St. Martha's Senior Housing Corporation d/b/a The Village ...financials.pvm.org/files/St. Martha's...

St. Martha's Senior Housing Corporationd/b/a The Village of St. Martha's

(a not-for-profit corporation)

HUD Project No. 044-EE104

Financial Report

with Supplemental Information

June 30, 2013

St. Martha's Senior Housing Corporationd/b/a The Village of St. Martha'sHUD Project No. 044-EE104

Certificate of Officers

We certify that we have examined the attached financial statements and supplementalinformation of HUD Project No. 044-EE104, St. Martha's Senior Housing Corporation d/b/a TheVillage of St. Martha's, and to the best of our knowledge and belief, the same is a true statementof the financial condition as of June 30, 2013.

______________________________Tim WintermutePresident

September 12, 2013

Date

______________________________Renardo EdwardsTreasurer

September 12, 2013

Date

ID# 20-8088875

Employer Identification Number


Management Agent's Certification

We certify that we have examined the attached financial statements and supplementalinformation of HUD Project No. 044-EE104, St. Martha's Senior Housing Corporation d/b/a TheVillage of St. Martha's, and to the best of our knowledge and belief, the same is a true statementof the financial condition as of June 30, 2013.

______________________________Cheryl CarneyManagement Agent Representative

September 12, 2013

Date

(248) 281-2020

Telephone Number

ID# 38-1387145

Management Company EmployerIdentification Number

Andrea Felice

Property Manager


Contents

Report Letter 1-2

Financial Statements

Balance Sheet 3-4

Statement of Activities 5-6

Statement of Changes in Net (Deficiency in) Assets 7

Statement of Cash Flows 8-9

Notes to Financial Statements 10-13

Supplemental Information 14

Report Letter 15

Balance Sheet Data 16-17

Statement of Activities Data 18-20

Statement of Changes in Net (Deficiency in) Assets Data 21

Statement of Cash Flows Data 22-23

Supplemental Information 24-25

Schedule of Changes in Fixed Asset Accounts 26

Schedule of Expenditures of Federal Awards 27

Computation of Surplus Cash 28

Report on Internal Control Over Financial Reporting and on Complianceand Other Matters Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards 29-31

Report on Compliance for the Major Federal Program; Report on InternalControl Over Compliance 32-35

Schedule of Findings and Questioned Costs 36-38

Independent Auditor's Report

To the Board of TrusteesSt. Martha's Senior Housing Corporation

d/b/a The Village of St. Martha's

Report on the Financial Statements

We have audited the accompanying financial statements of HUD Project No. 044-EE104, St.Martha's Senior Housing Corporation d/b/a The Village of St. Martha's (the "Organization"),which comprise the balance sheet as of June 30, 2013 and 2012 and the related statements ofactivities, changes in net (deficiency in) assets, and cash flows for the years then ended, and therelated notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financialstatements in accordance with accounting principles generally accepted in the United States ofAmerica; this includes the design, implementation, and maintenance of internal control relevantto the preparation and fair presentation of financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. Weconducted our audits in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standardsrequire that we plan and perform the audits to obtain reasonable assurance about whether thefinancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. Accordingly, we express no such opinion. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of significantaccounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

1

kim.brown

Southfield

kim.brown

Praxity



Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,the financial position of St. Martha's Senior Housing Corporation d/b/a The Village of St.Martha's as of June 30, 2013 and 2012 and the results of its operations and its cash flows for theyears then ended in accordance with accounting principles generally accepted in the UnitedStates of America.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report datedSeptember 12, 2013 on our consideration of St. Martha's Senior Housing Corporation d/b/a TheVillage of St. Martha's' internal control over financial reporting and on our tests of its compliancewith certain provisions of laws, regulations, contracts, grant agreements, and other matters. Thepurpose of that report is to describe the scope of our testing of internal control over financialreporting and compliance and the results of that testing, and not to provide an opinion on theinternal control over financial reporting or on compliance. That report is an integral part of anaudit performed in accordance with Government Auditing Standards in considering St. Martha'sSenior Housing Corporation d/b/a The Village of St. Martha's' internal control over financialreporting and compliance.

September 12, 2013By: Robert F. Long, CPA

Engagement Partner27400 Northwestern Highway

Southfield, MI 48037-0307

Federal ID Number: 38-1357951

Phone Number: (248) 352-2500

2


Balance Sheet

June 30, 2013 June 30, 2012

Assets

Current AssetsCash - Operations $ 331 $ 359Tenant accounts receivable 69 508Accounts receivable - HUD - 13,677

Prepaid expenses 341 2,927

Total current assets 741 17,471

Deposits - Held in TrustTenant deposits held in trust 12,233 13,506

Deposits - FundedEscrow deposits - 10,729

Replacement reserve 122,376 99,457

Total deposits - Funded 122,376 110,186

Fixed Assets

Land and land improvements 150,000 150,000

Buildings and building improvements 5,249,486 5,249,486

Office furniture and equipment 70,417 66,528

Maintenance equipment 9,660 9,660

Miscellaneous fixed assets 58,384 31,570

Total fixed assets 5,537,947 5,507,244

Accumulated depreciation (499,692) (354,348)

Net fixed assets 5,038,255 5,152,896

Total assets $ 5,173,605 $ 5,294,059

See Notes to Financial Statements. 3


Balance Sheet (Continued)

June 30, 2013 June 30, 2012

Liabilities and Net Assets

Current LiabilitiesAccounts payable - Operations (Note 3) $ 50,978 $ 59,384Accounts payable - Entity (Note 3) - 10,000Accrued wages payable 3,727 3,288

Accrued payroll taxes payable 325 276

Total current liabilities 55,030 72,948

Tenant deposits held in trust (contra) 11,222 12,190

Long-term Liabilities

Capital advance (Note 2) 5,175,900 5,175,900

Total liabilities 5,242,152 5,261,038

Net (Deficiency in) Assets

(Deficiency in) unrestricted net assets (68,547) 33,021

Total net (deficiency in) assets (68,547) 33,021

Total liabilities and net (deficiency in) assets $ 5,173,605 $ 5,294,059



Statement of Activities

Year Ended

June 30, 2013 June 30, 2012

Rent RevenueGross potential $ 161,600 $ 141,334

Tenant assistance payments 187,492 207,758

Total rent revenue (potential at 100%occupancy) 349,092 349,092

Vacancies

Apartments (22,865) (9,831)

Net rent revenue (rent revenue lessvacancies) 326,227 339,261

Financial RevenueProject operations 1 36

Investments - Replacement reserve 128 121

Total financial revenue 129 157

Other RevenueLaundry and vending revenue 1,586 1,858Gifts (Note 3) 29,478 3,828

Miscellaneous revenue 12,772 11,507

Total other revenue 43,836 17,193

Total revenue 370,192 356,611

Administrative ExpensesConventions and meetings 297 1,468Advertising and marketing 136 600Other renting expenses 694 488Office salaries 18,446 17,798Office expenses 747 970Management fee (Note 3) 22,080 21,528Manager or superintendent salaries 50,732 36,607Legal expenses 1,064 3,891Auditing expenses 6,900 6,400Bookkeeping fees/Accounting services (Note 3) 5,520 5,520Bad debts 345 3,771

Miscellaneous administrative expenses 2,081 2,940

Total administrative expenses 109,042 101,981



Statement of Activities (Continued)

Year Ended

June 30, 2013 June 30, 2012

Utilities ExpenseElectricity $ 28,791 $ 27,766Water 24,596 18,206

Gas 10,331 12,310

Total utilities expense 63,718 58,282

Operating and Maintenance ExpensesPayroll 23,811 20,484Supplies 3,950 1,216Contracts 58,625 57,110Operating and maintenance rent-free unit - 3,096Garbage and trash removal 1,371 1,242Heating/Cooling repairs and maintenance 2,424 575Snow removal 4,800 2,510

Miscellaneous operating and maintenance expenses 28,486 39,807

Total operating and maintenance expenses 123,467 126,040

Taxes and InsurancePayroll taxes (FICA) 6,561 5,474Property and liability insurance (hazard) 13,570 12,422

Health insurance and other employee benefits (Note 4) 10,033 9,118

Total taxes and insurance 30,164 27,014

Financial Expenses

Miscellaneous financial expenses 25 4

Total financial expenses 25 4

Total Costs of Operations BeforeDepreciation 326,416 313,321

Change in Net Assets BeforeDepreciation 43,776 43,290

Depreciation Expense 145,344 142,013

Change in Total Net Assets FromOperations $ (101,568) $ (98,723)



Statement of Changes in Net (Deficiency in) Assets

Net Assets - July 1, 2011 $ 131,744

Decrease in net assets (98,723)

Net Assets - June 30, 2012 33,021

Decrease in net assets (101,568)

Deficiency in Net Assets - June 30, 2013 $ (68,547)



Statement of Cash Flows

Year Ended

June 30, 2013 June 30, 2012

Cash Flows from Operating ActivitiesReceipts:

Rental $ 340,343 $ 337,042Interest 129 157Gifts 29,478 3,828

Other cash receipts 14,358 13,365

Total receipts 384,308 354,392

Disbursements:Administrative (25,939) (39,386)Management fee (20,240) (19,734)Utilities (63,718) (58,282)Salaries and wages (85,948) (68,354)Operating and maintenance (108,300) (120,614)Property insurance (13,570) (12,422)Miscellaneous taxes and insurance (14,008) (14,135)Tenant security deposits 305 3,697

Miscellaneous financial (25) (4)

Total disbursements (331,443) (329,234)

Net cash provided by operating activities 52,865 25,158

Cash Flows from Investing ActivitiesNet withdrawal from (deposit to) the mortgage escrow

account 10,729 (30)Net deposit to the reserve for replacement account (22,919) (21,414)Net purchase of fixed assets (30,703) (4,561)

Other investing activities (10,000) -

Net cash used in investing activities (52,893) (26,005)

Net Decrease in Cash (28) (847)

Cash - Beginning of year 359 1,206

Cash - End of year $ 331 $ 359



Statement of Cash Flows (Continued)

A reconciliation of change in net assets to net cash from operating activities is as follows:

Year Ended

June 30, 2013 June 30, 2012

Change in net assets $ (101,568) $ (98,723)Adjustments to reconcile change in net assets to net cash from

operating activities:Depreciation 145,344 142,013(Increase) decrease in assets:

Tenant accounts receivable 13,677 (2,657)Accounts receivable - HUD 439 438Prepaid expenses 2,586 457Cash restricted for tenant security deposits 1,273 1,974

(Decrease) increase in liabilities:Accounts payable - Operations (8,406) (21,788)Accrued liabilities 488 1,721

Tenant security deposits held in trust (968) 1,723

Net cash provided by operating activities $ 52,865 $ 25,158



Notes to Financial StatementsJune 30, 2013 and 2012

Note 1 - Nature of Business and Significant Accounting Policies

St. Martha's Senior Housing Corporation d/b/a The Village of St. Martha's (the"Organization") is a not-for-profit organization that owns and operates a 46-unit housingfacility project for elderly persons (the "Project"). The Project, located in Detroit,Michigan, is operated under HUD Section 202 of the National Housing Act and isregulated by the U.S. Department of Housing and Urban Development (HUD) withrespect to rental charges and operating methods.

The Organization is sponsored by Presbyterian Villages of Michigan (PVM). PVM is acomprehensive, diverse, and faith-based organization serving seniors in multiple settingssince 1945. Its mission, guided by its Christian heritage, is to serve seniors of all faithsand to create new possibilities for quality living. PVM's tradition of social accountabilityand servant leadership are further reflected in its statement of beliefs and values and itsvarious operational philosophies and practices.

Significant accounting policies are as follows:

Basis of Accounting - The Organization maintains its accounting records and preparesits financial statements on an accrual basis, which is in accordance with accountingprinciples generally accepted in the United States of America.

The accompanying schedule of expenditures of federal awards includes the federal grantactivity of St. Martha's Senior Housing Corporation d/b/a The Village of St. Martha's andis presented on the same basis of accounting as the basic financial statements. Theinformation in this schedule is presented in accordance with the requirements of OMBCircular A-133, Audits of States, Local Governments, and Non-profit Organizations.Therefore, some amounts presented in this schedule may differ from amountspresented in, or used in the preparation of, the basic financial statements.

Deposits - Funded - The funds held by the mortgagee represent a capital escrow andrestricted funds for a replacement reserve. The capital escrow was established with acapital investment of $10,000 as required by the Regulatory Agreement and pursuant toHUD regulations and is recorded in escrow deposits. In 2013, escrow fund matured andwas paid to PVM. The replacement reserve consists of deposits by the Organization tooffset specific expenses and to replace structural elements and mechanical equipmentupon the consent of HUD. Future monthly commitments for the funding of this reservetotal $1,900.

Deposits Held in Trust - In accordance with the Regulatory Agreement with HUD,the Organization is required to maintain a tenant security deposit trust account. Theamount must at all times be equal to or exceed the aggregate of all outstandingobligations to tenants for refundable security deposits. The tenant security depositsfund consists of cash.

10



Note 1 - Nature of Business and Significant Accounting Policies(Continued)

Regulatory Agreement - A Regulatory Agreement with HUD was signed inconnection with the mortgage note. No violations of this agreement were noted for theyears ended June 30, 2013 and 2012.

Classification of Net Assets - Net assets of the Organization are classified aspermanently restricted, temporarily restricted, or unrestricted, depending on thepresence and characteristics of donor-imposed restrictions limiting the Organization'sability to use or dispose of contributed assets or the economic benefits embodied inthose assets. All net assets of the Organization at June 30, 2013 and 2012 areconsidered unrestricted.

Federal Income Taxes - No provision for income taxes has been included in thefinancial statements since the Organization is exempt from federal income taxes underSection 501(c)(3) of the Internal Revenue Code.

Accounting principles generally accepted in the United States of America requiremanagement to evaluate tax positions taken by the Organization and recognize a taxliability if the Organization has taken an uncertain tax position that more likely than notwould not be sustained upon examination by the Internal Revenue Service or otherapplicable taxing authorities. Management has analyzed the tax positions taken bythe Organization and has concluded that as of June 30, 2013 and 2012, there are nouncertain tax positions taken or expected to be taken that would require recognition ofa liability or disclosure in the financial statements. The Organization is subject to routineaudits by taxing jurisdictions; however, there are currently no audits for any tax periodsin progress. Management believes it is no longer subject to income tax examinations foryears prior to 2010.

Tenant Accounts Receivable and Allowance for Bad Debts - Accounts receivablerepresents amounts due from tenants. Tenant accounts generally are collectible as longas a tenant is occupying the unit. When a tenant vacates the unit, any unpaid balanceremaining after application of the security deposit is charged to bad debt expense.There was no allowance for bad debts at June 30, 2013 and 2012.

Use of Estimates - The preparation of financial statements in conformity withaccounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenue and expenses during thereporting period. Actual results could differ from those estimates.

11



Note 1 - Nature of Business and Significant Accounting Policies(Continued)

Fixed Assets - Land, buildings, furnishings, and furniture and equipment are recordedat cost when purchased or appraised value if donated. Depreciation is computed on astraight-line basis over the estimated useful lives of the assets, which range from 5 yearsto 40 years.

Maintenance, repairs, and renewals that do not involve any substantial betterments arecharged to expense when incurred. Expenditures that increase the useful life of theproperty are capitalized.

Rental Income - Units that are designated for occupancy by eligible low-incometenants under a HUD Section 202 project rental assistance contract require tenants tocontribute a portion of the contract rent based on formulas prescribed by the U.SDepartment of Housing and Urban Development. Housing assistance payments arereceived for the balance of contract rent from HUD. The current contract will expire inAugust 2014.

Impairment of Assets - The Organization recognizes impairment of long-lived assetsused in operations when indicators of impairment are present and the undiscountedcash flows estimated to be generated by those assets are less than the assets' carryingamount. No impairment of the Organization's rental property has occurred.

Subsequent Events - The financial statements and related disclosures includeevaluation of events up through and including September 12, 2013, which is the date thefinancial statements were issued.

Note 2 - Capital Advance

The Organization obtained a capital advance from HUD which was used to assist infinancing the construction of the Project in accordance with the provisions of Section202 of the Housing Act of 1959. The capital advance at June 30, 2013 and 2012 is$5,175,900, bears no interest, and is not required to be repaid as long as the housingremains available to very low-income households and the aged and/or handicapped for aperiod of 40 years, ending March 2048. In addition, the Organization is subject to theadditional requirements of the HUD Section 202 program. If default occurs, then HUD,at its option, may accelerate the entire principal balance and charge interest. It is theOrganization's intent to comply with the program requirements. Based on the time andprovision requirements, the advance is recorded as a long-term liability. The capitaladvance is collateralized by the land and building of the Organization.

12



Note 3 - Related Party Transactions

Trustee appointments are approved by Presbyterian Villages of Michigan (PVM), arelated not-for-profit organization that is also the HUD-approved management agent.

As of June 30, 2013 and 2012, $50,978 and $59,384, respectively, is due to PVM forpayment of operating expenditures and is included in accounts payable.

In addition, during 2013 and 2012, the PVM Foundation provided the Organization with$29,478 and $3,828, respectively, in contribution support through the allocation of fundsraised by the Organization and matching grants from the PVM Foundation.

The property management agreement provides that a management fee in the amount of6.66 percent of gross rents collected be paid to PVM, limited to $40 per unit per month.In addition, the Organization pays accounting service fees to PVM, which are included inthe annual budget. The Organization paid management fees of $22,080 and $21,528 forthe years ended June 30, 2013 and 2012, respectively. Also, the Organization paidaccounting fees of $5,520 to PVM for both years ended June 30, 2013 and 2012.

The Organization had an amount due to PVM as the Organization's sponsor for theircapital investment of $10,000 as required by the Regulatory Agreement and pursuant toHUD regulations. This amount was repaid as of June 30, 2013 using funds from theescrow deposits account.

Note 4 - Retirement Plans

PVM and its affiliates maintain a tax-sheltered retirement plan qualified under InternalRevenue Code Section 403(b). Under this plan, qualified nonunion participants whocontribute may receive an employer discretionary match subject to sponsor boardapproval. The Organization's contributions to the plan for the years ended June 30,2013 and 2012 totaled $830 and $638, respectively.

Note 5 - Current Vulnerability Due to Certain Concentrations

The Organization's sole asset is St. Martha's Senior Housing Corporation d/b/a TheVillage of St. Martha's. The Organization's operations are concentrated in the seniorhousing market. In addition, the Organization operates in a heavily regulatedenvironment. The operations of the Organization are subject to the administrativedirectives, rules, and regulations of federal, state, and local regulatory agencies,including, but not limited to, HUD. Such administrative directives, rules, and regulationsare subject to change by an Act of Congress or an administrative change mandated byHUD. Such changes may occur with little notice or inadequate funding to pay for therelated cost, including additional administrative burden, to comply with a change.

13

Supplemental Information

14

Independent Auditor's Report on Supplemental Information



We have audited the financial statements of HUD Project No. 044-EE104, St. Martha's SeniorHousing Corporation d/b/a The Village of St. Martha's, as of and for the year ended June 30,2013. Our audit was performed for the purpose of forming an opinion on the financialstatements of St. Martha's Senior Housing Corporation d/b/a The Village of St. Martha's taken asa whole. The accompanying supplemental information, including the schedule of expendituresof federal awards, is presented for the purpose of additional analysis as required by HUD andthe U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments,and Non-Profit Organizations, and is not a required part of the financial statements. For thepurpose of electronic submission to the U.S. Department of Housing and Urban Development,Real Estate Assessment Center (REAC), the supplemental information is also deemed to includethe financial data template information as presented in the balance sheet and the statements ofactivities, changes in net (deficiency in) net assets, and cash flows. Such information is theresponsibility of management and was derived from and relates directly to the underlyingaccounting and other records used to prepare the financial statements. The information hasbeen subjected to the auditing procedures applied in the audit of the financial statements andcertain additional procedures, including comparing and reconciling such information directly tothe underlying accounting and other records used to prepare the financial statements or to thefinancial statements themselves, and other additional procedures in accordance with auditingstandards generally accepted in the United States of America. In our opinion, the information isfairly stated in all material respects in relation to the financial statements as a whole.

September 12, 2013

15

kim.brown

Southfield

kim.brown

Praxity


Balance Sheet DataJune 30, 2013

Assets

Current Assets1120 Cash - Operations $ 3311130 Tenant accounts receivable 69

1200 Prepaid expenses 341

1100T Total current assets 741

Deposits - Held in Trust1191 Tenant deposits held in trust 12,233

Deposits - Funded1320 Replacement reserve 122,376

1300T Total deposits - Funded 122,376

Fixed Assets

1410 Land and land improvements 150,000

1420 Buildings and building improvements 5,249,486

1465 Office furniture and equipment 70,417

1470 Maintenance equipment 9,660

1490 Miscellaneous fixed assets 58,384

1400T Total fixed assets 5,537,947

1495 Accumulated depreciation (499,692)

1400N Net fixed assets 5,038,255

1000T Total assets $ 5,173,605

16


Balance Sheet Data (Continued)June 30, 2013

Liabilities and Deficiency in Net Assets

Current Liabilities2110 Accounts payable - Operations $ 50,9782120 Accrued wages payable 3,7272121 Accrued payroll taxes payable 325

2122T Total current liabilities 55,030

2191 Tenant deposits held in trust (contra) 11,222

Long-term Liabilities2310 Capital advance 5,175,900

2000T Total liabilities 5,242,152

Deficiency in Net Assets3131 Deficiency in unrestricted net assets (68,547)

3130 Total deficiency in net assets (68,547)

2033T Total liabilities and deficiency in net assets $ 5,173,605

17


Statement of Activities DataYear Ended June 30, 2013

Rent Revenue5120 Gross potential $ 161,6005121 Tenant assistance payments 187,492

5100T Total rent revenue (potential at 100% occupancy) 349,092

Vacancies5220 Apartments (22,865)

5200T Total vacancies (22,865)

5152N Net rent revenue (rent revenue less vacancies) 326,227

Financial Revenue5410 Project operations 15440 Investments - Replacement reserve 128

5400T Total financial revenue 129

Other Revenue5910 Laundry and vending revenue 1,5865970 Gifts 29,4785990 Miscellaneous revenue 12,772

5900T Total other revenue 43,836

5000T Total revenue 370,192

Administrative Expenses6203 Conventions and meetings 2976210 Advertising and marketing 1366250 Other renting expenses 6946310 Office salaries 18,4466311 Office expenses 7476320 Management fee 22,0806330 Manager or superintendent salaries 50,7326340 Legal expenses 1,0646350 Auditing expenses 6,9006351 Bookkeeping fees/Accounting services 5,5206370 Bad debts 3456390 Miscellaneous administrative expenses 2,081

6263T Total administrative expenses 109,042

18


Statement of Activities Data (Continued)Year Ended June 30, 2013

Utilities Expense6450 Electricity $ 28,7916451 Water 24,5966452 Gas 10,331

6400T Total utilities expense 63,718

Operating and Maintenance Expenses6510 Payroll 23,8116515 Supplies 3,9506520 Contracts 58,6256525 Garbage and trash removal 1,3716546 Heating/Cooling repairs and maintenance 2,4246548 Snow removal 4,8006590 Miscellaneous operating and maintenance expenses 28,486

6500T Total operating and maintenance expenses 123,467

Taxes and Insurance6711 Payroll taxes (FICA) 6,5616720 Property and liability insurance (hazard) 13,5706723 Health insurance and other employee benefits 10,033

6700T Total taxes and insurance 30,164

Financial Expenses6890 Miscellaneous financial expenses 25

6800T Total financial expenses 25

6000T Total Costs of Operations Before Depreciation 326,416

5060T Change in Net Assets Before Depreciation 43,776

6600 Depreciation Expense 145,344

3250 Change in Total Net Assets from Operations $ (101,568)

19


Statement of Activities Data (Continued)Supplemental InformationYear Ended June 30, 2013

S1000-010 1 Total principal required under the mortgage, even if payments undera workout agreement are less or more than those required under themortgage $ 0

S1000-020 2 Replacement reserve deposits required by the Regulatory Agreementor amendments thereto, even if payments may be temporarilysuspended or waived 22,800

S1000-030 3 Replacement reserve or residual receipt releases that are included asexpense items on this profit and loss statement 0

S1000-040 4 Project improvement reserve releases under the flexible subsidyprogram that are included as expense items on this profit and lossstatement 0

20


Statement of Changes in Net (Deficiency in) Assets DataYear Ended June 30, 2013

S1100-060 Net Assets - July 1, 2012 $ 33,021

3250 Decrease in net assets (101,568)

3130 Deficiency in Net Assets - June 30, 2013 $ (68,547)

21


Statement of Cash Flows DataYear Ended June 30, 2013

Cash Flows from Operating ActivitiesReceipts:

S1200-010 Rental $ 340,343S1200-020 Interest 129S1200-025 Gifts 29,478

S1200-030 Other cash receipts 14,358

S1200-040 Total receipts 384,308

Disbursements:S1200-050 Administrative (25,939)S1200-070 Management fee (20,240)S1200-090 Utilities (63,718)S1200-100 Salaries and wages (85,948)S1200-110 Operating and maintenance (108,300)S1200-140 Property insurance (13,570)S1200-150 Miscellaneous taxes and insurance (14,008)S1200-160 Tenant security deposits 305

S1200-220 Miscellaneous financial (25)

S1200-230 Total disbursements (331,443)

S1200-240 Net cash provided by operating activities 52,865

Cash Flows from Investing ActivitiesS1200-245 Net withdrawal from the mortgage escrow account 10,729S1200-250 Net deposit to the reserve for replacement account (22,919)S1200-330 Net purchase of fixed assets (30,703)

S1200-340 Other investing activities (10,000)

S1200-350 Net cash used in investing activities (52,893)

S1200-470 Net Decrease in Cash (28)

S1200-480 Cash - Beginning of year 359

S1200T Cash - End of year $ 331

22


Statement of Cash Flows Data (Continued)Year Ended June 30, 2013

A reconciliation of change in net assets to net cash from operating activities is as follows:

3250 Change in net assets $ (101,568)Adjustments to reconcile change in net assets to net cash from

operating activities:6600 Depreciation 145,344

Decrease in assets:S1200-490 Tenant accounts receivable 13,677S1200-500 Accounts receivable - Other 439S1200-520 Prepaid expenses 2,586S1200-530 Cash restricted for tenant security deposits 1,273

(Decrease) increase in liabilities:S1200-540 Accounts payable - Operations (8,406)S1200-560 Accrued liabilities 488

S1200-580 Tenant security deposits held in trust (968)

S1200-610 Net cash provided by operating activities $ 52,865

23


Supplemental InformationYear Ended June 30, 2013

1. Schedule of Reserve for Replacements - In accordance with the provisions of theRegulatory Agreement, restricted cash is held by Huntington Bank to be used for replacementof property with the approval of HUD as follows:

1320P Balance - July 1, 2012 $ 99,457

1320DT Monthly deposits ($1,900 x 12) 22,800

1320INT Interest 128

1320OWT Other withdrawals - Bank service charges (9)

1320 Balance - June 30, 2013 $ 122,376

2. Schedule of Residual Receipts - N/A

3. Computation of Surplus Cash - Form HUD 93486 - See attached

4. Schedule of Changes in Fixed Asset Accounts - See attached

5. Schedule of 5300 Accounts - N/A

6. Schedule of 6900 Accounts - N/A

7. Nursing Home Data - N/A

8. Detail of Accounts:

5990 Cable and satellite television $ 10,777Beauty shop 435Miscellaneous 1,372Damage 188

5990 Total $ 12,772

6390 Mileage $ 275Dues and licenses 700Bank charges 1,030Miscellaneous office expenses 76

6390 Total $ 2,081

24


Supplemental Information (Continued)Year Ended June 30, 2013

8. Detail of Accounts (Continued):

6590 Foundation reimbursement $ 1,874Repairs and maintenance 132System maintenance, repair, and support 8,095Connectivity 15,892Software 1,869Minor system purchases 588Computer user training 36

6590 Total $ 28,486

S1200-340 Repayment of capital investment $ (10,000)

25


Schedule of Changes in Fixed Asset AccountsYear Ended June 30, 2013

Assets Accumulated Depreciation

Balance

July 1, 2012 Additions Deductions

Balance

June 30, 2013

Balance

July 1, 2012

Current

Provision Deductions

Balance

June 30, 2013

Net BookValue

June 30, 2013

1410 Land and land improvements $ 150,000 $ - $ - $ 150,000 $ - $ - $ - $ - $ 150,0001420 Buildings and building improvements 5,249,486 - - 5,249,486 328,093 131,237 - 459,330 4,790,1561465 Office furniture and equipment 66,528 3,889 - 70,417 16,632 6,847 - 23,479 46,9381470 Maintenance equipment 9,660 - - 9,660 2,415 966 - 3,381 6,2791490 Miscellaneous fixed assets 31,570 26,814 - 58,384 7,208 6,294 - 13,502 44,882

Total $ 5,507,244 $ 30,703 $ - $ 5,537,947 $ 354,348 $ 145,344 $ - $ 499,692 $ 5,038,255

Fixed Asset Addition Detail:

Office furniture and equipment:Recumbent bike $ 1,994Patio benches 1,895

Miscellaneous fixed assets -Security camera 26,814

Total $ 30,703

26


Schedule of Expenditures of Federal AwardsYear Ended June 30, 2013

Federal Agency/Pass-through Agency/Program TitleCFDA

NumberFederal

Expenditures

U.S. Department of Housing and Urban Development: Supportive Housing for the Elderly - Capital Advance 14.157 $ 5,175,900Supportive Housing for the Elderly - Project Rental Assistance

Contract 14.157 187,492

Total federal awards $ 5,363,392

27


Computation of Surplus CashYear Ended June 30, 2013

S1300-010 Cash $ 12,564

S1300-040 Total Cash 12,564

Current Obligations

S1300-075 Accounts Payable - 30 Days 50,978

S1300-100 Accrued Expenses (Not Escrowed) 4,052

2191 Tenant/Patient Deposits Held In Trust (Contra) 11,222

S1300-140 Total Current Obligations 66,252

S1300-150 Surplus Cash (Deficiency) $ (53,688)

S1300-210 Deposit Due Residual Receipts $ -

28

Report on Internal Control Over FinancialReporting and on Compliance and OtherMatters Based on an Audit of Financial

Statements Performed in Accordance withGovernment Auditing Standards

29

Report on Internal Control Over Financial Reporting and on Complianceand Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards


To Management and the Board of TrusteesSt. Martha's Senior Housing Corporation


We have audited, in accordance with the auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards issued by the Comptroller General of the United States, the financialstatements of St. Martha's Senior Housing Corporation d/b/a The Village of St. Martha's (the"Organization"), which comprise the balance sheet as of June 30, 2013 and the relatedstatements of activities, changes in net (deficiency in) assets, and cash flows for the year thenended, and related notes to the financial statements and have issued our report thereon datedSeptember 12, 2013.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered St. Martha'sSenior Housing Corporation d/b/a The Village of St. Martha's' internal control over financialreporting (internal control) to determine the audit procedures that are appropriate in thecircumstances for the purpose of expressing our opinions on the financial statements, but notfor the purpose of expressing an opinion on the effectiveness of the Organization's internalcontrol. Accordingly, we do not express an opinion on the effectiveness of the Organization'sinternal control.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, toprevent or detect and correct misstatements on a timely basis. A material weakness is adeficiency, or a combination of deficiencies, in internal control such that there is a reasonablepossibility that a material misstatement of the entity's financial statements will not be preventedor detected and corrected on a timely basis. A significant deficiency is a deficiency, or acombination of deficiencies, in internal control that is less severe than a material weakness, yetimportant enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the firstparagraph of this section and was not designed to identify all deficiencies in internal control thatmight be material weaknesses or significant deficiencies. Given these limitations, during our auditwe did not identify any deficiencies in internal control that we consider to be materialweaknesses. However, material weaknesses may exist that have not been identified.

30

kim.brown

Southfield

kim.brown

Praxity

To Management and the Board of TrusteesSt. Martha's Senior Housing Corporation


Compliance and Other Matters

As part of obtaining reasonable assurance about whether St. Martha's Senior HousingCorporation d/b/a The Village of St. Martha's' financial statements are free from materialmisstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts, and grant agreements, noncompliance with which could have a direct and materialeffect on the determination of financial statement amounts. However, providing an opinion oncompliance with those provisions was not an objective of our audit and, accordingly, we do notexpress such an opinion. The results of our tests disclosed no instances of noncompliance orother matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control andcompliance and the results of that testing, and not to provide an opinion on the effectiveness ofthe Organization's internal control or on compliance. This report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the Organization'sinternal control and compliance. Accordingly, this communication is not suitable for any otherpurpose.

Southfield, MichiganSeptember 12, 2013

31

Report on Compliance for the MajorFederal Program; Report on Internal

Control Over Compliance

32

Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance




Report on Compliance for the Major Federal Program

We have audited St. Martha's Senior Housing Corporation d/b/a The Village of St. Martha's' (the"Organization") compliance with the types of compliance requirements described in the U.S.Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that couldhave a direct and material effect on its major federal program for the year ended June 30, 2013.St. Martha's Senior Housing Corporation d/b/a The Village of St. Martha's' major federal programis identified in the summary of auditor's results section of the accompanying schedule of findingsand questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts,and grants applicable to its federal program.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for St. Martha's Senior HousingCorporation d/b/a The Village of St. Martha's' major federal program based on our audit of thetypes of compliance requirements referred to above.

We conducted our audit of compliance in accordance with auditing standards generally acceptedin the United States of America; the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States; andOMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Thosestandards and OMB Circular A-133 require that we plan and perform the audit to obtainreasonable assurance about whether noncompliance with the types of compliance requirementsreferred to above that could have a direct and material effect on a major federal programoccurred. An audit includes examining, on a test basis, evidence about St. Martha's SeniorHousing Corporation d/b/a The Village of St. Martha's' compliance with those requirements andperforming 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 themajor federal program. However, our audit does not provide a legal determination of St.Martha's Senior Housing Corporation d/b/a The Village of St. Martha's' compliance.

33

kim.brown

Praxity

kim.brown

Southfield



Opinion on the Major Federal Program

In our opinion, St. Martha's Senior Housing Corporation d/b/a The Village of St. Martha'scomplied, in all material respects, with the types of compliance requirements referred to abovethat could have a direct and material effect on its major federal program for the year ended June30, 2013.

Report on Internal Control Over Compliance

The management of St. Martha's Senior Housing Corporation d/b/a The Village of St. Martha's isresponsible for establishing and maintaining effective internal control over compliance with thetypes of compliance requirements referred to above. In planning and performing our audit ofcompliance, we considered St. Martha's Senior Housing Corporation d/b/a The Village of St.Martha's' internal control over compliance with the types of requirements that could have adirect and material effect on its major federal program to determine the auditing proceduresthat are appropriate in the circumstances for the purpose of expressing an opinion oncompliance for the major federal program and to test and report on internal control overcompliance in accordance with OMB Circular A-133, but not for the purpose of expressing anopinion on the effectiveness of internal control over compliance. Accordingly, we do not expressan opinion on the effectiveness of the Organization's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a controlover compliance does not allow management or employees, in the normal course of performingtheir assigned functions, to prevent or detect and correct noncompliance with a type ofcompliance requirement of a federal program on a timely basis. A material weakness in internalcontrol over compliance is a deficiency, or a combination of deficiencies, in internal control overcompliance such that there is a reasonable possibility that material noncompliance with a type ofcompliance requirement of a federal program will not be prevented or detected and correctedon a timely basis. A significant deficiency in internal control over compliance is a deficiency, or acombination of deficiencies, in internal control over compliance with a type of compliancerequirement of a federal program that is less severe than a material weakness in internal controlover 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 inthe first paragraph of this section and was not designed to identify all deficiencies in internalcontrol over compliance that might be material weaknesses or significant deficiencies. We didnot identify any deficiencies in internal control over compliance that we consider to be materialweaknesses. However, material weaknesses may exist that have not been identified.

34



The purpose of this report on internal control over compliance is solely to describe the scope ofour testing of internal control over compliance and the results of that testing based on therequirements of OMB Circular A-133. Accordingly, this report is not suitable for any otherpurpose.

Southfield, MichiganSeptember 12, 2013

35

Schedule of Findings and Questioned Costs

36


Schedule of Findings and Questioned CostsYear Ended June 30, 2013

Section I - Summary of Auditor's Results

Financial Statements

Type of auditor's report issued: Unqualified

Internal control over financial reporting:

Material weakness(es) identified? Yes X No

Significant deficiency(ies) identified that arenot considered to be material weaknesses? Yes X No

Noncompliance material to financial statements noted? Yes X None reported

Federal Awards

Internal control over major programs:

Material weakness(es) identified? Yes X No

Significant deficiency(ies) identified that arenot considered to be material weaknesses? Yes X None reported

Type of auditor's report issued on compliance for major programs: Unqualified

Any audit findings disclosed that are required to be reported in accordance withSection 510(a) of Circular A-133? Yes X No

Identification of major program:

CFDA Numbers Name of Federal Program or Cluster Opinion

14.157 Supportive Housing for the Elderly Unqualified

Dollar threshold used to distinguish between type A and type B programs: $300,000

Auditee qualified as low-risk auditee? X Yes No

37


Schedule of Findings and Questioned Costs (Continued)Year Ended June 30, 2013

Section II - Financial Statement Audit Findings

ReferenceNumber Finding

QuestionedCosts

CurrentYear: None


QuestionedCosts

PriorYear: None

Section III - Federal Program Audit Findings


QuestionedCosts

CurrentYear: None


QuestionedCosts

PriorYear: None

38

St. Martha's Senior Housing Corporation d/b/a The Village ...financials.pvm.org/files/St. Martha's...

Documents

Transcript of St. Martha's Senior Housing Corporation d/b/a The Village ...financials.pvm.org/files/St. Martha's...