MID-OHIO VALLEY REGIONAL AIRPORT WOOD COUNTY Single Audit For the Year Ended June 30, 2017 RFP#

Transcription

1 WOOD COUNTY Single Audit For the Year Ended June 30, 2017 RFP#

2 TABLE OF CONTENTS TITLE PAGE Independent Auditor s Report... 1 Basic Financial Statements: Statement of Net Position... 4 Statement of Revenues, Expenses and Change in Net Position... 5 Statement of Cash Flows... 7 Statement of Fiduciary Net Position... 8 Notes to the Basic Financial Statements... 9 Required Supplementary Information: Schedule of Proportionate Share of Net Pension Liability Schedule of Contributions Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Expenditures of Passenger Facility Charges Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Required by Government Auditing Standards Independent Auditor s Report on Compliance with Requirements Applicable to the Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance Schedule of Audit Findings Corrective Action Plan i

3 INDEPENDENT AUDITOR S REPORT March 29, 2018 Mid-Ohio Valley Regional Airport PO Box 4089 Parkersburg, WV To the Members of the Board: Report on the Financial Statements We have audited the accompanying financial statements of the business type activities and remaining fund information of Mid-Ohio Valley Regional Airport, Wood County, West Virginia (the Airport), as of and for the year ended June 30, 2017 and the related notes to the financial statements, which collectively comprise the Authority s basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for preparing and fairly presenting these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes designing, implementing, and maintaining internal control relevant to preparing and fairly presenting financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to opine on these financial statements based on our audit. We audited in accordance with auditing standards generally accepted in the United States of America and the financial audit standards in the Comptroller General of the United States Government Auditing Standards. Those standards require us to plan and perform the audit to reasonably assure the financial statements are free from material misstatement. An audit requires obtaining evidence about financial statement amounts and disclosures. The procedures selected depend on our judgment, including assessing the risks of material financial statement misstatement, whether due to fraud or error. In assessing those risks, we consider internal control relevant to the Airport s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not to the extent needed to opine on the effectiveness of the Airport s internal control. Accordingly, we express no opinion. An audit also includes evaluating the appropriateness of management s accounting policies and the reasonableness of their significant accounting estimates, as well as our evaluation of the overall financial statement presentation. We believe the audit evidence we obtained is sufficient and appropriate to support our audit opinion. 1

4 Mid-Ohio Valley Regional Airport Wood County Independent Auditor s Report Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activities and remaining fund information of the Mid-Ohio Valley Regional Airport, Wood County, West Virginia, as of June 30, 2017 and the changes in its financial position and its cash flows thereof for the year then ended in accordance with the accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require this presentation to include schedules of net pension liabilities and pension contributions, listed in the table of contents, to supplement the basic financial statements. Although this information is not part of the basic financial statements, the Governmental Accounting Standards Board considers it essential for placing the basic financial statements in an appropriate operational, economic, or historical context. We applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, consisting of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries to the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not opine or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to opine or provide any other assurance. Management has omitted the management s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by Governmental Accounting Standards Board (GASB) who consider it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Supplementary and Other Information Our audit was conducted to opine on the Airport s basic financial statements taken as a whole. The Schedule of Expenditures of Federal Awards and the Schedule of Expenditures of Passenger Facility Charges present additional analysis as required by Title 2, U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and the Passenger Facility Charge Audit Guide for Public Agencies (the Guide ), issued by the Federal Aviation Administration, and are not a required part of the financial statements. The Schedule of Expenditures of Federal Awards and the Schedule of Expenditures of Passenger Facility Charges are management s responsibility, and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. We subjected these schedules to the auditing procedures we applied to the basic financial statements. We also applied certain additional procedures, including comparing and reconciling this information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, these schedules are fairly stated in all material respects in relation to the basic financial statements taken as a whole. 2

5 Mid-Ohio Valley Regional Airport Wood County Independent Auditor s Report Page 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2018, on our consideration of the Airport s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report describes the scope of our internal control testing over financial reporting and compliance, and the results of that testing, and does not opine on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Airport s internal control over financial reporting and compliance. Perry and Associates Certified Public Accountants, A.C. Marietta, Ohio 3

6 STATEMENT OF NET POSITION AS OF JUNE 30, 2017 ASSETS Construction and Operations Air Service Total Cash and Cash Equivalents $ 601,173 $ 8,422 $ 609,595 Receivables, net: Accounts Receivable 100,921 55, ,390 Transportation Security Administration Receivable 8,465-8,465 Due from (to) Other Funds 213,544 (213,450) 94 Inventory 49,318-49,318 Total Current Assets 973,421 (149,559) 823,862 Construction in Progress - 679, ,675 Non-depreciable Capital Assets 4,121,319-4,121,319 Depreciable Capital Assets, Net of Accumulated Depreciation 24,036,618-24,036,618 TOTAL ASSETS 29,131, ,116 29,661,474 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows of Resources - Pensions 167, ,075 TOTAL DEFERRED OUTFLOWS OF RESOURCES 167, ,075 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 29,298,433 $ 530,116 $ 29,828,549 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Current Liabilities: Accounts Payable $ 113,990 $ 97,437 $ 211,427 Accrued Payroll Taxes and Withholdings 15,644-15,644 Other Post Employment Benefits Payable 352, ,154 Unearned Rent, Current 7,726-7,726 Total Current Liabilities 489,514 97, ,951 Long-Term Liabilities: Compensated Absences 20,780-20,780 Net Pension Liability 259, ,884 Unearned Rent 35,750-35,750 Total Long-Term Liabilities 316, ,414 TOTAL LIABILITIES 805,928 97, ,365 DEFERRED INFLOWS OF RESOURCES Deferred Inflows of Resources - Pensions 12,661-12,661 TOTAL DEFERRED INFLOWS OF RESOURCES 12,661-12,661 Net Position: Investment in Capital Assets 24,036, ,675 24,716,293 Unrestricted 4,443,226 (246,996) 4,196,230 Total Net Position 28,479, ,679 28,912,523 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 29,298,433 $ 530,116 $ 29,828,549 The accompanying notes are an integral part of the financial statements 4

7 STATEMENT OF REVENUES, EXPENSES AND CHANGE IN NET POSITION REVENUES: Construction and Operations Air Service Total Landing Area: Airlines $ 11,172 $ - $ 11,172 PFC - 11,797 11,797 Transit Aircraft 13,782-13,782 National Guard 24,000-24,000 Total Landing Area 48,954 11,797 60,751 Hangar Area Hangar #1, #2, #3, Tie Down 25,261-25,261 Hangar #4 7,911-7,911 Hangar #5 83,245-83,245 Car Wash Building 4,000-4,000 T-Hangar 45,000-45,000 Total Hangar Area 165, ,417 Terminal Area Airlines 48,341-48,341 Deicing 13,771 13,771 Rentals GSA / TSA 28,281-28,281 Rentals 15,310-15,310 Recovery of Utilities 30,626-30,626 Trash Hauling 3,101-3,101 Auto Rental Agency 18,521-18,521 Restaurant 12,633-12,633 TSA Security Reimbursement 29,515-29,515 Fuel and Oil Sales 1,391,610-1,391,610 FAA Construction Grants - 2,598,814 2,598,814 WVAC Construction Grants - 488, ,939 Miscellaneous 18,477-18,477 Total Terminal Area 1,610,186 3,087,753 4,697,939 Industrial Park Ground Rental 16,234-16,234 Recovery of Utilities / Maintenance 3,644-3,644 Total Industrial Park 19,878-19,878 Total Revenues $ 1,844,435 $ 3,099,550 $ 4,943,985 The accompanying notes are an integral part of the financial statements 5

8 STATEMENT OF REVENUES, EXPENSES AND CHANGE IN NET POSITION (CONTINUED) EXPENDITURES Construction and Operations Air Service Total Operating Expenses Salaries and Wages $ 462,880 $ - $ 462,880 Fringe Benefits 181, ,500 Insurance 50,409-50,409 Utilities 122, ,815 Equipment Gas and Oil 10,826-10,826 Supplies and Equipment 11,338-11,338 Administrative 11,235-11,235 Oil for Resale Repairs and Maintenance 111, ,405 Professional Fees 10,982-10,982 Fire and Crash Protection 10,589-10,589 Fuel Costs 792, ,533 Security 29,720-29,720 Air Service Marketing - 33,951 33,951 Construction in Progress - 2,880,334 2,880,334 Miscellaneous 46,663 (1) 46,662 Depreciation 1,453,751-1,453,751 Total Operating Expense 3,306,646 2,914,284 6,220,930 Operating Income (Loss) (1,462,211) 185,266 (1,276,945) Non-Operating Revenue (Expense) Interest Expense and Bank Fees (2,087) (335) (2,422) Bad Debt Expense / Other 3,950-3,950 Non-Operating Grants and Contributions 50,425-50,425 Total Non-Operating Revenues (Expsenses) 52,288 (335) 51,953 Change in Net Position (1,409,923) 184,931 (1,224,992) Net Position, Beginng of Year (RESTATED) - See Note 13 28,799,400 1,338,115 30,137,515 Transfer Capital Assets (to) Operations 1,090,367 (1,090,367) - NET POSITION, END OF YEAR $ 28,479,844 $ 432,679 $ 28,912,523 The accompanying notes are an integral part of the financial statements 6

9 STATEMENT OF CASH FLOWS Construction and Operations Air Service Total Cash Flows from Operating Activities: Cash Received from Customers and Others $ 1,853,778 $ 3,044,081 $ 4,897,859 Other Operating Revenues (84,219) - (84,219) Cash Paid to Suppliers and Employees (1,822,455) (3,158,647) (4,981,102) Other Operating Expenses 26,564-26,564 Net Cash Provided (Used) by Operating Activities (26,332) (114,566) (140,898) Cash Flows from Noncapital Financing Activities: Net Cash Provided (Used) by Non-Operating Activities 52,288 (335) 51,953 Cash Flows from Financing Activities: Realized Unearned Rent (3,250) - (3,250) Repayment on Note - Line of Credit (60,879) - (60,879) Net Cash Provided (Used) by Fianancing Activities (64,129) - (64,129) Cash Flows from Investing Activities: Non-Operating Grants and Contributions Net Cash Provided (Used) by Investinging Activities Net Increase (Decrease) in Cash and Cash Equivalents (38,173) (114,901) (153,074) Cash and Cash Equivalents at Beginning of Year 639, , ,670 Cash and Cash Equivalents at End of Year $ 601,174 $ 8,422 $ 609,596 Reconciliation of Operating Income Operating Income (Loss) $ (1,462,211) $ 185,266 $ (1,276,945) Adjustments: Depreciation 1,453,751-1,453,751 (Increase) Decrease Accounts Receivable - trade 9,343 (55,469) (46,126) (Increase) Decrease Accounts Receivable - other (Increase) Decrease in Prepaid Expenses (Increase) Decrease Due to from Other Funds (94) - (94) (Increase) Decrease Deferred Outflows (84,125) - (84,125) (Increase) Decrease Inventory 32,793-32,793 Increase (Decrease) Accounts Payable (28,061) (244,363) (272,424) Increase (Decrease) Payroll Liability Expense 4,872-4,872 Increase (Decrease) OPEB 17,667-17,667 Increase (Decrease) Compensated Absences 3,169-3,169 Increase (Decrease) NPL 110, ,321 Increase (Decrease) Deferred Inflows (83,757) - (83,757) Total Adjustments 1,435,879 (299,832) 1,136,047 Net cash (used) by operating activities $ (26,332) $ (114,566) $ (140,898) The accompanying notes are an integral part of the financial statements 7

10 STATEMENT OF FIDUCIARY NET POSITION Agency Assets Cash and Cash Equivalents $ 94 Accounts Receivable 123,630 Total Assets 123,724 Liabilities Accounts Payable 123,630 Due To Other Funds 94 Total Liabilities $ 123,724 The acconmpanying notes are an integral part of the financial statements 8

11 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 1 - NATURE OF ORGANIZATION AND REPORTING ENTITY The operations of Mid-Ohio Valley Regional Airport (Airport) are conducted for Wood County Airport Authority and Mid-Ohio Valley Regional Airport Authority. Wood County Airport Authority is responsible for all aspects of the organization other than responsibility of administering the airport marketing grant which is a delegated responsibility to Mid-Ohio Valley Regional Airport Authority from Wood County Airport Authority. On May 10, 1973, the County Court of Wood County, West Virginia, pursuant to provisions of Chapter Eight, Article Twenty-Nine A, of the Code of West Virginia, as amended, created and established as a public agency, a public corporation known as "Wood County Airport Authority". All assets used in airport operations and improvement projects under the custody of the County Court were transferred to the Wood County Airport Authority. Mid-Ohio Valley Regional Airport Authority was created, and exists, pursuant to the provisions of West Virginia Code , as amended of the Acts of the West Virginia Legislature, and is a public corporation. Mid-Ohio Valley Regional Airport Authority formed and is (to the extent relinquished by the Wood County Airport Authority) "to operate an airport or landing field and appurtenant facilities in Wood County, West Virginia, to serve the Mid-Ohio Valley area in which it is located". Mid-Ohio Valley Regional Airport Authority powers include those set forth in said statutes or other applicable laws of the State of West Virginia not retained by the Wood County Airport Authority NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Airport prepares its financial statements in accordance with accounting principles generally accepted in the United States of America as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard setting body for establishing governmental accounting and financial reporting principles. Significant accounting policies of the Authority are described below. A. Basis of Presentation The Airport's funds are enterprise funds. Enterprise funds are proprietary funds used to account for business-like activities provided to the general public. These activities are financed primarily by user charges and the measurement of financial activity focuses on net income measurement similar to the private sector. The Airport presents the operations and the air service marketing and construction activities in separate funds and in total. In addition, the Airport maintains a fiduciary fund for Essential Air Services funds received from the United States Department of Transportation and disbursed to airlines. B. Measurement Focus and Basis of Accounting Measurement focus is a term used to describe which transactions are recorded within the various financial statements. Basis of accounting refers to when transactions are recorded regardless of the measurement focus applied. The proprietary funds utilize an "economic resources" measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net assets (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is classified as net assets. All proprietary funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. 9

12 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Airport's enterprise funds are charges to customers for sales and service. Operating expenses for enterprise funds include the costs of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Additionally, the government reports the following fund type: The agency fund is custodial in nature (assets equal liabilities) and does not present results of operations or have a measurement focus. The agency fund is accounted for using the full accrual basis of accounting. This fund is used to account for assets the Airport holds for others in an agency capacity. C. Accounts Receivable All accounts receivables are shown net of allowances for what has been identified as being uncollectibles in the amount of $3,000. D. Capital Assets Construction of the airport began in 1938 as a WPA project and continued primarily as a War Department project (runways, taxi strips, etc.) through No attempt was made at the time of construction to accumulate the costs involved. In 1958 a full-time bookkeeper was hired and at that time, original costs and accumulated depreciation thereon were calculated as of June 30, 1958, and recorded on the newly established general ledger, together with additions to that date. All additions to capital assets are capitalized when available for service. The cost of maintenance and repairs is charged to operations in the year in which the cost is incurred. When capital assets are retired, the cost and accumulated depreciation thereon are eliminated for their respective amounts and any gain or loss on the disposition is reflected in the current operations. Depreciation is computed on the straight-line method on the following estimated useful lives: E. Inventory Asset Useful Life Landing Area 3-25 Years Hangar Area 3-25 Years Terminal Area 3-25 Years Industrial Park 3-10 Years Administrative 3-10 Years Inventory consists of aviation and automobile fuel and is stated at cost, determined on the first-in first-out basis. Quantities are determined by physical measurement. 10

13 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Components of Net Position The net investment in capital assets component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt also should be included in this component of net position. If there are significant unspent related debt proceeds or deferred inflows of resources at the end of the reporting period, the portion of the debt or deferred inflows of resources attributable to the unspent amount should not be included in the calculation of net investment in capital assets. Instead, that portion of the debt or deferred inflows of resources should be included in the same net position component (restricted or unrestricted) as the unspent amount. The restricted component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Generally, a liability relates to restricted assets if the asset results from a resource flow that also results in the recognition of a liability or if the liability will be liquidated with the restricted assets reported. The unrestricted component of net position is he net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position. G. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires 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 period. H. Compensated Absences Compensated absences are those for which employees have a right to receive consideration for expected future absences. For funds presented in accordance with accounting principles generally accepted in the United States of America, compensated absences should be accounted for in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 43 without modification. I. Sales Tax Taxes collected on sales are remitted directly to the taxing authority and are omitted from sales and cost of sales respectively. J. Deferred Outflows/Inflows of Resources In addition to assets and liabilities, the statement of financial position may report deferred outflows/inflows of resources. Deferred outflows of resources represent a consumption of net position that applies to a future period and will not be recognized as an outflow of resources (expense/expenditure) until that time. Deferred inflows of resources represent an acquisition of net position that applies to a future period and will not be recognized as an inflow of resources (revenue) until that time. The Airport reported deferred inflows and outflows of resources related to pensions for 2017 in the Statement of Net Position. 11

14 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Net Pension Liability For purposes of measuring the net pension liability and deferred outflows/inflows of the resources related to pensions, and pension expense, information about the fiduciary net position of the Airport s Public Employee Retirement System (PERS), and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by the PERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. L. Net Position Net position represents the difference between all other elements on the statement of financial position. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balance of any borrowing used for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on its use either through constitutional provisions or enabling legislation adopted by the Airport or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. An example of net position restricted for other purposes includes activities for various federal grants and programs. Net position is reported as unrestricted when the net position does not meet the definition of net investment in capital assets or restricted net position. The Airport s policy is to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. NOTE 3 DEPOSITS WITH FINANCIAL INSTITUTIONS Deposits of cash made by the Mid-Ohio Valley Regional Airport are summarized below. The deposits that are represented are classified as to credit risk by the three categories described below: Category 1 - Insured (FDIC) or collateralized with securities held by the Airport or its agent in the Airport's name. Category 2 - Collateralized with securities held by the pledging financial institution's trust department or agent in the Airport's name. Category 3 - Uncollateralized. Cash on hand and deposits with banking institutions in checking accounts are presented as cash in the accompanying financial statements were $601,173 for Operation fund, $8,422 for Construction and Air Service fund and $94 for the agency fund as of June 30, Such deposits at June 30, 2017 were covered by federal depository insurance and pledged securities thus all was subject to a Category 1 credit risk. Per FAA guidance regarding Passenger Facility Charge (PFC) the fees collected are restricted for facility use on certain airport improvement programs. The fees collected are accounted for in the construction fund and unspent portions of fees collected are considered to be restricted cash. However, as of June 30, 2017, the airport's balance of unspent PFC monies is $(112,713). The negative balance represents expense for airport improvement projects paid for in the operations fund and not reimbursed from collected PFC funds in the construction fund. NOTE 4 LAND COST IN INDUSTRIAL PARK No land acquisition costs are included in the project costs for the Industrial Park. The parcel costs were included as a part of project , site preparation of the runway extension. These land acquisition costs were paid by the Wood County Commission. 12

15 NOTE 5 CAPITAL ASSETS NOTES TO THE BASIC FINANCIAL STATEMENTS Capital assets activity for the fiscal year ended June 30, 2017 was as follows: Totals June 30, 2016 Totals (RESTATED) Additions Deletions June 30, 2017 Non-depreciable capital assets Land $ 4,121,319 $ - $ - $ 4,121,319 Total Nondepreciable capital assets 4,121, ,121,319 Depreciable capital assets Landing area equipment and runways 41,821,716 1,090,367-42,912,084 Hangar area equipment and buildings 3,045, ,045,827 Terminal area equipment and buildings 4,408, ,408,223 Administrative equipment 48, ,995 Industrial park equipment and buildings 1,388, ,388,404 Total depreciable capital assets 50,713,165 1,090,367-51,803,532 Less accumulated depreciation for: Landing area equipment and buildings 17,957,227 1,313,963-19,271,190 Hangar area equipment and buildings 2,995,365 11,392-3,006,757 Terminal area equipment and buildings 3,923, ,313-4,051,781 Administrative equipment 48, ,783 Industrial park equipment and buildings 1,388, ,388,404 Total accumulated depreciation 26,313,164 1,453,750-27,766,915 Total capital assets being depreciated, net 24,400,001 (363,383) - 24,036,618 Total capital assets, net $ 28,521,320 $ (363,383) $ - $ 28,157,937 NOTE 6 UNEARNED RENT REVENUE The Airport offers various tenants of its Industrial Park a lease that permits lessees to pay rentals in advance in the form of capital improvements to the site. These advanced payments of capital improvements are then amortized over the life of the leases and charged to revenues on a monthly basis. The capital improvements remain the property of the lease holding during the terms of the agreement of the lease with the Airport. The balance of the advance rentals subject to amortization is as follows: Total Unearned Rent $ 43,476 Less: Current Portion 7,726 Non-Current Portion $ 35,750 13

16 NOTE 7 LONG-TERM LIABILITIES NOTES TO THE BASIC FINANCIAL STATEMENTS As of June 30, 2017, the Airport elements of long term debt is a United National Bank credit line, net pension liability associated with the multiple employer pension plan, and balance of compensated absences being accrued vacation days and comp time. The Airport s long-term liability requirements as of June 30, 2017 are as follows: Beginning Ending Balance Additions Deletions Balance Compensated Absences $ 17,611 $ 23,442 $ 20,273 $ 20,780 Line of Credit - United National Bank 60,879-60,879 - Net Pension Liability 149, , ,884 Total $ 228,053 $ 133,763 $ 81,152 $ 280,664 NOTE 8 RETIREMENT HEALTH PLAN The Airport contributes to the West Virginia Retiree Health Benefits Trust (RHBT), a cost-sharing, multiple employer defined benefit post-employment healthcare plan administered by the West Virginia Public Employees Insurance Agency (PEIA). RHBT provides medical benefit to eligible retired employees of participating employers. RHBT issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to: West Virginia Retiree health Benefits Trust, Building 5, Room 1001, 1900 Kanawha Boulevard East, Charleston, West Virginia, Chapter 5, Article 16D of the West Virginia Code assigns the authority to establish and amend benefits and provisions to the RHBT. Participating employers are contractually required to contribute at a rate assessed each year by RHBT. The RHBT board sets the employer contribution rate based on the annual required contributions (ARC) of the plan, an amount actuarially determined in accordance with the parameters of Governmental Accounting Standards Board (GASB) Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) of the plan over a period not to exceed thirty years. The Airport s OPEB liability to RHBT for the year ended June 30, 2017 was $352,

17 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS AND PLANS Public Employee Retirement System (PERS) The Board participates in a statewide, cost-sharing, multiple employer defined benefit plan on behalf of the general Board employees. The system is administered by agencies of the State of West Virginia and funded by contributions from participants, employers, and State appropriations, as necessary. The Board s cost-sharing multiple-employer plan is administered by the Consolidated Public Retirement Board (CPRB), which acts as a common investment and administrative agent for all of the participating employers. CPRB issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CPRB website at The following is a summary of eligibility factors, contribution methods, and benefits provisions: Eligibility to participate: Authority establishing contribution obligations and benefit provisions: All Board full-time employees, except those covered by other pension plans. State statute Tier 1 Plan member s contribution rate: 4.50% (Employees hired before July 1, 2015) Tier 2 Plan member s contribution rate: 6.00% (Employee hired after July 1, 2015) Board s contribution rate: 12.00% Period required to vest: Benefits and eligibility for distribution: 5 years for Tier 1 and 10 years for Tier 2 Tier 1 A member who has attained age 60 and has earned 5 years or more of contributing service or age 55 if the sum of his/her age plus years of credited service is equal to or greater than 80. The final average salary (three highest consecutive years in the last 15) times the years of service times 2% equals the annual retirement benefit. Tier 2 Qualification for normal retirement is age 62 with 10 years of services or at least age 55 with and service equal to 80 or greater. The average salary is the average of the five consecutive highest annual earnings out of the last fifteen years of earnings) times the years of service times 2% equals the retirement benefit. 15

18 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS AND PLANS (CONTINUED) Public Employee Retirement System (PERS) (Continued) Deferred portion No Provision for: Cost of living Death benefits No Yes The Airport s contributions to the West Virginia Public Employees Retirement System for the year ended June 30, 2017 is as follows: Percentage of Payroll Total Wages Coverage Wages Amount Contributed Employer Share - 12% $ 435,349 $ 435,349 $ 52,242 Tier 1 Employee Share - 4.5% 399, ,053 17,957 Tier 2 Employee Share - 6% 36,296 36,296 2,178 Trend Information Annual Percent Fiscal Year Pension Cost Contributed 2017 $ 52, % 2016 $ 52, % 2015 $ 50, % For 2017, the required contribution was $52,242. Of this amount $4,179 is reported in accrued payroll and withholdings. PERS issues a publicly available financial report that includes financial statements and required supplementary information. That information may be obtained by writing to the Public Employees Retirement System, 4101 MacCorkle Avenue, SE, Charleston, WV Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions At fiscal year-end, the Airport reported the following liabilities for its proportionate share of the net pension liabilities. The net pension liabilities were measured as of June 30, 2016 for the Airport fiscal year ended June 30, 2017, respectively. The total pension liability used to calculate the net pension liabilities were determined by an actuarial valuation as of June 30, 2015 and rolled forward to June 30, 2016 using the actuarial assumptions and methods described in the appropriate section of this note. The Airport's proportion of the net pension liabilities was based on a projection of the Airport's long-term share of contributions to the pension plans relative to the projected contributions of all participating governments, actuarially determined. At June 30, 2017, the Airport reported the following proportions and increase/decreases from its proportion measured as of June 30, 2016: 16

19 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS AND PLANS (CONTINUED) Public Employee Retirement System (PERS) (Continued) 2017 Amount for proportionate share of net pension liability $ 259,884 Percentage for proportionate share of net pension liability % Increase/(decrease) in % from prior proportion measured % For the year ended June 30, 2017, the Airport recognized the following pension expense: PERS Pension Expense $ (5,291) The Airport reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources for the year ended June 30, 2017: Deferred Outflows of Resources Deferred Inflows of Resources Net difference between projected and actual earnings on pension plan investments $ 81,665 $ - Net differences between projected and actual experiences 21,672 - Deferred differences in assumptions - 12,661 Changes in proportion and differences between contributions and proportionate share of contributions 11,496 - Contributions subsequent to measurement date 52,242 - Totals $ 167,075 $ 12,661 The amount reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30: 2018 $ 18, , , ,439 Total $ 102,172 17

20 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS AND PLANS (CONTINUED) Actuarial assumptions The total pension liability was determined by an actuarial valuation as of July 1, 2015 and rolled forward to June 30, 2016 for all plans, using the following actuarial assumptions, applied to all periods included in the measurement. Public Employee Retirement System (PERS) (Continued) PERS June 30, 2016 Individual entry age normal cost with level percentage of Actuarial Cost Method payroll Asset Valuation Method Fair value Amortization Method Level dollar, fixed period Amortization Period Through Fiscal Year 2035 Actuarial Assumptions: Investment Rate of Return 7.50% Projected Salary Increases: PERS: State % Nonstate % Inflation Rate 3.00% Discount Rate 7.50% Mortality Rates Healthy males - 110% of RP-2000 Non-Annuitant, Scale AA fully generational; Healthy females - 101% of RP-2000, Non- Annuitant, Scale AA fully generational; Disabled males - 96% of RP-2000 Disabled Annuitant, Scale AA fully generational; Disabled females - Withdrawal Rates: State % Nonstate % Disability Rates % Retirement Rates % Date Range in Most Recent Experience Study The long-term expected rate of return on pension plan investments were determined using a buildingblock method in which estimates of expected real rates of returns (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each asset class are summarized in the following tables: 18

21 NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS AND PLANS (CONTINUED) Public Employee Retirement System (PERS) (Continued) 2017 Long-term Expected PERS Rate Target Asset Asset Class of Return Allocation US Equity 7.0% 27.5% International Equity 7.7% 27.5% Core Fixed Income 2.7% 7.5% High Yield Fixed Income 5.5% 7.5% TPS 2.7% 0.0% Real Estate 7.0% 10.0% Private Equity 9.4% 10.0% Hedge Funds 4.7% 10.0% 100.0% Discount Rate The discount rate used to measure the total pension liability was 7.5 percent for all defined benefit plans. The projection of cash flows used to determine the discount rates assumed that employer contributions will continue to follow the current funding policies. Based on those assumptions, the fiduciary net position for each defined benefit pension plan was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rates of return on pension plan investments were applied to all periods of projected benefit payments to determine the total pension liabilities of each plan. The following chart presents the sensitivity of the net pension liability to changes in the discount rate, calculated using the discount rates as used in the actuarial evaluation, and what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage point higher than the current rate: 1% Decrease 6.50% Current Discount Rate 7.50% 1% Increase 8.50% Proportionate share of PERS's Net pension liability $ 470,426 $ 259,884 $ 81,073 Detailed information about the pension plans' fiduciary net position is available in the separately issued financial report available at the Consolidated Public Retirement Board's website at That information can also be obtained by writing to the West Virginia Consolidated Public Retirement Board, 4101 MacCorkle Avenue SE, Charleston, WV NOTE 10 RISK MANAGEMENT The Airport is exposed to various risks of losses related to torts; theft; damage to and destruction of assets; errors and omissions; and natural disasters. The Authority provides insurance coverage to employees for job related injuries through BrickStreet Insurance. Liabilities for contingencies are reported when it is probable a loss has occurred, and the amount of the loss can be reasonably estimated. 19

22 NOTE 10 RISK MANAGEMENT (CONTINUED) NOTES TO THE BASIC FINANCIAL STATEMENTS During the year ended June 30, 2017 the Airport did not reduce insurance coverages from coverage levels in place as of June 30, No settlements have exceeded coverage levels in place during the past three years. NOTE 11 CONTINGENT LIABILITIES The Airport participates in federal grants that are subject to financial and compliance audits by grantor agencies or their representatives. These audits could lead to a request for reimbursement to the grantor agency for expenditures disallowed under the terms of the grant. The Airport believes that disallowed claims, if any, will not have a material effect on the financial condition. NOTE 12 - SUBSEQUENT EVENTS Management has evaluated events subsequent to the date of the statement of financial position through March 29, 2018, the date the financial statements were available to be issued. No events have occurred subsequent to the statement of financial position date through March 29, 2018 that would require adjustment or disclosure in the financial statements. Certain events that occur between the date of the financial statements and the date they are issued must be disclosed. There are two ways that subsequent events may affect the financial statements and they are: Recognized events are those that existed at the date of the financial statement and provide additional information available prior to the issuance of the financial statements. Non-recognized events are those that provide additional information prior to the issuance of the financial statements but did not exist at the date of the financial statement. The Airport is not aware of any recognized or unrecognized subsequent events that should be reported in the financial statements. NOTE 13 RESTATEMENT NOTE The following restatement to net position at the beginning of the year is due to the incorrect posting to capital assets and accounts payable, capital assets and accumulated depreciation not being recorded at the correct amounts. For the year ended June 30, 2016 net position is as follows: Construction Operations and Air Service Net Position, as Previously Stated $ 29,920,702 $ 358,213 Change in Capital Assets, Net (1,321,702) 1,321,702 Correction of Recording Errors 200,400 (341,800) Net Position at June 30, 2016 as Restated $ 28,799,400 $ 1,338,115 20

23 SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY JUNE 30, 2017 Public Employees Retirement System Airport's proportion of the net pension liability (asset) (percentage) % % % % Airport's proportionate share of the net pension liability (asset) $ 259,884 $ 149,563 $ 95,346 $ 233,035 Airport's covered payroll $ 389,630 $ 363,221 $ 345,952 $ 368,829 Airport's proportionate share of the net pension liability (asset) as a percentage of its covered payroll 66.70% 41.18% 27.56% 63.18% Plan fiduciary net position as a percentage of the total pension liability 86.11% 94.23% 91.29% 79.70% Information prior to 2013 is not available. This chart will be built prospectively. 21

24 SCHEDULE OF CONTRIBUTIONS JUNE 30, 2017 Public Employees Retirement System Contractually required contribution $ 52,242 $ 52,600 $ 50,851 $ 50,163 $ 51,636 Contributions in relation to contractually (52,242) (52,600) (50,851) (50,163) (51,636) required contribution Contribution deficit (surplus) $ - $ - $ - $ - $ - Airport's covered payroll $ 435,353 $ 389,630 $ 363,221 $ 345,952 $ 368,829 Contributions as a percentage of covered payroll 12.00% 13.50% 14.00% 14.50% 14.00% Information prior to 2013 is not available. The schedule will be built prospectively. 22

25 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FEDERAL GRANTOR Federal Pass Through Pass Through Grantor CFDA Entity Identifying Program / Cluster Title Number Number Expenditures U.S. DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Direct Awards Airport Improvement Program $ 44, ,774, ,490 Total Airport Improvement Program 2,964,532 Total U.S. Department of Transportation 2,964,532 Total Expenditures of Federal Awards $ 2,964,532 The accompanying notes are an integral part of this schedule. The accompanying notes to this schedule are an integral part of this schedule 23

26 NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 2 CFR (b)(6) NOTE A BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal award activity of Mid-Ohio Valley Regional Airport (the Airport s) under programs of the federal government for the year ended June 30, The information on this Schedule is prepared in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Airport, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Airport. NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the cash basis of accounting. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. The Airport has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. NOTE C - MATCHING REQUIREMENTS Certain Federal programs require the Airport to contribute non-federal funds (matching funds) to support the Federally-funded programs. The Airport has met its matching requirements. The Schedule does not include the expenditure of non-federal matching funds. 24

27 SCHEDULE OF PASSENGER FACILITY CHARGE Passenger Facility Charge (PFC) fees Balance of unspent PFC monies as of June 30, 2016 $ (124,510) Plus, PFC Monies Collected FY ,797 Less, PFC Monies Spent on Projects FY Equals, Balance of Unspent PFC Monies as of June 30, 2017 $ (112,713) 25

28 March 29, 2018 INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS REQUIRED BY GOVERNMENT AUDITING STANDARDS Mid-Ohio Valley Regional Airport PO Box 4089 Parkersburg, WV To the Members of the Board: We have audited, in accordance with auditing standards generally accepted in the United State and the Comptroller General of the United States Government Auditing Standards, the financial statements of the Mid-Ohio Valley Regional Airport, Wood County, West Virginia, (the Airport) as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the Airport s basic financial statements and have issued our report thereon dated March 29, Internal Control Over Financial Reporting As part of our financial statement audit, we considered the Airport s internal control over financial reporting (internal control) to determine the audit procedures appropriate in the circumstances to the extent necessary to support our opinions on the financial statements, but not to the extent necessary to opine on the effectiveness of the Airport s internal control. Accordingly, we have not opined on it. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, when performing their assigned functions, to prevent, or detect and timely correct misstatements. A material weakness is a deficiency, or combination of internal control deficiencies resulting in a reasonable possibility that internal control will not prevent or detect and timely correct a material misstatement of the Authority s financial statements. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all internal control deficiencies that might be material weaknesses or significant deficiencies. Therefore, unidentified material weaknesses or significant deficiencies may exist. Given these limitations, we did not identify any deficiencies in internal control that we consider material weaknesses. We did identify a certain deficiency in internal control, described in the accompanying schedule of audit findings that we consider a significant deficiency. We consider finding to be a significant deficiency. 26