FIELDSTONE OWNERS ASSOCIATION REVIEWED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION DECEMBER 31,2017

Transcription

1 FIELDSTONE OWNERS ASSOCIATION REVIEWED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION DECEMBER 31,2017 Sandra L Vaughan, CPA Ebbetts Pass Accounting P0 Box 130 Avery, CA (209)

2 Table of Contents I Page Independent Accountant's Review Report Financial Statements: BalanceSheet...3 Statement of Revenues, Expenses, and Changes in Fund Balance...4 Statement of Cash Flows. 5 Notes to the Financial Statements 6-9 Supplementary Information Supplementary Information of Future Major Repairs and Replacements (Compiled) Ebbctls Pass Accoimtrng 4549 E Hwy 4. Avery, CA 95224

3 Sandra L. Vaughan, CPA Ebbetts Pass Accounting P0 Box 130 Avery, CA (209) Independent Accountant's Review Report Board of Directors Murphys, CA We have reviewed the accompanying financial statements of Fieldstone Owners Association (a corporation), which comprise the balance sheet as of December and the related statement of revenues, expenses and changes in fund balances, statement of cash flows for the year then ended and the related notes to the financial statements. A review includes primarily applying analytical procedures to management's financial data and making inquiries of the association management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintainance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement whether due to fraud or error. Accountant's Responsibility Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our report. Accountant's Conclusion on the Financial Statements Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity With accounting principles generally accepted in the United States of America. 1

4 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the information about future repairs and replacements of common property on page 10 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is 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 operational, economic, or historical context. Such information is the responsibilty of management. We have compiled the required supplementary information in accordance with Statements on Standards for Accounting and Review Services promulaged by the Accounting and Review Services Committee of the AICPA. We have not audited or reviewed the required supplementary information and do not express an opinion, a conclusion, nor provide any form of assurance on it. Ebbetts Pan Accounting April 26, 2018

5 Balance Sheet ASSETS Current Assets OperatinglReserves EDSB-Operating, Unrestricted Total Unrestricted Restricted Reserve Funds: EDSB-Reserve Total Restricted Operating Replacement Fund Fund i TOTAL $ $ - $ , , Total OperatlnglReserves , Accounts Receivable Assessments Receivable Total Accounts Receivable I 380 Other current Assets Prepaid Insurance Total Other Current Assets I Total current Assets TOTAL ASSETS $ 143,101 $ 358,661 $ LIABILITIES & EQUITY Current Liabilities Accounts Payable Assessments Paid in Advance $ $ - 1$ , Total current Liabilities ,585 FUND BALANCES Fund Balances, Unrestricted Fund Balances, Restricted Total Fund Balances , , , , , ,177 TOTAL LIABILITIES & FUND BALANCE $ 143,101 $ 358,651 $ See accompanying notes and Independent accountants re,iew report 3

6 Revenues, Expenses and Changes in Fund Balances Twelve Months Ended Operating Replacement Fund Fund - REVENUES Interest $ 21 $ 70 $ Late Fees &Penalties 10 Membership Assessments 154,280 Rental Unit #209, net Total Revenues Total , EXPENSES Administrative Capital (Reserve) Expenditures Common Area Maintenance Landscaping Pool Utilities Total Expense 25,131 25,131 (4.508) 64, , , ,266 6,207 6, ,119 EXCESS OF REVENUES OVER EXPENSES (64,067) TRANSFER BETWEEN FUNDS PRIOR PERIOD ADJUSTMENT BEGINNING FUND BALANCE (52.784) 52,784 (450) (450) , ENDING FUND BALANCE $ 129,516 $ $ 488,177 See accompanying notes and Independent accountants review report 4

7 Statement of Cash Flows Year Ended Operating Replacement Fund Fund Total CASH FLOWS FROM OPERATING ACTIViTIES Excess of revenues over expenses $ 103,610 $ (64,067) $ 39,803 Adjustments to reconcile excess of revenues over expenses to net cash provided (used) by operating activities: Increase (decrease) In: Assessments Receivable Prepaid Insurance (1.506) (1,506) Accounts Payable ,963 Assessments Received In Advance ,554 Net cash provided (used) by Operating Activities CASH FLOWS FROM FINANCING ACTMTIES lnterfund Transfers (52.184) 52,184 - Net cash provided by Financing Activities (52.184), 52,184 0 Net Increase (Decrease) In Cash 59,527 1 (11,283) CASH AT THE BEGINNING OF THE YEAR , CASH AT END OF YEAR $ 129,331 $ $ 481,998 SUPPLEMENTAL INFORMATION Income taxes paid $ See accompanying notes and Independent accountants review report 5

8 Notes to Financial Statements Note A - Summary of Significant Accounting Policies This summary of significant accounting policies of (The Association) is presented to assist in understanding the Association's financial statements. Nature of Onerations is a nonprofit mutual benefit corporation incorporated in July 2004, under the Nonprofit Mutual Benefit Corporation Law of the State of California. The specific and primary purpose for which the Association wa formed is to repair, maintain, and manage common areas, enforce the rules and regulations adopted by the Board of Directors from time to time, and discharge such other lawful duties and responsibilties required pursuant to the Corporation's Bylaws and the Declaration of Covenants, Conditions, and Restrictions. The Association is supported by monthly assessments to its 46 residential units located in Murphys, California. Basis of Accounting The Company maintains its records on an accrual basis of accounting for both income tax and financial reporting purposes. Budgetary Accounting The Company adopts a budget annually which is approved by the Board of Directors. Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers cash on deposit and certificates of deposit that are readily convertible into cash to be cash equivalents. Use of Estimates The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Actual results could differ from these estimates. See Accompanying Independent Accountanfs Review Report 6

9 Notes to Financial Statements Note A - Summary of Significant Accounting Policies (Continued) Member Assessments Association members are subject to monthly assessments to provide funds for the Association's operating expenses, future capital acquisitions, and major repairs and replacements. Assessments receivable at the balance sheet date represent assessments due from unit owners. The Association has the authority to place liens on delinquent accounts and considers assessments receivable at to be fully collectible. No allowance for doubtful accounts is deemed necessary. Any excess assessments at year end are retained by the Association for use in future years. Replacement Fund The Association has elected to set aside funds for capital expenditures. Accumulated funds, which aggregate appoximately $358,661 at December 31,12017, are held in a separate account and are generally not available for operating purposes. The annual provision to the fund is determined by the Board of Directors after its consideration of a study of the reserve account requirements. The Board may estimate the total annual contribution necessary each year so as to accumulate funds in order to repair, replace, restore, or maintain its capital assets at the end of their useful lives. Actual expenditures, however, may vary from estimated amounts and the variations may be material. Therefore, amounts designated for the fixture repair and replacements may not be adequate to meet fixture needs. Unless the governing documents impose more stringent standards, the California Civil Code limits the Board of Directors in their use of the replacement fund. The Board of Directors shall not expend funds designated as reserve funds for any purpose other than to repair, replace, restore, or maintain major components that the Association is obligated by the establishment of the reserve fund. However, such accumulated funds may only be temporarily transferred to the Association's operating find as specified in the Civil Code. Any funds so transferred must thereafter be restored as reserve funds. According to the Civil Code, the Board of Directors may, unless the governing documents impose more stringent standards, without approval of owners, impose the regular assessment up to 20% greater than the preceding year's regular assessment and impose the special assessment up to 5% greater than the preceding year's budgeted gross expenses. Further, for special circumstances, the Association may impose assessments without limit for emergency situations. See Accompanying Independent Accountant's Review Report 7

10 Notes to Financial Statements Note A - Summary of Significant Accounting Policies (Continued) Pronerty and Eciuinment Real property and common areas acquired from the developer and related improvements to such property are not recorded in the Association's financial statements because those properties are considered owned by the individual unit owners in common and not by the Association. The Association does not capitalize property not directly associated with the units as the Association cannot dispose of these assets for cash and the Association does not generate significant cash flows from members on the basis of usage or from nonmembers. Assets are monitored through reserve studies. See Note C for more information on the current reserve study. The Association did acquire Unit #209 due to delinquent assessments in December In 2016, the lender foreclosed on this property for the debt of the previous owner. The Association received reimbursements of $4,541 in 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 future major repairs and replacements. Note B - Income Taxes The Association is a non-profit organization that is exempt from most federal income taxes. The Association files corporate income tax returns to the state of California and Federal government. The state assesses tax on non-related member income less nonrelated member expenses. The Association has adopted the recognition requirements for uncertain income tax positions as required by accounting principles generally accepted in the United States of America, with no cumulative effect adjustment required. As of, the Association had no uncertain tax positions requiring accrual. See Accompanying Independent Accountant's Review Report 8

11 4 Notes to Financial Statements Note B - Income Taxes (Continued) The State of California has a four year statute of limitations and the Federal government has a three year statute of limitations upon which they may subject the Association to examination. Note C - Future Major Repairs and Replacements The Association's governing documents require funds to be accumulated for future major repairs and replacements. Accumulated funds, held for reserves at are $358,661. These funds are held in a separate account and are not available for operating purposes. The funding program for the year ended was based on a reserve study which was prepared on February 22, 2017 by John D Beatty & Company. The study estimated the remaining useful lives and the replacement costs of the common property components. The Association is funding such major repairs and replacements over the estimated useful lives of the components based on the study's estimates of current replacement costs, considering amounts previously accumulated in the replacement fund. Actual expenditures, however, may vary from the estimated amounts and the variations may be material. Therefore, amounts accumulated in the replacement fund may not be adequate to meet future needs. The Association has the right to increase regular assessments up to 20 percent above the regular assessment for the preceding fiscal year or impose special assessments up to an aggregate of 5 percent of the budgeted gross expenses for that year without the approval of property owners, consisting of a quorum, casting a majority of votes at a meeting or election of the Association. Note D - Risk The Company is exposed to various risks of loss related to theft of, damage to and destruction of assets, errors and omissions, injuries and natural disasters. The Company carries various insurance policies for these risks. Concentration of credit risk for cash deposits at banks are insured by the Federal Deposit Insurance Company (FDIC) up to $250,000. At the Company had approximately $229,355 in excess of insured limits held at El Dorado Savings Bank. Note E - Subsequent Events The Company has evaluated the period after the balance sheet date up through April 26, 2018 which is the date that the financial statements are available to be issued, and determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements. See Accompanying Independent Accountant's Review Report 9

12 SUPPLEMENTARY INFORMATION

13 . 0 Supplementary Information on Future Major Repairs and Replacements (Compiled) On February 22,2017, John D Beat)' & Company, an independent reserve study company, performed an on site visit for the year ended. The study estimates the remaining useful lives and the replacement costs of the components of common property. The estimates are based on future estimated replacement costs. Funding requirements take into account an annual inflation rate of 3.0% and a threshold margin of 10%. The following information is based on the 2017 study and presents significant information about the components of common property. Estimated Estimated Remaining Current Useful Replacement Components Life (Years) Costs Paving/Concrete 5-30 $ 264,242 Building:Exterior ,217 Building:Interior ,095 Roofing ,118,448 Landscaping 1-4 8,286 Fencing/Wall ,630 Lighting ,522 Miscellaneous/Other ,250 Reserve Study 2 1,400 Furnishings 3 5,250 Recreational Facilties ,217 Undesignated 1 3,300 Total $ 1,751,857 Based upon the reserve study prepared by John D Beaty & Company, the estimated amount of cash necessary to repair, replace, restore or maintain the association's major components for 2017 is $66,000. As of the reserve is approximately 61% funded. The replacement fund balance as of is $358,661. See independent accountant's review report on supplementary information 10