KANW-FM A DEPARTMENT OF ALBUQUERQUE MUNICIPAL SCHOOL DISTRICT NO.12 FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR S REPORT

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1 A DEPARTMENT OF ALBUQUERQUE MUNICIPAL SCHOOL DISTRICT NO.12 FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR S REPORT JUNE 30, 2014

2 KANW -FM A DEPARTMENT OF ALBUQUERQUE MUNICIPAL SCHOOL DISTRICT #12 TABLE OF CONTENTS FOR THE YEAR ENDED JUNE 30, 2014 FINANCIAL SECTION Independent Auditor s Report 1-2 Statement of Net Position 3 Statement of Revenues, Expenses, and Changes in Net Position 4 Statement of Cash Flows 5 Notes to Financial Statements 6-8 SUPPLEMENTARY INFORMATION Corporation for Public Broadcasting electronic submission

3 To the Board of Education Albuquerque Municipal School District #12 Albuquerque, New Mexico INDEPENDENT AUDITOR S REPORT Report on the Financial Statements We have audited the accompanying financial statement of the business-type activities of KANW-FM in Albuquerque, New Mexico, as of and for the year ended June 30, 2014, and the related notes to the financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business type activities of KANW-FM in Albuquerque, New Mexico as of June 30, 2014, and the respective changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America Lead Ave SE, Suite C Albuquerque, NM Phone: Fax: moyewaters.com 1

4 Emphasis of Matter As discussed in Note # la, the financial statements of KANW-FM in Albuquerque, New Mexico, are intended to present the financial position, the changes in net assets, and cash flows of only the public broadcasting operations that is attributable to the transactions ofkanw~fm. They do not purport to, and do not, present fairly the fmancial position of the Albuquerque Municipal Schoo] District #12, as of June 30,2014, the changes in its financial position and cash flows, where applicable, for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matter We have previously audited KANW-FM's 2013 financial statements, and we expressed an unmodified opinion on the financial statements of the business type activities in our report dated January 24, In our opinion, the comparative information presented herein as of and for the year ended June 30, 2013, is consistent, in all material respects, with the audited financial statements from which it has been derived. 2

5 A Department of Albuquerque Municipal School District No. 12 Statement of Net Position Proprietary Fund June 30, 2014 (With Comparative Totals As Of June 30, 2013) ASSETS Current Assets: Cash and cash equivalents $ 595,520 $ 584,301 Total Current Assets 595, ,301 Capital Assets: Buildings and Equipment (Note 2) 1,247, ,777 Less Accumulated Depreciation (Note 2) (580,307) (540,034) Total Capital Assets 667, ,743 LIABILITIES Total Assets 1,262, ,044 Current Liabilities: Accounts Payable 30,557 16,389 Compensated Absences (Note 3) 5,874 5,703 Deferred Revenue (Note 4) 2,131 35,725 Total Current Liabilities 38,562 57,817 Noncurrent Liabilities; Compensated Absences (Note 3) 11,925 11,578 Total Noncurrent Liabilities 11,925 11,578 Total Liabilities 50,487 69,395 NET POSITION Invested in Capital Assets (Note 5) 667, ,743 Unrestricted (Note 5) 545, ,906 Total Net Position 1,212, ,649 Total Liabilities & Net Position $ 1,262,939 $ 922,044 SEE INDEPENDENT AUDITOR'S REPORTS The Accompanying Notes Are An Integral Part Of These Financial Statements 3

6 A Department of Albuquerque Municipal School District No. 12 Statement of Revenues, Expenses and Changes in Net Position Proprietary Fund For the Years Ended June 30, 2014 (With Comparative Totals As Of June 30, 2013) OPERATING REVENUES CPB Grant $ 210,723 $ 426,862 Local Government Support 351,147 16,145 Contributions - Memberships 34, ,579 Business Underwriting 101,298 80,528 Music and Other Merchandise Sales 117, ,490 Fundraising 168, ,614 Total Operating Revenue 983, ,218 OPERATING EXPENSES Management and General 90,362 81,027 Programming 123, ,120 Broadcasting 135,675 90,736 Program Information and Promotion 104, ,092 Fundraising and Membership Development 129, ,685 Loss on Disposition of Assets - 5,266 Depreciation 40,276 39,686 Total Operating Expenses 624, ,612 Change in Net Position 359, ,606 Restatement of Net Position - (980) Net Position at Beginning of Year 852, ,023 Net Position at End of Year $ 1,212,452 $ 852,649 SEE INDEPENDENT AUDITOR'S REPORTS The Accompanying Notes Are An Intergral Part Of These Financial Statements 4

7 A Department of Albuquerque Municipal School District No. 12 Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2014 (With Comparative Totals As Of June 30, 2013) CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Grantors $ 170,489 $ 182,147 Government Contributions for Capital Outlay Expenditures 357,787 - Receipts from Contributions, Underwriting and Fundraising 304, ,721 Music and Merchandise Sales 117, ,490 Operating Expenses (569,051) (603,809) Net cash provided (used) by operating activities 381,171 19,549 CASH FLOWS FROM NON CAPITAL FINANCING ACTIVITIES None - - Net cash provided (used) by non capital financing activities - - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES None - - Net cash provided (used) by capital financing activities - - CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Fixed Assets (369,952) (120,184) Net cash provided (used) by investing activities (369,952) (120,184) Net increase (decrease) in cash and cash equivalents 11,219 (100,635) Cash and cash equivalents at beginning of year 584, ,936 Cash and cash equivalents at end of year $ 595,520 $ 584,301 RECONCILIATION OF INCREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) $ 359,803 $ 232,606 Adjustments to reconcile increases in net assets to cash provided by operating activities: Depreciation Expense 40,276 39,686 Loss on Disposition of Assets - 5,266 Change in Assets and Liabilities: Accounts and Other Payables 14, Payroll Liabilities 518 1,860 Deferred Revenues (33,594) (260,860) Net Cash Provided by Operating Activitites $ 381,171 $ 19,549 SEE INDEPENDENT AUDITOR'S REPORTS The Accompanying Notes Are An Integral Part Of These Financial Statements 5

8 A DEPARTMENT OF THE ALBUQUERQUE MUNICIPAL SCHOOL DISTRICT NO. 12 NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2014 Note 1. Summary of Significant Accounting Policies A. Function of Entity KANW-FM (89.1 MHz) is a public radio station based in Albuquerque, New Mexico. Launched in 1951, it is the oldest FM radio station in the State of New Mexico. KANW-FM is administered by the Albuquerque Municipal School District #12. It is used for educational purposes at times but mostly has a music format featuring New Mexico based Spanish music artists. The KANW-FM is funded by the Corporation of Public Broadcasting, member and listener contributions, business underwriting of programs, and support from the Albuquerque Public Schools. These financial statements include only the financial information of KANW-FM and do not include any other financial information of the Albuquerque Municipal School District #12. B. Basis of Accounting In the financial statements of KANW-FM, business-like activities are presented using 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. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. C. Interfund Receivables and Payables During the course of operations, transactions occur between KANW-FM and the Albuquerque Public Schools that may result in amounts owed or receivable between the entities. Short-term transactions are reported as either receivables or payables from the Albuquerque Public Schools. D. Statement of Cash Flows For purposes of the statement of cash flows, KANW-FM considers all highly liquid investments as cash equivalents. Cash includes balances held in accounts administered by the Albuquerque Public Schools. E. Grant Receivables Grant receivables represent the amount expended during the grant period but reimbursed by the grantor after year-end. When revenues are received in the next year, the receivable will then be reduced F. Fixed Assets Fixed assets are stated at cost. KANW-FM capitalizes all acquisitions at cost in excess of $5,000 with a useful life of more than one year. Depreciation, which includes the assets recorded under capital leases, is computed principally using the straight-line method over the estimated useful lives of individual assets. Asset lives range from five to forty years. 6

9 A DEPARTMENT OF THE ALBUQUERQUE MUNICIPAL SCHOOL DISTRICT NO. 12 NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2014 Note 1. Summary of Significant Accounting Policies-continued G. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. H. Prior Year Comparative Information The financial statements include prior-year summarized comparative in total. Such information should be read in conjunction with financial statements for the year ended June 30, 2013 from which the information was derived. Note 2. Capital Assets Capital asset activity for the year ended June 30, 2014 is as follows: Balance as of Balance as of 06/30/2013 Additions Rounding 06/30/2014 Buildings 334, ,990 Improvements Machinery & Equipment 474,963 12, ,125 Automobiles 36, ,255 Construction in Progress 30, , ,694 Total Capital Assets 877, , ,247,726 Less Accumulated Depreciation (540,034) (40,276) 3 (580,307) Net Capital Assets $ 337,743 $ 329,673 $ 3 $ 667,419 Depreciation expense for the year ended June 30, 2014 was $40,276. Note 3. Compensated Absences The Albuquerque Public School District s policy regarding vacation time permits employees to accumulate earned but unused vacation leave. The liability for these compensated absences is reported in the financial statements of proprietary funds as a liability when it is incurred. The current portion of this debt is estimated based on historical trends. Note 4. Deferred Revenue Deferred revenue represents the unearned portion of CPB grant funding. Note 5. Equity Classifications Equity is classified as net assets and displayed in three components: a. Invested in capital assets, net of related debt Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. 7

10 A DEPARTMENT OF THE ALBUQUERQUE MUNICIPAL SCHOOL DISTRICT NO. 12 NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2014 Note 5. Equity Classifications-continued b. Restricted net assets Consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted net assets All other net assets that do not meet the definition of restricted or invested in capital assets, net of related debt. 8