CSP VILLAGE APARMENTS HUD Project No. 062-EH197 Tuscaloosa, Alabama FINANCIAL STATEMENTS AND SUPPLEMENT INFORMATION December 31, 2017
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 Tuscaloosa, Alabama December 31, 2017 FINANCIAL STATEMENTS: CONTENTS PAGE Independent Auditors Report 1-2 Statement of Financial Position 3-4 Statement of Activities and Changes in Net Assets 5 Statement of Cash Flows 6-7 Notes to Financial Statements 8-10 SUPPLEMENTARY INFORMATION: Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on and Audit of Financial Statements Performed in Accordance with Government Auditing Standards 11-12 Independent Auditors Report on Compliance for Each Major Program and on Internal Control Over Compliance Required By the Uniform Guidance 13-14 Schedule of Findings and Questioned Costs 15 Supporting Data Required by HUD 16-17 Statement of Financial Position Data 18-19 Statement of Activities Data 20-21 Computation of Surplus Cash 22 Statement of Funds in Financial Institutions 23 Listing of Identity of Interest Companies 24 Schedule of Expenditures of Federal Awards 25 Notes to Schedule of Expenditures of Federal Awards 26
MCCABE AND ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS 321 A First Avenue N.E. Fayette, Alabama 35555 Richard N. McCabe, CPA Telephone 205-932-8096 Fax 205-932-8280 Member American Institute of Certified Public Accountants / Alabama Society of Certified Public Accountants INDEPENDENT AUDITOR S REPORT March 20, 2018 To the Board of Directors CSP Village Apartments 601 Black Bears Way. Tuscaloosa, Alabama 35401 REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of CSP Village Apartments, Inc. ( a nonprofit corporation), which comprise the statement of financial position as of December 31, 2017, and the related statements of activities, 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. AUDITOR S 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. 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 judgement, including the assessment of the risks of material misstatements 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 CSP Village Apartments, Inc. as of December 31, 2017, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. -1-
OTHER MATTERS Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information shown on pages 11-26 is presented for purposes of additional analysis as required by the Uniform Financial Reporting Standards issued by the U. S. Department of Housing and Urban Development, Office of the Inspector General, and is not a requited part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting other records used to prepare the financial statements. The information 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 account and other records used to prepared 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. OTHER REPORTING REQUITED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated March 20, 2018 on our consideration of CSP Village Apartments internal control over financial reporting and on our test of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matter. The purpose of that report is to describe the scope of our testing of internal control over financial reporting or on compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit perform in accordance with Government Auditing Standards in considering CSP Village Apartments, Inc. s internal control over financial reporting and compliance. McCabe and Associates, CPA Fayette, Alabama -2-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 STATEMENT OF FINANCIAL POSITION December 31, 2017 ASSETS CURRENT ASSETS Miscellaneous Prepaid Expense $ 3,013 Total Current Assets 3,013 PROPERTY AND EQUIPMENT Land 75,000 Building 1,779,037 Furniture and Equipment 299,139 Less: Accumulated depreciation (1,103,363) Net Property and Equipment 1,049,813 DEPOSITS HELD IN TRUST FUNDED Tenant deposits held in trust 9,209 Total Deposit Held In Trust 9,209 RESTRICTED DEPOSITS AND FUNDED RESERVES Tax escrow 241 Insurance escrow 4,883 Replacement reserve 78,023 Property insurance 17,706 MIP escrow 8,015 Total restricted deposits 108,868 OTHER ASSETS Miscellaneous other assets 67 Capitalized loan costs 0 Total Other Assets $ 67 TOTAL ASSETS $ 1,170,970 See notes to financial statements and independent auditors report. -3-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 STATEMENT OF FINANCIAL POSITION December 31, 2017 LIABILITIES AND NEW ASSETS CURRENT LIABILITIES Bank overdraft $ 6,151 Accounts payable operations 152,365 Prepaid rent 40 Accrued payroll taxes 571 Accrued wages payable 52 Accrued interest payable 5,808 Mortgage payable First Mortgage Current portion (Note 4) 29,125 Total Current Liabilities 194,112 DEPOSIT LIABILITIES Tenant deposits held in trust 9,209 Total Deposit Liabilities 9,209 LONG-TERM LIABILITIES Mortgage payable First Mortgage (Note 4) 1,829,322 Debt Issuance Cost ( 103,657) Total Long-Term Liabilities 1,725,665 Total Liabilities 1,928,986 NET ASSETS (DEFICIT) (758,016) TOTAL LIABILITIES AND NET ASSETS $ 1,170,970 See notes to financial statements and independent auditors report. -4-
CSP VILLAGE APARTMENTS HUD Project No. 062-EN197 STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS For the Year Ended December 31, 2017 REVENUES Rent revenue $ 113,916 Tenant assistance payments 297,840 Revenue from investments 33 Other income 2,100 Total Revenues 413,889 EXPENSES Administrative expense 105,930 Utilities expense 57,730 Operating and maintenance expense 90,735 Taxes and insurance 28,661 Financial expense 82,416 Depreciation and amortization 66,329 Total Expenses 431,801 Change in net asset (17,912) Net Assets (deficit), beginning of year (740,104) Net Assets (deficit), end of year $ (758,016) See notes to financial statements and independent auditors report. -5-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 STATEMENT OF CASH FLOWS For the Year Ended December 31, 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Rental income received $ 411,756 Interest received 33 Other income received 2,100 Administrative expense paid (83,365) Management fees (22,565) Utilities paid (57,730) Operating and maintenance expenses paid (105,380) Insurance paid (28,661) Interest paid on mortgage (70,291) MIP expense (12,125) Increase in net security deposits held in trust -0- Net cash provided by operating activities 33,772 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of fixed assets (6,818) Deposit to reserve for replacement and interest retained in account (18,500) Withdrawals from replacement reserve 21,906 Deposits to other escrow accounts (33,459) Withdrawal from other escrow accounts 37,748 Net cash provided by investing activities 877 CASH FLOWS FROM FINANCING ACTIITIES Mortgage principal payments (34,649) Net cash used by financing activities (34,649) Net increase in cash -0- Cash and cash equivalents -0- Beginning of year -0- End of year $ -0- See notes to financial statements and independent auditors report. -6-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 STATEMENT OF CASH FLOWS (Continued) For the Year Ended December 31, 2017 Reconciliation of changes in net assets to net cash Provided by operating activities Change in net assets (17,912) Adjustment to reconcile net change in assets to net cash provided by operating activities: Depreciation and amortization 66,329 Increase in prepaid expenses (56) Increase in cash restricted for tenant security deposit (983) Decrease in bank overdraft (12,935) Decrease in accounts payable (817) Decrease in accrued expenses (857) Increase in prepaid rent 20 Increase in tenant security deposits held in trust 983 Net cash provided by operating activities $ 33,7772 See notes to financial statements and independent auditors report. -7-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 NOTES TO FINANCIAL STATEMENTS For the Year Ended December 31, 2017 NOTE 1 - GENERAL These financial statements reflect the operations of CSP Village Apartments, a non-profit corporation, organized to operate a 40-unit apartment project for the elderly located in Tuscaloosa, Alabama. The Project is subject to Section 8 Housing Assistance Payments agreements with the U. S. Department of Housing and Urban Development (HUD), and a significant portion of the Project s rental income is received from HUD. The project also has a loan guarantee subject to the provisions of Section 223 (f) of the National Housing Act. This corporation is exempt from federal income taxes under Internal Revenue Code section 501 (c) (3). Its current exemption letter is dated February 8, 1994, and remains in effect until terminated, modified or revoked by the Internal Revenue Service. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING These statements are prepared on the accrual basis of accounting under which revenues and related assets are recorded when measureable and available to finance operations. Expenses are recorded as the liabilities are incurred. Commitments such as purchase orders and contracts are not recorded as expenses until a liability is incurred for goods received or services rendered. UNRESTICTED NEW ASSETS None of the Project s net assets are subject to donor-imposed restrictions. Accordingly, all net assets are accounted for as unrestricted net assets. CASH EQUIVALENTS For purpose of the Statement of Cash Flows, the Agency considers all unrestricted investment securities purchased with a maturity of three months or less to be cash equivalents. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates. NOTE 3 - DEPRECIATION AND AMORTIZATION Property and equipment are carried at cost. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the related assets. Assets acquired with a cost in excess of $1,000 are capitalized as fixed assets on the financial statements. Depreciation expense for 2017 was $62,627. Amortization of capitalized mortgage loan cost for 2017 was $3,703. -8-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 NOTES TO FINANCIAL STATEMENTS For the Year Ended December 31, 2017 NOTE 4 - MORTGAGE PAYABLE On December 16, 2011, the mortgage loan on the building was refinanced with additional funds to be used for building repairs. The new loan balance was $2,045,800 and is a permanent building loan guaranteed by HUD. The monthly installments for principal and interest are $8,754.08 with a maturity date of December, 2050. Interest is being charged at 4.1%/ The balance of the loan at December 31, 2017 was $1,858,447. Included in the refinancing of the mortgage loan were loan fees of $129,578. Loan fees are reported as a reduction in the long-term obligation and amortized over the life of the loan. Amortization expense of $3,702 has been recognized for 2017. The mortgage note is secured by the apartment project. Maturities are follows: NOTE 5 - RELATED PARTY TRANSACTIONS 2018 $ 29,125 2019 30,342 2020 31,610 2021 32,930 2022 2026 186,475 2027 2031 228,822 2032 2041 344,553 2042 2046 422,799 2047 2049 551,791 Total $ 1,858,447 Prior to February, 2010, the Project was managed by Community Service Programs of West Alabama, Inc. The management fee was 6.1% of gross rents. There were no management fees paid to Community Service Programs of West Alabama, Inc. after 2010. However, Community Service Program of West Alabama, Inc. is due management fees of $119,706 from prior years. These fees are in accounts payable. Prior to February, 2010, the project contracted certain repairs and maintenance through Community Service Programs of West Alabama, Inc. on a cost reimbursement basis. There were no amounts paid to Community Service Programs after 2010, however there are amounts due of $10,982 from prior years that are recorded in accounts payable NOTE 6 HUD-RESTRICTED DEPOSITS Under the regulatory agreement, the Project is required to set aside amounts for the replacement of property and other project expenditures approved by HUD. HUD-restricted deposits are held in separate accounts and generally are not available for operating purposes. NOTE 7 RENT INCREASES Under the regulatory agreement, the Project may not increase rents charged to tenants without HUD approval. NOTE 8 RESIDUAL RECEIPTS ACCOUNT Use of the residual receipts account is contingent upon HUD s written approval. -9-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 NOTES TO FINANCIAL STATEMENTS For the Year Ended December 31, 2017 NOTE 9 - CURRENT VULNERAB ILITY DUE TO CERTAIN CONCENTRATIONS The Project s sole asset is a 40-unit apartment project. The project s operations are concentrated in the multifamily real estate market. In addition, the project operates in a heavily regulated environment. The operations of the project are subject to the administrative directives, rules and regulations of federal, state and local regulatory agencies, including, but not limited to, HUD. Such administrative directives, rules and regulations are subject to change by an act of Congress or an administrative change mandated by HUD. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change. NOTE 10 - INCOME TAX The organization is tax exempt under Internal Revenue Code Section 501 (C) (3). The Organization files Form 990 annually. For the year ended December 31, 2017, the Organization has no unrelated business income, and, accordingly, has no income tax liability. As of December 31, 2017 the Organization has no uncertain tax positions that qualify for either recognition or disclosures in the financial statements. Under normal circumstances, the Internal Revenue Service and the Alabama Department of Revenue have three years to audit previously filed income tax returns. NOTE 11 MANAGEMENT FEES The project pays a management fee equal to 5.46% of gross revenues to SPM, LLC. Management fees for 2017 were $22,565. NOTE 12 SUBSEQUENT EVENTS Subsequent events were examined through March 20, 2018, the date the financial statements were available for release -10-
. SUPPLEMENTARY INFORMATION
MCCABE AND ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS 321 A First Avenue N.E. Fayette, Alabama 35555 Richard N. McCabe, CPA Telephone 205-932-8096 Fax 205-932-8280 Member American Institute of Certified Public Accountants / Alabama Society of Certified Public Accountants INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORM IN ACCORDANCE WITH GOVERNMENT AUDIT STANDARDS The Board of Directors CSP Village Apartments 601 Black Bear Way. Tuscaloosa, Alabama 35401 March 20, 2018 We have audited, in accordance with the auditing standards generally accepted in the United States of American and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of CSP Village Apartments (a nonprofit corporation), which comprise the statement of financial position as of December 31, 2017, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated March 20, 2018. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered CSP Village Apartments internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing our opinion on the financial statements, but not for the expressing an opinion on the effectiveness of CSP Village Apartments internal control. Accordingly, we do not express an opinion on the effectiveness of CSP Village Apartments internal control. A deficiency in internal control exists when the design or operations of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitation, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. -11-
Compliance and Other Matters As part of obtaining reasonable assurance about whether CSP Village Apartments, Inc. s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statements amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of the Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization s internal control or on compliance. This report is an Auditing Standards in considering the organization s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. McCabe and Associates, CPA Fayette, Alabama -12- MCCABE AND ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANTS 321 A First Avenue N.E. Fayette, Alabama 35555 Richard N. McCabe, CPA Telephone 205-932-8096 Fax 205-932-8280 Member American Institute of Certified Public Accountants / Alabama Society of Certified Public Accountants INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUDEANCE The Board of Directors CSP Village Apartments 601 Black Bears Way Tuscaloosa, Alabama 35401 March 20, 2018 Report on Compliance for Each Major Federal Program We have audited CSP Village Apartments compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of CSP Village Apartments major federal programs for the year ended December 31, 2017. CSP Village Apartments major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for Compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of CSP Village Apartments major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the audit requirements of Title 2 U. S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about CSP Village Apartments compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of CSP Village Apartment s compliance. -13-
Opinion on Each Major Federal Programs In our opinion, CSP Village Apartments complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2017. Report on Internal Control over Compliance Management of CSP Village Apartments is responsible for establishing and maintaining effective internal control over compliance with the types of audit of compliance requirements referred to above. In planning and performing our audit of compliance, we considered CSP Village Apartments internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of CSP Village Apartments internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of perfuming heir assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. McCabe and Associates, CPA Fayette, Alabama -14- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH197 SCHEDULE OF FINDINGS AND QUESTIONED COST For the year ended December 31, 2017 Summary of Auditor s Results The auditor s report expressed an unmodified opinion on the financial statements of CSP Village Apartments. There were no significant deficiencies or material weaknesses identified during the audit of the audit of the financial statements. No instances of noncompliance material to the financial statements of CSP Village Apartments, which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. No significance deficiencies or material weakness in internal control for the major federal awards programs were identified during the audit of CSP Village Apartments. The auditor s report on compliance for the major federal award programs for CSP Village Apartments expressed an unmodified opinion on all major federal programs. There were no audit findings that are required to be reported in accordance with 2 CFR Section 200.516 (a). The program tested as major program was: CFDA #14.155 Section 223 (f) Loan Guarantee The threshold used for distinguishing between Type A and B programs was $750.000. CSP Village Apartments was determined to be low-risk auditee. Findings Financial Statement Audit No Matters were reported. Findings and Questioned Costs Major Federal Awards Programs Audit There are no such findings or questioned cost in the current year. -15- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH197 Supporting Data Required by HUD ACCOUNTS AND NOTES RECEIVABLE (OTHER THAN FROM REGULAR TENANTS) None DELINQUENT TENANT ACCOUNTS RECEIVABLE None MORTGAGE ESCROW DEPOSITS Estimated amount required as of December 31, 2016 for future payment of: Property Insurance $ 24,800 Amount on deposit in reserve account 22,588 Estimated requirement less than the amount of deposit $ 2,212 TENANT SECURITY DEPOSITS Tenant security deposits are held in a separate bank account in the name of the Project. Interest income earned on these deposits inures to the benefit of the tenant. RESERVE FOR REPLACEMENTS In accordance with the provisions of the Regulatory Agreement, restricted cash is held by the Bank of Tuscaloosa to be used for replacement of property with the approval of HUD as follows: Balance, December 31, 2016 $ 81,429 Monthly deposits (12@$1,539) 18,468 Interest income 32 Bank Charges (8) Disbursement (21,898) Balance, December 31, 2017, on deposit in reserve account $ 78,023 RESIDUAL RECEIPTS RESERVE In accordance with the provisions of the Regulatory Agreement, residual receipts realized from the operation of the mortgaged property shall be deposited and held by the Bank of Tuscaloosa and shall be disbursed only at the discretion of HUD. Balance, December 31, 2016 $ -0- Deposit -0- Disbursements -0- Balance, December 31, 2017 $ -0- -16- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH197 Supporting Data Required by HUD ACCOUNTS PAYABLE (OTHER THAN TRADE CREDITORS) None ACCRUED TAXES None COMPENSATION OF OFFICERS None UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO STOCKHOLERS None OWNERSHIP INTEREST There were no changes in ownership interest during the year. CHANGES IN FIXTED ASSETS YEAR ENDED DECEMBER 31, 2017 ASSETS BALANCE BALANCE 12/31/16 ADDITIONS DEDUCTON 12/31/17 Land $ 75,000 $ -0- $ -0- $ 75,000 Building 1,772,219 6,818-0- 1,779,037 Furniture & Equipment 299,139-0- -0-299,139 Totals $ 2,146,358 $ 6,818 $ -0- $ 2,153,176 ACCUMULATED DEPRECIATON NET BALANCE CURRENT BALANCE BOOK VALUE 12/31/16 PROVISION DEDUCTION 12/31/17 12/31/17 Land $ -0- $ -0- $ -0- $ -0- $ 75,000 Building 883,576 44,306-0- 927,882 851,155 Furniture & Equipment 157,160 18,321-0- 175,481 123,658 Totals $ 1,040,736 $ 62,627 $ -0- $ 1,103,363 $ 1,049,813-17- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH197 STATEMENT OF FINANCIAL POSITION DATA December 31, 2017 ASSETS CURRENT ASSETS 1200 Miscellaneous Prepaid Expense $ 3,013 1100T Total Current Assets 3,013 DEPOSITS HELD IN TRUST FUNDED 1191 Tenant deposits held in trust 9,209 RESTRICTED DEPOSITS AND FUNDED RESERVES 1310 Escrow deposits 30,845 1320 Replacement reserve 78,023 1340 Residual receipts reserve -0-1300T Total restricted deposits 108,868 FIXED ASSETS 1410 Land 75,000 1420 Building 1,779,037 1450 Furniture 299,139 1400T Total fixed assets 2,153,176 1495 Less: accumulated depreciation (1,103,363) 1400N Net fixed assets 1,049,813 OTHER ASSETS 1590 Miscellaneous other assets 67 1900 Capitalized loan fees 0 1900T Total other assets 67 1000T Total Assets $ 1,170,970-18- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH197 STATEMENT OF FINANCIAL POSITION DATA December 31, 2017 LIABILITIES AND NET ASSETS CURRENT LIABILITIES 2105 Bank overdraft - operating $ 6,151 2100 Accounts payable operations 152,365 2120 Accrued wages payable 52 2121 Accrued payroll taxes 571 2131 Accrued interest payable 5,808 2170 Mortgage payable First Mortgage Current portion 29,125 2210 Prepaid revenue 40 2122T Total Current Liabilities 194,112 DEPOSIT LIABILITIES 2191 Tenant deposits held in trust 9,209 LONG-TERM LIABILITIES 2300 Mortgage Payable First Mortgage(Note 4) 1,829,322 2360 Debt Issuance Cost (103,657) 233T Total Long-Term Term Liabilities 1,725,665 2000T Total Liabilities 1,928,986 NET ASSETS 3130 Total net assets (758,016) 2033 Total Liabilities and Net Assets $ 1,170,970-19- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH-197 STATEMENT OF ACTIVITIES DATA For the Year Ended December 31, 2017 REVENUES 5120 Rent Revenue - gross potential $ 113,916 5121 Tenant Assistance payments 297,840 5193 Specials claims revenue 586 5100T Total Rent Revenue 412,342 5400 Revenue from investments Replacement Res. 32 5490 Revenue from investments miscellaneous 1 5400T Total Financial Revenue 33 5910 Laundry and vending revenue 1,482 5920 Agreement Expense Recovery 32 5900T Total other revenues 413,889 EXPENSES 6203 Conventions and training 944 6210 Advertising 0 6250 Other renting expenses 475 6310 Office salaries 1,920 6311 Office Expenses 16,674 6320 Management Fee 22,565 6330 Manage salary 30,138 6340 Legal expense 0 6350 Audit Expenses 2,325 6351 Accounting/Bookkeeping 1,440 6390 Miscellaneous administrative Service coordinator 29,449 6263T Total Administrative Expenses 105,930 6450 Electricity 43,821 6451 Water 8,870 6452 Gas 5,039 6400T Total Utilities Expense 57,730 6510 Payroll 419 6515 Supplies 1,865 6520 Contracts 71,664 6525 Garbage and trash removal 3,725 6546 Heating/Cooling repairs/maintenance 13,062 6590 Miscellaneous operating and maintenance -0-6500T Total Operating and Maintenance Expenses 90,735-20- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH-197 STATEMENT OF ACTIVITIES DATA For the Year Ended December 31, 2017 EXPENSES (CONTINUED) 6711 Payroll tax expense 2,128 6720 Property and liability insurance 19,862 6722 Worker s compensation 1,133 6723 Health insurance 5,538 6700T Total taxes and insurance 28,661 6820 Interest on mortgage payable 70,291 6850 MIP Expense 8,422 6821 Interest Debt issuance cost 3,703 6800T Total financial expense 82,416 6000T Total cost of operations before depreciation 365,472 5060T Profit (loss) before depreciation 48,417 6600 Depreciation 62,627 6610 Amortization 3,702 6600T Total depreciation and amortization 66,329 5060N Operating profit (loss) (17,912) 7100T Net entity expenses -0-3250 Change in total net assets from operations $ (17,912) S1000-010 Total mortgage principal payments required during the year $ 34,649 S1000-020 Total of 12 monthly deposits during the year into the replacement reserve account 18,468-21- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH-197 COMPUTATION OF SURPLUS CASH - ANNUAL For the Year Ended December 31, 2017 Cash (deficit) 9,209 Current obligations Accounts payable 2,233 Accrued wages payable 52 Prepaid revenue 40 Tenant security deposits 9,209 Total current obligations 11,534 Surplus cash (deficiency) $ (2,325) -22- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH197 STATEMENT OF FUNDS IN FINANCIAL INSTITUTIONS For the Year Ended December 31, 2017 FUNDS HELD BY MORTGAGE: Financial Institution Account Title Balance Bank of Tuscaloosa Operating Account $ -0- Bank of Tuscaloosa Tenant Security Deposit 9,209 Bank of Tuscaloosa Insurance Escrow 4,883 Bank of Tuscaloosa Tax Escrow 242 Berkadia Commerce Mortgage Replacement Reserve 78,023 Berkadia Commercial Mortgage Property insurance escrow 17,706 Berkadia Commercial Mortgage MIP Escrow 8,015 Funds held by mortgagor $ 118,078-23- CSP VILLAGE APARTMENTS
HUD Project No. 062-EH197 LISTING OF IDENTITY OF INTEREST COMPANIES AND ACTIVITIES DOING BUSINESS WITH OWNER/ AGENT For the Year Ended December 31, 2017 Company Name Type of Services Balance Community Service Programs Property Management $ -0- of West Alabama, Inc. Community Service Programs Repairs and maintenance $ -0- of West Alabama, Inc. -24-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended December 31, 2017 Federal Grantor/ Pass-Through CFDA Grantor s Current Year Program Title Number Numbers Revenue Expenses U. S. Department of Housing and Urban Development Section 223 (f) Loan Guarantee 14.157* $ -0- $ 1,858,447 Section 8 Housing Assistance Payments 14.195 AL09T861033 297,840 297,840 $ 297,840 $ 2,156,287 *NOTE: Program 14.157 represents the outstanding loan balance as of the audit date. See notes to Schedule of Expenditures of Federal Awards. -25-
CSP VILLAGE APARTMENTS HUD Project No. 062-EH197 NOTE TO SCHEDULE OF EXPENSITURES OF FEDERAL AWARDS For the year ended December 31, 2017 BASIS OF PRESENTATON The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal awards activity of CSP Village Apartments under programs of the federal government for the year ended December 31, 2017. The information in this Schedule is presented in accordance with the requirements of Title 2 U. S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of CSP Village Apartments it is not intended to and does no present the financial position, change in net assets, or cash flows of CSP Village Apartments. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrued basis of accounting, Such expenditures are recognized following the cost principals contained in the Uniform Guidance, where in certain types of expenditures are not allowed or are limited as to reimbursement. INDIRECT COST RATE CSP Village Apartments has elected not to use the 10% de Minimis indirect cost rate allowed under Uniform Guidance. -26-