GREATER POMONA HOUSING DEVELOPMENT CORPORATION HUD PROJECT NO. 122-EH175-WAH-LS FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION June 30, 2016 and 2015
TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT 1-2 FINANCIAL STATEMENTS Statements of Financial Position Statements of Activities Statements of Cash Flows Notes to Financial Statements 3-4 5-6 7-8 9-12 SUPPLEMENTARY INFORMATION Supplementary Data Required by HUD Schedule of Expenditures of Federal Awards Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors' Report on Compliance for Major HUD Program and on Internal Control Over Compliance Required by the Consolidated Audit Guide for Audits of HUD Programs Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by The Uniform Guidance Schedule of Findings and Questioned Costs Schedule of Prior Audit Findings and Questioned Costs Officer's Certification Management Agent's Certification 13-20 21 22-23 24-25 26-27 28 29 30 31
Forman Richter &Rubin An Accountancy Corporation Certified Public Accountants INDEPENDENT AUDITORS' REPORT To the Board of Directors Greater Pomona Housing Development Corporation dba Access Village Report on the Financial Statements We have audited the accompanying financial statements of Greater Pomona Housing Development Corporation dba Access Village (the Project), HUD Project No. 122-EH175-WAH-L8, which comprise the statements of financial position as of June 30, 2016 and 2015, and the related statements of activities and cash flows for the years 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits 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 the 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 Greater Pomona Housing Development Corporation dba Access Village as of June 30, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 858 South Oak Park Rd. Suite 200. Covina, CA 91724-3674. (626) 915-7666. Fax (626) 331-7607. email Covina@FRRcpa.com www.fonnanrichterrubin.com
Supplementary Information 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 13 to 20 is presented for purposes of additional analysis as required by the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General, and is not a required part of the financial statements. The accompanying schedule of expenditures of federal awards shown on page 21, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and 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 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. The schedule of prior audit findings and questioned costs has not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated August 16, 2016, on our consideration of Greater Pomona Housing Development Corporation dba Access Village's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and 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 performed in accordance with Government Auditing Standards in considering Greater Pomona Housing Development Corporation dba Access Village's internal control over financial reporting and compliance. FORMAN RICHTER & RUBIN AN ACCOUNTANCY CORPORATION Covina, California August 16, 2016
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENTS OF FINANCIAL POSITION June 30, 2016 and 2015 ASSETS 2016 CURRENT ASSETS Cash - operations $ 13,394 Accounts receivable - HUD Interest receivable Prepaid expenses 3,335 Total Current Assets 16,729 RESIDENT DEPOSITS HELD IN TRUST 14,097 RESTRICTED DEPOSITS (Note 4) Replacement reserves 236,757 Total Restricted Deposits 236,757 PROPERTY AND EQUIPMENT (Notes 2 and 3) Land 160,674 Building 1,152,553 Building equipment 49,407 Furniture and equipment 2,402 Furnishings 47,969 Office furniture and equipment 1,376 Total Property and Equipment 1,414,381 Less: accumulated depreciation 998,398 Net Property and Equipment 415,983 OTHER ASSETS (Note 2) Financing costs, less accumulated amortization of $64,096 in 2016 and $62,093 in 2015 16,026 Total Assets $ 699,592 2015 $ 13,513 218 89 3,263 17,083 14,083 227,368 227,368 160,674 1,152,553 32,607 2,402 47,969 1,376 1,397,581 969,402 428,179 18,029 $ 704,742 The accompanying Notes to Financial Statements are an integral part of this statement - 3-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENTS OF FINANCIAL POSITION June 30,2016 and 2015 LIABILITIES AND NET ASSETS (DEFICIT) 2016 CURRENT LIABILITIES Accounts payable - operations $ 5,110 Accrued wages 546 Accrued interest 5,562 Accrued expenses 8,300 Prepaid revenue 206 Current portion of mortgage payable (Note 3) 60,302 Total Current Liabilities 80,026 RESIDENT SECURITY DEPOSITS 12,606 MORTGAGE NOTE PAYABLE, net of current portion (Note 3) 661,325 Total Liabilities 753,957 NET ASSETS (DEFICIT) (54,365) Total Liabilities and Net Assets (Deficit) $ 699,592 2015 $ 12,700 1,042 5,987 8,300 54,993 83,022 12,361 721,628 817,011 (112,269) $ 704,742 The accompanying Notes to Financial Statements are an integral part of this statement -4-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENTS OF ACTIVITIES Years Ended June 30, 2016 and 2015 2016 REVENUES Rent revenue - residents $ 70,876 Rental assistance payments 232,001 Gross Potential Rent Revenue 302,877 Vacancies - apartments {342} Net Rent Revenue 302,535 Revenue from investments - reserve for replacements 1,363 Total Financial Revenue 1,363 Tenant charges 100 Total Other Revenue 100 Total Revenue 303,998 EXPENSES Conventions and meetings 94 Advertising and marketing 1,190 Other renting expenses 665 Office salaries 827 Office expenses 5,612 Management fees 18,720 Legal 11 Audit 8,300 Bookkeeping fees I accounting services 2,721 Miscellaneous administrative 2,703 Total Administrative Expenses 40,843 2015 $ 73,395 225,143 298,538 {546} 297,992 1,302 1,302 120 120 299,414 125 595 1,182 923 4,412 18,720 250 7,500 2,715 2,887 39,309 The accompanying Notes to Financial Statements are an integral part of this statement - 5-
DBA ACCESS VILLAGE HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENTS OF ACTIVITIES (CONTINUED) Years Ended June 30, 2016 and 2015 2016 Electricity $ 4,660 Water 9,634 Gas 3,236 Sewer 1,073 Total Utilities Expenses 18,603 Payroll 4,897 Supplies 17,392 Contracts 27,970 Garbage and trash removal 6,423 Security payroll / contract 7,254 HVAC maintenance 184 Miscellaneous operating and maintenance 158 Total Operating and Maintenance Expenses 64,278 Real estate taxes 9,181 Payroll taxes 516 Property and liability insurance 11,500 Workmen's compensation 244 Miscellaneous taxes, licenses, permits & insurance 719 Total Taxes and Insurance Expenses 22,160 Interest on mortgage payable 69,121 Miscellaneous financial expense 90 Total Financial Expenses 69,211 Total Cost of Operations Before Depreciation 215,095 Change in Net Assets Before Depreciation 88,903 Depreciation 28,996 Amortization 2,003 Change in Net Assets 57,904 Net Assets (Deficit) at Beginning of Year (112,269) Net Assets (Deficit) at End of Year $ (54,365) 2015 $ 4,876 12,401 3,507 1,067 21,851 8,427 21,752 30,836 6,234 6,096 3,877 166 77,388 9,327 423 11,250 209 863 22,072 74,000 90 74,090 234,710 64,704 31,173 2,003 31,528 (143,797) $ (112,269) The accompanying Notes to Financial Statements are an integral part of this statement - 6-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENTS OF CASH FLOWS Years Ended June 30, 2016 and 2015 2016 CASH FLOWS FROM OPERATING ACTIVITIES Rental receipts $ 302,741 Interest received 1,670 Other receipts 100 Total Receipts 304,511 Administration 21,534 Management fees 18,720 Utilities 19,766 Salaries 1,323 Operating and maintenance 70,468 Real estate taxes 9,181 Property insurance 11,548 Miscellaneous taxes and insurance 1,502 Resident deposits held in trust (231) Interest on mortgage 69,546 Miscellaneous financial 90 Total Disbursements 223,447 Net Cash Provided by Operating Activities 81,064 CASH FLOWS FROM INVESTING ACTIVITIES Deposits (to) the replacement reserve account, net (9,389) Purchase of property and equipment {16,800} Net Cash (Used in) Investing Activities (26,189) CASH FLOWS FROM FINANCING ACTIVITIES Mortgage principal payments (54,994) Net (Decrease) in Cash (119) Cash at Beginning of Year 13,513 Cash at End of Year $ 13,394 2015 $ 297,949 1,152 120 299,221 20,626 18,720 22,484 466 69,411 9,327 11,317 1,415 (4) 74,386 90 228,238 70,983 (8,643) {14,695} (23,338) (50,152) (2,507) 16,020 $ 13,513 The accompanying Notes to Financial Statements are an integral part of this statement - 7-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENTS OF CASH FLOWS (CONTINUED) Years Ended June 30, 2016 and 2015 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation Amortization (Increase) decrease in assets: Accounts receivable - HUD Accounts receivable - interest Prepaid expenses Cash restricted for resident security deposits Increase (decrease) in liabilities: Accounts payable Accrued liabilities Accrued interest Prepaid revenue Resident deposits held in trust Net Cash Provided by Operating Activities $ 2016 57,904 28,996 2,003 218 89 (72) (14) (7,590) (496) (425) 206 245 81,064 2015 $ 31,528 31,173 2,003 (218) 68 (144) (30) 7,341 (343) (386) (43) 34 $ 70,983 The accompanying Notes to Financial Statements are an integral part of this statement - 8-
HUD PROJECT NO. 122-EH175-WAH-LB NOTES TO FINANCIAL STATEMENTS Years Ended June 30, 2016 and 2015 1. ORGANIZATION Greater Pomona Housing Development Corporation dba Access Village (the Project) is a 24-unit apartment facility organized to provide housing for the elderly and handicapped persons with low income, located in Claremont, California. The Project is operated under Section 202 of the National Housing Act for Elderly and regulated by the U.S. Department of Housing and Urban Development (HUD) with respect to rental charges and operating methods. The Project's major program is its Section 202 direct loan. Legal title to the Project is held by Greater Pomona Housing Development Corporation, a nonprofit corporation. The accompanying financial statements are those of the Project and do not represent the financial statements of Greater Pomona Housing Development Corporation. The Project also is subject to a Section 8 Housing Assistance Payment agreement 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 Section 8 program is a non-major HUD program. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements are prepared on the accrual basis of accounting and in accordance with U.S. generally accepted accounting principles. Accounts Receivable and Bad Debts Accounts receivable are charged to bad debt expense when they are determined to be uncollectible based upon a periodic review of the accounts by management. Accounting principles generally accepted in the United States of America require that the allowance method be used to recognize bad debts; however, the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method. Investment in Real Estate Investment in real estate is carried at cost. Management does not believe that there are any current facts or circumstances that would indicate impairment of the rental property in accordance with U.S. generally accepted accounting principles. Depreciation is provided for in the amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives using the straight-line method. Capitalization and Depreciation Depreciation of furniture and equipment is computed by the straight-line method over 5-7 years. The building is computed by the straight-line method over 27.5 years. Major additions, betterments and improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the statements of activities. Financing Cost and Amortization Financing costs are being amortized using the straight-line method over 40 years, which is the life of the related mortgage loan (Note 3). - 9-
HUD PROJECT NO. 122-EH175-WAH-LS NOTES TO FINANCIAL STATEMENTS Years Ended June 30, 2016 and 2015 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Rental Revenue Rental revenue is recognized as rentals become due. Rental payments received in advance are deferred until earned. All leases between the Project and residents of the property are operating leases. Income Taxes The Project is exempt from federal and state income taxes under Section 501 (c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code, respectively. Accordingly, no provision for income taxes is included in the financial statements. In addition, the Project has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509(a) of the Code. The Project's federal and state income tax returns are subject to possible examination by the taxing authorities until the expiration of the related statutes of limitations on those tax returns. In genera!, the federal income tax returns have a three year statute of limitations, and the state income tax returns have a four year statute of limitations. The Project evaluates all significant tax positions. As of June 30, 2016 and 2015, the Project does not believe that it has taken any positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year. It is the Project's policy to recognize any interest and penalties in the year incurred. There was no interest or penalties incurred in 2016 and 2015. Net Assets (Deficit) None of the Project's net assets are subject to donor-imposed stipulations and may be expendable for any purpose in performing the primary objectives of the Project, and are accordingly accounted for as unrestricted net assets. Distributions The Project's regulatory agreement with HUD stipulates, among other things, that the Project will not make distributions of assets or income to any of its officers or directors. Cash and Cash Equivalents For the purposes of the statements of cash flows, the Project considers all highly liquid debt instruments with an initial maturity of three months or less to be cash equivalents. Use of Estimates Management uses estimates and assumptions in preparing financial statements in accordance with U.S. generally accepted accounting principles. 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 vary from the estimates that were utilized in preparing the financial statements. -10-
HUD PROJECT NO. 122-EH175-WAH-LB NOTES TO FINANCIAL STATEMENTS Years Ended June 30,2016 and 2015 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fair Value Measurement In accordance with U.S. generally accepted accounting principles, valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs are internally derived, reflecting what the reporting entity believes to be market assumptions. U.S. generally accepted accounting principles classifies these inputs into the following hierarchy: Level One Inputs - Quoted prices for identical instruments in active market. Level Two Inputs - Quoted prices for identical instruments in active market; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations whose inputs are observable or whose significant value drivers are observable. Level Three Inputs - Instruments with primarily unobservable value drivers. In adopting the fair value measurement in accordance with U.S. generally accepted accounting principles, related disclosures are segregated for assets and liabilities measured at fair value based on the level used within the hierarchy to determine their fair values. These standards do not have any financial impact on the Project's financial statements. 3. MORTGAGE NOTE PAYABLE The U.S. Department of Housing and Urban Development (HUD) holds the mortgage on this Project, secured by a deed of trust. The original loan amount was $1,312,600, to be amortized over 40 years with interest at 9.25% per annum, due in 2023. The outstanding balance due as of June 30,2016 and 2015, was $721,627 and $776,621, respectively, and accrued interest was $5,562 and $5,987, respectively. Maturities of the mortgage note in each of the next five years and in the aggregate are as follows: Years Ending June 30, Amount 2017 $ 60,302 2018 66,122 2019 72,504 2020 79,503 2021 87,177 Thereafter 356,019 Total $ 721,627 Total mortgage interest expense was $69,121 and $74,000 for the years ended June 30,2016 and 2015, respectively. - 11 -
4. RESTRICTED DEPOSITS HUD PROJECT NO. 122-EH175-WAH-LS NOTES TO FINANCIAL STATEMENTS Years Ended June 30, 2016 and 2015 Under the regulatory agreement, the Project is required to set aside $7,938 annually for the replacement of property and other project expenditures as approved by HUD. HUD-restricted deposits of $236,757 and $227,368 at June 30, 2016 and 2015, respectively, are held in a separate interest-bearing account and generally are not available for operating purposes. 5. RENT INCREASES The Project may not increase rents charged to residents without HUD approval. 6. MANAGEMENT FEE The Project paid a management fee equal to $65 per unit per month to CARING Housing Ministries, Inc. Total management fees for the years ended June 30,2016 and 2015 was $18,720, each year. 7. RESIDUAL RECEIPTS ACCOUNT Surplus cash as defined by HUD is required to be deposited into a residual receipts bank account annually. Use of the residual receipts account is contingent upon HUD's prior written approval. 8. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS The Project's sole asset is a 24-unit housing facility. 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 the change. 9. SUBSEQUENT EVENTS The Project has evaluated events and transactions occurring subsequent to the statement of financial position date of June 30, 2016 for items that should potentially be recognized or disclosed in these financial statements. The evaluation was conducted through August 16, 2016, the date these financial statements were available to be issued. No such material events or transactions were noted to have occurred. - 12 -
SUPPLEMENTARY INFORMATION TABLE OF CONTENTS Statement of Financial Position Data Statement of Activities Data Statement of Cash Flows Data Schedule of Reserve for Replacement Schedule of Changes in Property and Equipment Computation of Surplus Cash, Distributions, and Residual Receipts (Annual) 13-14 15-17 18-19 20 20 20
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENT OF FINANCIAL POSITION DATA June 30,2016 Account No. ASSETS CURRENT ASSETS 1120 Cash - operations $ 13,394 1200 Prepaid expenses 3,335 1100T Total Current Assets 16,729 1191 RESIDENT DEPOSITS HELD IN TRUST 14,097 RESTRICTED DEPOSITS 1320 Replacement reserves 236,757 1300T Total Restricted Deposits 236,757 PROPERTY AND EQUIPMENT 1410 Land 160,674 1420 Building 1,152,553 1440 Building equipment (portable) 49,407 1450 Furniture and project/resident use 2,402 1460 Furnishings 47,969 1465 Office furniture and equipment 1,376 1400T Total Property and Equipment 1,414,381 1495 Less: accumulated depreciation 998,398 1400N Net Property and Equipment 415,983 OTHER ASSETS 1520 Financing costs, less accumulated amortization of $64,096 16,026 1500T Total Other Assets 16,026 1000T Total Assets $ 699,592 See Independent Auditors' Report -13-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENT OF FINANCIAL POSITION DATA June 30, 2016 Account No. LIABILITIES AND NET ASSETS (DEFICIT) CURRENT LIABILITIES 2110 Accounts payable - operations $ 5,110 2120 Accrued wages 546 2131 Accrued interest 5,562 2170 Current portion of mortgage payable 60,302 2190 Accrued audit fees 8,300 2210 Prepaid revenue 206 2122T Total Current Liabilities 80,026 2191 RESIDENT SECURITY DEPOSITS 12,606 2320 MORTAGE NOTE PAYABLE, less current portion 661,325 2000T Total Liabilities 753,957 3131 NET ASSETS (DEFICIT) (54,365) 2033T Total Liabilities and Net Assets (Deficit) $ 699,592 See Independent Auditors' Report - 14-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENT OF ACTIVITIES DATA Year Ended June 30, 2016 Account No. 5120 5121 5100T 5220 5152N 5440 5400T 5920 5900T 5000T 6203 6210 6250 6310 6311 6320 6340 6350 6351 6390 6390-010 6390-020 6390-030 6390-040 6263T REVENUES Rent revenue - residents Rental assistance payments Gross Potential Rent Revenue Vacancies - apartments Net Rent Revenue Revenue from investments - reserve for replacements Total Financial Revenue Resident charges Total Other Revenue Total Revenue EXPENSES Conventions and meetings Advertising and marketing Other renting expenses Office salaries Office expense Management fees Legal Audit Bookkeeping fees / accounting services Miscellaneous administrative Travel 1,597 Resident counseling 369 Dues and subscriptions 36 Bank service charges 701 Total Administrative Expenses $ 70,876 232,001 302,877 (342) 302,535 1,363 1,363 100 100 303,998 94 1,190 665 827 5,612 18,720 11 8,300 2,721 2,703 40,843 See Independent Auditors' Report - 15-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENT OF ACTIVITIES DATA (CONTINUED) Year Ended June 30, 2016 Account No. 6450 6451 6452 6453 6400T 6510 6515 6520 6525 6530 6546 6590 6500T 6710 6711 6720 6722 6790 6700T 6830 6890 6800T 6000T 5060T 6600 6610 3250 S1100-060 3131 Electricity Water Gas Sewer Total Utilities Expenses Payroll Supplies Contracts Garbage and trash removal Security payroll / contract HVAC maintenance Miscellaneous operating and maintenance Total Operating and Maintenance Expenses Real estate taxes Payroll taxes Property and liability insurance Workmen's compensation Miscellaneous taxes, licenses, permits & insurance Total Taxes and Insurance Expenses Interest on mortgage payable Miscellaneous financial expense Total Financial Expenses Total Cost of Operations Before Depreciation Change in Net Assets Before Depreciation Depreciation Amortization Change in Net Assets Net Assets (Deficit) at Beginning of Year Net Assets (Deficit) at End of Year $ 4,660 9,634 3,236 1,073 18,603 4,897 17,392 27,970 6,423 7,254 184 158 64,278 9,181 516 11,500 244 719 22,160 69,121 90 69,211 215,095 88,903 28,996 2,003 57,904 (112,269) $ (54,365) See Independent Auditors' Report - 16-
HUD PROJECT NO. 122-EH175-WAH-LS STATEMENT OF ACTIVITIES DATA (CONTINUED) Year Ended June 30,2016 Account No. 81000-010 81000-020 81000-030 81000-040 OTHER INFORMATION Total first mortgage principal payments required during the audit period. The total of all monthly reserve for replacement deposits (usually 12) required during the audit period even if deposits have been temporarily waived or suspended. Replacement Reserve, or Residual Receipts and Releases which are included as expense items on this Profit and Loss statement. Project Improvement Reserve releases under the Flexible 8ubsidy Program that are included as expense items on this Profit and Loss statement. $ 54,994 7,938 See Independent Auditors' Report - 17-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENT OF CASH FLOWS DATA Year Ended June 30,2016 Account No. CASH FLOWS FROM OPERATING ACTIVITIES 81200-010 Rental receipts $ 302,741 81200-020 Interest received 1,670 81200-030 Other receipts 100 S1200-040 Total Receipts 304,511 81200-050 Administration 21,534 81200-070 Management fees 18,720 81200-090 Utilities 19,766 81200-100 8alaries 1,323 81200-110 Operating and maintenance 70,468 81200-120 Real estate taxes 9,181 81200-140 Property insurance 11,548 81200-150 Miscellaneous taxes and insurance 1,502 81200-160 Resident deposits held in trust (231) 81200-180 Interest on mortgage 69,546 81200-220 Miscellaneous financial 90 S1200-230 Total Disbursements 223,447 S1200-240 Net Cash Provided by Operating Activites 81,064 CASH FLOWS FROM INVESTING ACTIVITIES 81200-250 Deposits (to) the replacement reserve account, net (9,389) 81200-330 Purchase of property and equipment {16,800} S1200-350 Net Cash (Used in) Investing Activities (26,189) CASH FLOWS FROM FINANCING ACTIVITIES S1300-360 Mortgage principal payments (54,994) S1200-470 Net (Decrease) in Cash (119) S1200-480 Cash at Beginning of Year 13,513 S1200T Cash at End of Year $ 13,394 8ee Independent Auditors' Report - 18-
HUD PROJECT NO. 122-EH175-WAH-L8 STATEMENT OF CASH FLOWS DATA (CONTINUED) Year Ended June 30, 2016 Account No. CASH FLOWS FROM OPERATING ACTIVITIES 3250 Change in net assets $ 57,904 Adjustments to reconcile change in net assets to net cash provided by operating activities: 6600 Depreciation 28,996 6610 Amortization 2,003 Increase or decrease in: 81200-500 Accounts receivable - HUD 218 81200-500 Accounts receivable - interest 89 81200-520 Prepaid expenses (72) 81200-530 Cash restricted for resident security deposits (14) 81200-540 Accounts payable (7,590) 81200-560 Accrued liabilities (496) 81200-570 Accrued interest (425) 81200-580 Resident deposits held in trust 245 81200-590 Prepaid revenue 206 S1200-610 Net Cash Provided by Operating Activities $ 81,064 8ee Independent Auditors' Report - 19-
Schedule of Reserve for Replacement HUD PROJECT NO. 122-EH175-WAH-L8 SUPPLEMENTARY DATA REQUIRED BY HUD June 30, 2016 Balance at Beginning of Year Total monthly deposits Investment revenue Balance at End of Year $ 227,368 7,938 1,451 $ 236,757 Schedule of Changes in Property and Eguipment Beginning Balance Additions Deductions Ending Balance Land Building Building equipment (portable) Furniture for project/resident use Furnishings Office furniture and equipment $ 160,674 1,152,553 32,607 2,402 47,969 1,376 $ 16,800 $ $ 160,674 1,152,553 49,407 2,402 47,969 1,376 Total $ 1,397,581 $ 16,800 $ $ 1,414,381 Accumulated Depreciation $ 969,402 $ 28,996 $ $ 998,398 Computation of Surplus Cash, Distributions, and Residual Receipts (Annual) Cash Total Cash Current Obligations Accrued interest Accounts payable due within 30 days Accrued wages Accrued audit fees Prepaid revenue Resident security deposits Total Current Obligations Cash (Deficiency) $ 27,491 27,491 5,562 5,110 546 8,300 206 12,606 32,330 $ (4,839) See Independent Auditors' Report - 20-
HUD PROJECT NO. 122-EH175-WAH-L8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS June 30, 2016 Federal Grantor/Pass-through Grantor/Program Title U.S. Department of Housing and Urban Development Section 202 Loan Section 8 Housing Assistance Payments Total Federal CFDA Number 14.157 14.195 Federal Expenditures $ 721,627 232,001 $ 953,628 BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of Greater Pomona Housing Development Corporation dba Access Village, HUD Project No. 122-EH175-WAH-L8, under programs of the federal government for the year ended June 30, 2016. Expenditures reported on the schedule are reported on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Tit/e 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 the Project, it is not intended and does not present the financial position, changes in net assets, or cash flows of the Project. See Independent Auditors' Report - 21 -
Forman Richter &Rubin An Accountancy Corporation 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 PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Greater Pomona Housing Development Corporation dba Access Village We have audited, 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, the financial statements of Greater Pomona Housing Development Corporation dba Access Village (the Project), HUD Project No. 122-EH175-WAH-L8, which comprise the statement of financial position as of June 30, 2016, 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 August 16, 2016. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Project's 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 an opinion on the effectiveness of the Project's internal control. Accordingly, we do not express an opinion on the effectiveness of the Project's internal control. A deficiency in internal control exists when the design or operation 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 limitations, 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Project'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 statement 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. 858 South Oak Park Rd. Suite 200. Covina, CA 91724-3674. (626) 915-7666. Fax (626) 331-7607. email Covina@FRRcpa.com www.fonnanrichterrubin.com
Purpose of this 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 Project's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. FORMAN RICHTER & RUBIN AN ACCOUNTANCY CORPORATION Covina, California August 16, 2016
Forman Richter &Rubin An Accountancy Corporation Certified Public Accountants INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR MAJOR HUD PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE CONSOLIDA TED AUDIT GUIDE FOR AUDITS OF HUD PROGRAMS To the Board of Directors Greater Pomona Housing Development Corporation dba Access Village Report on Compliance for Major HUD Program We have audited Greater Pomona Housing Development Corporation dba Access Village's (the Project), HUD Project No. 122-EH175-WAH-L8, compliance with the compliance requirements governing federal financial reports, mortgage status, replacement reserve, residual receipts, distributions to owners, equity skimming, cash receipts, cash disbursements, resident application, eligibility, and recertification, security deposits, management functions, unauthorized change of ownership/acquisition of liabilities, unauthorized loans of project funds and excess income described in the Consolidated Audit Guide for Audits of HUD Programs (the Audit Guide) that could have a direct and material effect on the Project's major U.S. Department of Housing and Urban Development (HUD) program for the year ended June 30, 2016. The Project's major HUD program is the Supportive Housing for the Elderly. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its HUD program. Auditors' Responsibility Our responsibility is to express an opinion on compliance for the Project's major HUD program based on our audit of the 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 Guide. Those standards and the Audit Guide require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a direct and material effect on the major HUD program occurred. An audit includes examining, on a test basis, evidence about the Project's 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 the major HUD program. However, our audit does not provide a legal determination of the Project's compliance. Opinion on Major HUD Program In our opinion, the Project complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on its major HUD program identified above for the year ended June 30,2016. 858 South Oak Park Rd. Suite 200. Covina, CA 91724-3674. (626) 915-7666. Fax (626) 331-7607. email Covina@FRRcpa.com www.formanrichterrubin.com
Report on Internal Control Over Compliance Management of the Project is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Project's internal control over compliance with the requirements that could have a direct and material effect on the major HUD program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major HUD program and to test and report on internal control over compliance in accordance with the Audit Guide, 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 the Project's 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 performing their assigned functions, to prevent, or detect and correct, noncompliance with a compliance requirement of a HUD 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 reasonable possibility that material noncompliance with a compliance requirement of a HUD 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 combination of deficiencies, in internal control over compliance with a compliance requirement of a HUD program that is less severe than a material weakness in internal control over compliance, yet important enough to merit the 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 our testing based on the requirements of the Audit Guide. Accordingly, this report is not suitable for any other purpose. FORMAN RICHTER & RUBIN AN ACCOUNTANCY CORPORATION Covina, California August 16, 2016
Forman Richter &Rubin An Accountancy Corporation Certified Public Accountants INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Directors Greater Pomona Housing Development Corporation dba Access Village Report on Compliance for Each Major Federal Program We have audited Greater Pomona Housing Development Corporation dba Access Village's (the Project), HUD Project No. 122-EH175-WAH-LS, compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Project's major federal programs for the year ended June 30, 2016. The Project's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of the Project's major federal programs based on our audit ofthe 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 the Project's 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 the Project's compliance. Opinion on Each Major Federal Program In our opinion, the Project 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 June 30,2016. 858 South Oak Park Rd. Suite 200. Covina, CA 91724-3674. (626) 915-7666. Fax (626) 331-7607. email Covina@FRRcpa.com www.fonnanrichterrubin.com
Report on Internal Control over Compliance Management of the Project is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Project's 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 the Project's 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 performing their 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 reasonable possibility that material noncompliance with a type of compliance 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. FORMAN RICHTER & RUBIN AN ACCOUNTANCY CORPORATION Covina, California August 16, 2016
SUMMARY OF AUDITORS' RESULTS HUD PROJECT NO. 122-EH175-WAH-LS SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2016 1. The auditors' report expresses an unmodified opinion on the financial statements of Greater Pomona Housing Development Corporation dba Access Village. 2. No material weaknesses were identified during the audit of the financial statements. 3. No instances of noncompliance material to the financial statements of Greater Pomona Housing Development Corporation dba Access Village were disclosed during the audit. 4. No material weaknesses were identified during the audit of the major federal award programs. 5. The auditors' report on compliance for the major federal award programs for Greater Pomona Housing Development Corporation dba Access Village expresses an unmodified opinion. 6. Audit findings, if any, relative to the major federal award programs for Greater Pomona Housing Development Corporation dba Access Village are reported in this Schedule. 7. The programs tested include: Major program - Housing for the Elderly or Handicapped (Section 202) (CFDA No. 14.157). 8. The threshold for distinguishing Types A and B programs was $750,000. 9. Greater Pomona Housing Development Corporation dba Access Village was determined to be a lowrisk auditee. FINDINGS-FINANCIAL STATEMENTS AUDIT Our audit disclosed no findings that are required to be reported herein under the HUD Consolidated Audit Guide. FINDINGS AND QUESTIONED COSTS-MAJOR FEDERAL AWARD PROGRAMS AUDIT Our audit disclosed no findings that are required to be reported herein under the HUD Consolidated Audit Guide. - 28-
PRIOR AUDIT FINDINGS HUD PROJECT NO. 122-EH175-WAH-LB SCHEDULE OF PRIOR AUDIT FINDINGS AND QUESTIONED COSTS June 30, 2016 There were no open findings from the prior audit report, dated August 19, 2015, for the year ended June 30, 2015, issued by Forman, Richter and Rubin. STATUS OF FINDINGS ISSUED BY HUD OIG, OTHER FEDERAL AGENCIES, OR CONTRACT ADMINISTRATORS The Project was successfully inspected by a HUD certified inspector receiving a score of 99a. The report issued on October 20,2015 by the U.S. Department of Housing and Urban Development Real Estate Assessment Center noted certain insignificant deficiencies as follows: Findings - The report noted deficiencies on the building exterior which includes damaged hardware/locks. Status - HUD requires the correction of all deficiencies listed in the report as part of the ongoing maintenance program. The Project has completed subsequent work orders addressing the deficiencies noted in the report and has since been corrected. DEFICIENCES ISSUED BY HUD MANAGEMENT There were no letters or reports issued by HUD management during the year covered by this audit. - 29-