FY2010 Audit Report Airport
Blair Airport Authority
FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR’S REPORTS
For the year ended September 30, 2010
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS’ REPORT 3 - 4
MANAGEMENT’S DISCUSSION AND ANALYSIS 5 - 11
BASIC FINANCIAL STATEMENTS
Statement of net assets 12
Statement of activities 13
Balance sheet - governmental funds 14
Reconciliation of the balance sheet of governmental
funds to the statement of net assets 15
Statement of revenues, expenditures, and changes in
fund balance - governmental funds 16
Reconciliation of the statement of revenues, expenditures
and changes in fund balances of governmental funds
to the statement of activities 17
NOTES TO FINANCIAL STATEMENTS 18 - 30
SUPPLEMENTAL INFORMATION
Schedule of expenditures of federal awards 32
Notes to schedule of expenditures of federal awards 33
Budgetary comparison schedule - general fund 34
Fund balances for the last five years 35
TABLE OF CONTENTS - CONTINUED
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT
AUDITING STANDARDS 36 - 37
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH
REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL
EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL
OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 38 - 39
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 40 - 42
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 43
Blair Airport Authority
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 30, 2010
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As management of the Blair Airport Authority, (“Airport”), we offer readers of the Airport’s
financial statements this narrative overview and analysis of the financial activities of the Airport
for the fiscal year ended September 30, 2010.
OVERVIEW OF FINANCIAL STATEMENTS
The discussion and analysis is intended to serve as an introduction to the Blair Airport
Authority’s basic financial statements. The Airport’s basic financial statements include three
components: 1) government-wide financial statements; 2) fund financial statements; and 3)
notes to the basic financial statements. This report also contains other supplementary
information in addition to the basic financial statements.
Government-wide financial statements
The government-wide financial statements are designed to provide readers with a broad
overview of the Airport’s finances, in a manner similar to a private-sector business.
The statement of net assets presents information on all of the Airport’s assets and liabilities, with
the difference between the two reported as net assets. Over time, increases or decreases in net
assets may serve as a useful indicator of whether the economic position of the Airport is
improving or deteriorating.
The statement of activities presents information showing how the government’s net assets
changed during the most recent fiscal year. All changes in net assets are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods (e.g., uncollected taxes and incurred but unpaid interest).
Both of the government-wide financial statements distinguish functions of the Airport that are
principally supported by taxes and intergovernmental revenues (governmental activities). The
governmental activities are the operations of a municipal airport.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have
been segregated for specific activities or objectives. The Airport, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All of the funds of the Airport are governmental funds.
Blair Airport Authority
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2010
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OVERVIEW OF FINANCIAL STATEMENTS - CONTINUED
Governmental Funds: Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information may be
useful in evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the government’s near-term
financing decisions. Both the expenditures and changes in fund balances provide a reconciliation
to facilitate this comparison between governmental funds and governmental activities. The
majority of the Airport’s basic services are reported in governmental funds, which focus on how
money flows into and out of those funds and the balances left at year-end that are available for
spending. These funds are reported using an accounting method identified as the modified
accrual basis of accounting, which measures cash and all other financial assets that can readily be
converted into cash. The governmental fund statements provide a detailed short-term view of the
Airport’s general government operations and the basic services it provides. Governmental fund
information helps determine whether there are more or fewer financial resources that can be
spent in the near future to finance the Airport’s programs. By comparing information presented
for governmental funds with similar information presented for long-term effect of the
government’s near term financing decisions. The relationships of differences between
governmental activities (reported in the statement of net assets and the statement of activities)
and governmental funds is detailed in a reconciliation following the fund financial statements.
The Airport adopts an annual appropriated budget for all governmental funds. A budgetary
comparison schedule has been provided for general funds to demonstrate compliance with the
state budget statutes.
Notes to the financial statements: The notes provide additional information that is essential to
a full understanding of the data provided in the government-wide and fund financial statements.
Government-wide Financial Analysis: Capital assets (i.e. land, buildings, and equipment)
account for over 98% of the total assets. The Airport uses these assets to provide services to its
customers. Accordingly, these assets are not an available source for payment of future spending.
Of the remaining assets, less than 1% of the governmental assets are cash and equivalents. The
following chart shows the Airport’s net assets for 2010:
SEE TABLE 1
2010 2009
Current and other assets 186,223$ 512,307$ Capital assets 15,001,792 13,063,975 Total assets 15,188,015$ 13,576,282$
Other liabilities 1,296,432$ 1,159,967$ Long-term debt outstanding 1,797,765 1,881,585
Total liabilities 3,094,197$ 3,041,552$
NET ASSETSInvested in capital assets net related debt 11,959,372$ 10,372,484$
Unrestricted (deficit)134,446 162,246
Total net assets 12,093,818$ 10,534,730$
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ASSETS
LIABILITIES
Blair Airport AuthorityMANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
SUMMARY OF NET ASSETS
September 30, 2010
TABLE 1
Blair Airport Authority
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2010
- 8 -
OVERVIEW OF FINANCIAL STATEMENTS - CONTINUED
At the end of the current fiscal year, the Airport reported a positive balance in both net assets
invested in capital assets and in unrestricted net assets.
The following chart is a summary of financial information relating to the Airport’s statement of
activities:
SEE TABLE 2
Governmental activities: Governmental activities increased the Airport’s net assets by
$1,559,088.
Key elements of the decrease are as follows:
The increase is due in part to grants for the addition of capital assets.
Governmental principal and interest payments were financed in part by tax revenue. The
Airport’s charges for services include the resale of fuel and rent income from hangar and
other Airport owned property.
The prior year comparative financial data is provided in each table to provide additional
information.
Financial Analysis of the Airport’s Funds
As mentioned earlier in this analysis, the Airport uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements.
Governmental Funds: The focus of the Airport’s governmental funds is to provide information
on near-term inflows, outflows, and balances of spendable resources. Such information is useful
in assessing the Airport’s financing requirements. In particular, unreserved fund balance may
serve as a useful measure of a government’s net resources available for spending at the end of
the fiscal year.
As of the end of the current fiscal year, the Airport’s governmental funds reported combined
unreserved ending fund balances of $134,446, a decrease of $27,800 from the prior year. This
decrease in unreserved ending fund balances was due to the increase of net assets invested in
capital assets, net of related debt, due to the continued expansion of the Airport facilities. The
Airport’s fund balances for the past five years are presented in a table format on page 35.
2010 2009
Program revenues
Charges for services 179,636$ 169,325$
Capital grants and contributions 1,906,178 942,357
General revenues
Property taxes 140,704 114,339
Other taxes 19,162 15,766
Interest and other revenue 18,287 8,261
Total revenues 2,263,967 1,250,048
EXPENSES
General government 566,425 361,076
Interest on debt 138,454 98,550
Total expenses 704,879 459,626
CHANGE IN NET ASSETS 1,559,088 790,422
NET ASSETS, BEGINNING OF YEAR,
AS PREVIOUSLY REPORTED 10,534,730 9,711,104
PRIOR PERIOD ADJUSTMENT - 33,204
NET ASSETS, BEGINNING OF YEAR, AS RESTATED 10,534,730 9,744,308
NET ASSETS, END OF YEAR 12,093,818$ 10,534,730$
Blair Airport Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
CHANAGES IN NET ASSETS
September 30, 2010
REVENUES
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TABLE 2
Blair Airport Authority
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2010
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OVERVIEW OF FINANCIAL STATEMENTS - CONTINUED
Budget variances in the General Fund: The Airport General Fund expenditures did not exceed
budget. Significant budget variances are detailed as follow:
Variance
Favorable
Account (Unfavorable) Reason
Federal Grant Income 460,869 Airport received a grant from the
FAA to reimburse the Airport for a
project that was not anticipated to
occur until fiscal year 2011.
Miscellaneous income (23,224) The Airport budgeted to receive a
reimbursement on a water line
project of $50,000. The final project
called for a reimbursement of
approximately $73,200. The
reimbursement of the final $50,000
was not billed and received until
after fiscal year end.
Capital Outlay expense 344,021 Costs to date for Airport Expansion
were not as high as projected. These
additional costs should be incurred in
fiscal year 2011.
Debt principle expense 363,435 Airport obtained less refinancing
than previously projected.
Interest Expense (39,551) Airport had $39,551 of interest
expense that had not been separately
budgeted. This expense was
budgeted with the debt principle
expense.
Debt Proceeds (411,327) Airport obtained less refinancing
than previously projected.
Capital assets: The Airport’s government-wide capital assets, net of accumulated depreciation,
increased due to Airport improvement projects during the current year. Additional information
Blair Airport Authority
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2010
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as well as a detailed classification of the Airport’s net capital assets can be found in the notes to
the Financial Statements.
Long-term debt: The long-term debt of the Airport decreased by $83,820 due to the payment of
$83,820 of principle on long term debt (bonds and NDA long term loans). The Airport continues
to move forward with capital projects that extend from one fiscal year to another that will be
financed with short term Bond Anticipation Notes that will be turned into long term debt in two
to three years. These projects will provide greater airport safety and expand the necessary
facilities to make the airport more viable to business category aircraft, thus increasing the
opportunity to increase income and profitability.
OVERVIEW OF FINANCIAL STATEMENTS - CONTINUED
Next year’s budget and rates: The property tax levy request for the City of Blair for the fiscal
year beginning October 1, 2009, was set at $0.356863 per one hundred dollars of valuation. The
property tax levy request for the Airport Authority for the fiscal year beginning October 1, 2009
was set at $0.032994 per one hundred dollars of valuation, or a total City and Airport levy of
$0.389857. The Airport levy continues to solely support long term debt and the Airport would
anticipate reaching the statutory levy limit of $0.035 per hundred dollars of actual valuation
before all capital improvements are completed.
Additional Notes: The Airport is still working to complete the acquisition of Tract E (Petersen
Property). The condemnation case is still in Washington County District Court. The Authority
Board has authorized staff and legal Counsel to try to negotiate a settlement that would be
acceptable to the Airport and funding agencies. In addition, the Airport will have relocation
costs that have been estimated at somewhere between $300,000 and $400,000. Hopefully the
case will be resolved within the new fiscal year.
The Airport is also currently working to remove obstructions on the Petersen property to allow
the Airport approach slope to be reduced to 31 to 1, rather than the current 20 to 1 for improved
safety. Current FAA Airport Improvement Program funding is 95% for all eligible costs. The
only non-eligible cost to date is the interest cost of $40,000 to $50,000 per year on interim
financing (short term). The Authority continues to look at ways to finance additional hanger
construction. The construction of additional hangars continues to hinder development. The
Airport continues to maintain a waiting list for good hangers. The viability of a good Fixed
Based Operator (FBO) still hangs on the Authority’s ability to increase based aircraft.
Request for information: The financial report is designed to provide a general overview of the
Airport’s finances for all those with an interest in the government’s finances. Questions
concerning any of the information provided in this report or requests for additional information
should be addressed to the Blair Airport Authority, 218 S. 16th Street, Blair, NE 68008.
Cash and cash equivalents 121,933$
Due from County Treasurer 10,950
Other receivables 10,953
Fuel inventory 42,387
Capital assets
Land 5,201,538
Buildings and runways 10,919,855
Accumulated depreciation (1,119,601)
Total assets 15,188,015$
LIABILITIES
Accounts payable 13,894$
Accrued interest 25,806
Deferred revenue 8,937
Deposits 3,140
Short term notes payable 1,244,655
Long-term debt
Due within one year 88,820
Due in more than a year 1,708,945
Total liabilities 3,094,197
NET ASSETS
Investment in capital assets net of related debt 11,959,372
Unrestricted (deficit)134,446
Total net assets 12,093,818
Total liabilities and net assets 15,188,015$
Blair Airport Authority
STATEMENT OF NET ASSETS
September 30, 2010
ASSETS
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See accompanying notes and independent auditor's report.
Net (Expenses)
Revenues and
Changes in
Net Assets
Charges for Grants and Governmental
FUNCTIONS/PROGRAMS Expenses Services Contributions Activities
Governmental activities
General government 566,425$ 179,636$ 1,906,178$ 1,519,389$
Interest on long-term debt 138,454 - - (138,454)
Total Government activities 704,879$ 179,636$ 1,906,178$ 1,380,935
General revenues
Taxes
Property taxes 140,704
Other taxes 19,162
Unrestricted investment earnings 121
Other income 18,166
Total general revenues 178,153
CHANGES IN NET ASSETS 1,559,088
NET ASSETS, BEGINNING OF YEAR 10,534,730
NET ASSETS, END OF YEAR 12,093,818$
STATEMENT OF ACTIVITIES
Blair Airport Authority
For the year ended September 30, 2010
See accompanying notes and independent auditor's report.
- 13 -
Revenues
Program
General Debt
Fund Fund Total
Cash and cash equivalents 122,583$ -$ 122,583$
Due from County Treasurer - 10,950 10,950
Other receivables 10,953 - 10,953
Fuel inventory 42,387 - 42,387
Total assets 175,923$ 10,950$ 186,873$
LIABILITIES
Accounts payable 13,894$ 650$ 14,544$
Accrued interest 4,512 - 4,512
Deferred revenue - 5,568 5,568
Deposits 3,140 - 3,140
Short term notes payable 1,244,655 - 1,244,655
Total liabilities 1,266,201 6,218 1,272,419
FUND BALANCE
Unreserved (1,090,278) - (1,090,278)
Reserved for debt service - 4,732 4,732
Total fund balance (1,090,278) 4,732 (1,085,546)
Total liabilities and fund balance 175,923$ 10,950$ 186,873$
September 30, 2010
See accompanying notes and independent auditor's report.
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ASSETS
Blair Airport Authority
BALANCE SHEET
GOVERNMENTAL FUNDS
Fund balance of governmental funds (1,085,546)$
Amounts reported for governmental activities in the statement of
net assets are different because:
Capital assets, net of depreciation, are not current financial
resources and are not included in the governmental funds 15,001,792
Deferred revenues are not a current financial resources and
are not included in the government funds. (3,369)
Notes and bonds payable are not current financial liabilities.
Therefore, they are not included in the governmental funds (1,797,765)
Interest accrued on long-term debt (21,294)
Net assets of governmental activities 12,093,818$
Blair Airport Authority
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
September 30, 2010
TO THE STATEMENT OF NET ASSETS
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See accompanying notes and independent auditor's report.
General Debt
Fund Fund Total
REVENUES
Taxes -$ 158,608$ 158,608$
Charges for services 180,570 - 180,570
Grants 1,906,178 - 1,906,178
Interest income 121 - 121
Other revenues 25,446 - 25,446
Total revenues 2,112,315 158,608 2,270,923
EXPENDITURES
Administration 189,569 2,872 192,441
Capital outlay 2,319,081 - 2,319,081
Debt service
Principal 23,820 60,000 83,820
Interest 61,538 76,910 138,448
Total expenditures 2,594,008 139,782 2,733,790
REVENUES OVER (UNDER) EXPENDITURES (481,693) 18,826 (462,867)
FUND BALANCE, BEGINNING OF YEAR (608,585) (14,094) (622,679)
FUND BALANCE, END OF YEAR (1,090,278)$ 4,732$ (1,085,546)$
See accompanying notes and independent auditor's report.
- 16 -
For the year ended September 30, 2010
Blair Airport Authority
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE - GOVERNMENTAL FUNDS
Net changes in fund balance - total governmental funds (462,867)$
Amounts reported for governmental activities in the statement of
activities are different because:
Governmental funds report capital outlays as expenditures.
However, in the statement of activities, the cost of those
assets is allocated over their estimated useful lives as a
functional expense when the cost is above the capitalization
threshold. The activity is reconciled as follows:
Cost of assets capitalized 2,180,064
Depreciation expense (242,247)
Revenue reported in the statement of activities that do not
provide current financial resources are not reported as
revenue in the governmental funds 324
Bonds are reported as expenditures when paid and as
revenue when received in the governmental funds. However,
there is no impact in the statement of activities when loans are
made or repaid. This amount represents the change in the
long-term debt 83,820
Interest accrued on long-term debt does not require the
use of current financial resources and is not reported as an
expenditure in govermental funds (6)
Change in net assets of governmental activities 1,559,088$
Blair Airport Authority
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
For the year ended September 30, 2010
- 17 -
See accompanying notes and independent auditor's report.
TO THE STATEMENT OF ACTIVITIES
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS
September 30, 2010
- 18 -
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the Blair Airport
Authority (the Airport).
1. Description of the Reporting Entity
This report includes all funds of the Airport, which is the “primary government.”
The Airport operates under a Board of Trustees form of government and provides
airport services.
The Airport is a body corporate and politic, constituting a public corporation and
an agency of the City. The Board has full and exclusive jurisdiction and control.
The Board and its corporate existence shall continue only for a period of twenty
years and therein after until all its liabilities have been met and its bonds paid in
full. All administrative duties are handled by the City Administration until such
time as the Airport can hire its own staff. As per Nebraska Statues, the Airport
Board has appointed the City Treasurer, as treasurer for the Airport.
2. Basis of Accounting/Measurement Focus
The accounts of the Airport are organized on the basis of funds, each of which is
considered a separate accounting entity. The operations of each fund are
accounted for with a separate set of self-balancing accounts that comprise its
assets, liabilities, fund equity, revenues, and expenditures. Governmental
resources are allocated to and accounted for in individual funds based upon the
purposes for which they are to be spent and the means by which spending
activities are controlled.
Government-Wide Financial Statements
The Airport government-wide financial statements include a statement of net
assets and a statement of activities (including changes in net assets). These
statements are prepared using the standards of the Governmental Accounting
Standards Board (GASB), General Accepted Accounting Principles (GAAP), as
well as FASB pronouncements issued through November 30, 1989. These
statements present summaries of governmental activities for the Airport.
Fiduciary activities of the Airport are not included in these statements.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
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NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
2. Basis of Accounting/Measurement Focus - Continued
Government-Wide Financial Statements - Continued
These statements are presented on an “economic resources” measurement focus
and the accrual basis of accounting. Accordingly, all of the Airport’s assets and
liabilities including capital assets and infrastructure as well as long-term debt, are
included in the accompanying statement of net assets. The statement of activities
presents changes in net assets. Under the accrual basis of accounting, revenues
are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred.
The Statement of Activities demonstrates the degree to which the direct expenses
of a given function are offset by program revenue. Direct expenses are those that
are clearly identifiable with a specific function. The types of transactions
reported as program revenues for the Airport are reported in three categories: 1)
charges for services, 2) operating grants and contributions, and 3) capital grants
and contributions. Charges for services include revenues from customers or
applicants who purchase, use or directly benefit from goods, services, or
privileges provided by a given function. Grant and contributions include revenues
restricted to meeting the operational or capital requirements of a particular
function. Taxes or other items not included among program revenues are reported
instead as general revenues.
All internal balances in the statement of net assets and internal transactions in the
statement of activities have been eliminated.
Governmental Fund Financial Statements
Governmental fund financial statements include a balance sheet and a statement
of revenues, expenditures, and changes in fund balances for all major
governmental funds. An accompanying schedule is presented to reconcile and
explain the differences in net assets as presented in these statements to the net
assets presented in the government-wide financial statements. The Airport has
presented all major funds that met the qualifications of GASB Statement No. 34.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
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NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
2. Basis of Accounting/Measurement Focus - Continued
All governmental funds are accounted for on a spending or “current financial
resources” measurement focus and the modified accrual basis of accounting.
Accordingly, only current assets and current liabilities are included on the balance
sheet. The statement of revenues, expenditures and changes in fund balances
present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses in net current assets). Under modified
accrual basis of accounting, revenues are recognized in the accounting period in
which they become both measurable and available to finance expenditures of the
current period. Accordingly, revenues are recorded when received in cash, except
that revenues subject to accrual (generally 60 days after year-end) are recognized
when due. The primary sources susceptible to accrual are property tax,
investment income, and grant revenues.
Expenditures are generally recognized under the modified accrual basis of
accounting when the related fund liability is incurred. An exception to this
general rule is principal and interest on general long-term debt which is
recognized when due.
The Airport reports the following major governmental funds:
The general fund is the government’s primary operating fund. It is a
governmental fund that is used to account for all financial resources except those
required to be accounted for in another fund.
The debt service fund is a governmental fund that is used to account for funds
needed to make principal and interest payments on outstanding debt issues.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
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NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
3. Budgetary Policy and Control
Budgetary Basis of Accounting
The Airport’s legally adopted budget is not in conformity with accounting
principles generally accepted in the United States of America. The budget is
prepared and adopted using the cash basis of accounting whereby revenues
budgeted are expected to be received rather than earned and expenditures
budgeted are expected to be disbursed rather than incurred. Differences between
the budgeted basis of accounting and the generally accepted basis are reconciled
in the budget to actual schedule in the required supplementary information. The
Board sets the property tax levy needed to support the coming year’s budget in
August of each year and submit its budget as required by State statute.
Budgetary Control
Each funds appropriated budget is prepared on a detailed line item basis.
Revenues are budgeted by source. Expenditures are budgeted by department.
Expenditures at the fund level constitute the legal level of control. Expenditures
may not exceed appropriations at this level. All budget revisions at this level are
subject to final review by the Board.
4. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
5. Deposits and Investments
The Airport’s cash and cash equivalents are considered to be cash on hand,
demand deposits and short-term investments with original maturities of three
months or less from the date of acquisition.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 22 -
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
6. Capital Assets
Capital assets, which include land, buildings, machinery and equipment
(furniture, vehicles, computers, etc.) and infrastructure assets (runways), are
reported in Governmental Activities column of the Government-Wide Financial
Statement. Capital assets are defined by the Airport as assets with an initial,
individual cost of more than $5,000. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated or annexed capital
assets are recorded at estimated market value at the date of donation or
annexation.
The cost of normal maintenance and repairs that do not add to the value of the
asset or materially extend assets lives are not capitalized. Major outlays for
capital assets and improvements are capitalized as projects are constructed. The
Airport qualifies for the exemption under GASB 34 to not retroactively apply the
capitalization requirements of general infrastructure assets. The requirement to
capitalize and depreciate these assets has been applied as of October 1, 2003.
Depreciation is recorded in the Government-Wide Financial Statements on a
straight-line basis over the useful life of the assets as follows:
Assets Years
Machinery and equipment 10
Vehicles 5
Buildings and runways 40
7. Property Taxes
Property tax revenue is recognized when collected by the County as the Airport’s
agent when measurable and available. There are no property taxes due which are
not delinquent and all delinquent taxes are considered collectible.
The Airport’s December 31, 2009 valuation was included with the City of Blair’s
valuation of $457,537,882. The levy for the Airport for the year ending
September 30, 2010 was $0.032994 per $100 of value. The total tax levy was
$150,960. Property taxes are collected by the County and are due December 31
of each year and delinquent in halves at May 1 and September 1 of the following
year. In-lieu of tax receipts are equivalent in value to payments for services
provided.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 23 -
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
8. Claims and Judgments Payable
The Airport records a liability for litigation, judgments, and claims when it is
probable that an asset has been impaired or a liability has been incurred prior to
year-end and the probable amount of loss (net of any insurance coverage) can be
reasonably estimated. The liability, if any, is reported in the Government-Wide
Statement of Net Assets. The portion of the liability, which will be liquidated
with expendable, available financial resources, if any, is reflected as a liability of
applicable governmental funds.
9. Restricted Assets
Assets are reported as restricted when limitations on their use change the nature or
normal understanding of the availability of the asset. Such constraints are either
externally imposed by creditors, contributions, grantors, or laws of other
governments, or are imposed by law through constitutional provisions or enabling
legislation. The Airport’s policy is to first apply restricted resources to an
expense when incurred for purposes for which both restricted and unrestricted net
assets are available.
10. Inventory
Inventories are valued at cost which approximates market, using the first-in/first-
out (FIFO) method. The costs of inventories are recorded as expenditures when
used (consumption method).
11. Transfers
Transfers are used to move revenues from the fund that statute or budget requires
to collect them to the fund that statute or budget requires to expend them and to
move unrestricted revenue collected in the general fund to finance various
programs accounted for in other funds in accordance with budgetary
authorizations.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 24 -
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
12. Interfund Receivables and Payables
During the course of operations, numerous transactions occur between individual
funds that may result in amounts owed between funds. Those related to goods and
services type transactions are classified as “due to and from other funds.” Short-
term interfund loans are reported as “interfund receivables and payables.” Long-
term interfund loans (noncurrent portion) are reported as “advances from and to
other funds.” Interfund receivables and payables between funds are eliminated in
the statement of net assets.
NOTE B. DEPOSITS
Deposits consist of demand deposits and certificates of deposit with current maturities.
These deposits have no restrictions. The deposits are entirely insured or collateralized
with securities held by the entity’s agent.
Custodial credit risk is the risk that in the event of a bank failure, the Airport’s deposits
may not be returned. The statutes of the State of Nebraska require that local
governmental units follow the “prudent man” rule with deposits, and that deposits be
secured by collateral valued at market or par whichever is lower less the amount insured
by the Federal Deposit Insurance Corporation. The Airport has no investment policy that
would further limit its deposits. The carrying amount of bank balances at September 30,
2010, was $152,563.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 25 -
NOTE C. RELATED PARTIES
The Airport’s operating, administrative, and accounting functions are performed by the
administrative offices of the City of Blair. The Airport incurs no cost for the resources used
by the City of Blair in performing these functions.
NOTE D. CAPITAL ASSETS
Balance Balance
September
30, 2009
Increases
Decreases
September
30, 2010
Capital assets not depreciated
Land $ 4,318,471 $ 890,347 $ (7,280) $ 5,201,538
Construction in Progress 977,839 - (977,839) -
Total capital assets not depreciated 5,296,310 890,347 (985,119) 5,201,538
Other capital assets
Buildings and runways 8,645,019 2,274,836 - 10,919,855
Less accumulated depreciation
Buildings and runways (877,354) (242,247) - (1,119,601)
Other capital assets, net 7,767,665 2,032,589 - 9,800,254
Governmental activities capital assets, net $ 13,063,975 $ 2,922,936 $(985,119) $ 15,001,792
Depreciation expense of $242,247 was charged to general government expenses on the
statement of activities.
NOTE E. RISK MANAGEMENT
The Airport is exposed to various risks of loss related to torts; theft; damage to and
destruction of assets; errors and omissions; injuries to employees; and natural disasters.
These risks are covered by the purchase of commercial insurance. The Airport assumes
liability for any deductibles and claims in excess of coverage limitations. Settled claims
from these risks have not exceeded commercial insurance coverage in any of the past
three fiscal years.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 26 -
NOTE F. NET ASSET CATEGORIES
In the government-wide financial statements net assets are classified in the following
categories:
Invested in Capital Assets
This category groups all capital assets, including infrastructure, into one component of
net assets. Accumulated depreciation on these assets reduces this category.
Restricted Net Assets
This category presents external restrictions imposes by creditors, grantors, contributors or
laws or regulations of other governments and restrictions imposed by law through
constitutional provisions or enabling legislation.
Unrestricted Net Assets
This category represents the net assets of the Airport that are not restricted for any project
or other purpose.
In the governmental fund financial statements, reserves and designations segregate
portions of fund balance that are either not available or have been earmarked for specific
purposes. The various reserves and designations are established by actions of the Airport
Board and Management and can be increased, reduced, or eliminated by similar actions.
NOTE G. SHORT-TERM DEBT
On April 22, 2009 and August 1, 2009, the Airport entered into an agreement with
Washington County Bank in which the financial institution would provide up to $500,000
in each of two bond anticipation notes to manage the temporary cash flow deficits that
occur due to the timing of expenditures related to federal funds received which do not
coincide with the timing of reimbursement on these projects. An additional bond
anticipation note was issued on January 20, 2010 in the amount of $2,500,000. Proceeds
from the note issued January 20, 2010 were applied to pay off the April 22, 2009 and
August 1, 2009 notes. The bond anticipation note is due within one year of issuance.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 27 -
NOTE G. SHORT-TERM DEBT - CONTINUED
Short term debt activity for the year ended September 30, 2010, was as follows:
Interest Beginning Ending
Dated Description Rate Balance Additions Reductions Balance
04/22/2009 Note 2009 3.95% $ 437,215 $ 6,711 $ (443,926) $ -
08/01/2009 Note 2009B 4.15% 372,691 47,177 (419,868) -
01/20/2010 Note 2010 4.50% - 1,952,955 (708,300) 1,244,655
Total $ 809,906 $ 2,006,843 $(1,572,094) $ 1,244,655
The 2010 note is secured by a pledge of the revenues and all monies derived from the
operation of the Airport’s facility, including the authorized levy of taxes.
NOTE H. LONG TERM DEBT
Long term debt at September 30, 2010 consisted of the following:
4/23/2003 Refunding bonds
12/1/09 -
12/1/16 1.40-4.35% 275,000$ -$ (30,000)$ 245,000$
11/6/2006 Refunding bonds
12/1/09 -
12/1/26 4.00-5.25% 1,350,000 - (30,000) 1,320,000
8/23/2006 Project F-29 Note
Monthly
through 2017 0.00% 77,875 - (10,500) 67,375
8/23/2006 Project H-01 Note
Monthly
through 2023 0.00% 178,710 - (13,320) 165,390
Total 1,881,585$ -$ (83,820)$ 1,797,765$
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 28 -
NOTE H. LONG TERM DEBT - CONTINUED
The 2003 and 2006 bonds are secured by a pledge of the revenues, income, receipts, profits and other monies derived by the Airport for the operation, management, and ownership of its airport facility, including monies derived from the authorized levy of taxes. As of September 30, 2010, annual debt service requirements of governmental activities to maturity are as follows:
Principal Interest
Requirements Requirements Total
Year ending September 30,
2011 88,820 74,571 163,391
2012 88,820 72,036 160,856
2013 93,820 69,315 163,135
2014 93,820 66,402 160,222
2015 98,820 63,295 162,115
2016-2020 506,475 261,238 767,713
2021-2025 567,190 141,561 708,751
2026-2030 260,000 13,912 273,912
$ 1,797,765 $ 762,330 $ 2,560,095
NOTE I. ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Airport uses the direct write-off for uncollectable accounts. While the direct write-
off method is not GAAP, management has determined that there is no material difference
between the direct write-off method and the allowance method. There were no
significant doubtful accounts at September 30, 2010.
NOTE J. CONCENTRATION OF CREDIT RISK
All of the revenue from charges for services of the Airport is from the local Blair area
therefore creating a concentration of credit risk. If the Blair area economy was depressed
this could have an adverse effect on the collection of the revenue.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 29 -
NOTE K. GASBS No. 54
In March 2009, the GASB approved Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions (Statement). Certain of the significant changes in
the Statement will require the following:
Fund balances for each of the Airport’s governmental funds (general fund, and debt
service fund) will be displayed in the following classifications depicting the relative
strength of the spending constraints placed on the purposes for which resources can be
used:
Non-spendable fund balance - amounts that cannot be spent because they are either not in
a spendable form (such as inventories and prepaid amounts) or are legally or
contractually required to be maintained intact.
Restricted fund balance - amounts that can be spent only for specific purposes because of
constraints imposed by external providers (such as grantors, bondholders, and higher
levels of government), or imposed by constitutional provisions or enabling legislation.
Committed fund balance - amounts that can be spent only for specific purposes
determined by a formal action of the government’s highest level of decision-making
authority.
Assigned fund balance - amounts the government intends to use for specific purposes that
do not meet the criteria to be classified as restricted or committed.
Unassigned fund balance - amounts that are available for any purpose; these amounts can
be reported only in the Airport’s General Fund.
The Statement also establishes several new presentation and disclosure requirements,
including requirements related to stabilization arrangements (i.e., “rainy day” amounts).
In addition, the Statement clarifies the definitions of the various types of governmental
funds.
The provisions of GASBS No. 54 must be implemented by the Airport no later than the
fiscal year beginning October 1, 2010. Implementation will require the Airport to restate
existing fund balances for the governmental funds.
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2010
- 30 -
NOTE L. CONTINGENCIES
The Airport participates in a federal programs, which are subject to financial and
compliance audits by the granting agencies. The amount of expenses, if any, which may
be disallowed by the granting agencies, is not determinable at this time; however,
management does not believe that such amount, if any, would be significant.
The Airport is currently involved in a condemnation action to acquire land necessary to
complete a plan for expansion of the airport. The condemnation is currently in active
litigation and management intends to pursue the case vigorously. At this point,
management believes that any estimate of a potential loss would be highly speculative; as
such, no estimate for any future potential loss as a result of the condemnation has been
made.
SUPPLEMENTAL INFORMATION
Federal
CFDA Federal
Federal Grantor/Pass-through Grantor/Program Title Number Expenditures
U.S. Department of Transportation
Pass-through Programs
Nebraska Department of Aeronautics
Airport Improvement Program 20.106 1,880,733$
Total expenditures of federal awards 1,880,733$
-32-
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended September 30, 2010
Blair Airport Authority
See notes to the schedule of expenditures of federal awards and independent auditor's report.
Blair Airport Authority
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended September 30, 2010
- 33 -
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Presentation
The accompanying schedule presents expenditures paid or accrued, or passed
through, for each federal awards program in accordance with the Office of
Management and Budget (OMB) Circular A-133. Federal programs in titles are
reported as presented in the Catalog of Federal Domestic Assistance (CFDA),
whenever possible.
2. Basis of Accounting
The schedule of expenditures of federal awards is presented on the full accrual
basis of accounting.
3. Contingencies
During the normal course of business, the Blair Airport Authority receives funds
from the United States Government for program services. Substantially all of
these funds are subject to future audit by the U. S. Department of Transportation,
however, it is management’s opinion that resulting adjustments, if any, would not
have a material effect upon the accompanying financial statements.
Variance
Original Final Favorable
Budget Budget Actual (Unfavorable)
REVENUES
Rent income 109,500$ 109,500$ 102,214$ (7,286)$
Gas sales 80,000 80,000 72,820 (7,180)
Interest 100 100 121 21
Grants 1,120,135 1,781,306 2,242,175 460,869
Miscellaneous income 50,500 50,500 27,276 (23,224)
Total revenues 1,360,235 2,021,406 2,444,606 423,200
EXPENDITURES
General government 187,236 205,425 206,210 (785)
Capital outlay 2,455,932 2,959,351 2,615,330 344,021
Debt principal 1,012,320 1,718,414 1,354,979 363,435
Interest expense - - 39,551 (39,551)
Total expenditures 3,655,488 4,883,190 4,216,070 667,120
REVENUES OVER (UNDER) EXPENDITURES (2,295,253) (2,861,784) (1,771,464) 1,090,320
OTHER FINANCING SOURCES (USES)
Debt proceeds 2,285,797 2,817,926 2,406,599 (411,327)
REVENUES AND OTHER SOURCES OVER (UNDER)
EXPENDITURES AND OTHER USES (9,456) (43,858) 635,135 678,993$
FUND BALANCE, BEGINNING OF YEAR 214,436 214,436 214,436
FUND BALANCE, END OF YEAR 204,980$ 170,578$ 849,571$
(823,021)
(1,116,828)
General Fund balance (1,090,278)$
- 34 -
See independent auditor's report.
An explanation of the differences between budgetary inflows and outflows
and revenues and expenditures determined in accordance with generally
accepted accounting principles follows:
The budget fund balance at the beginning of the year is a based on cash
reserves rather than fund balance.
Blair Airport Authority
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
For the year ended September 30, 2010
Accrual adjustments made because the Authority budgets for revenues
and expenditures on the cash basis, rather than on the modified accrual
basis.
Year ending September 30,Fund Balances Property Taxes Gas Sales Gas Cost Rent Income Operating Expenses
2006 80,548$ 44,167$ 38,816$ 32,654$ 55,207$ 98,616$
2007 17,069 58,201 47,121 52,009 72,679 141,976
2008 129,073 99,504 101,865 92,837 121,129 155,829
2009 (622,679) 125,795 61,212 56,315 108,113 107,743
2010 (1,085,546) 158,608 72,820 63,797 107,750 125,772
Blair Airport Authority
FUND BALANCES FOR THE LAST FIVE YEARS
September 30, 2010
- 35 -
See independent auditor's report.
Blair Airport Authority
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year ended September 30, 2010
- 40 -
I. SUMMARY OF AUDIT RESULTS
Financial Statements
Type of auditors’ report issues: Unqualified
Internal controls over financial reporting:
Material weaknesses identified: Yes
Significant deficiencies identified that
are not considered to be material weaknesses: No
Noncompliance material to financial statements noted: No
Federal Awards
Internal control over major programs:
Material weaknesses identified: No
Significant deficiencies identified that
are not considered to be material weaknesses: No
Type of auditors’ report issued on
compliance for major programs: Unqualified
Any audit findings disclosed that are required to
be reported in accordance with Section 510(a) of
OMB Circular A-133: No
Identification of major programs:
CFDA Numbers Name of Federal Program or Cluster
20.106 Airport Improvement Program
Dollar threshold used to distinguish between
Type A and Type B programs: $300,000
Audit qualified as low-risk auditee: No
Blair Airport Authority
SCHEDULE OF FINDINGS AND QUESTIONED COSTS - CONTINUED
Year ended September 30, 2010
- 41 -
II. FINDINGS—FINANCIAL STATEMENTS
Finding 10-01: Financial Statements and Adjustments
Criteria - Many organizations, including the Airport, rely on their auditor to generate the
annual financial statements including footnotes. We assisted in the proper presentation of
the financials and proposed material adjusting entries to present fairly the financial
statements of the Airport. Material audit adjustments were required to properly record
debt, inventory, accounts payable, accounts receivable, and prior period adjustments.
Condition - The Airport keeps it books on a cash basis and has not developed the
expertise and controls to prepare the financial statements.
Cause - Lack of the required expertise and controls in preparing the basic set of financial
statements.
Effect - Material adjusting entries are required to be made during the audit for the proper
presentation of the Airport’s financial statements.
Questioned Costs - None
Recommendation - The Airport may consider gathering the necessary expertise to
prepare a required set of financial statements in a format acceptable for GAAP reporting.
Officials Response – The Airport Treasurer has started a process to develop government-
wide and fund financial statements using its accounting software for fund financials and
an excel worksheet for government-wide financials. This process should be in place for
next year’s financial statement preparation.
Blair Airport Authority
SCHEDULE OF FINDINGS AND QUESTIONED COSTS - CONTINUED
Year ended September 30, 2010
- 42 -
Finding 10-02: Documentation of Policies and Procedures
Criteria - The Airport should have formalized policies and procedures for its key
administrative functions. A standard operating procedure (SOP) can be an effective
catalyst to drive performance improvements and improving overall results. SOP’s will
ensure that Airport operations are done consistently, approved procedures are being
followed in compliance with Airport regulations, they will serve as training documents
for teaching users about processes, and they will serve as a historical record of the how,
where, when, and why of the Airport’s operations and information.
Condition - Employees do not have documentation of key procedures to support their job
duties.
Cause - Lack of formalized standard operating procedures and controls.
Effect - Reliance on informal information from City Administrator and City Treasurer on
majority of Airport’s accounting procedures and information.
Questioned Costs – None
Recommendation - We recommend that the Airport formalize and maintain a policies and
procedures manual for key activities. This manual should include all areas of activities,
including administration and operations. A policy and procedures manual will document
how the Airport operates and will support cross-training and reduce training issues
relating to employee turnover.
Officials Response – The Airport has drafted up formal policy and procedure documents in
the current fiscal year. These documents are still in draft stage but the Airport anticipates
that they will be formally adopted during the next fiscal year.
III. FINDINGS AND QUESTIONED COSTS—MAJOR FEDERAL AWARD PROGRAMS
None
Blair Airport Authority
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
Year ended September 30, 2010
- 43 -
Finding 09-01:
Condition - The Airport keeps it books on a cash basis and relies on its auditors to
prepare the financial statements.
Recommendation - The Airport may consider gathering the necessary expertise to
prepare a required set of financial statements in a format acceptable for GAAP reporting.
Current Status - See current year finding 10-01.
Finding 09-02:
Condition - Employees do not have documentation of procedures to support their job
duties.
Recommendation - We recommend that the Airport formalize and maintain a policy and
procedures manual. This manual should include all areas of activities, including
administration and operations. A policy and procedures manual will document how the
Airport operates and will support cross-training and reduce training issues relating to
employee turnover.
Current Status - See current year finding 10-02.