Interprogram due to Totalcurrentliabilities Noncurrentliabilities: N oncurrentliabilities-other Noncurrentportion of long-term debt lotalliabilities 374, , , , ,303, Fund equity: Contributed capital(net) Retained earnings Totalfund equity 20,870, , Totalliabilities and fund equity 22, see notes to financialstatem ents

7 Housing A uthority ofthe C ity ofbaton Rouge CO M BINING STATEM ENT O F REVENUES,EXPENSE A ND CHANG ES IN RETAIN ED EAR NING S--A LL FUNDS Forthe yearended Septem ber30,1999 EXH IBIT B O perating revenues: N ettenantrevenue Tenantrevenue-other Interestincom e O therincom e H U D PHA grants O thergovernm entgrants Totaloperating revenues A LL FU N D S 1,317, , , , ,652, O perating expenses: A dm instration Tenantservices Utilities O rdinary m aintenance G eneralexpense Extraordinary m aintenance C apitaliosses-noncapitalized H ousing assistance paym ents O perating expenses before depreciation Operating income/(ioss)before depreciation Depreciation expense Netoperating income/(ioss)afterdepreciation Retained earnings (operating reserve), Add:HUD-REAC prioryeargaap adjustments Operating income/(ioss)before depreciation 1,638, , , ,334, , , , (293,730.00) 1,997, (2,290,920.00) 1,079, (174,258.00) (293,730.00) Retained earnings (operating reserve), , NetH U D contribution, Currentyearaddition and REAC adjustments NetH U D contribution ,412, TotalEquity, ,481, see notes to financialstatem ents

8 Housing Authority ofthe City ofbaton Rouge CO M BINING STATEM ENT O F CA SH FLO W S --.A LL FUNDS Forthe YearEnded Septem ber30,1999 EXHIBIT C page 1 of2 ('ash flow s from operating activities: C ash received from tenants C ash received from otherincom e C ash paid forgoods and services C ash paid to em ployees Netcash provided by operating activities 1,367, , (8,968, (1,555, (9,007, (;ash flow s from noncapitat financing activities: O perating grants and subsidies Cash flow s from capital and related financing activities Proceeds from grants Acquisition ofcapitalassets Proceeds from issuance ofnotes Aquistion ofcapitalassets Netcash used forcapita and related financing activities ([;ash flows from investing activities: Intereston investm ents see notes to financialstatem ents

9 Housing Authority ofthe C ity ofbaton Rouge C O M BINING STATEM ENT O F CA SH FLO W S--ALL FLO W S Forthe YearEnded Septem ber30,1999 EXHIBIT C page 2 of2 Reconciliation ofoperating incom e to netcash provided by operating activities Adjustments to reconcile operating incom e to netcash NetHUD-REAC Adjustments-Non Cash Depreciation (Increase)decrease in tenant rents receivable (Increase)decrease due from US DeptofHUD (Increase)decrease in supplies inventory (Increase)decrease in due from othergovts. (Increase)decrease in prepaid insurance (Increase)decrease in undistributed debits (Increase)decrease in accts receivable m isc. Increase (decrease)in accoutpay othergovts. Increase (decrease)in accounts payable and accrued liabilities Increase (decrease)in security deposits Increase (decrease)in accountpayable HUD Increase (decrease)in accrued vacation pay Increase (decrease)in deferred revenues Increase (decrease)in a/p noncurrent Totaladjustments Change in cash and equivalents Beginning Cash (9,259.00) (147,296.00) (75,760.00) 9, (66,969.00) (3,645.00) , , (416,605.00) 137, (430,564.00) (28,209.00) (768,846.65) (1,062,576.65) C ash and cash equivalents end ofyear-exhibita 628, see notes to financialstatem ents

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11 TH E H O USING A UT H O RITY O F TH E C ITY O F BA TO N RO U G E B ATO N RO U G E,LO U ISIAN A N O TES TO TH E FIN A N C IA L STA TEM ENT S t-lousing Authorities are chartered as a public corporation under the laws (LSA-RS 40:39 l)of the:state of Louisiana.forthe purpose of providing safe and sanitary dweling accomm odations for the residents of Baton R ouge, Louisiana. This creation w as contingentupon the localgoverning body of the city orparish. The PH A isgoverned by a five m em ber Board of Com missioners, The m em bers, appointed by the M ayor of Baton Rouge,Louisiana,serve a fouryearstaggered term. U nderthe United StatesH ousing A ctof 1937,as am ended,the U S D epartm entof H UD has direct responsibility for adm inistering low rent housing program s in the United States. Accordingly,H U D has entered into an annualcontributions contract w ith the PH A for the purpose of assisting the PH A in financing the acquisition,construction and leasing of housing unitsand to make annualcontributions(subsidies)to the PHA forthe purpose of m aintaining thislow rentcharacter. (1)Finao_~;:ialRepo_rt_i&g Entity G enerally accepted accounting principles require thatthe financialstatem ents present the accountsand operationsofthe PH A and its com ponentunits,entitiesforw hich the PH A is considered to be financial ly accountable. Blended com ponentunits,although legally separate entities, are, in substance, part of the PH A 's operations and data from these units,if any are com bined w ith data of the PH A. Each discretely presented com ponent,if any, w ould be reported in a separate colum n in the com bined financial statem ents to em phasize thatitis legally separate IYom the PH A. As of Septem ber 30, 1999,and for the fiscal then ended, the PH A had no discretely presented com ponent units or any com ponentunitsrequired to be blended in these financialstatem ents. (2) Ch_ange.in_Accounting Pri~ For the year ended Septem ber 30, the PH A has changed from the G overnm ent Funds M ethod to the Enterprise M ethod. Thischange w asstrongly recom m ended by the RealEstate AssessmentCenter(REAC)of the Departmentof HUD The Enterprise Funds M ethod accounts for operations in a m anner sim ilar to a private business. Under this m etbod,allassets, including fixed assets,and alliabilities are in one fund, and one financialstatem ent. The Enterp rise Fund recognizes revenues and expenses on the full accru al basis. Revenuesare recognized w hen earned and becom e m easurable. Expensesare recognized in the period incurred,if m easurable. In the prior m ethod used,the G overnm entalfunds M ethod,the m odified accrualm ethod w asnecessary.

12 D epreciation expense m ust be recognized for the Enterprise Fund. Under the Governm ental Funds M ethod, depreciation w as optional and the PH A elected not to recognize it. R EA C suggeststhataccum ulated depreciation be charged to H U D CapitalContributions, not Retained Earnings. REAC directs that soft costs from developm ent and m odernization be deleted from fixed assetsand charged to H U D CapitalContributions. REA C also direcls PttA 's to deleted outstanding debt ow ed to H U D, annual contributions and debt am ortization funds receivable due from H UD,and close tem to H U D CapitalContributions. The am ountof the Septem ber 30, 1999 operating reserve becom esthe beginning retained earnings. These is no cum ulative eft?cton beginning retained earningsresulted from the accounting m ethod change. (3) Bu ~t2~ta.w D_a_ta, The PH A is required by its [tu D A nnualc ontributions C ontractto adoptannualbudgets forthe Low Rentttousing Program and the Section 8 Program s. A nnualbudgetsare not required tbr(:lap grantsastheirbudgetsareapproved forthelength oftheproject.both annualand projectlength budgetsrequire grantorapproval. The PH A is tinder a lim ited budgetreview from HU D w ith the controlcategory of total operating expenditures. If there are no overrunsof the totaloperating expenditures,then H UD does notrequire budgetrevisions other than w hen there are substan tialadditions to nonroutine expenditures. Thebudgetisprepared on a statutory (ttud)basisand doesnotcontain a provision for uncollectible tenant receivables or depreciation. The budget does reflect furniture and equipm entadditions from operations. (4) The entity defines cash and cash equivalents to include certificates of deposit, m oney m arketfunds,savingsaccounts,and dem and deposits. (5) _TenantRecejva_b!es Receivables fbr rental and service charges are reported in the G eneral Fund, net of allow ancesfordoubtfulaccounts. (6) Comoensated Absence Authority em ployees accrue personalleave, or com pensated absences,by a prescribed form ula based on length of service.

13 N O TE B --CASH D EPO SITS W ITH FIN AN CIAL IN STITU TION S Itis entity's policy fordepositsto be secured to be secured by collateralvalued atm arket or par, w hich is low er, less the am ount of the Federal D eposit Insurance Corporation insurance. The entity's deposits are categorized to give an indication of the levelof risk assum ed by the entity atseptem ber30,1999. The categoriesare described asfollow s: C ategory 1-- Insured orcouateralized w ith securities held by the entity orby itsagentin the entity'snam e. Category 2 -- Collateralized w ith securities held by the pledging financial institution's trustdepartm entoragentin the entity'snam e. Category 3 -- Uncollateralized,uninsured and unregistered, but w ith securities held by the bank,itsagent,pledged to the PH A,butnotin the PH A 's nam e. Cash Deposits,categorized by levelofrisk,(atcost,which approximatesmarket)are Total B ank B ala 2 Category $628, , ,465 Even though the pledged securities are considered uncolateralized (Category 3)under the provisions of G A SB Statem ent 3, Louisiana Revised Statute 39:1229 im poses a statutory requirem ent on the custodialbank to advertise and se lthe pledged securities w ith 10 daysof being notified by the PI.tA thatthe fiscalagenthas failed to pay deposited fundsupon dem and. N O TE C -- A CTIV ITIES O F THE PH A AtSeptember30,1999,the PHA wasmanaging 1,326 unitsof low-rentin 16 projects underfw -1281,521unitsof vouchersprogram underfw -2216,953 unitsof underfw E under the existing program,21 units under the m oderate rehabilitation program FW -2059,CG P program,ph D EP program, Service coordinator program,and business activities. Business activities includes the operation of laundry facilities and the acquisition and renovation of a centralofice building.

14 N O TE D -- CO N TIN G EN CIE S The entity is subject to possible examinations by federalregulators who determine com pliance with 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 federalgrantorsand/orprogram beneficiaries. N O TE E -- FIXE D A SSETS A s noted in N ote A,softcoststbrrnerly capitalized have been w ritten of an d fixed assets are now depreciated on the straight-line m ethod over their estim ated usefu l lives as follow s: Site im provem ents B uildings Building im provem ents N ondw elling structures Equipm ent 20 Y ears 20 Y ears 10 Y ears 20 Y ears 3 to 7 Y ears C ost Current A ccum ulated N et D epreciation D epreciation Land $9~895,675 B uildings& hnprovem ents 37,625,684 1,991,031 Equipm ent 1,315,898 6,159 25,491,005 1, ,895,675 10,143,648 21,045 $48,437,254 1,997,190 26,776,699 20,063,365 Allland and building are encum bered by a D eclaration of Trust in favor of the U nited Statesof Am erica assecurity forobligationsguaranteed by the governm entand to protect otherintereslsof the governm ent. N O TE F -- I,O N G -TERM D EBT A s noted in N ote A, long-term debt ow ed to H UD has been closed to HUD Capital C ontributions. N O TE G -- RETIREM E N T PLA N The entity provides benefits for all of its full-tim e em ployees through a defined contribution plan. In a defined contribution plan, benefits depend solely on am ounts contributed to the plan,plus investm ent earnings. Em ployees are eligible to participate alter a six m onths exclusionary period. The em ployees contribute 5% and the entity

15 contributes 8% of the em ployee's base salary each m onth. The entity'scontributionsfor each employee (and interest alocated to the employee's account) are vested 20% annually for each year of participation. A n em ployee is fu ly vested after 5 years of participation. The entity's totalpayrollin fiscalyearended Septem ber30, 1999 w as$1,555,634. The entity's contributions w ere calculated using the base salary am ount of $1,555,634. Contributions to plan w ere $77,781 and $124, By the em ployee and the entity, respectively. N O TE H --D ISCLO SU RES ABOU T FA IR VAI,U E OF FIN A NCIA L IN STRU M EN TS The follow ing m ethods and assum ptionsw ere used to estim ate the fair value of each class of financialinstrum entslbrw hich itispracticable 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. N O TE 1 -- A C CO U N TIN G FO R TH E IM PA IRM EN T O F LO N G -LIV ED A SSETS The fullam ount of the caw ing value of buildings and land im provem ents are deem ed recoverable from future cash flow s. N O TE J -- U SE O F ESTIM A TES 1N TH E PREPARA TIO N O F FINAN CIAL STA TEM E N TS The preparation of financialstatem ents in conform ity w ith generally accepted accounting principles requires m anagem ent to m ake estim ates and assum ptions that afect certain reported am ounts and disclosures. A ccordingly, actual results could difer from those estim ates.

16 {-lousing Authority ofthe City ofbaton Rouge C ity ofbaton Rouge,Louisiana SC HEDULE O F EXPENDITU RES O F FEDERAL AW A RDS Forthe yearended Septem ber30,1999 SCHEDULE FEDERAL AG ENCY C FDA NO. FederalAw ard Expenditures U S Departm entofhousing and Urban Developm entd irectprogram s Low Incom e Housing: O perating Subsidy Leased D evelopm ent TotalLow Incom e Housing Section 8 C luster: Vouchers Certificates M oderate Rehabilitation New Construction SubstantialRehabilitation TotalSection 8 C luster Com prehensive G rants C la P ,925,991 4,434, ,421, Public Housing Drug E-lim ination Program : PH D EP Youth Sports TotalPH DEP Shelter+ Care HO PE Service Coordinator Child Care Food Program (USDA) TO TA L FED ERA L EXPENDITURES N O TE:This schedule ofexpenditures offederalaw ards is prepared on G AA P accounting. see notes to financialstatem ents

17

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21 Housing Authoritofthe City ofbaton Rouge SCHEbULE ~V Baton Rouge,Louisiana CO M BINING SCHEDULE O F RE!VENUES,EXPENDITURES AND CHANG ES IN FUND BALANCE CO M PREHENSIVE G RANT PRO G RA M FUND FO R THE',YEAR ENDED SEPTEM BER 30,1999 PRO JECT CG P 1998 PRO JECT CG P 1999 TO TAL R EV ENU ES LocalSources FederalSources-G rants TotalRevenues , EXPEND ITURES C,'urrent: Adm inistrative G eneralexpenses Facilities Acquisition and Construction TotalExpenditures , , EXCESS (DEFICIENCY)OF REVENUES OVER EXPENDITURES FUN D BA LANCE AT BEG INNING O F YEAR CAPITAL O UTLAYS-ENTERPRISE FUNDS FUND BALANCE AT END O F YEAR see notes to financialstatem ents 138, , , ,

22 Housing Authority ofth e City ofbaton Rouge Baton Rouge,Louisiana PHA's Statem entand Certification ofactualc osts CO M PLETED PR OJECTS A nnualc ontributions C ontractfw Forthe yearended Septem ber30,1999 SC HEDULE V 1.The actualcostsofthe projects are as folows PRO JECT PRO JECT PRO JECT LA48P LA48D EP LA48ESC TO TAL Funds Approved Funds Expended , [~ co ss offunds Approved FUND S A DVA NC ED HUD Funds Ex pended 1,067, , , , , [~ cess offunds Advanced The distribution ofco stsby project as shown on the FinalStatem entofc ostdated , and accom panying the program closeoutdocum entation subm itted to H U D forapprovalis in agreem entw ith the PHA's records. 2.A lprogram costs have been paid and a lrelated liabilities have been discharged through paym ent. see notes to financialstatem ents

23 W ILLIA M DA N IEL M C C A SK ILL,C PA A PR O FESSIO N A L A C C O U N T IN G C O R PO RATIO N 415 M A G N O LIA LA N E M A N D EV ILLE,LO U ISIA N A TEId'~PHO NI'~504-g FAX CEI,1,1q~AR 504~ 74~',49g E-M AIL M EM tler LOUISIANA SOGIE'I~"OF CPA'S M ISSISSIPPIS(~'IE'I'Y OF CPA'S, UMERICAN INSTIT~FrE OF CPA 'S REPO RT O N CO M PLIANCE AND O N INTERNAL C()N'IRO L OVER FINAN(21AL REPO RTING BASED O N AN AUDIT O F FINAN(?IAL STATEM ENTS PERFO RM ED IN AQCORDANCF W ITh (io 'vl(r NM ENT"AI,,~,UI)ITIN(;ST ~N I)ARD S B O A R D O F CO M M ISSIO N ER S H O U SING A UTH O RITY O F THE CITY O F BA TON RO U GE BA TO N RO U G E,LO U ISIAN A I have audited the financial statem ents ot'the H ousing A uthority of the City of Baton Rouge (PHA),as of and forthe yearended September30,t999,and have issued my report thereon dated February 14, generally accepted auditing standards and contained in G overu m ent A udit Standards U nited States. 1 conducted m y audit in accordance w ith the standards applicable to financial audits issued by the Com ptroller G eneral of the.comp liance A s pact of obtaining reasonable assurance about w hether the PH A 's financialstatem ents are free of m aterial m isstatem ent, 1 perform ed tests of its com pliance w ith certain provisions of law s,regulations, contracts and grants, noncom pliance w ith w hich could have a direct and m aterial efect on the determ ination of financial statem ent am ounts. However,providing:an opinionon compliancewith thoseprovisionswasnotan objective of m y auditand accordingly, 1 do not express such an opinion. The results of ourtests disclosed instances of noncom pliance thatare required to be reported underg overnm ent Auditir)g _. S _ La~!dards and w hich are described in the accom panying schedule of findings and questioned costs as item s InternalControlO ver FinancialR enortinu In planning and perform ing m y audit, 1 considered the PH A 's internal control over financial reporting in order to determ ine m y auditing procedures lbr the purpose of expressing m y opinion on the financialstatem ents and not to provide assurance on the internalcontrolover financialreporting. H ow ever, w e noted certain m atter involving the interu al control over financial reporting an its operation that w e consider to be reportable conditions. Reportable conditions involve m atters com ing to our attention relating to significant deficiencies in the design or operation of the internalcontrolover financialreporting that,in ourjudgment,could adversely afectthe PHA's ability to record, process, sum m arize, and report financialdata consistent with the assertions of

24 m anagem ent in the general purpose financial statem ents. Reportable conditions are described in the accom panying schedule of findingsand questioned costsasitem A m aterialweakness isa condition in w hich the design oroperation of one orm ore of the internalcontrol com ponents dos not reduce to a relatively low levelthe risk that m isstatem ents in am ounts that w ould be m aterial in relation to the general ~ u s _ e financialstatem ents being audited m ay occur and notbe detected within a tim ely period by em ployees in the norm al course of performing their assigned functions. O ur consideration of the internal control over financial reporting w ould not necessarily disclose all m atters in the internal control that m ight be reportable conditions and, accordingly, w ould not necessarily disclose al reportable conditions that are also considered to be m aterialw eaknesses. H ow ever,of the reportable conditions described above,w e consideritem 99-1to be a m aterialw eakness. This report is intended forthe inform ation of the auditcom m ittee,m ~nagem ent,and for H UD. H owever,thisreportisa m atter of public record an d itsdistribulion isnotlim ited. February 14,2000 W llham D arn elm ccasklll,cpa A ProfessionalAccounting Corporation

25 W ILLIA M DA NIEL M C C A SK ILL,C PA A PRO FESSIO NA L A C C O UN TIN G C O R PO RA TIO N 415 M A G N O LIA LA N E M A N D EV 1LLE,LO U ISIAN A "lj'l.epiioni" FAX CH,I,LLAR ~ 498 E-M All. MEM BER I,O UISIANA SOCIETY O F CPA'S M ISSISSIPPINt,N_'IETY OF CPA 'S X. M ERICAN INSTITUTE OF CPA'S BO A RD O F CO M M ISSIO N ERS H O USIN G AU TH OR ITY OF THE CITY OF BA TON RO U G E BATO N RO U G E,LO U ISIAN A REPO RT O N COM PLIANCE W ltiirequirem ENTS ~tppi,icable TO EAC H M AJO R PROG RAM AND INTERNAl, CO NTRO L O VER CO M PLIA NC E IN A('J(X)R DANCE W ltn O M B CIRC ULA R A-133 Compliance 1 have audited the com pliance of the H ousing Authority of the City of Baton Rouge (PHA) with the types of compliance requirements described in the U.S.Ofi ce of M ana~aem e1~! _. a n _ d B u _dget (O M B) Circular A-t33 Com pliance_sutln ement that are applicableto each ofitsmajorfederalprogramsfortheyearended September30,1999. The PHA's majorfederalprograms are identified in the summary ofauditor'sresults section of the accom panying schedule of findingsand questioned costs. Com pliance with the requirementsof laws,regulations,contracts,and grantsapplicable to each of itsmajor federalprogram s is the responsibility of the PH A 's m anagem ent. M y responsibility is to expressan opinion on the PH A 'scom pliance based on m y audit. I conducted my audit of com pliance in accordance w ith generaly accepted auditing standards:the standards applicable to financialaudits contained in Governm entauditing Standards issued by the Com ptroller G eneralof the U nited States;an d OM B Circular, Auditsof States.LocalG overnm ents.and N on ProfitO r~,anizations. Those standards and O M B Circular A -133 require that 1 plan and perfonn the auditto obtain reasonable assurance about w hether noncom pliance w ith the types of com pliance requirementsrefen'ed to above thatcould have a directand materialefecton a major federalprogram occun'ed A n audit includes exam ining,on a testbasis,evidence about the PH A 's com pliance w ith those requirem ents and perform ing such otherprocedures as w e considered necessary in the circum stances. I believe that m y audit provides a reasonable basisform y opinion. M y auditdoesnotprovide a legaldeterm ination on the PH A 's com pliance w ith those requirem ents. In m y opinion, the PH A 's com plied, in all m aterial respects w ith the requirem ents referred to above thatare applicable to each of itsmajorfederalprogramstbrthe year ended M onth dale,year.

26 The m anagem ent of the PH A is responsible for establishing and m aintaining effective internal control over com pliance w ith requirem ents of law s, regulations, contracts and grantsapplical~le to federalprogram s, tn planning and pertbrm ing m y audit, Iconsidered the PH A 's internal controlover com pliance w ith requirem ents that could have a direct and material efect on a major federal program in order to determine my auditing proceduresfor"the purpose of expressing m y opinion on com pliance and to testand report on intern alcontrolovercom pliance in accordance w ith O M B Circular A M y consideration of the intern al controlover com pliance would notnecessarily disclose allm atterin the intern al controlthatm ightbe m aterialw eaknesses. A m aterialw eakness is a condition in w hich the design or operation of the internalcontrolcom ponents does not reduce to a relatively low level the risk that noncom pliance w ith applicable requirem entsof law s,regulations,contractsand grantsthatw ould be m aterialin relation to a majorfederalprogram being audited may occurand notbe detected within a timely period by em ployeesin the norm alcourse of perform ing theirassigned functions. Inoted no m atters involving the internalcontrolover com pliance and its operation thaticonsider to be m aterialw eaknesses. February 14,2000 W iliam DanielM ccaskil,cpa A ProfessionalA ccounting Corp oration

27 TH E H O U SING A UTIIO R ITY O F TH E C ITY O F BA TO N R O UG E BATON RO U GE,LOU ISIAN A SU M M A RY SC H ED U LE O F PR IO R FIND ING S There w ere no findingsin the prioraudit

28 TH E H O USING A U TH O R ITY O F TH E C ITY O F BA TO N R O UG E B A TO N R O U G E,LO U ISIAN A SCH EDULE O F C URRENT AUDIT FINDING S A ND Q UESTIO NED CO STS PerA-133,Section 505(d) 1. Sum m ary Schedule of A uditorsresults The reportincludesan unqualified opinion on the financialstatem ents There w ere reportable conditionsin internalcontrolsfound required to be disclosed atthe financialstatem entlevel. The auditdisclosed noncom pliance w hich is m aterialto the financial statem ents. No reportable conditionsin internalcontrolovermajorprograms,as required by A -133,w ere disclosed by the audit. v. The compliance reportissued formajorprogramswasunqualified V The reportdisclosed no auditfindingsrequired to be reported under Section 510a of A V A lmajorprogramshaveoversightby HUD and areidentified as follow s: C FD A # N am e of Program Low R ent Com prehensive G rants V I vi The dollarthreshold used to distinguish betw een Type A and Type B program sw as$300,000. The auditee w as notconsidered a low risk auditee.

29 2. Finding relating to the financialstatem entsrequired to be reported w ith G A G A S are as follow s: FIND IN G 99-1 Statem entof"c ondition- The PH A overran its Low R entoperating budgetin four (4)areas. Criteria----The PH A properly budgets allof its program atthe beginning of the fiscalyear. The PH A should m onitor the budget versus actualduring the year. During the year, w hen the actualexpenditures exceed the budget~m anagem ent should eitherreduceexpendituresoradjustthebudgetasappropriate. Effect---The PH A violated its policies as w ellas State law w ith budgetoverruns. Theoperating budgetprojected adeficitof$21,285.theactualresultsproduced a deficitof $287,453. Cause --The PH A 's m anagem ent did m onitor its operating expenditures during the yearand w asaw are of the budgetovenuns. H ow ever,because the PHA isno longer required to subm it operating budgets and budget revisions to H UD m anagem enterred by notsubm itting a revised Operating Budgetto the Board of C om m issioners fortim ely approval. PH A Response---The PH A agreesw ith the auditor'sfinding.the PH A willm ake every efort in the future to subm it budget revisions to the Board of C om m issioners on a tim ely basisand abide by theirdecisions. Findingsand questioned costsforfederalaw ardsasdefined in A-133,Section 510a alw ith H U D oversight: N one

30 TH E tto U SIN G A U TH O R ITY O F TH E C ITY O F BA TO N R O U G E BATO N ROU G E,LOU ISIAN A C O R RE C TIV E A C T IO N PLA N O urcorrective action plan isasfollow s Finding _ 1. ContactPerson Responsible for A ction--joseph Johnson Corrective Action Planned- M anagem ent w il continue to closely m onitor the budget versus actualexpenditures of the PHA. In the future,we wi leither 1) make the necessary expenditures cuts to live within our operating budget,or2)prepare budget revisionsand subm itthem to the B oard of Com m issionerfortim ely approval.