Audited Financial Statements - FORHA

[Pages:15]FAIR OAKS RANCH HOMEOWNERS ASSOCIATION, INC.

FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION

FOR THE YEAR ENDED DECEMBER 31, 2018

TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT ................................................................................................ 1 BALANCE SHEET ................................................................................................................................. 3 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE.......................... 4 STATEMENT OF CASH FLOWS .......................................................................................................... 6 NOTES TO FINANCIAL STATEMENTS .............................................................................................. 8 REQUIRED SUPPLEMENTARY INFORMATION ............................................................................. 12

FUTURE MAJOR REPAIRS AND REPLACEMENTS ...................................................................... 13

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Members Fair Oaks Ranch Homeowners Association, Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of Fair Oaks Ranch Homeowners Association, Inc., which comprise the balance sheet as of December 31, 2018, and the related statement of revenues, expenses, and changes in fund balances, and cash flow for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit 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 association'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 association's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

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Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fair Oaks Ranch Homeowners Association, Inc. as of December 31, 2018 and the results of its operations and its cash flow for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the supplementary information on future major repairs and replacements on page 13 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Financial Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Armstrong, Vaughan & Associates, P.C. April 4, 2019

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FAIR OAKS RANCH HOMEOWNERS ASSOCIATION, INC. BALANCE SHEET

DECEMBER 31, 2018

ASSETS

Operating Fund

Replacement Fund

Total

Current Assets: Cash and Cash Equivalents Certificates of Deposit Accounts Receivable Allowance for Doubtful Accounts Prepaid Insurance Total Current Assets

$ 185,957 $ -

20,184 (687) 7,873

213,327

64,221

64,221

$ 185,957 64,221 20,184 (687) 7,873 277,548

Property and Equipment: Park Equipment Pavilion Accumulated Depreciation Total Property and Equipment

269,989 75,880 (66,737) 279,132

-

269,989

-

75,880

-

(66,737)

-

279,132

TOTAL ASSETS

$ 492,459 $ 64,221 $ 556,680

LIABILITIES AND FUND BALANCE

Liabilities: Accounts Payable Federal Income Tax Payable Payroll Liabilities Prepaid Assessments Accrued Compensated Absences Total Liabilities

$ 7,061 $ 1,229 1,890 12,801 2,567 25,548

- $ 7,061

-

1,229

-

1,890

-

12,801

-

2,567

-

25,548

Fund Balance

466,911

64,221

531,132

TOTAL LIABILITIES AND FUND BALANCE

$ 492,459 $ 64,221 $ 556,680

The accompanying notes are an integral part of the financial statements. 3

FAIR OAKS RANCH HOMEOWNERS ASSOCIATION, INC. STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE

FOR THE YEAR ENDED DECEMBER 31, 2018

REVENUES

Assessments Transfer Fees Resale Certificates Unit Billing Fees Late Fees Donations Architectural Fees Miscellaneous Income Interest Income

TOTAL REVENUES

EXPENSES Administration Expenses:

Office Salaries Legal and Professional Insurance Administrative Expense Depreciation Expense Meeting Expenses Website Expense Payroll and Taxes Bank Charges Program Expenses Telephone Expense Accounting Federal Income Tax

Total Administration Expenses

Common Area Expenses: Projects - Parks and Trails Property Management Projects - Office Remodel Signage Cleaning Contract Total Common Area Expenses

TOTAL EXPENSES

Operating Fund

Replacement Fund

Total

$ 261,965 $ 71,190 31,700 10,304 3,603 4,845 600 249 1,438 385,894

- $ 261,965

-

71,190

-

31,700

-

10,304

-

3,603

-

4,845

-

600

-

249

918

2,356

918

386,812

85,362 33,323 27,194 26,565 13,232 7,522 7,093 6,820 6,691 5,926 3,982 3,000 2,629 229,339

68,167 63,092 17,174 2,047 1,570 152,050

$ 381,389 $

-

85,362

-

33,323

-

27,194

-

26,565

-

13,232

-

7,522

-

7,093

-

6,820

-

6,691

-

5,926

-

3,982

-

3,000

-

2,629

-

229,339

-

68,167

-

63,092

-

17,174

-

2,047

-

1,570

-

152,050

- $ 381,389

The accompanying notes are an integral part of the financial statements. 4

FAIR OAKS RANCH HOMEOWNERS ASSOCIATION, INC. STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE (CONT)

FOR THE YEAR ENDED DECEMBER 31, 2018

Excess (Deficiency) of Revenues Over (Under) Expenses

Transfers Between Funds BEGINNING FUND BALANCE

ENDING FUND BALANCE

Operating Fund

Replacement Fund

Total

$ 4,505 $

918 $ 5,423

(20,000)

20,000

-

482,406

43,303

525,709

$ 466,911 $ 64,221 $ 531,132

The accompanying notes are an integral part of the financial statements. 5

FAIR OAKS RANCH HOMEOWNERS ASSOCIATION, INC. STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2018

CASH FLOWS FROM OPERATING ACTIVITIES Excess (deficiency) of revenues over (under) expenses Adjustments to reconcile excess (deficiency) of revenues over (under) expenses to net cash provided (used) by operating activities: Depreciation Expense (Increase) Decrease in: Accounts Receivable - Members (Net) Increase (Decrease) in: Accounts Payable Income Tax Payable Payroll Liabilities Prepaid Assessments Deferred Revenue NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES Park Equipment Purchase Purchase of Certificates of Deposit Redemption of Certificates of Deposit Reinvestment of Certificates of Deposit NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES Transfer Between Funds NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

Operating Fund

Replacement Fund

Total

$ 4,505 $

918 $ 5,423

13,232

(6,953)

5,669 (379) 274 11,348 (3,000)

24,696

-

13,232

-

(6,953)

-

5,669

-

(379)

-

274

-

11,348

-

(3,000)

918

25,614

(170,887) -

62,146 -

(108,741)

(20,000)

(918)

(20,918)

(170,887) (20,000) 62,146

(918)

(129,659)

(20,000)

20,000

-

$ (20,000) $ 20,000 $

-

The accompanying notes are an integral part of the financial statements. 6

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