Weidner
& A
ssociates,
P
.
C
.
Certified Public Accountants 3002 South Oak Way Lakewood, CO 80227
MEMBER
________________________________________________________________________________________________________________________________________________________________________
Dale L. Weidner, CPA Thomas R. Weidner, CPA Scott W. Weidner E-mail: [email protected] E-mail: [email protected] Email: [email protected] Sara C. Weidner Phone/Fax: 303 985 1299 Phone: 720 810 2260 E-mail: [email protected] FAX: 303 202 3633 Phone/Fax: 303 708 8766
The Board of Directors and Members July 31, 2012 The Newport Place Condominiums Association, Inc.
C/O The Colorado Property Management Group, Inc. 2620 South Parker Road, Suite 105
Aurora, Colorado 80014 Dear Board and Members,
We recently completed our audit of the Association’s financial statements for the year ended December 31, 2011. During our procedures we noted the following matters to bring to the attention of the Board and Members.
Citywide Bank Income Tax Withholding
In 2011 Citywide Bank withheld income taxes from interest income. We recommend that Citywide be contacted to discontinue this practice. The Association did not owe income taxes in 2011 and it is very unlikely that any taxes will be owed in future years.
This letter is intended solely for the use of the Board and Members of the Association to assist in
management and is not to be used by third parties for any other purposes. We considered the foregoing in our procedures, and this report does not affect the report on the financial statements. We would be pleased to discuss the above paragraphs with the Board, and to answer any other questions concerning the financial statements and tax returns.
Sincerely,
THE NEWPORT PLACE
CONDOMINIUMS ASSOCIATION, INC.
FINANCIAL STATEMENTS
And
INDEPENDENT AUDITORS’ REPORT
For The Year Ended December 31, 2011
Weidner
& A
ssociates,
P
.
C
.
Certified Public Accountants 3002 South Oak Way Lakewood, CO 80227
MEMBER
________________________________________________________________________________________________________________________________________________________________________
Dale L. Weidner, CPA Thomas R. Weidner, CPA Scott W. Weidner Email: [email protected] Email: [email protected] Email: [email protected] Sara C. Weidner Phone/Fax: 303 985 1299 Phone: 720 810 2260 Email: [email protected] FAX: 303 202 3633 Phone/Fax: 303 708 8766
Independent Auditors’ Report
To the Board of Directors and Members
The Newport Place Condominiums Association, Inc.
We have audited the accompanying balance sheet of The Newport Place Condominiums Association, Inc. as of December 31, 2011, and the related statements of revenues and expenditures and changes in fund balances and of cash flows for the year then ended. These financial statements are the
responsibility of the Association's Board of Directors. 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 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.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Newport Place Condominiums Association, Inc. as of December 31, 2011, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 4, the Association does not have information regarding future major repairs and replacements of the Association’s common property. Therefore, that information is not included in this report. Accounting principles generally accepted in the United States of America require that information to 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 financial statements in an appropriate
operational, economic, or historical context. Our opinion on the basic financial statements is not affected by the absence of this information.
Certified Public Accountants Lakewood, Colorado
The Newport Place Condominiums Association, Inc.
Balance Sheet
December 31, 2011
Operating Reserve Total
Fund Fund Funds
ASSETS:
Cash:
Checking and money market accounts $59,879 $8,857 $68,736 Certificate of deposit 25,645 25,645
Total cash 59,879 34,502 94,381
Accounts receivable - members 7,305 7,305
Prepaid expenses 4,046 4,046
Prepaid income taxes 13 70 83
Interfund receivable (payable) 19,424 (19,424) 0
$90,667 $15,148 $105,815 LIABILITIES:
Accounts payable $12,133 $12,133
Loan payable (Note 7) $83,814 83,814
Deferred revenue - prepaid assessments 10,693 10,693 22,826 83,814 106,640
MEMBERS' EQUITY:
Fund balances 67,841 (68,666) (825)
$90,667 $15,148 $105,815
The accompanying notes are an integral part of the financial statements.
The Newport Place Condominiums Association, Inc.
Statement of Revenues and Expenditures and Changes in Fund Balances
For the Year Ended December 31, 2011
Operating Reserve Total
Fund Fund Funds
REVENUES:
Assessments - members (Note 3) $145,723 $145,723 Budgeted allocation of assessments to reserve fund (32,296) $32,296 0 Special assessment (Note 6) 2,636 2,636 Legal fees, late fees and other member charges 8,017 8,017
Other income 2,809 2,809
Interest 46 251 297
126,935 32,547 159,482
EXPENDITURES: Administrative
Insurance $16,795 $16,795
Management fees 14,556 14,556
Legal fees 3,892 3,892
Bad debts expense 1,052 1,052
Other administrative costs 1,939 1,939
Grounds
Landscape contract 4,250 4,250
Trash removal 4,606 4,606
Snow removal 4,641 4,641
Other grounds expenses 566 566
Building
Plumbing and boiler 5,083 5,083
Roof and gutter 3,349 3,349
Janitorial and pest control 2,113 2,113
Other building expenses 9,707 9,707
Utilities
Water and sewer 13,454 13,454
Gas and electric 26,755 26,755
Reserve
Roof $18,275 18,275
Boilers 9,568 9,568
Note interest (Note 7) 7,639 7,639
Drainage project 1,149 1,149
112,758 36,631 149,389
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 14,177 (4,084) 10,093
Fund balances - beginning of year 53,664 (64,582) (10,918)
Fund balances - end of year $67,841 ($68,666) ($825)
The accompanying notes are an integral part of the financial statements.
The Newport Place Condominiums Association, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2011
Operating Reserve Total
Fund Fund Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Excess (deficiency) of revenues over expenditures $14,177 ($4,084) $10,093 Adjustments to reconcile excess (deficiency) of
revenues over expenditures to net cash provided by (used in) operating activities:
(Increase) decrease in accounts receivable (1,395) (1,395) (Increase) decrease in prepaid expenses (293) (293) (Increase) decrease in prepaid income taxes (13) (70) (83) Change in interfund receivable (payable) (25,740) 25,740 0 Increase (decrease) in accounts payable 5,972 5,972 Increase (decrease) in prepaid assessments 6,056 6,056 Total adjustments (15,413) 25,670 10,257 Net cash provided by (used in) operating activities (1,236) 21,586 20,350 Increase (decrease) in loan payable (18,904) (18,904) Cash at beginning of year 61,115 31,820 92,935
Cash at end of year $59,879 $34,502 $94,381
Supplemental Disclosure of Cash Flows Information:
Income taxes paid during the year $13 $70 $83 Interest paid during the year $0 $0 $0
The accompanying notes are an integral part of the financial statements.
The Newport Place Condominiums Association, Inc.
Notes to Financial Statements
December 31, 2011
NOTE 1. ORGANIZATION
The Newport Place Condominiums Association, Inc. (“The Association”) is a residential management association incorporated on November 12, 1980 as a Colorado nonprofit corporation. The Association was formed to maintain and preserve the common property on behalf of its members. The Association is located in Denver, Colorado and consists of the owners of 43 residences. The Members elect the Association’s Board of Directors. The Board volunteers its time to manage the affairs of the
Association.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements and the related income tax returns have been prepared on the accrual basis.
FUND ACCOUNTING
The accounts of the Association are maintained in accordance with fund accounting whereby resources are classified for reporting purposes into funds with specified activities or purposes. The Association’s two funds are operating and reserve. The operating fund is used to account for the general operations of the Association. The reserve fund is used to account for money set aside and related expenditures for major repairs and replacements.
DELINQUENT ASSESSMENTS
The Association's policy is to enforce collection of assessments by retaining legal counsel and by placing liens on the properties of delinquent members.
COMMON PROPERTY
Consistent with preferable accounting for residential associations the Association’s property, including common areas, is not capitalized in these financial statements. That property is commonly owned by the resident-owners, cannot be detached from the development and sold, and is not used by the Association to generate cash.
ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles may require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Such estimates can also affect the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
The Newport Place Condominiums Association, Inc.
Notes to Financial Statements
December 31, 2011
NOTE 3. ASSESSMENTS
Assessments are determined by the Board of Directors upon approval of the annual budget and are intended to meet both the normal operating costs of the Association and the costs of estimated future major repairs or capital improvements. Assessments to homeowners ranged from $226 to $320 per month during 2011 including utility assessments. Assessments for the year included amounts designated in the Association’s budget for the reserve fund as discussed in Note 4 below. The Association may levy special assessments to cover costs as described in the Association’s governing documents.
NOTE 4. RESERVE FUND - FUTURE MAJOR REPAIRS AND REPLACEMENTS
The Association's governing documents require that a reserve fund be accumulated for the future repair and replacement of the major components of the Association’s common property. The Association does not have a reserve study which would provide a plan for the accumulation and disposition of reserve fund resources. However, the Association’s budget for 2011 allocated $32,296 of assessment revenues to the reserve fund. That amount was transferred during the year. The Association’s operating fund paid reserve fund expenses of $19,424 during the year resulting in the year-end interfund balance on the Balance Sheet.
Future allocations of assessment revenues to the reserve fund may vary from allocations needed for the repair and replacement of the major components of the Association’s common property.
Therefore, the reserve fund may not be adequate to meet the costs of all future major repairs and replacements. If additional amounts are needed the Association may increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available. Any of these steps, or a combination of these steps, may be required to meet the Association’s future repair and replacement needs.
NOTE 5. FEDERAL AND STATE CORPORATE INCOME TAXES
The Association must file annual federal and Colorado income tax returns. The Association files its federal income tax return as a homeowners’ association (Form 1120-H) in accordance with Internal Revenue Code Section 528. Under Section 528 the Association is not taxed on assessment revenues or on other income derived from members and used to serve the Association’s exempt purposes. Those exempt purposes generally include the maintenance, management and care of Association property. However, under Section 528 certain income, such as interest, is deemed to be related to nonexempt purposes. Nonexempt income, net of expenses allocable to that income, is taxable for both federal and Colorado tax purposes. The Association had no net taxable income for federal or Colorado purposes for the year.
NOTE 6. SPECIAL ASSESSMENT
In 2009 the Association initiated a special assessment totaling $60,000 for roof repairs payable over 36 months starting in March of that year. That special assessment concluded as of February 2011.
The Newport Place Condominiums Association, Inc.
Notes to Financial Statements
December 31, 2011
NOTE 7. LOAN PAYABLE
The Association has a loan that was taken out to fund major drainage repairs. As of December 31, 2011 the loan balance was $83,814. The loan bears an interest rate of 8%. Minimum principal payments during the next four years are as follows:
Year Ending December 31,
2012 $ 20,485
2013 22,186
2014 24,027
2015 17,116
83,814 $
