‘THE GREENS AT SEVEN OAKS HOMEOWNERS’ ASSOCIATION FINANCIAL STATEMENTS, DECEMBER 31, 2016‘THE GREENS AT SEVEN OAKS HOMEOWNERS’ ASSOCIATION DECEMBER 31, 2016 ‘TABLE OF CONTENTS INDEPENDENT ACCOUNTANTS! REPORT FINANCIAL STATEMENTS Balance Sheets Statements of Income Statements of Cash Flows Statements of Changes in Members’ Equity NOTES TO FINANCIAL STATEMENTS ‘SUPPLEMENTARY INFORMATION ‘Supplementary information on Future Major Repairs ‘and Replacements (Compiled) PageWren Kelly CPAs, LLP Ameren Inte of 10000 Stockdale Highway, Suite 150 Calor Society of coved Pai Aeananate Bakersfield, California 93311 Cone Pubic Nevontente INDEPENDENT ACCOUNTANT'S REVIEW REPORT To the Board of Directors and Members of ‘The Greens at Seven Oaks Homeowners’ Association We have reviewed the accompanying financial statements of Tho Greens at Seven Oaks Homeowners! Association, which comprise the balance sheets as of December 31, 2016 and 2085, and the related stalements of income, changes fn members’ equly and cash lows forthe years then ended. review includes prmariy appying analyical procedures to managements financial Gata and making inquiis of ‘company management. A review i substantially less in scope than an aust, the objective of which isthe ‘expression of an opinion regarding the fnancial statements taken as a whole, Accordingly, we do nat ‘express such an epson ‘Management's Responsibiity for the Financial Statements Management is responsibe for the preparaton and fair presentation of these fancial statements in 2ecordance wih accountng principles generaly accepted inthe United Ststes of America; this nudes ‘he design, implementation, and mainenance of intemal canols relevant to the preparation and fair presentation of financial statements that ate free fom material msstatement whether due to fraud oF ‘Accountant's Responsibilly forthe Financtal Statements (Our respensibity i to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services ssued by the Accounting and Review Services Commitee ofthe AICPA, ‘Those siandards require us to arfotm procedures to obtain Imited assurance 2s a basis fer reporting whether we are aware of any mterial modieatons that should be made fo the fancial statements for them to be in accordance wih accounting pinciples general accepted Inthe United States of Americ, ‘We believe thatthe results of eur procedures provide a reasonable basis for our conclusion ‘Accountant's Conclusion Based on our review, we are rot aware of any material modifications that should be made to the ‘accompanying financial statements in order for them fo Be in accordance wih accounting principles ‘generally accepted inthe United Sates of America ‘Supplementary Information ‘The supplementary information about future repairs and replacements on page 9 isnot a required pat of the basic financial statements but Is supplementary Informaton required by the American Intute of CCettied Public Accounts. We have compled the supplementary Information from information that representaton of management of The Greens at Soven Oaks Homeowners’ Associaton vthout aut oF Feview Accordingly, we do not expres an opinion or any ater form of assurance onthe suppiementary information ‘wren Kely CPAS, LU Bokersfeld, California February 21, 2017 1 Mailing Address: Post Office Box 12290, Bakersfield, California 93389-2290 Telephone: 661.325.8115 Fax: 661.325.3427‘THE GREENS AT SEVEN OAKS HOMEOWNERS’ ASSOCIATION BALANCE SHEETS DECEMBER 31, 2016 AND 2015 2016 2015 ASSETS CURRENT ASSETS Cash in Checking $ 75802 $ 86,104 Cash in Savings 4,878,420, 4,514,930 1,654,231 1,601,034 Assessments Receivable 4,358 2,236 Miscellaneous Recehvable - 6,379 Prepaid Expenses m9 727 Prepaid Taxes 836 4.454 TOTAL ASSETS $1,660,144 _§_1,611,527 LIABILITIES AND MEMBERS’ EQUITY CURRENT LIABILITIES. ‘Accounts Payable $1130 $144 Prepaid Assessments 42/302 36,232 TOTAL CURRENT LIABILITIES 53,741 49,347 MEMBERS’ EQUITY 1,606,403, 1,562,180 TOTAL LIABILITIES AND MEMBERS’ EQUITY $ 1,650,144 _$_ 1,611,527 ‘See Accompanying Notes and Accountants! Report 2‘THE GREENS AT SEVEN OAKS HOMEOWNERS’ ASSOCIATION ‘STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2016 AND 2015 REVENUES Members’ Assessments Interest Income Miscellaneous Income TOTAL REVENUES EXPENSES: ‘Administrative Management Fee Marketing Expense Reserve Study Legal and Accounting Office Expenses Uncollected Assessments Ucense & Fees Social Committee Steno Services Bank Charges Overs Gas Water Rubbish & Sewer ‘Telephone Cable Maintenance Grounds General Repairs and Maintenance Entry Gate Poo! ‘TOTAL ORDINARY EXPENSES NET ORDINARY INCOME OTHER INCOME AND (EXPENSE) Appropriated Expenditures TOTAL OTHER INCOME AND (EXPENSE) NET INCOME GEFORE TAXES FEDERAL AND STATE INCOME TAXES (Note 2) NET INCOME 2016 $ 504,192 11/066 9331 524,589 48,650 111659 11550 1,085, 24,878 4,945 11525 60 60 9,102, 27,469 T1626 10,746 4138 12197 21456 68,632 123,402 53,594 12,493 23,704 213,283, 373,017 151,572 104,485) 104,485) 47,087 2,864) $44,223 ‘See Accompanying Notes and Accountants’ Report 3 2015 $494,498 13,168 41350, 512,014 47,150 11/871 2:30 3}020 3318 18,943, ‘643 4,490 11313 120 80 90,248. 28,370 1/008 8,950 ages 9551 5,265 67,168 91,037 44372 9875 18,265 463,549 320,965, 191,049 73,755) 73,755) 117,293 (3,649) $113,644‘THE GREENS AT SEVEN OAKS HOMEOWNERS! ASSOCIATION STATEMER MEMBERS’ EQUITY December 31, 2014 Appropriations Expenditures Net income MEMBERS’ EQUITY December 31, 2015 Appropriations Expenditures. Net Income MEMBERS’ EQUITY December 31, 2016 NTS OF CHANGES IN MEMBERS’ EQUITY DECEMBER 31, 2016 AND 2015 /APPROPRIATED TOTAL UNAPPROPRIATED ___(NOTE3) $1,448,536 $ 108.975 $1,339,561 : (147,884) 147,864 73,756 (73,758) 119,644 110,326 3318 $1,562,180 $ 145,193 $1,416,987 (160,652) 160,652 104,485 (104,485) 44,223, 33,157 11,066 $1,60.403 _§__122,183 1,484,220 See Accompanying Notes and Accountants’ Report 4‘THE GREENS AT SEVEN OAKS HOMEOWNERS’ ASSOCIATION STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2016 AND 2015 2016 2015 ‘CASH FLOWS FROM OPERATING ACTIVITIES. Net Income (Loss) $ 44223 $113,644 ‘Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities: Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivables 4257 (3,234) (Increase) Decrease in Prepaid Expenses 9 (22) Increase (Decrease) in Accounts Payable (2,768) (2,762) Increase (Decrease) in Prepaid Taxes 315 197 Increase (Decrease) in Prepaid Assessments 7,159 4,400 Increase (Decrease) in Other Accrued Payable NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 53,197, 112,223 INCREASE (DECREASE) IN CASH 53,197 112,223 CASH AT THE BEGINNING OF THE YEAR 4,601,034 1,488,811 CASH AT THE END OF THE YEAR $1,654,231 $1,601,034 ‘SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash Payment For: Income Taxes $2401 $2,660 ‘See Accompanying Notes and Accountants’ Report 5‘THE GREENS AT SEVEN OAKS HOMEOWNERS’ ASSOCIATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant, accounting policies of The Greens at Seven Oaks Homeowners’ Association (the Association) is presented to assist in the understanding of the Association's financial statements. The financial statements and notes are representations of the Association's management, which is responsible for thetr integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the presentation of the financial statements. Nature of Organization: The Greens at Seven Oaks Homeowners’ Association is located in Bakersfield, California, The Association consists of 404 members. The Greens at Seven Oaks Homeowners’ Association is governed by a member-elected Board of Directors anc is organized and operated to provide for the management, maintenance and care cf Association property and common areas. Assessments: Association members are subject to annual assessments, Special andlor emergency assessments may be imposed by the Board of Directors, Assessments Receivable: Assessment receivables are reported at the amount management expects t2 collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results ‘of operations of the year in which those differences are determined, with an offsetting entry to a valuation alowance for assessment receivables. Balances that are stil ‘outstanding after management has used reasonable collection efforts are writen off through a change to the valuation allowance and a credit to assessments receivable. Common Area Reserve Expenditures: Association common area property and equipment, including steets, lighting, and entry gates, was intially purchased by the developer of the Association and has not been recorded in this financial statement. It is the policy of the Association to expense and charge reserve expenditures for the replacement of equipment and property as needed. The expenses are reflected on the income statement anc statement of members’ equity as reserve expenditures. Therefore, no equipment and property has been capitalized and no depreciation expense is reflected on the income statement. Basis of Presentation: The accompanying financial statements, and the Association's, corporate income tax retums, have been prepared on the accrual basis of accounting, Revenues are recognized when earned and expenses recognized when incurred. Cash and Cash Equivalents: The Association considers all short-term investments with a maturity at date of purchase of twelve months or less to be cash equivalents. Cash equivalents are clessified with cash in the balance sheet, 6‘THE GREENS AT SEVEN OAKS HOMEOWNERS’ ASSOCIATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Estimates: Management is required to make estimates and assumptions that affect the reported amounts of assets and liablities, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates and the differences could be material Date of Management's Review: In preparing the financial statements, the management has evaluated subsequent events and transactions for potential recognition or disclosure through February 21, 2017, the date the financial statements were issued. ‘Membership: Membership in the Association is mandatory by virtue of unit ownership, NOTE 2 - INCOME TAXES For Federal income tax purposes for 2016 and 2015, the Association has elected under Section 528 of the Intemal Revenue Code, to file as a condominium management association and pay inccme tax on its net nonexempt income only. For California income tac purposes, the Association is treated as an exempt organization under Section 23701-T of the California Code and pays tax on its net nonexempt income. ‘The Association files an Exempt Organization Annual Informational Return. Provision for tates based on income forthe years ended December 31, 2016 and 2015 Cited of the olowing 2016 2018, es er state 700 01 Sta S309 NOTE 3 - APPROPRIATED RETAINED EARNINGS ‘The Association has established a general reserve for the replacement of selected ‘common areas. Reserve activity for 2016 is summarized as follows: Balance ——_Eamings and Reserve 421312016 _ Appropriations _ Expenditures _12131/2016 Reserve for Common Areas _$_1416.987 _$ 171718 _$ (104,485) $1,484,220 $1416987, “$171,718, “S$ __(104.485) “$1,484,220‘SUPPLEMENTARY INFORMATION‘THE GREENS AT SEVEN OAKS HOMEOWNERS’ ASSOCIATION, ‘SUPPLEMENTARY INFORMATION ON FUTURE. MAJOR REPAIRS AND REPLACEMENTS ‘COMPILED DECEMBER 31, 2016, A study, as required by Calforia Law CCS5EO, to determine the adequacy of the current funding program forthe replacement of Association common areas was conducted by Association Reserves, In. A report dated May 13, 2015, concludes thatthe accumulated requirement ofthe Association to fund the depreciated portion ofthe assets is ‘The estimated amount inthe reserve fund atthe end of the curent fiscal year is $1,504,059 based in whole or in part on the last reserve study or update prepared by Association Reserves, Inc. as of May 13, 2015, The recommended fully funded reserve at the end ofthe Current fiscal year Is $1.454.016, resulting in reserves being 103.4% percent funded at this ate, “The reserve study racorrmended the components ofthe common area should be funded as of the date ofthe study as noted below: Estimated uy Funded Femaining -Reserve™——Current Fund Component Useful Life _ Balance ‘Balance ‘Streets 130yrs «(728489 «-§ «(759,589 ny ery 199,088 199.695 Cubhouse 45yr8 461,185, 477,053 Pool & Spa 535 5 57,998 59.939 Landscaping & Inigation Sys 13,350, 13813, Total $ 1454016 $1,504,050 “The study conducted estimated the remaining usel lives and the replacement costs of the common property components. The Association Is funding for such future major repairs and replacements over the estimated useful lives ofthe components based on the study's estimates of cuent replacement costs, Estimated current repacement costs have not been revised since that date and do not take into account the effects of inflation between the date ofthe study and the date the components wil require replacement, In adtion, actial expenditures may vary trom the estimated amounts and the variations may be material, Therefore, amounts designated for future repsis and replacements may not be adequate to meet future needs. If additonal funds are needed, the Association has the right to increase the monthly assessments, pass special assessments and delay replacement untl funds are avalaole ‘See Accountants! Report °