INNSBRUCK PROPERTY OWNERS ASSOCIATION, INC. FINANCIAL STATEMENTS for the years ended December 31, 2004 and December 31, 2003
INNSBRUCK PROPERTY OWNERS ASSOCIAnON, INC. Table of Contents December 31, 2004 INDEX Review Report 1 Financial Statements Balance Sheet. Statement of Revenues, Expenses and Changes in Members Equity Statement of Cash Flows 2 3 4 Notes to Financial Statements 5-7
Thomas & Owen, LLC CERTIFIED PUBLIC ACCOUNTANTS Timothy H. Thomas, CPA Wade E. Owen, CPA 67 Kenimer Street PO Box 2959 Cleveland GA, 30528 (706) 865-1095 (706) 348-6020 FAX To the Board of Directors Innsbruck Property Owners Association, Inc. Helen, Georgia 30545 We have reviewed the accompanying balance sheet ofinnsbruck Property Owners Association, Inc. as of December 31, 2004 and December 31, 2003 and the related statements of revenues, expenses, and changes in members equity and the statement of cash flows for the years then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Innsbruck Property Owners Association, Inc. A review consists principally of inquires ofthe association's personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression ofan opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modification that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting standards. The American Institute of Certified Public Accounts has determined that supplementary information about future major repairs and replacements ofcommon property is required to supplement, but not required to be a part of, the basic financial statements. Innsbruck Property Owners Association, Inc. has not conducted a study of future major repairs and replacements. Thomas & Owen, LLC ft It/fie.. August 22, 2004
Innsbruck Property Owners Association, Inc. Balance Sheet oecember 31, 2004 and 2003 2004 2003 ASSETS Current Assets Cash, including interest bearing deposits $39,417 $31,053 Net member assessments receivable 23,219 16,965 Prepaid Insurance 1,609 976 Total Current Assets 64,245 48,994 Fixed Assets Land 120,000 120,000 Land improvements 155,158 70,658 Clubhouse and Pool 331,046 310,711 Equipment and Fixtures 64,987 64,332 Accumulated. Depreciation (71,777) (42,299) Total Fixed Assets 599,415 523,402, TOTAL ASSETS $663,659 $572,396 --------- --------- --------- --------- LIABILITIES &MEMBERS' EQUITY Current Liabilities Accounts Payable o 3,950 Prepaid assessments 23,678 27,380 Damage Deposits 82,700 69,500 Total Current Liabilities 106,378 100,830 Long-Term Liabilities Notes Payable - Regions Bank 115,000 100,000 Members Equity Members equity 442,281 371,566 Total Members Equity 442,281 371,566 TOTAL LIABILITIES &EQUITY $663,659 $572,396 See accompanying notes and accountants report - 2 --------- ---------
Innsbruck Property Owners Association, Inc. Statements of Revenues, Expenses, and Changes in Fund Balance For the Years Ended December 31, 2004 and 2003 2004 2003 REVENUES Member Assessments Road impact fees Interest Income Other Miscellaneous TOTAL REVENUES $303,818 $236,628 19,500 29,600 6,322 2,894 3,700 3,450 333,340 272,572 EXPENSES Administrative Accounting Bad Debts Insurance Legal and Professional NCRB expense Other administrative expenses Total Administrative expenses Operations Repairs and Maintenance Rent Supplies Utilities Security Depreciation Interest Expense Total Operations TOTAL EXPENSES EXCESS OF REVENUES OVER EXPENSES BEGINNING MEMBERS EQUITY ENDING MEMBERS EQUITY 8,320 8,550 13,528 2,591 7,804 6,978 6,492 5,021 12,504 8,419 14,332 57,067 37,472 65,777 32,385 12,000 1,515 1,894 37,117 40,115 57,859 52,873 174,268 127,266 29,478 28,116 1,812 7,118 262,625 199,973 $70,715 $72,599 ------- ------- 371,566 298,967 $442,281 $371,566 ------- ------- See accompanying notes and accountants report -3
Innsbruck Property Owners Association, Inc. Statement of Cash Flows For the Years Ended December 31, 2004 and 2003 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES Excess of Expenses over Revenues Adjustment to reconcile excess of revenues over expenses to net cash provided by operating activities: Depreciation (Increase) Decrease in: AIR - Members Prepaid Insurance Increase (Decrease) in: Accounts Payable Prepaid Assessments Damage Deposits Total Adjustments NET CASH FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Improvements &Equip. Cash from Sale of Assets NET CASH USED BY INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Notes Retirement of Debt $70,715 $72,599 29,478 28,116 (6,254) (930) (633) 1,124 (3,950) 2,401 (3,702) 12,020 13,200 54,500 28,139 97,231 98,854 169,830 (105,490) (41,894) o o (105,490) (41,894) 15,000 o o (150,000) NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE IN CASH &EQUIVALENTS BEGINNING CASH AND &EQUIVALANTS ENDING CASH &EQUIVALENTS 15,000 (150,000) 8,364 (22,064) 31,053 53,117 $39,417 $31,053 ------ ------ ------ See accompanying notes and accountants report -4
INNSBRUCK PROPERTY OWNERS ASSOCIAnON, INC. for the years ended December 31, 2004 and December 31, 2003 NOTES TO FINANCIAL STATEMENTS NOTE A. Nature of Operations Innsbruck Property Owners Association, Inc.., was incorporated November 11, 1985, as a not-for-profit corporation in the state ofgeorgia for the purposes ofoperating and maintaining the common property of the Innsbruck development. The association consists of 528 lots. The common property consists of 1.6 acres of land, clubhouse, pool, and 10 miles of paved roads. These roads have no easily ascertainable value and are not carried on the balance sheet. NOTE B. Summary of Significant Accounting Policies Accounts Receivable - Members Association members are subject to annual assessments to provide funds for the Association's operating expenses, future capital acquisitions, and major repairs and replacements. Accounts receivable at the balance sheet dates represent fees due from unit owners. Annual fees for the years ended were billed at $480.00 per unit owned. Assessments outstanding over one year are charged interest at 18%apr. The Association's policy is to retain legal counsel and place liens on the properties of owners whose assessments have passed a reasonable time period. Any excess assessments at year end are retained by the Association for use in the succeeding year. Interest Income Interest income is used to operate the common property as needed. Income Taxes The Association, upon election, qualifies as a tax-exempt homeowners association under Internal Revenue Code Section 528 for the tax years ended December 31, 2002 and 2001. Under that Section, the Association is not taxed on income and expenses related to its exempt purpose, which is the acquisition, construction, management, maintenance, and care of Association property. Where there is net nonexempt function income, which includes earned interest and revenues received from nonmembers, it is taxed at 30% by the federal government and at 6% by Georgia. However, the Association has used Section 277 of the Internal Revenue Code for the 2003 and 2004 years electing to apply excess income over expenses against subsequent tax year member assessments as provided by the IRS Revenue Ruling 70-604. (con't) - 5
INNSBRUCK PROPERTY OWNERS ASSOCIATION, INC. for the years ended December 31, 2004 and December 31, 2003 NOTES TO FINANCIAL STATEMENTS NOTE B. Summary of Significant Accounting Policies (con'o Property and Equipment Property and equipment acquired by the Association are recorded at cost and property contributed to the Association by the developer is recorded at estimated fair value at the date of contribution. Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. When property and equipment are sold or returned, the related cost and accumulated depreciation is removed from the accounts and any gain or loss is included in the results of operations. Depreciation The Association's furniture and equipment are depreciated using the straight-line method and tax basis depreciation systems. Useful lives are from 5 to 7 years for trailers, furniture, office equipment, machinery, other equipment, and amenities; 15 years for land improvements; and 39 years for buildings. Inventory The Association maintains no inventories at this time. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosure. Actual results could differ from those estimates. NOTE C. Allowance for doubtful accounts The balance of member assessments receivable of$23,219 is presented net ofallowance for doubtful accounts of$19,605. NOTE D. Contingencies, risk, and uncertainties Due to heavy use by contractors and other factors, the paved roads within the development require extensive maintenance. An uncertainty exists as to the remaining usable life of these roads. The board has taken steps to address this problem and amounts for re-paving are budgeted each year. - 6
INNSBRUCK PROPERTY OWNERS ASSOCIATION, INC.,.. for the years ended December 31, 2004 and December 31, 2003 NOTES TO FINANCIAL STATEMENTS NOTE E. Operating lease The Association leases the street lights within the development for $15 per pole. The association is additionally responsible for the associated electricity used for operation of these lights. For 2004, the aggregate cost for street lighting was $33,223. NOTE F. Long Term Notes Payables The association has a line of credit at Regions Bank. The limit is $250,000 and the balance at the financial statement date was $115,000. The interest rate is 4.25%. No amounts have been classified as current as interest only is required to be paid. The proceeds were used to build the clubhouse and pool and are secured by the common properties of the association. ' -7