Internal Audit. S o n o m a C o u n t y. A u d i t o r - C o n t r o l l e r - T r e a s u r e r - T a x C o l l e c t o r

Transcription

1 A u d i t o r - C o n t r o l l e r - T r e a s u r e r - T a x C o l l e c t o r Internal Audit S o n o m a C o u n t y Reporting Package Sonoma County Airport : For the Fiscal Year Ended Audit No: 3040 Report Date: September 30, 2013 Audit Manager: Kanchan Charan, CPA Audit Supervisor: Damian Gonshorowski, CPA Auditor: Christina Liu, CPA

2 Reporting Package For the Fiscal Year Ended Page Basic Financial Statements: Statement of Net Position Statement of Revenues, Expenses, and Changes in Net Position... 3 Statement of Cash Flows Notes to the Basic Financial Statements Other Matters Proposed and Posted Adjustments... 14

3 Statement of Net Position (Unaudited) Assets Current assets: Cash and investments $ 578,614 Receivables 222,211 Due from other governments 132,403 Restricted assets: Cash and investments 432,227 Total current assets 1,365,455 Noncurrent assets: Restricted cash and investments: Deposits with others 399,000 Customer security deposits 33,571 Total noncurrent assets 432,571 Capital assets: (Continued) Non-depreciable 22,591,926 Depreciable, net 16,996,185 Total capital assets (net of accumulated depreciation) 39,588,111 Total noncurrent assets 40,020,682 Total assets $ 41,386,

4 Statement of Net Position (continued) (Unaudited) Liabilities Current liabilities: Accounts payable and accrued liabilities $ 445,246 Interest payable 39,765 Due to other funds 810,000 Due to other governments 482,307 Capital lease obligation 131,770 Unearned revenue 80,739 Total current liabilities 1,989,827 Current liabilities payable from restricted assets: Customer deposits payable 33,571 Noncurrent liabilities: Advances from other governments 5,860,201 Capitalized lease obligation 204,882 Compensated absences 126,017 Total noncurrent liabilities 6,191,100 Total liabilities 8,214,498 Net Position Invested in capital assets, net of related debt 32,098,951 Restricted for: PFC projects 432,227 Unrestricted 640,461 Total net position $ 33,171,

5 Statement of Revenues, Expenses, and Changes in Net Position For the Fiscal Year Ended (Unaudited) Operating Revenues Charges for sales and services: Charges for services $ 233,262 Rents and concessions 3,823,260 Miscellaneous 4,714 Total operating revenues 4,061,236 Operating Expenses Services and supplies 1,847,629 Salaries and employee benefits 1,437,492 Bad debt expense 7,668 Depreciation & amortization 925,486 Total operating expenses 4,218,275 Operating (loss) (157,039) No operating Revenues (Expenses) Passenger facility charges 336,096 Investment income 26,683 Fines, forfeitures, penalties 9,158 Insurance reimbursement 42,614 Interest expense (65,203) Total nonoperating revenues (expenses) 349,348 Income before contributions and transfers 192,308 Capital Contributions Capital contributions - FAA grants 92,362 Capital Contributions - Donations Charging Stations 24,160 Transfer to other funds (4,992) Change in net position 303,838 Net assets, beginning of the year 32,867,801 Net assets, end of the year $ 33,171,

6 Sonoma Sonoma County County Airport Airport Statement of Cash Flows Statement of Cash Flows For the Fiscal Year Ended For the Fiscal Year Ended (Unaudited) (Unaudited) Cash Flows from Operating Activities Received from customers and other funds $ 4,049,390 Payments to suppliers (716,938) Payments to employees (1,486,431) Payments for interfund services used (1,070,029) Net cash provided by operating activities 775,992 Cash Flows from Non-capital Financing Activities Fines, forfeitures and penalties 12,002 Transfer to other funds (4,992) Proceeds from insurance reimbursement 42,614 Net cash provided by non-capital and related financing activities 49,624 Cash Flows from Capital and Related Financing Activities Grants and other contributions 383,546 Acquisition and construction of capital assets (4,631,416) Principal paid on capital debt (128,043) Principal paid on state loans (459,578) Interest paid on capital debt (330,671) Receipts from passenger facility charges 372,713 Net cash used in capital and related financing activities (4,793,449) Cash Flows from Investing Activities Interest received 26,683 Net cash provided by investing activities 26,683 Net decrease in cash and cash equivalents (3,941,150) Cash and cash equivalents, beginning of year (including $266,162 reported in restricted accounts) 5,384,562 Cash and cash equivalents, end of year (including $465,798 reported in restricted accounts $ 1,443,412 and $399,000 deposits with others) (Continued) - 4 -

7 Statement of Cash Flows For the Fiscal Year Ended (Unaudited) Reconciliation of operating loss to net cash provided by operating activities: Operating loss $ (157,039) Adjustments to reconcile operating loss to net cash provided by operating activities: Depreciation and amortization 925,486 Increase in accounts receivable (15,115) Increase in accounts payable 68,333 Decrease in compensated absences payable (48,940) Decrease in resticted customer deposits (35,674) Increase in unearned revenue 38,943 Total adjustments 933,030 Net cash provided by operating activities $ 775,991 Noncash investing, capital and financing activities: Acquisition of capital assets through payables 35,138 Donations of charging stations 24,160 Capitalized interest 264,698 Total noncash investing, capital and financing activities $ 323,996 Reconciliation of cash and cash equivalents to the Statement of Net Position: Cash and investments 578,614 Deposits with others 399,000 Restricted cash and investments 465,798 Total cash and cash equivalents $ 1,443,412 The notes to the basic financial statements are an integral part of this statement

8 Notes to the Basic Financial Statements I. Reporting Package This reporting package was prepared by the Fiscal Services Division and reviewed by the Audit Division of the office of the Sonoma County Auditor-Controller-Treasurer-Tax Collector. The information contained in this reporting package is intended solely for use by Vavrinek, Trine, Day and Co. in their role as independent auditors for the County of Sonoma. Significant disclosures required of general purpose financial statements have been omitted from this reporting package. Accordingly, the financial information included in this reporting package is not intended for those who are not informed about such matters. II. Cash and Investments Cash Balance The cash balance consists of: Amortized Cost Fair Value Cash with County Treasurer $ 578,114 $ 571,289 Cash with County Treasurer, restricted 465, ,798 Deposits with others 399, ,000 Cash with Bank of America Petty Cash Total $ 1,443,412 $ 1,436,587 The fair value of the cash investments with the Treasurer is $6,825 less than the amortized cost of those investments. An adjustment was not made for the difference between cost and fair value. The restricted portion represents cash and investments that are restricted as customer deposits or restricted as to use by the Federal Aviation Administration

9 Notes to the Basic Financial Statements III. Changes in Long-Term Liabilities Long-term liability activity for the fiscal year ended was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Advances from other governments $ 6,802,086 - $ (459,578) $ 6,342,508 $ 482,307 Advances from other funds 810, , ,000 Capital lease obligation 464,695 - (128,043) 336, ,770 Compensated absences 174,957 - (48,940) 126,017 - Total long-term liabilities $ 8,251,738 $ 0 $ (636,561) $ 7,615,177 $ 1,424,077 IV. Capital Lease Obligations: During the Fiscal Year , the Airport entered into a new capital leases for Security equipment. The maturity date for the lease obligation is 2015, the original issue amount is $650,000, principal payments are made semiannually and yearly principal amounts range between $69,276 and $135,606 and the interest rate is 2.89%. The annual long-term obligation requirements to maturity the capital lease obligation at June 30, 2013 are as follows: Year Ending Principal Interest Total June 30, ,770 8, , ,606 4, , ,276 1,001 70,277 Total long-term liability $ 336,652 $ 14,733 $ 351,

10 Notes to the Basic Financial Statements V. Due to/advances from Other Funds The County of Sonoma entered into the following loan agreements with the Sonoma County Treasury Pool as follows: Annual Original Outstanding Interest Principal Issue at June 30, Type of Indebtedness Maturity Rates Installments Amount 2013 Treasury Note % $ 810,000 $ 810,000 $ 810,000 Total County of Sonoma indebtedness $ 810,000 Less: Current portion due (810,000) Total long-term advances from other funds $ - VI. Due to/advances from Other Governments The County of Sonoma entered into the following loan agreements with the State of California, Department of Transportation as follows: Annual Original Outstanding Interest Principal Issue at June 30, Type of Indebtedness Maturity Rates Installments Amount 2013 Hangar Construction % $ 40, ,527 $ 1,000,000 $ 247,935 Hangar Construction % $ 21, ,727 $ 1,297,000 $ 446,209 Building Purchase % $ 67, ,270 $ 1,690,000 $ 852,719 Runway Extension % $ 204, ,194 $ 5,000,000 $ 4,795,645 Total State of California, Department of Transportation indebtedness $ 6,342,508 Less: Current portion due (482,307) Total long-term advances from other governments $ 5,860,

11 Notes to the Basic Financial Statements The annual long-term obligation requirements to maturity for due to other governments at are as follows: Year Ending Principal Interest Total June 30, , , , , , , , , , , , , , , , ,665, ,530 2,354, ,785, ,321 2,114, ,198 17, ,911 Total long-term liability $ 6,342,508 $ 2,227,139 $ 8,569,647 There are a number of limitations and restrictions contained in the above loan agreements. Airport management believes it is in compliance with all significant limitations and restrictions. VII. Grants and other contributions Summary of funding received by the Sonoma County Airport from federal sources during the fiscal year ended : Eligible Agency Description Costs Receivable Federal Funds: FAA Airport Improvements $ 1,387,000 $ 123,607 FAA Land Acquisition 719,767 8,796 FAA Airport Improvements 921,500 - Total grants and other contributions $ 3,028,267 $ 132,

12 Notes to the Basic Financial Statements VIII. Net Position Invested in Capital Assets The net position invested in capital assets, net of related debt is calculated as follows: Capital assets, net of accumulated depreciation $ 39,588,111 Less: Due to other governments (current) (1,292,307) Capital lease obligation (current and non-current) (336,652) Advances from other governments (non-current) (5,860,201) Net position invested in capital assets $ 32,098,

13 Notes to the Basic Financial Statements IX. Capital Assets Capital asset activity for the year ended was as follows: Beginning Retire- Transfers & Ending Balance Additions ments Adjustments Balance Capital assets, not being depreciated: Land $ 12,639,412 $ 1,164,183 $ - $ - $ 13,803,595 Construction in progress 5,073,613 3,714, ,788,330 Total capital assets not being depreciated: 17,713,025 4,878, ,591,925 Capital assets being depreciated: Buildings & Improvements 33,920, ,920,272 Equipment 1,420,428 76,511 (22,386) - 1,474,553 Total capital assets being depreciated 35,340,700 76,511 (22,386) - 35,394,825 Less accumulated depreciation for: Buildings & Improvements (16,790,296) (821,942) - - (17,612,238) Equipment (705,243) (103,544) 22,386 - (786,401) Total accumulated depreciation (17,495,539) (925,486) 22,386 - (18,398,639) Total capital assets being depreciated, net 17,845,161 (848,975) ,996,186 Total capital assets, net $ 35,558,186 $ 4,029,925 $ - $ - $ 39,588,111 Construction in progress included capitalized interest of $264,

14 Notes to the Basic Financial Statements X. Changes in Restricted Cash and Investments Beginning Ending Balance Increase Decrease Balance Customer deposits $ 69,245 $ - $ (35,674) $ 33,571 Passenger facility charges 196, ,864 (140,554) 432,227 Total restricted cash and investments $ 266,162 $ 375,864 $ (176,228) $ 465,798 XI. Passenger Facility Charges In accordance with FAA regulation, the Sonoma County Airport began receiving Passenger Facility Charges (PFCs) in May of In 1990, Congress approved the Aviation Safety and Capacity Expansion Act, which authorized domestic airports to impose a PFC on enplaning passengers. In May 1991, the FAA issued the regulations for the use and reporting of PFCs. PFCs may be used for airport projects that must meet at least one of the following criteria: (1) preserve or enhance safety, security, or capacity of the national air transportation system, (2) reduce noise or mitigate noise impacts resulting from an airport, or (3) furnish opportunities for enhanced competition between or among carriers. The PFC funds are recognized on the accrual basis of accounting and the funds collected are restricted and may be used on specifically approved projects. Due to their restricted use, PFCs are categorized as non-operating revenues. All funds collected must be maintained in an interest bearing account prior to disbursement. Cumulative PFC collections and the related interest received as of were as follows: PFC Cash at 6/30/12 $ 196,917 Plus: FY12/13 Collections 336,096 FY12/13 Interest Income 3,151 Prior year PFC Receivable 36,617 Less: FY12/13 Expenses (140,554) PFC Cash at 6/30/13 $ 432,227 Collected but unexpended PFC revenue is included on the statement of net position as restricted cash and investments. Related PFC receivables are also reported as restricted assets. Federal Air Regulations at section of 14 CFR requires inclusion of the Passenger Facility Charges program in the annual single audit

15 Other Matters 1. Please describe any changes in significant accounting policies (e.g. revenue, recognition, depreciation methodologies, expense recognition, capitalization thresholds, etc.). None. 2. Describe the nature of any current, pending or threatened claims, assessments and/or litigation. Also indicate the dollar amounts involved and who at County Counsel is working on the case. The Superior Court held $399,000 for pending litigations with Hallenbarter and Ravani regarding land acquisition for Airport Runway Safety Enhancement Project. 3. Did the department receive any Federal funding during the year? If so, describe the grant and the dollars and types of expenditures involved. Also attach a copy of the grant agreement. The Airport received $92,362 from the Federal Aviation Administration for three projects related to land acquisition, airport improvements and environmental assessment. The allowable costs incurred in accomplishing the projects consisting of land acquisition and associated relocation, demolition, site clearance, collecting airport data, and conducting environmental assessment study. 4. Describe new debt issuance and/or refinancing during the year. Also attach a copy of the debt agreement. None. 5. Please add any other information that might be deemed important or material to the financial statements. None

16 Proposed and Posted Adjustments Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 To reclassify PFC related assets as restricted assets III-A RESTRICTED CASH/SHORT TERM INVESTMENTS 432, EQUITY IN POOLED CASH 432,227 Total 432, ,227 Adjusting Journal Entries JE # 2 To reclassify deposits from others as restricted cash III-F Restricted Cash (non-current) 33, EQUITY IN POOLED CASH 33,571 Total 33,571 33,571 Adjusting Journal Entries JE # 3 I-J-1 Audit adjustment in FY11/12 to reclassify the Runway Master Plan back to CIP CONSTRUCTION IN PROGRESS 501, FIXED ASSETS - BUILDING AND IMPROVEMENTS 501,658 Total 501, ,658 Adjusting Journal Entries JE # 4 To reclassify rent reimbursement to rent revenue per client's classification I-J DONATIONS/REIMBURSEMENTS 72, RENTS/CONCESSIONS 72,000 Total 72,000 72,000 Adjusting Journal Entries JE # 5 To reclassify Misc. back to Charges for Service per client's classification III-B MISCELLANEOUS REVENUE 11, AIRCRAFT LANDING FEES 11,323 Total 11,323 11,323 Adjusting Journal Entries JE # 6 To adjust depreciation expense which included items that were not in service in FY12/13 III-D ACCUMULATED DEPRECIATION - FIXED ASSETS 16, DEPRECIATION 16,844 Total 16,844 16,844 Adjusting Journal Entries JE # 7 To reclassify amount of liability from notes payable to due to other funds III-F-10, III-F NOTES PAYABLE 810, DUE TO OTHER FUNDS 810,000 Total 810, ,