FY2004 Audit - Webformat
27 Pages
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FY2004 Audit - Webformat

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27 Pages
English

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INDEPENDENT AUDITOR'S REPORT The Industrial Commission State of North Dakota Bismarck, North Dakota We have audited the accompanying financial statements of the business-type activities of the North Dakota Housing Finance Agency, a department of the State of North Dakota, as of and for the year ended June 30, 2004, which collectively comprise the North Dakota Housing Finance Agency’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of North Dakota Housing Finance Agency’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The June 30, 2003 financial statements were audited by other auditors whose report, dated August 15, 2003, expressed an unqualified opinion on those statements. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant ...

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    INDEPENDENT AUDITOR'S REPORT
    The Industrial Commission State of North Dakota Bismarck, North Dakota   We have audited the accompanying financial statements of the business-type activities of the North Dakota Housing Finance Agency, a department of the State of North Dakota, as of and for the year ended June 30, 2004, which collectively comprise the North Dakota Housing Finance Agencys basic financial statements as listed in the table of contents. These financial statements are the responsibility of North Dakota Housing Finance Agencys management. Our responsibility is to express an opinion on these financial statements based on our audit. The June 30, 2003 financial statements were audited by other auditors whose report, dated August 15, 2003, expressed an unqualified opinion on those statements.  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 inGovernment 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.  As discussed in Note 1, the financial statements of North Dakota Housing Finance Agency are intended to present the financial position, the changes in financial position, and the cash flows of only that portion of the business-type activities of the State of North Dakota that is attributable to the transactions of North Dakota Housing Finance Agency. They do not purport to, and do not, present fairly the financial position of the State of North Dakota as of June 30, 2004, and the changes in its financial position and cash flows, where applicable, for the years then ended in conformity with accounting principles generally accepted in the United States of America.  In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activities of North Dakota Housing Finance Agency as of June 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended, in conformity with accounting principles generally accepted in the United States of America.  In accordance withGovernment Auditing Standards, we have also issued a report dated September 8, 2004 on our consideration of North Dakota Housing Finance Agency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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standardsand should be considered in assessing the results of our audit.  
 
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The Managements Discussion and Analysis (MD&A) on pages 3 through 6 are not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.  Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the North Dakota Housing Finance Agencys basic financial statements. The combining schedules and supplementary information as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is also presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations, is also not a and required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.  
 BRADY, MARTZ & ASSOCIATES, P.C.  September 8, 2004
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NORTH DAKOTA HOUSING FINANCE AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2004
  The discussion and analysis of the financial performance of the North Dakota Housing Finance Agency (Agency) that follows is meant to provide additional insight into the Agency’s activities for the year ended June 30, 2004. Please read it in conjunction with the Agency’s financial statements and footnotes, which are presented within this report.  North Dakota Housing Bonds issued by North Dakota Housing Finance Agency are revenue bonds that are neither a general nor a moral obligation of the state but are a general obligation of the Agency.  Financial Highlights   Mortgage loans receivable has decreased $47,248 to $503,166 from the previous year. This is the net change of $101,936 in loans being purchased and $149,184 of repaid principal and amortized loan discounts.  Bonds payable have decreased by $75,960 with $101,634 new bonds issued, $177,594 bonds called or matured.  Net income of $2,319 is down from the prior year by $5,611 as a result of lower investment earnings on the more recent series of bonds and acceleration of bond financing costs due to the increase in bond calls from prepayments.  Income from operations of $39,327 down $7,510 from the prior year as a result of fewer mortgages outstanding and lower interest rates on recent series investment contracts.  Operating expenses is $36,359 down $6,218 from the previous year due to fewer bonds outstanding resulting in less interest expense.  Overview of the Financial Statements  This annual financial report consists of two parts: Management’s Discussion and Analysis (this section) and the Basic Financial Statements. The financial statements of the Agency provide accounting information similar to that of many other business entities. The Balance Sheet summarizes the assets and liabilities, with the difference between the two reported as net assets. The Statement of Revenues, Expenses and Changes in Fund Net Assets summarizes the Agency’s operating performance for the year. The Statement of Cash Flows summarizes the flow of cash through the Agency.
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS – page 2
    CONDENSED BALANCE SHEETS –JUNE 30, 2004 AND 2003  2004 2003 ASSETS Unrestricted current assets Restricted current assets Total current assets Unrestricted noncurrent assets Restricted noncurrent assets Total assets
   
LIABILITIES Current liabilities Noncurrent liabilities NET ASSETS Invested in capital assets Restricted for pledged assets Restricted for debt service Unrestricted Total liabilities and net assets
 
$ 6,813  158,038  164,851  1,926  525,738  527,664 $ 692,515
$ 29,756  591,692  621,448
 35  18,037  45,457  7,538  71,067 $ 692,515
$ 10,540  184,506  195,046  2,047  573,904  575,951 $ 770,997
$ 39,355  662,894  702,249
 56  17,877  40,215  10,600  68,748 $ 770,997
Change
$ (3,727)  (26,468)  (30,195)  (121)  (48,166)  (48,287) $ (78,482)
$ (9,599)  (71,202)  (80,801)
 (21)  160  5,242  (3,062)  2,319 $ (78,482)
Percentage
 (35) %  (14)  (15)  (6)  (8)  (8)  (10) %
 (24) %  (11)  (12)
 (38)  1  13  (29)  3  (10) %
 
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$ 32,616  5,212  1,499  39,327
 29,615  416  2,346  2,165  1,796  21  36,359  2,968
$ 39,659  5,610  1,568  46,837
 36,674  247  1,865  2,013  1,748  30  42,577  4,260
$ (7,043)  (398)  (69)  (7,510)
 (7,059)  169  481  152  48  (9)  (6,218)  (1,292)
 (18) %  (7)  (4)  (16)
 (19)  68  26  8  3  (30)  (15)  (30)
 MANAGEMENT’S DISCUSSION AND ANALYSIS – page 3    CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS – YEAR ENDED JUNE 30, 2004, AND 2003  2004 2003 Change Percentage OPERATING REVENUES Mortgage interest income Investment income Fee income Total revenues OPERATING EXPENSES Interest expense Agency grants Amortization of deferred bond financing costs Administrative and operating expenses Salaries and benefits Depreciation Total expenses OPERATING INCOME NONOPERATING REVENUES (EXPENSES) HUD Section 8 Assistance Investment income HUD Section 8 Assistance INCOME BEFORE TRANSFERS TRANSFERS Transfer to Information Technology Department 24 Transfer to Industrial Commission 25 CHANGE IN NET ASSETS 2,319 TOTAL NET ASSETS, BEGINNING OF YEAR 68,748 TOTAL NET ASSETS, END OF YEAR $ 71,067
 
 
 13,289  (600)  (13,289)  (600)
 2,368
 13,166  3,694  (13,166)  3,694
 7,954
-                          24  7,930  60,818 $ 68,748
 123  (4,294)  (123)  (4,294)
 (5,586)
 24  1  (5,611)  7,930 $ 2,319
 1  (116)  1  (116)
 (70)
 100  4  (71)  13  3 %
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS – page 4
    Investment Income  Operating interest income is comprised of the sum of interest earnings on funds held in trust for the Home Mortgage Finance Program. These funds are invested in investment contracts as reported in Notes 1 and 2 to the financial statements. The decline in interest earnings was due to the decline in the amount of funds invested.  Non-operating interest income represents earnings on the Agency’s investments. These funds are invested in US Treasury securities or the Bank of North Dakota money market and demand accounts. The decrease in interest earnings was due to the decrease in market value of the treasuries.  Budgetary Information  As discussed in Note 1 to the financial statements, the North Dakota Housing Finance Agency is funded under a biennial appropriation approved by the state legislature. The biennial appropriation does not provide any state General Fund dollars. Hence, total Agency appropriation is funded from Agency operations.  Contacting the North Dakota Housing Finance Agency’s Financial Management  The information in this report is intended to provide the reader with an overview of the Agency’s operations along with the Agency’s accountability for those operations. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the North Dakota Housing Finance Agency, PO Box 1535, Bismarck, ND 58502-1535.   
 
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2004
NORTH DAKOTA HOUSING FINANCE AGENCY BALANCE SHEETS JUNE 30, 2004, AND 2003 (In Thousands)   ASSETS CURRENT ASSETS - UNRESTRICTED Cash and cash equivalents Investments Due from State Agencies Receivables Interest Investments Due from HUD Othe Prepaid expenses Total unrestricted current assets CURRENT ASSETS - RESTRICTED Cash and cash equivalents Receivables Current portion of loans receivable Interest Loans Investments Total restricted current assets Total current assets NONCURRENT ASSETS - UNRESTRICTED Service release premium, ne Equipment, ne Total unrestricted noncurrent assets NONCURRENT ASSETS - RESTRICTED Loans receivable, net of current portion Investments Deferred bond financing costs, ne Total restricted noncurrent assets Total noncurrent assets Total assets
 
The accompanying notes are an integral part of these financial statements.
$ 1,486  4,164  41  239  349  50  3  6,813  145,655  9,851  2,465  67  158,038  164,851  1,891  35  1,926  493,315  26,583  5,840  525,738  527,664 $ 692,515
2003
$ 2,648  6,723  78  239  356  48  12  10,54  171,129  10,399  2,902  76  184,506  195,046  1,991  56  2,047  540,015  26,69  7,195  573,90  575,951 $ 770,997
 
 
      LIABILITIES CURRENT LIABILITIES Due to HUD Due to state agencies Current portion of rebate due to IRS Othe Current portion of compensated absences Current portion of bonds payable Accrued interest Funds held in trust Deferred credits Total current liabilities NONCURRENT LIABILITIES Compensated absences, net of current portion Rebate due to IRS, net of current portion Bonds payable, net of current portion Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets Restricted for pledged assets Restricted for debt service Unrestricted Total net assets Total liabilities and net assets
  
 
2004
$ 313  31  95  622  110  8,870  13,318  5,473  65  29,756  38  1,885  589,769  591,692  621,448  35  18,037  45,457  7,538  71,067  $ 692,515
2003
$ 301  15  1,306  548  91  14,505  16,818  5,695  76  39,355  62  2,738  660,09  662,89  702,249   56  17,877  40,215  10,600  68,748  $ 770,997
 
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NORTH DAKOTA HOUSING FINANCE AGENCY STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS YEARS ENDED JUNE 30, 2004, AND 2003 (In Thousands)   OPERATING REVENUES Mortgage interest income Investment income Fee income Total revenues OPERATING EXPENSES Interest expense Agency grants Amortization of deferred bond financing costs Administrative and operating expenses Salaries and benefits Depreciation Total expenses OPERATING INCOME NONOPERATING REVENUES (EXPENSES) HUD grants Investment income HUD grants INCOME BEFORE TRANSFERS TRANSFERS Transfer to Information Technology Department Transfer to Industrial Commission CHANGE IN NET ASSETS TOTAL NET ASSETS, BEGINNING OF YEAR TOTAL NET ASSETS, END OF YEAR     
The accompanying notes are an integral part of these financial statements.
2004 $ 32,616  5,212  1,499  39,327  29,615  416  2,346  2,165  1,796  21  36,359  2,968  13,289  (600)  (13,289)  (600)  2,368  24  25  2,319  68,748 $ 71,067
2003 $ 39,659  5,610  1,568  46,837  36,674  247  1,865  2,013  1,748  30  42,577  4,260  13,166  3,694  (13,166)  3,694  7,954                  - 24  7,930  60,818 $ 68,748
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NORTH DAKOTA HOUSING FINANCE AGENCY STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2004, AND 2003 (In Thousands)
  OPERATING ACTIVITIES Receipts from customers Payment of grants Payments to service providers State agencies Other Payments to employees Payment of rebate to IRS Net cash provided by operating activities NONCAPITAL FINANCING ACTIVITIES Principal payments on notes and bonds Proceeds from note borrowings and bond issuance Interest paid on notes and bonds Payment of bond issue costs Transfer to Information Technology Department Transfer to Industrial Commission Net cash used for noncapital financing activities INVESTING ACTIVITIES Proceeds from sale of investments Interest received from investments Net cash provided by (used for) investing activities INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR   
(continued on next page)
2004 $ 191,196  (396)  (50)  (103,938)  (1,793)  (1,205)  83,814  (177,594)  101,634  (33,115)  (990)  (24)  (25)  (110,114)  264  (600)  (336)  (26,636)  173,777 $ 147,141
2003 $ 189,669  (257)  (143)  (75,785)  (1,744)  (1,630)  110,110  (140,411)  101,695  (39,337)  (778) -                 (24)  (78,855)  245  3,694  3,939  35,194  138,583 $ 173,777
 
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NORTH DAKOTA HOUSING FINANCE AGENCY STATEMENTS OF CASH FLOWS - Continued YEARS ENDED JUNE 30, 2004, AND 2003 (In Thousands)
  RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income Adjustments to reconcile operating income to net cash from operating activities Depreciation Amortization Deferred fee income/loan discounts DBFC and original issue discounts Service release premium Fair value (increases) of investments Loan principal repayments Loan purchases Interest received on mortgage loans Reclassification of interest income/expense to other activities Changes in assets and liabilities Due from HUD Due from State Agencies Other receivables Prepaid expenses Due to HUD Due to State Agencies Other liabilities Rebate due to IRS Funds held in trust Deferred credits and revenues Net cash provided by operating activities
  
The accompanying notes are an integral part of these financial statements.  
2004 $ 2,968  21  (961)  2,346  100  2,405  150,145  (101,936)  32,616  (2,554)  7  37  (20)  (17)  11  16  69  (1,205)  (221)  (13) $ 83,814
2003 $ 4,260  30  (946)  1,864  288  (1,903)  142,058  (69,855)  39,659  (2,433)  27  (48)  (27)  4  (37)  7  63  (1,630)  (1,272)  1 $ 110,110
 
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