THE VILLAGE AT ABACOA CONDOMINIUM ASSOCIATION, INC. Audited Financial Statements and Supplementary Information December 31, 2016

Transcription

1 THE VILLAGE AT ABACOA CONDOMINIUM ASSOCIATION, INC. Audited Financial Statements and Supplementary Information December 31, 2016

2 TABLE OF CONTENTS Page INDEPENDENT AUDITORS REPORT 1-2 FINANCIAL STATEMENTS Balance Sheet 3 Statement of Revenue, Expenses and Changes in Fund Balances 4 Statement of Cash Flows 5 Notes to Financial Statements 6-9 SUPPLEMENTARY INFORMATION Schedule of Future Major Repairs and Replacements 11 Schedule of Operating Expenses Actual and Budget 12-13

3 1800 NW Corporate Blvd, Suite 303 Boca Raton, FL Phone (561) Fax (561) INDEPENDENT AUDITORS REPORT To the Board of Directors: The Village at Abacoa Condominium Association, Inc. Jupiter, Florida We have audited the accompanying financial statements of The Village at Abacoa Condominium Association, Inc., which comprise the balance sheet as of December 31, 2016, and the related statements of revenues, expenses, and changes in fund balances and cash flows for the year then ended, and the related notes to the financial statements. 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Village at Abacoa Condominium Association, Inc. as of December 31, 2016, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Continued.

4 Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedule of Operating Expenses Actual and Budget on pages 12 and 13 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of the Association s management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information, except for the portion marked unaudited, on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Disclaimer of Opinion on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Schedule of Future Major Repairs and Replacements on page 11 be presented to supplement the basic financial statements. Such information, although not a required part of the basic financial statements, is supplementary information required by the Financial Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operation, economic, or historic context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Lanter, Leonardo & DiCrescenzo, LLC Certified Public Accountants Boca Raton, Florida March 20, 2017

5 THE VILLAGE AT ABACOA CONDOMINIUM ASSOCIATION, INC. Balance Sheet December 31, 2016 Assets Operating Fund Replacement Fund Total Cash and cash equivalents $ 782,148 $ 882,785 $ 1,664,933 Accounts receivable, net 82,986-82,986 Prepaid insurance 115, ,749 Prepaid expense 7,725-7,725 Deposits 11,646-11,646 Interfund borrowing 23,081 (23,081) - Total Assets $ 1,023,335 $ 859,704 $ 1,883,039 Liabilities Accounts payable $ 101,038 $ - $ 101,038 Prepaid maintenance fees 50,838-50,838 Total Liabilities 151, ,876 Fund Balances 871, ,704 1,731,163 Total Liabilities and Fund Balances $ 1,023,335 $ 859,704 $ 1,883,039 See independent auditors' report and notes to the financial statements 3

6 THE VILLAGE AT ABACOA CONDOMINIUM ASSOCIATION, INC. Statement of Revenue, Expenses and Changes in Fund Balances Year Ended December 31, 2016 Operating Fund Replacement Fund Total Revenue Maintenance fees $ 1,971,404 $ 314,277 $ 2,285,681 Settlement - 130, ,000 Water reimbursement 237, ,293 Pet fee 1,200-1,200 Screening fee 16,525-16,525 Late fee income 14,155-14,155 Interest income ,610 Storage income 1,935-1,935 Miscellaneous income 4,811-4,811 2,248, ,131 2,693,210 Expenses (See supplementary information) Administrative 99,112-99,112 Insurance 250, ,385 Utilities 819, ,820 Contracts 343, ,396 Repairs and maintenance 541, , ,397 Total Expenses 2,054, ,078 2,295,110 Excess revenues (expenses) 194, , ,100 Fund balances - beginning of year 708, ,651 1,364,471 Prior period adjustments (31,408) - (31,408) Fund balances - ending of year $ 871,459 $ 859,704 $ 1,731,163 See independent auditors' report and notes to the financial statements 4

7 THE VILLAGE AT ABACOA CONDOMINIUM ASSOCIATION, INC. Statement of Cash Flows Year Ended December 31, 2016 Operating Replacement Fund Fund Total Cash flows from operating activities: Excess revenues / (expenses) $ 194,047 $ 204,053 $ 398,100 Adjustments to reconcile excess / (deficiency) of revenues over expenses to net cash provided by operating activities: Prior period adjustments (31,408) - (31,408) Changes in assets and liabilities: (Increase) decrease in: Accounts receivable, net (46,911) - (46,911) Prepaid insurance 61,657-61,657 Prepaid expense 8,770-8,770 Deposits (11,646) - (11,646) Increase (decrease) in: Accounts payable 93,022-93,022 Insurance payable (29,303) - (29,303) Prepaid maintenance fees 5,886-5,886 Net cash provided by operating activities 244, , ,167 Net increase in Cash 244, , ,167 Cash and equivalent - beginning of year 538, ,732 1,216,766 Cash and equivalent - end of year $ 782,147 $ 882,785 $ 1,664,933 Supplemental Information: Cash paid during the period for interest $ - $ - $ - See independent auditors' report and notes to the financial statements 5

8 THE VILLAGE AT ABACOA CONDONIINIUM ASSOCIATION, INC. Notes to the Financial Statements December 31, 2016 Note 1 - Organization and Summary of Significant Accounting Policies and General Matters Organization The Village at Abacoa Condominium Association, Inc. a Florida not-for-profit corporation, was formed for the purpose of operating as a condominium association in Jupiter, Florida, in June 2004 and serves the various 453 unit owners in controlling, regulating, managing, maintaining and conserving the common elements and common areas of the community as described in the Declaration of Covenants, Conditions and Restrictions and as recorded in the Articles of incorporation and By-Laws. All policy decisions are formulated by the Board of Directors. Fund Accounting The Association s governing documents provide certain guidelines for governing its financial activities. To ensure observance of limitations and restrictions on the use of financial resources, the Association maintains its accounts using fund accounting. Financial resources are classified for accounting and reporting purposes in the following funds established according to their nature and purpose: Operating Fund - This fund is used to account for financial resources available for the general operations of the Association. Replacement Fund - This fund is used to accumulate financial resources designated for various capital projects. Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities, if any, at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the balance sheet and statement of cash flows, the Association considers demand deposits with banks, certificates of deposit, money market funds and all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Property and Equipment Certain Real property and common areas and related improvements to such property are not recorded in the Association s financial statements because those properties are owned by the individual unit owners in common and not by the Association. The Association capitalizes all property and equipment to which it holds title or has other evidence of ownership. Property and equipment are depreciated over the estimated useful lives of the assets using the straight-line method. Prepaid Insurance Insurance premiums are expensed, pro-rata, over the coverage periods. Premiums representing coverage subsequent to the end of the year are recorded as prepaid insurance. 6

9 THE VILLAGE AT ABACOA CONDONIINIUM ASSOCIATION, INC. Notes to the Financial Statements December 31, 2016 Note 1 - Organization and Summary of Significant Accounting Policies and General Matters (Continued) Allocation of Expenses The Association has four subdivisions: 01 Residential, 02 - Town Center Residential, 03 - General Common and 04 - Commercial Limited Common-Retail. Assessments are prorated by unit to fund the General Common (03) subdivision. Member Assessments Member assessments are billed monthly based upon their proportionate share of ownership and are recognized as revenue on a pro rata basis over the period covered by the billing. Member assessments are based upon estimates of amounts necessary to provide funds for the Associations operating expenses and future major repairs and replacements. Assessments receivable from members are reported at the outstanding balance due from the members. It is the Association s policy to retain legal counsel and place liens on the units of members whose assessments are delinquent. Any excess assessments at year end are retained by the Association for reduction of member assessments in future years. Income Taxes The Association is subject to federal and state taxation and has essentially two methods to determine the amount of tax, if any, it must pay. Under one method, the excess of revenues from members over related expenditures is subject to taxation unless such excess is returned to the unit owners or applied to the following year's assessments. The other method enables the Association to elect to exclude from taxation exempt function income, which generally consists of revenue from unit owner assessments. Under either method, the Association may be subject to tax on investment income and other non- exempt income, but at different tax rates. The Association filed its 2016 income tax return on Form 1120-H, under Section 528 of the Internal Revenue Code. The Association could be subject to federal and state income tax examinations for its open tax years (2014, 2015 and 2016). Fair Value Measurement Under FASB ASC 820, Fair Value Measurements and Disclosures (SFAS No. 157), fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Association has determined that there was no material difference between the carrying value and the fair value of its financial assets and liabilities at December 31, 2016 and therefore, no adjustment for the effect of FASB ASC 820 was made to the Association s financial statements at December 31, Date of Management Review In preparing these financial statements, the Association has evaluated events and transactions for potential recognition or disclosure through March 20, 2017 the date the financial statements were available to be issued. 7

10 THE VILLAGE AT ABACOA CONDONIINIUM ASSOCIATION, INC. Notes to the Financial Statements December 31, 2016 Note 2 - Concentration of Credit Risk Financial instruments which potentially subject the Association to concentrations of credit risk are primarily cash and cash equivalents and unit owner receivables. The Association s cash is deposited with one financial institution and the carrying value approximates fair value. Deposit accounts are insured by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance coverage is limited to $250,000 per bank institution. At December 31, 2016, the Association had $1,068,606 balance in excess of federally insured amounts (FDIC). Note 3 - Assessments Receivable The Association considers assessments delinquent if they are more than ten days in arrears. The Association will retain legal counsel and place a lien on the property of any unit owner whose assessments are sixty days or more past due. In determining the collectability of specific unit owner balances, management considers the age of the balance (measured in number of days delinquent), the owner's payment history and current economic trends. Accordingly, based on management s judgment, the Association provides for estimated uncollectible amounts through a charge to expense and a credit to a valuation allowance. Balances that remain outstanding after the Association has made reasonable collection efforts are written off via a charge to the valuation allowance and a credit to assessments receivable. As of December 31, 2016, maintenance assessments receivable aggregated to $134,346 and allowances for doubtful accounts totaled $51,360 in the accompanying financial statements. Note 4 Replacement Fund Chapter 718 of the Florida Statutes and the Associations governing documents require that the Association's budget include assessments for future major repairs and replacements, unless waived by an annual vote of the unit owners. Such assessments shall be for items including, but not limited to, roof replacement, building painting, pavement resurfacing, and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. In October 2012, the Association conducted an independent study to estimate the remaining useful lives and the replacement costs of the components of common property. Information about the estimates of future costs of major repairs and replacements, as required by the American Institute of Certified Public Accountants, has been presented. See supplementary Schedule of Future Major Repairs and Replacements. At a duly held meeting, the unit owners approved to fully fund reserves. The funds are being accumulated based on estimates of future needs for repairs and replacements of common property components. Actual expenditures may vary from the estimated future expenditures, and the variations may be material. Therefore, amounts accumulated in the replacement fund may not be adequate to meet all future needs for major repairs and replacements. If additional funds are needed, the Association has the right to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available. 8

11 THE VILLAGE AT ABACOA CONDONIINIUM ASSOCIATION, INC. Notes to the Financial Statements December 31, 2016 Note 4 Replacement Fund (Continued) The balance at December 31, 2016, consists of the following: Balance 1/1/2016 Assessments/ Transfers Transfer Expenditures Balance 12/31/2016 Roof Town Center $ 192,784 $ 119,867 $ - $ (127,695) $ 184,956 Roof Village (29,068) 105, ,973 Painting - Town Center 368,223 23,426 - (105,583) 286,066 Painting - Village 45,938 22, ,907 Pavement/Parking 74,050 42, ,024 Roof Gatehouse 18,246 (7,800) 10,446 Interior Bldg - TC Hallway Painting 71,754-71,754 Interior Bldg - TC Hallway Carpeting 30,000-30,000 Hvac 10,000-10,000 Interest 3, ,578 $ 655,651 $ 315,131 $ 130,000 $ (241,078) $ 859,704 During 2016, The Association received $130,000 from a lawsuit against the prior roofing company and used a portion funds were the roofs were redone during The Association does not allocate interest earned on the replacement fund to specific replacement components as earned, but does so periodically depending on projecting requirements. Note 5 - Commitments and Contingencies The Association has contracted annually with a property management company (the "Manager") to provide complete management and maintenance services as well as all accounting and bookkeeping services at a rate of approximately $4,167 per month. The agreement renews from year to year with unless terminated or cancelled within 60 days written notice by either the Manager or the Association. During July 2012, the Association signed a contract for bulk cable and internet service for seven years, at a monthly rate of $26.02 and $19.99 per unit, respectively. In addition, the Association has various other contract services such as lawn maintenance, pest control, janitorial services, pool maintenance and elevator maintenance. These contracts have different expiration dates and renewal terms. Note 6 - Windstorm Insurance The insurance policy for Windstorm coverage renewed December 15, The deductible amount is estimated at $573,750 which represents approximately 3% of the insured value of the residential buildings and common elements, which are estimated to be $19,125,000. 9

12 SUPPLEMENTARY INFORMATION

13 THE VILLAGE AT ABACOA CONDONIINIUM ASSOCIATION, INC. Schedule of Future Major Repairs and Replacements December 31, 2016 During 2016, the Association conducted an independent study to estimate the remaining useful lives and the replacement costs of the components of common property. Replacement costs were based on estimates from historical experience. Actual expenditures may vary from these estimated amounts and the variance may be material. Therefore, amounts accumulated in the replacement fund may not be adequate to meet all future needs. If additional funds are needed, the Association has the right to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available. The following presents significant information about the components of common property: Name of component Estimated Useful Lives Estimated Remaining Useful Lives Estimated Future Replacement Costs Balance 12/31/ Full Funding Calculation Roofs, Concrete Title $ 1,393,687 $ 75,973 $ 87,848 Roofs, Metail Retail ,374-1,757 Roofs, Modified Bitumen , ,956 34,805 Walls, Stucco, Paint, Capital Repairs - Apartments , ,066 2,631 Walls, Stucco, Paint, Capital Repairs - Townhomes ,141 68,907 28,047 Amphitheatre, Paint ,693-6,693 Amphitheatre, Roof, Concrete Title , Amphitheatre, Roof, Metal , Asphalt, Pavement, Crack Repair ,261-11,261 Asphalt, Pavement, Mill & Overlay , ,024 40,843 Pavers, Vehicular ,131-7,426 Garge - Paint ,221-26,221 Garage - Roofs ,096-1,673 Garage - Taffic Membranes , ,734 Interior Bldg - TC Hallway Painting ,753 71,754 - Interior Bldg - TC Hallway Carpeting 30,000 Roof Gatehouse 10,446 Hvac 10,000 Interest 4,578 $ 2,829,642 $ 859,704 $ 386,840 See independent auditors report 11

14 THE VILLAGE AT ABACOA CONDONIINIUM ASSOCIATION, INC. Schedule of Operating Expenses Actual and Budget Year Ended December 31, 2016 Actual Budget Over / (Under) Variance Administrative Office Equipment $ 8,820 $ 7,080 $ 1,740 Postage 711 2,300 (1,589) Office Supplies and Expenses 17,358 6,500 10,858 Legal Fees 20,017 12,500 7,517 Contracted Service 3,335 4,500 (1,165) Elevator License & Inspection 1, ,000 Fees to Division 61 1,652 (1,591) Annual Condo Fees 1, ,652 Bad Debt Expense 1, ,000 (98,760) Management Services Contract 43,882 50,000 (6,118) 99, ,043 (86,931) Insurance Insurance 249, ,000 (90,290) Insurance Appraisal 675 4,650 (3,975) 250, ,650 (94,265) Utilities Electricity 95,709 90,044 5,665 Water 221,294 79, ,094 IQ Water 2,122 6,400 (4,278) Sewer 37,313 23,700 13,613 Sewer Loxahatchee 82,733 4,465 78,268 Cable TV 228, ,000 (6,671) Trash Removal 128, ,800 (14,966) Telephone 4,979 4, Telephone - Entry 11,165 18,000 (6,835) Cable Internet 525 4,500 (3,975) Gas 6,817 4,500 2, , , ,411 See independent auditors report 12

15 THE VILLAGE AT ABACOA CONDONIINIUM ASSOCIATION, INC. Schedule of Operating Expenses Actual and Budget (Continued) Year Ended December 31, 2016 Over / (Under) Actual Budget Variance Contracts Management Personnel $ 113,131 $ 125,000 $ (11,869) Lawn Maintenance 82,047 72,000 10,047 Landscape Replacement 1,069 9,750 (8,681) Landscape - Mulch 13,700 13,700 - Tree Maintenance 17,835 20,000 (2,165) Irrigation - Maintenance Contract 2,976 9,850 (6,874) Elevator Maintenance Contract 23,076 19,300 3,776 Air Conditioning Maintenance Contract 2,845 3,330 (485) Pest Control 12,206 8,000 4,206 Security - Contract 14,825 16,640 (1,815) Fire Alarm Maintenance 56,480 37,165 19,315 Pool Maintenance 3,206 4,395 (1,189) 343, ,130 4,266 Repairs and Maintenance General Repairs & Maintenance 73,358 68,000 5,358 Interior Hallways 5,087 9,878 (4,791) Town Center Phase 1 162, ,617 12,592 Repairs & Maintenance - Roofs 16,165 5,000 11,165 Elevator Repairs & Maintenance - 10,000 (10,000) Repairs & Maintenance - Pets Repairs & Maintenance - Plumbing 2,089 5,000 (2,911) Repairs & Maintenance - Air Conditioners 8,984 27,070 (18,086) Electrical Repairs - 5,000 (5,000) Golf Cart - 1,000 (1,000) Mold Treatment 50,595-50,595 Repairs & Maintenance - Fire Alarm 7,844 27,500 (19,656) Janitorial Service Contract 207, ,220 29,069 Repairs & Maintenance - Pool 6,721 2,500 4, , ,385 51,934 Total Expenses $ 2,054,032 $ 1,973,617 $ 80,415 See independent auditors report 13