Credit Enhancement 2003 |
Previous | 1 of 1 | Next |
|
small (250x250 max)
medium (500x500 max)
Large
Extra Large
large ( > 500x500)
Full Resolution
|
This page
All
|
OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 Management's Discussion and Analysis i Audited Financial Statements Independent Auditors' Report 1 Statement of Net Assets 2 Statement of Revenues, Expenses and Changes in Net Assets 3 Statement of Cash Flows 4 Notes to Financial Statements 5 Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 8 Management's Discussion and Analysis OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND This section of the Oklahoma Credit Enhancement Reserve Fund's (the "Fund's") annual financial report presents a discussion and analysis of its financial performance for the year ended June 30, 2003. Please read it in conjunction with the financial statements which follow this section. The following table summarizes the financial position and results of operations of the Fund: 2003 2002 Assets: Current assets $ 572,219 $ 475,812 Total Assets 572,219 475,812 Liabilities: Current liabilities 36,814 40,349 Long-term liabilities 315,292 344,452 Total Liabilities 352,106 384,801 Net Assets: Unrestricted 220,113 91,011 Total Net Assets $ 220.113 $ 91.011 Operating Revenues: Insurance premiums $ 135,104 $ 113,572 Interest income 3,508 6,401 Other 5,000 5,000 Total Operating Revenues 143,612 124,973 Operating Expenses 14,510 20,935 Total Operating Expenses 14,510 20,935 Change in net assets 129,102 104,038 Total net assets (deficit), beginning of the year 91,01l (13,027) Total net assets, end of the year $ 220.113 $ 91.011 Management's Discussion and Analysis--Continued THE OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND OVERVIEW OF THE FINANCIAL STATEMENTS The three financial statements presented within the financial statements are as follows: • Statement of Net Assets - This statement presents information reflecting the Fund's assets, liabilities and net assets. Net assets represent the amount of total assets less total liabilities. The statement of net assets is categorized as to current and non-current assets and liabilities. For purposes of the financial statements, current assets and liabilities are those assets and liabilities with immediate liquidity or which are collectible or becoming due within 12 months ofthe statement date. • Statement of Revenues, Expenses and Changes in Net Assets - This statement reflects the operating revenues and expenses, as well as non-operating revenues and expenses during the operating year. Major sources of operating revenues are insurance premium income with major sources of operating expenses being personnel and administrative expense. The change in net assets for an enterprise fund is similar to net profit or loss for any other business enterprise. • Statement of Cash Flows - The statement of cash flows is presented on the direct method of reporting which reflects cash flows from operating, financial and investing activities. Cash collections and payments are reflected in this statement to arrive at the net increase or decrease in cash for the calendar year. FINANCIAL HIGHLIGHTS • The Fund's total assets for the year ended June 30, 2003, increased in comparison to the previous year. Total assets during 2003 increased approximately $96,000, primarily due to increase in cash and cash equivalents. Cash and cash equivalents increased due to more insurance premiums and other receipts received than cash paid for operating expenses. Total liabilities decreased during 2003 by approximately $33,000. This was primarily due to the reduction of unearned revenues. The operating revenues increased approximately $ I9,000 during 2003. Insurance premiums increased approximately $22,000 and interest income decreased by approximately $3,000 during 2003. Total operating expenses decreased approximately $6,000 during 2003 due to less administrative expenses incurred during the current year compared to the prior year. Total net assets increased by approximately $129,000 between July 1,2002 and June 30, 2003. • • • • CONTACTING THE AUTHORITY'S MANAGEMENT This financial report is designed to provide our bondholders, patrons and other interested parties with a general overview of the Fund's finances and to demonstrate the Fund's accountability for its finances. If you have questions about this report or need additional financial information, contact: James G. Fulmer, President The Oklahoma Development Finance Authority Administrator of The Oklahoma Credit Enhancement Reserve Fund 5900 N. Classen Court Oklahoma City, Oklahoma 731 18 Telephone: 405-842-1145 11 Cole & Reed, P.C. ~~f98~~ 531 Couch Drive, SUite 200 Oklahoma City, OK 73102-2251 (405) 239-7961 FAX (405) 235-0042 Independent Auditors' Report The Board of Directors The Oklahoma Credit Enhancement Reserve Fund We have audited the statement of net assets of Oklahoma Credit Enhancement Reserve Fund (the "Fund"), a component unit of the Oklahoma Development Finance Authority, as of June 30, 2003, and the related statements of revenues, expenses and changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 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 Fund as of June 30, 2003, 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. Management's Discussion and Analysis is 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 measurements and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. In accordance with Government Auditing Standards, we have also issued our report dated September 8, 2003, on our consideration of the Fund's internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Oklahoma City, Oklahoma September 8, 2003 STATEMENT OF NET ASSETS OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 ASSETS CURRENT ASSETS Cash and cash equivalents Interest receivable Insurance premiums receivable TOTAL CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Accounts payable Deferred revenue TOTAL CURRENT LIABILITIES LONG- TERM LIABILITIES Deferred revenue Reserve for losses TOTAL LONG-TERM LIABILITIES TOTAL LIABILITIES NET ASSETS Unrestricted See accompanying notes to financial statements. 2 $ 562,979 207 9,033 572,219 572,219 3,000 33,814 36,814 263,918 51,374 315,292 352,106 $ 220,113 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND For the Year Ended June 30, 2003 OPERA TING REVENUES Insurance premiums Investment income Other OPERA TING EXPENSES Professional services Administrative CHANGE IN NET ASSETS NET ASSETS AT BEGINNING OF YEAR NET ASSETS AT END OF YEAR See accompanying notes to financial statements. TOTAL OPERATING REVENUES TOTAL OPERATING EXPENSES OPERA TING INCOME 3 $ 135,104 3,508 5,000 143,612 11,010 3,500 14,510 129,102 129,102 91,011 $ 220,113 STATEMENT OF CASH FLOWS OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND For the Year Ended June 30, 2003 CASH FLOWS FROM OPERATING ACTIVITIES Cash received for insurance premiums Cash paid to suppliers and employees Interest income received Other receipts NET CASH PROVIDED BY OPERATING ACTIVITIES CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income CHANGE IN ASSETS AND LIABILITIES Decrease in fees receivable and other current assets Decrease in interest receivable Increase in accounts payable Decrease in deferred revenue and reserve for losses NET CASH PROVIDED BY OPERATING ACTIVITIES See accompanying notes to financial statements. . 4 $ 103,627 (I 1,932) 3,703 5,000 100,398 462,581 $ 462,581 $ 129,102 $ 3,796 195 2,578 (35,273) 100,398 NOTES TO FINANCIAL STATEMENTS OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Credit Enhancement Reserve Fund: Under Oklahoma statutes, the Credit Enhancement Reserve Fund Act (the "Act") created the Oklahoma Credit Enhancement Reserve Fund (the "Fund") to be managed, administered, and utilized by the Oklahoma Development Finance Authority (the "Authority") solely to secure the payment of interest, principal, and premium, if any, on revenue bonds and other financial obligations issued by the Authority for the specific purpose of enhancing and supporting the credit of such obligations. In addition, the Act authorizes the Fund to issue bonds which are the direct and general obligations of the state of Oklahoma (the "State") (to which the full faith and credit of the State is pledged) in a total principal amount not to exceed $100,000,000 for the purpose of generating monies to be deposited to the Fund. Method of Reporting in the Authority's Financial Statements: The Fund is a component unit of the Authority and is included in the Authority's financial reporting entity. The financial activity of the Fund is discretely presented in the Authority's financial statements. Basis of Accounting: The operations of the Fund are accounted for as an enterprise fund on an accrual basis in order to recognize the flow of economic resources. Under this basis, revenues are recognized in the period in which they are earned, and expenses are recognized in the period in which they are incurred. Balances classified as operating revenues and expenses are those which comprise the Fund's principal ongoing operations. Since the Fund's operations consist of insuring lending activities, most revenues and expenses are considered operating. Principles of Presentation: The Fund has prepared its financial statements in accordance with accounting principles generally accepted in the United States. The Fund has implemented Governmental Accounting Standards Board ("GASB") Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments ("Statement 34"). With the implementation of Statement 34, the Fund has prepared required supplementary information titled "Management's Discussion and Analysis" which precedes the financial statements, has prepared a statement of net assets classified between current and noncurrent assets and liabilities, has categorized changes in revenues and expenses as changes in net assets (liabilities), and has prepared cash flows using the direct method. 5 NOTES TO FINANCIAL STATEMENTS--Continued OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Principles of Presentation--Continued: GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The Fund applies Financial Accounting Standards Board pronouncements and Accounting Principles Board opinions issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements, in which case GASB prevails. Accounting principles generally accepted in the United States require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Cash and Cash Equivalents: The Fund, for purposes of reporting cash flows, considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Insurance Premiums: Insurance premiums include billed amounts for insurance premiums at year-end. Insurance premiums are accrued based on the annual fee as stipulated in the bond indenture. Deferred Revenue: On certain debt financing which the Fund is guaranteeing, the Fund has received all of its insurance premiums in advance. These premiums are deferred and recognized as revenue over the life of the various debt obligations on a straight-line basis. Reserve for Losses: The reserve for losses is an estimate based on management's evaluation of the loan portfolio (those obligations guaranteed by the Fund) giving consideration to general economic conditions, the nature and volume of the loan portfolio, and the historic loan loss experience of the Fund. It is maintained at a level that management considers adequate to absorb potential losses in the loan portfolio. Income Taxes: The Fund, as an integral part ofthe State, is exempt from federal and state income taxes. NOTE B--DEPOSITS At June 30, 2003, the carrying amount and bank balance of the Fund's cash deposits was $562,979. All bank balances were covered by Federal Deposit Insurance or collateralized with securities held by the Fund's agent in the Fund's name. 6 NOTES TO FINANCIAL STATEMENTS--Continued OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30,2003 NOTE C--RESERVE FOR LOSSES As of June 30, 2003, approximately $32 million of outstanding financial obligations was insured by the Fund. The Fund has accrued a reserve for losses of approximately $51,000 as of June 30, 2003, to cover potential losses from the outstanding financial obligations insured by the Fund. Through June 30, 2003, there have been no Oklahoma Credit Enhancement Reserve Fund General Obligation Bonds issued since it is the intention of the Authority to utilize existing assets to meet obligations arising from losses reserved by the Fund at June 30, 2003. 7 Cole & Reed, P.c. Cf?~!!?~~ Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 531 Couch Drive, Suite 200 Oklahoma City, OK 73102-2251 (405) 239-7961 FAX (405) 235-0042 The Board of Directors The Oklahoma Credit Enhancement Reserve Fund We have audited the financial statements of the Oklahoma Credit Enhancement Reserve Fund (the "Fund") as of and for the year ended June 30, 2003, and have issued our report thereon dated September 8,2003. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the Fund's financial statements are free of material misstatements, we performed tests of its compliance with certain provisions of laws and regulations, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Fund's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on internal control over financial reporting. Our consideration of internal control over financial reporting would not necessarily disclose all matters in internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of management and the Board of Directors and is not intended to be and should not be used by anyone other than these specified parties. Oklahoma City, Oklahoma September 8, 2003 8 ..
Object Description
Description
Title | Credit Enhancement 2003 |
OkDocs Class# | D1125.3 C912e 2003 |
Digital Format | PDF, Adobe Reader required |
ODL electronic copy | Deposited by agency in print; scanned by Oklahoma Department of Libraries 8/2011 |
Rights and Permissions | This Oklahoma state government publication is provided for educational purposes under U.S. copyright law. Other usage requires permission of copyright holders. |
Language | English |
Full text | OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 Management's Discussion and Analysis i Audited Financial Statements Independent Auditors' Report 1 Statement of Net Assets 2 Statement of Revenues, Expenses and Changes in Net Assets 3 Statement of Cash Flows 4 Notes to Financial Statements 5 Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 8 Management's Discussion and Analysis OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND This section of the Oklahoma Credit Enhancement Reserve Fund's (the "Fund's") annual financial report presents a discussion and analysis of its financial performance for the year ended June 30, 2003. Please read it in conjunction with the financial statements which follow this section. The following table summarizes the financial position and results of operations of the Fund: 2003 2002 Assets: Current assets $ 572,219 $ 475,812 Total Assets 572,219 475,812 Liabilities: Current liabilities 36,814 40,349 Long-term liabilities 315,292 344,452 Total Liabilities 352,106 384,801 Net Assets: Unrestricted 220,113 91,011 Total Net Assets $ 220.113 $ 91.011 Operating Revenues: Insurance premiums $ 135,104 $ 113,572 Interest income 3,508 6,401 Other 5,000 5,000 Total Operating Revenues 143,612 124,973 Operating Expenses 14,510 20,935 Total Operating Expenses 14,510 20,935 Change in net assets 129,102 104,038 Total net assets (deficit), beginning of the year 91,01l (13,027) Total net assets, end of the year $ 220.113 $ 91.011 Management's Discussion and Analysis--Continued THE OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND OVERVIEW OF THE FINANCIAL STATEMENTS The three financial statements presented within the financial statements are as follows: • Statement of Net Assets - This statement presents information reflecting the Fund's assets, liabilities and net assets. Net assets represent the amount of total assets less total liabilities. The statement of net assets is categorized as to current and non-current assets and liabilities. For purposes of the financial statements, current assets and liabilities are those assets and liabilities with immediate liquidity or which are collectible or becoming due within 12 months ofthe statement date. • Statement of Revenues, Expenses and Changes in Net Assets - This statement reflects the operating revenues and expenses, as well as non-operating revenues and expenses during the operating year. Major sources of operating revenues are insurance premium income with major sources of operating expenses being personnel and administrative expense. The change in net assets for an enterprise fund is similar to net profit or loss for any other business enterprise. • Statement of Cash Flows - The statement of cash flows is presented on the direct method of reporting which reflects cash flows from operating, financial and investing activities. Cash collections and payments are reflected in this statement to arrive at the net increase or decrease in cash for the calendar year. FINANCIAL HIGHLIGHTS • The Fund's total assets for the year ended June 30, 2003, increased in comparison to the previous year. Total assets during 2003 increased approximately $96,000, primarily due to increase in cash and cash equivalents. Cash and cash equivalents increased due to more insurance premiums and other receipts received than cash paid for operating expenses. Total liabilities decreased during 2003 by approximately $33,000. This was primarily due to the reduction of unearned revenues. The operating revenues increased approximately $ I9,000 during 2003. Insurance premiums increased approximately $22,000 and interest income decreased by approximately $3,000 during 2003. Total operating expenses decreased approximately $6,000 during 2003 due to less administrative expenses incurred during the current year compared to the prior year. Total net assets increased by approximately $129,000 between July 1,2002 and June 30, 2003. • • • • CONTACTING THE AUTHORITY'S MANAGEMENT This financial report is designed to provide our bondholders, patrons and other interested parties with a general overview of the Fund's finances and to demonstrate the Fund's accountability for its finances. If you have questions about this report or need additional financial information, contact: James G. Fulmer, President The Oklahoma Development Finance Authority Administrator of The Oklahoma Credit Enhancement Reserve Fund 5900 N. Classen Court Oklahoma City, Oklahoma 731 18 Telephone: 405-842-1145 11 Cole & Reed, P.C. ~~f98~~ 531 Couch Drive, SUite 200 Oklahoma City, OK 73102-2251 (405) 239-7961 FAX (405) 235-0042 Independent Auditors' Report The Board of Directors The Oklahoma Credit Enhancement Reserve Fund We have audited the statement of net assets of Oklahoma Credit Enhancement Reserve Fund (the "Fund"), a component unit of the Oklahoma Development Finance Authority, as of June 30, 2003, and the related statements of revenues, expenses and changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 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 Fund as of June 30, 2003, 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. Management's Discussion and Analysis is 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 measurements and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. In accordance with Government Auditing Standards, we have also issued our report dated September 8, 2003, on our consideration of the Fund's internal control over financial reporting and our tests of its compliance with certain provisions of laws and regulations. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Oklahoma City, Oklahoma September 8, 2003 STATEMENT OF NET ASSETS OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 ASSETS CURRENT ASSETS Cash and cash equivalents Interest receivable Insurance premiums receivable TOTAL CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Accounts payable Deferred revenue TOTAL CURRENT LIABILITIES LONG- TERM LIABILITIES Deferred revenue Reserve for losses TOTAL LONG-TERM LIABILITIES TOTAL LIABILITIES NET ASSETS Unrestricted See accompanying notes to financial statements. 2 $ 562,979 207 9,033 572,219 572,219 3,000 33,814 36,814 263,918 51,374 315,292 352,106 $ 220,113 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND For the Year Ended June 30, 2003 OPERA TING REVENUES Insurance premiums Investment income Other OPERA TING EXPENSES Professional services Administrative CHANGE IN NET ASSETS NET ASSETS AT BEGINNING OF YEAR NET ASSETS AT END OF YEAR See accompanying notes to financial statements. TOTAL OPERATING REVENUES TOTAL OPERATING EXPENSES OPERA TING INCOME 3 $ 135,104 3,508 5,000 143,612 11,010 3,500 14,510 129,102 129,102 91,011 $ 220,113 STATEMENT OF CASH FLOWS OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND For the Year Ended June 30, 2003 CASH FLOWS FROM OPERATING ACTIVITIES Cash received for insurance premiums Cash paid to suppliers and employees Interest income received Other receipts NET CASH PROVIDED BY OPERATING ACTIVITIES CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income CHANGE IN ASSETS AND LIABILITIES Decrease in fees receivable and other current assets Decrease in interest receivable Increase in accounts payable Decrease in deferred revenue and reserve for losses NET CASH PROVIDED BY OPERATING ACTIVITIES See accompanying notes to financial statements. . 4 $ 103,627 (I 1,932) 3,703 5,000 100,398 462,581 $ 462,581 $ 129,102 $ 3,796 195 2,578 (35,273) 100,398 NOTES TO FINANCIAL STATEMENTS OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Credit Enhancement Reserve Fund: Under Oklahoma statutes, the Credit Enhancement Reserve Fund Act (the "Act") created the Oklahoma Credit Enhancement Reserve Fund (the "Fund") to be managed, administered, and utilized by the Oklahoma Development Finance Authority (the "Authority") solely to secure the payment of interest, principal, and premium, if any, on revenue bonds and other financial obligations issued by the Authority for the specific purpose of enhancing and supporting the credit of such obligations. In addition, the Act authorizes the Fund to issue bonds which are the direct and general obligations of the state of Oklahoma (the "State") (to which the full faith and credit of the State is pledged) in a total principal amount not to exceed $100,000,000 for the purpose of generating monies to be deposited to the Fund. Method of Reporting in the Authority's Financial Statements: The Fund is a component unit of the Authority and is included in the Authority's financial reporting entity. The financial activity of the Fund is discretely presented in the Authority's financial statements. Basis of Accounting: The operations of the Fund are accounted for as an enterprise fund on an accrual basis in order to recognize the flow of economic resources. Under this basis, revenues are recognized in the period in which they are earned, and expenses are recognized in the period in which they are incurred. Balances classified as operating revenues and expenses are those which comprise the Fund's principal ongoing operations. Since the Fund's operations consist of insuring lending activities, most revenues and expenses are considered operating. Principles of Presentation: The Fund has prepared its financial statements in accordance with accounting principles generally accepted in the United States. The Fund has implemented Governmental Accounting Standards Board ("GASB") Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments ("Statement 34"). With the implementation of Statement 34, the Fund has prepared required supplementary information titled "Management's Discussion and Analysis" which precedes the financial statements, has prepared a statement of net assets classified between current and noncurrent assets and liabilities, has categorized changes in revenues and expenses as changes in net assets (liabilities), and has prepared cash flows using the direct method. 5 NOTES TO FINANCIAL STATEMENTS--Continued OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30, 2003 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Principles of Presentation--Continued: GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The Fund applies Financial Accounting Standards Board pronouncements and Accounting Principles Board opinions issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements, in which case GASB prevails. Accounting principles generally accepted in the United States require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Cash and Cash Equivalents: The Fund, for purposes of reporting cash flows, considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Insurance Premiums: Insurance premiums include billed amounts for insurance premiums at year-end. Insurance premiums are accrued based on the annual fee as stipulated in the bond indenture. Deferred Revenue: On certain debt financing which the Fund is guaranteeing, the Fund has received all of its insurance premiums in advance. These premiums are deferred and recognized as revenue over the life of the various debt obligations on a straight-line basis. Reserve for Losses: The reserve for losses is an estimate based on management's evaluation of the loan portfolio (those obligations guaranteed by the Fund) giving consideration to general economic conditions, the nature and volume of the loan portfolio, and the historic loan loss experience of the Fund. It is maintained at a level that management considers adequate to absorb potential losses in the loan portfolio. Income Taxes: The Fund, as an integral part ofthe State, is exempt from federal and state income taxes. NOTE B--DEPOSITS At June 30, 2003, the carrying amount and bank balance of the Fund's cash deposits was $562,979. All bank balances were covered by Federal Deposit Insurance or collateralized with securities held by the Fund's agent in the Fund's name. 6 NOTES TO FINANCIAL STATEMENTS--Continued OKLAHOMA CREDIT ENHANCEMENT RESERVE FUND June 30,2003 NOTE C--RESERVE FOR LOSSES As of June 30, 2003, approximately $32 million of outstanding financial obligations was insured by the Fund. The Fund has accrued a reserve for losses of approximately $51,000 as of June 30, 2003, to cover potential losses from the outstanding financial obligations insured by the Fund. Through June 30, 2003, there have been no Oklahoma Credit Enhancement Reserve Fund General Obligation Bonds issued since it is the intention of the Authority to utilize existing assets to meet obligations arising from losses reserved by the Fund at June 30, 2003. 7 Cole & Reed, P.c. Cf?~!!?~~ Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 531 Couch Drive, Suite 200 Oklahoma City, OK 73102-2251 (405) 239-7961 FAX (405) 235-0042 The Board of Directors The Oklahoma Credit Enhancement Reserve Fund We have audited the financial statements of the Oklahoma Credit Enhancement Reserve Fund (the "Fund") as of and for the year ended June 30, 2003, and have issued our report thereon dated September 8,2003. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the Fund's financial statements are free of material misstatements, we performed tests of its compliance with certain provisions of laws and regulations, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Fund's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on internal control over financial reporting. Our consideration of internal control over financial reporting would not necessarily disclose all matters in internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of management and the Board of Directors and is not intended to be and should not be used by anyone other than these specified parties. Oklahoma City, Oklahoma September 8, 2003 8 .. |
Date created | 2011-08-03 |
Date modified | 2011-08-03 |