FY2011 Audit Report AirportBlair Airport Authority
FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR'S REPORTS
For the year ended September 30, 2011
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 18-29
SUPPLEMENTAL INFORMATION
Budgetary comparison schedule - general fund 31
Fund balances for the last five years 32
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
A UDITING STANDARDS 33 - 3 4
SCHEDULE OF FINDINGS AND RESPONSES
35
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 36
R&—
S
&ASSOCIATES, L.L.C.
Certified Public Accountants I Consultants
INDEPENDENT AUDITOR'S REPORT
Honorable Chairman and Board Members
Blair Airport Authority
Blair, Nebraska
We have audited the accompanying financial statements of the governmental activities and each
major fund, as of and for the year ended September 30, 2011, which collectively comprise the
Blair Airport Authority's basic financial statements as listed in the table of contents. These
financial statements are the responsibility of the Blair Airport Authority's management. Our
responsibility is to express opinions 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 and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities and each major fund of the Blair
Airport Authority as of September 30, 2011, and respective changes in financial position for the
year then ended in conformity with accounting principles generally accepted in the United States
of America.
In accordance with Goverw)7ew Auditing Standards, we have also issued our report dated March
27, 2012 on our consideration of the Blair Airport Authority's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit preformed in accordance with Government
Auditing Stwidards and should be considered in assessing the results of our audit.
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OEM290.2480
F 402.390.08850 a N E 681 4 T 40.3e e 015 N.98th St..Suite 200 mat 1W stroads Point � 1� � ��
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis and budgetary comparison information presented on
pages 5 through 11 and 31 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's response to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express
an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Blair Airport Authority's financial statements as a whole The fund
balances for the last five years on page 32 is presented for the purpose of additional analysis and
is not a required part of the basic financial statements. The report on fund balances for the last
five years has not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we do not express an opinion or provide any assurance on
it. r
✓'`� Z.L. �-
Hayes & Associates, L.L.C.
Omaha, Nebraska
March 27, 2012
Blair Airport Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended September 30, 2011
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, 2011.
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.
-5-
Blair Airport Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended September 30, 2011
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 reconciliation 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 infonmation 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 2% of the governmental assets are cash and equivalents. The
following chart shows the Airport's net assets for 2011:
SEE TABLE 1
"I
Blair Airport Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
SUMMARY OF NET ASSETS
September 30, 2011
ASSETS
Current and other assets
Capital assets
Total assets
LIABILITIES
Other liabilities
Long -tern debt outstanding
Total liabilities
NET ASSETS
Invested in capital assets net related debt
Unrestricted (deficit)
Total net assets
TABLE 1
-7-
2011 2010 Change
$ 224,713 $ 186,223 $ 38,490
14,726,924 15,001,792 (274,868)
$ 14,951,637 $ 15,188,015 $ (236,378)
$ 1,395,069 $ 1,296,432 $ 98,637
1,708,945 1,797,765 (88,820)
$ 3,104,014 $ 3,094,197 $ 9,817
$ 11,680,755 $ 11,959,372 $ (278,617)
166,868 134,446 32,422
$ 11,847,623 $ 12,093,818 $ (246,195)
Blair Airport Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended September 30, 2011
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 decreased the Airport's net assets by
$246,195.
Key elements of the decrease are as follows:
® The decrease is the result of increased depreciation expense, less grant funds received,
and land acquisition related costs.
The prior year comparative financial data is provided in each table to provide additional
inforination.
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
ending fund balances of ($1,147,273), a decrease of $61.727 from the prior year. The Airport's
fund balances for the past five years are presented in a table format on page 32.
Blair Airport Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
CHANAGES IN NET ASSETS
September 30, 2011
TABLE 2
REVENUES
Program revenues
2011 2010 Change
Charges for services
$ 215,214
$ 179,636
$ 35,578
Capital grants and contributions
49,792
1,906,178
(1,856,386)
General revenues
Property taxes
141,345
140,704
641
Other taxes
19,591
19,162
429
Interest and other revenue
68,423
18,287
50,136
Total revenues
494,365
2,263,967
(1,769,602)
EXPENSES
General government
609,344
566,425
42,919
Interest on debt
131,216
138,454
(7,238)
Total expenses
740,560
704,879
35,681
CHANGE IN NET ASSETS
(246,195)
1,559,088
(1,805,283)
NET ASSETS, BEGINNING OF YEAR
12,093,818
10,534,730
1,559,088
NET ASSETS, END OF YEAR
$ 11,847,623
$ 12,093,818
$ (246,195)
KIM
Blair Airport Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended September 30, 2011
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
Positive
Account e ative
Reason
Federal grant income $(1,856,181)
Anticipated Grant Funds were not
realized due to delay in
condemnation appeals.
Gas sales $19,219
Airport had increased sales of fuel
above projections.
Rent income $14,140
Income was higher due to rental of
additional property.
Miscellaneous income $64,413
We had received a reimbursement on
water line project of $50,000 and
insurance claim payment for
property damages.
General governmental ($53,336)
Expenses exceeded projections due
to increased costs for maintenance
and emergency repairs, some of
which were covered by insurance.
Capital Outlay expense $665,891
Costs were not as high due to delay
in condemnation appeals.
Debt principle expense ($1,436,927)
Costs where not realized as
anticipated due to delay in
condemnation appeals.
Interest expense ($56,681)
Interest costs that had not been
separately budgeted. For budgeting
purposes, interest is lumped into debt
principle.
Debt proceeds ($161,723)
Costs of refinancing weren't as high
as anticipated.
Capital assets: The Airport's government -wide capital assets, net of accumulated depreciation,
decreased due to less new assets than accumulated depreciation.
Additional information as well
as a detailed classification of the Airport's net capital assets
can be found in the notes to the
Financial Statements.
-10-
Blair Airport Authority
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended September 30, 2011
OVERVIEW OF FINANCIAL STATEMENTS - CONTINUED
Long-term debt: The long-term debt of the Airport decreased by $88,820 due to of the payment
of $88,820 of principal 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.
Next ,year's budget and rates: The property tax levy request for the City of Blair for the fiscal
year beginning October 1, 2010, was set at $0.353324 per one hundred dollars of valuation. The
property tax levy request for the Airport Authority for the fiscal year beginning October 1, 2010
was set at $0.032614 per one hundred dollars of valuation, or a total City and Airport levy of
$0.385938. 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. Negotiations for
a settlement have not materialized with any success. In addition to the acquisition costs the
landowner has appealed the relocation benefit payments. Relocation benefits are currently
estimated at approximately $450,000 for personal property and up to $720,000 for business.
Federal fund will ultimately cover 90% of the cost.
The Airport has recently signed a land lease agreement with Skywerx Aviation, LLC for
Skywerx Aviation to build a new hangar for Skywerks own use. Skywerx Aviation will be a
fi•anchised Fixed Based Operator (FBO) at the Airport. Skywerx will provide maintenance, fuel
sales, and charter flights operating from the airport.
A second group is currently negotiating with the airport authority for a land lease to build
additional hangars.
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.
Blair Airport Authority
STATEMENT OF NET ASSETS
September 30, 2011
ASSETS
Cash and cash equivalents
Due from County Treasurer
Other receivables
Fuel inventory
Capital assets
Land
Buildings and runways
Accumulated depreciation
Total assets
LIABILITIES
Accounts payable
Accrued interest
Deferred revenue
Deposits
Short term notes payable
Long-term debt
Due within one year
Due in more than a year
Total liabilities
NET ASSETS;
Investment in capital assets net of related debt
Unrestricted (deficit)
Total net assets
Total liabilities and net assets
See accompanying notes and independent auditor's report.
-12-
$ 183,789
16,507
9,258
15,159
5,201,538
10,919,855
(1,394,469)
$ 14,951,637
$ 19,268
25,770
8,937
3,870
1,337,224
88,820
1,620,125
3,104,014
11,680,755
166,868
11,847,623
$ 14,951,637
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ASSETS
Cash and cash equivalents
Due from County Treasurer
Other receivables
Fuel inventory
Total assets
LIABILITIES
Accounts payable
Accrued interest
Deferred revenue
Deposits
Short term notes payable
Total liabilities
FUND BALANCE
Nonspendable
Restricted
Unassigned
Total fund balance
Total liabilities and fund balance
Blair Airport Authority
BALANCESHEET
GOVERNMENTAL FUNDS
September 30, 2011
General Debt
Fund Fund Total
$ 171,481 12,308 $ 183,789
- 16,507 16,507
9,258 - 9,258
15,159 - 15,159
$ 195,898 $ 28,815 $ 224,713
$ 19,268 $
4,740
3,870
1,337,224 _
1,365,102
$ 19,268
- 4,740
6,884 6,884
- 3,870
- 1,337,224
6,884 1,371,986
15,159 - 15,159
- 21,931 21,931
(1,184,363) - (1,184,363)
(1,169,204) 21,931 (1,147,273)
$ 195,898 $ 28,815 $ 224,713
See accompanying notes and independent auditor's report.
-14-
Blair Airport Authority
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
September 30, 2011
Fund balance of govermnental funds $
37,090
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
14,726,924
Deferred revenues are not a current financial resources and
are not included in the government funds.
(2,053)
Notes and bonds payable are not current financial liabilities.
Therefore, they are not included in the governmental funds
(1,708,945)
Interest accrued on long -tern debt
(21,030)
Net assets of governmental activities $
13,031,986
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is
See accompanying notes and independent auditor's report.
-15-
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Blair Airport Authority
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE - GOVERNMENTAL FUNDS
For the year ended September 30, 2011
General
Debt
Fund
Fund
Total
REVENUES
Taxes $ - $
159,620
$ 159,620
Charges for services 215,214
-
215,214
Grants 49,792
-
49,792
Interest income 61
-
61
Other revenues 68,362
-
68,362
Total revenues 333,429
159,620
493,049
EXPENDITURES
Administration 274,056
2,850
276,906
Capital outlay 57,570
-
57,570
Debt service
Principal 23,820
65,000
88,820
Interest 56,909
74,571
131,480
Total expenditures 412,355
142,421
554,776
REVENUES OVER (UNDER) EXPENDITURES (78,926)
17,199
(61,727)
FUND BALANCE, BEGINNING OF YEAR (1,090,278)
4,732
(1,085,546)
FUND BALANCE, END OF YEAR $ (1,169,204) $
21,931
$ (1,147,273)
1
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See accompanying notes and independent auditor's report.
-16-
i'
Blair Airport Authority
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the year ended September 30, 2011
Net changes in fund balance - total governmental funds
Amounts reported for govenunental 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
Depreciation expense
Revenue reported in the statement of activities that do not
provide current financial resources are not reported as
revenue in the governmental funds
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
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
Change in net assets of governmental activities
See accompanying notes and independent auditor's report.
-17-
$ (61,727)
(274,868)
1,316
88,820
264
$ (246,195)
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS
For the year ended September 30, 2011
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 ReportingEntity
ntity
This report includes all funds of the Airport, which is the "primary govermnent."
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
For the year ended September 30, 2011
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 fi•om 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.
-19-
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
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.
-20-
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
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
1 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.
-21 -
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
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
Buildings and runways 40
Machinery and equipment 10
Vehicles 5
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, 2010 valuation was included with the City of Blair's
valuation of $465,374,213. The levy for the Airport for the year ending
September 30, 2011 was $0.032614 per $100 of value. The total tax levy was
$151,776. 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.
-22-
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
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.
-23 -
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
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,
2011, was $184,548.
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.
-24-
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
NOTE D. CAPITAL ASSETS
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.
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.
-25-
Balance
Balance
September
September
30, 2010
Increases Decreases
30, 2011
Capital assets not depreciated
Land
$ 5,201,538
$ - $ -
$ 5,201,538
Construction in Progress
-
- -
-
Total capital assets not depreciated
5,201,538
- -
5,201,538
Other capital assets
Buildings and runways
10,919,855
- -
10,919,855
Less accumulated depreciation
Buildings and runways
(1,119,601)
(274,868) -
(1,394,469)
Other capital assets, net
9,800,254
(274,868) -
9,525,386
Governmental activities capital assets, net
$ 15,001,792
$ (274,868) $ -
$ 14,726,924
Depreciation expense of $274,868
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.
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.
-25-
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
NOTE F. NET ASSET CATEGORIES - CONTINUED
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. A 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. An additional anticipation note was issued on January 20, 2011 in the amount of
$3,000,000. Proceeds from this note were applied to pay off the January 20, 2010 note.
The remaining bond anticipation note is due within one year of issuance.
-26-
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
NOTE G. SHORT-TERM DEBT - CONTINUED
Short term debt activity for the year ended September 30, 2011, was as follows:
Interest Beginning Ending
Dated Description Rate Balance Additions Reductions Balance
01/20/2010 Note 2010 4.50% $1,244,655 78,492 (1,323,147)
01/20/2011 Note 2011 4.40% - 1,337,224 -
1,337,224
Total $1,244,655 $ 1,415,716 $(1,323,147) $ 1,337,224
The 2011 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, 2011 consisted of the following:
4/23/2003 Refunding Bonds 12/1/09-12/1/16 1.40-4.35%
$ 245,000 $ -
$ (30,000)
$ 215,000
11/6/2006 Refunding Bonds 12/1/09-12/1/26 4.00-5.25%
1,320,000 -
(35,000)
1,285,000
Monthly
8/23/2006 Project F-29 Note through 2017 0%
67,375 -
(10,500)
56,875
Monthly
8/23/2006 Project H-01 Note through 2023 0%
165,390 -
(13,320)
152,070
$1,797,765 $ -
$ (88,820)
$1,708,945
-27-
Blair Airport Authority
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2011
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, 2011, annual debt service requirements of governmental activities to
maturity are as follows:
Year ending
September
Principle
hnterest
30,
Requirements
Requirements
Total
2012
$ 88,820
$ 73,399
$ 162,219
2013
93,820
70,714
164,534
2014
93,820
67,941
161,761
2015
98,820
64,984
163,804
2016
98,820
61,834
160,654
2017-2021
515,975
258,754
774,729
2022-2026
583,870
141,561
725,431
2027-2030
135,000
13,913
148,913
$ 1,708,945
$ 753,100
$ 2,462,045
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, 2011,
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
For the year ended September 30, 2011
NOTE K. FUND BALANCES
As of October 1, 2010, the Airport implemented GASB Number 54 (Fund Balance
Reporting and Governmental Fund Type Definitions) for the classification of fund
balances in governmental funds. This standard became effective for periods beginning
after June 15, 2010. Fund balances for each of the Airport's governmental funds (general
fund, and debt service fund) are 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.
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.
-29-
SUPPLEMENTAL INFORMATION
Blair Airport Authority
BUDGETARY COMPARISON SCHEDULE - GENERAL FUND
For the year ended September 30, 2011
REVENUES
Rent income
Gas sales
Interest
Grants
Miscellaneous income
Total revenues
EXPENDITURES
General government
Capital outlay
Debt principal
Interest expense
Total expenditures
REVENUES OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Debt proceeds
REVENUES AND OTHER SOURCES OVER (UNDER)
EXPENDITURES AND OTHER USES
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
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.
Accrual adjustments made because the Authority budgets for revenues
and expenditures on the cash basis, rather than on the modified accrual
basis.
General Fund balance
See independent auditor's report.
-31-
(1,939,849)
(77,755)
S (1,169,204)
Variance
Original/Final
Favorable
Budget
Actual
(Unfavorable)
S 103,640
117,780
14,140
80,000
99,219
19,219
120
61
(59)
2,007,635
53,741
(1,953,894)
0
64,413
64,413
2,191,395
335,214
(1,856,181)
236,008
289,344
(53,336)
725,000
59,109
665,891
4,061,455
2,624,528
1,436,927
-
56,681
(56,681)
5,022,463
3,029,662
1,992,801
(2,831,068)
(2,694,448)
136,620
2,855,000
2,693,277.00
(161,723)
23,932
(1,171)
$ (25,103)
170,578
849,571
$ 194,510
S 848,400
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.
Accrual adjustments made because the Authority budgets for revenues
and expenditures on the cash basis, rather than on the modified accrual
basis.
General Fund balance
See independent auditor's report.
-31-
(1,939,849)
(77,755)
S (1,169,204)
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&ASSOCIATES, L.L.C.
Certified Public Accountants ( Consultants
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT A UDITING STANDARDS
Honorable Chairman and Board Members
Blair Airport Authority
Blair, Nebraska
We have audited the financial statements of the governmental activities and each major fund of
the Blair Airport Authority, Nebraska, as of and for the year ended September 30, 2011, which
collectively comprise the Blair Airport Authority's, basic financial statements and have issued
our report thereon dated March 27, 2012. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General
of the United States.
Internal Control Over Financial Reporting
In plaruiing and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion of the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented,
or detected and corrected on a timely basis.
Westroads Pointe ( 1015 N.98th St. Suite 200 Omaha, NE 68114 T402,390.2480 ( 402.390.0885 MIMI
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies in
internal control over financial reporting that might be deficiencies, significant deficiencies, or
material weaknesses. We did not identify any deficiencies in internal control over financial
reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Blair Airport Authority, Nebraska's
financial statements are free of material misstatement, we performed tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with
which could have a direct and material effect on the determination of financial statement
amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit, and accordingly, we do not express such an opinion. The results of our
tests disclosed no instances of noncompliance or other matters that are required to be reported
under Government Auditing Standards.
This report is intended solely for the information and use of management, Blair Airport
Authority Board, others within the entity, and federal awarding agencies and pass-through
entities and is not intended to be and should not be used by anyone other than these specified
parties.
Hayes & Associates, L.L.C.
Omaha, Nebraska
March 27, 2012
-34-
Blair Airport Authority
SCHEDULE OF FINDINGS AND RESPONSES
For the year ended September 30, 2011
No current ,year findings report.
-35-
Blair Airport Authority
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the year ended September 30, 2011
Finding 10-01:
Condition - The Airport keeps it books on a cash basis and has not developed the
expertise and controls 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.
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.
Current Status — Prior year finding appears adequately resolved.
Finding 10-02:
Condition - Employees do not have documentation of key procedures to support their job
duties.
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.
Current Status - The Airport utilizes the City of Blair to do all accounting and therefore
follows the City of Blair accounting procedures. The City has completed the drafting of a
formal policy and procedure manual. The manual was implemented by the City during
the year ended December 31, 2011 and was formally adopted by the city council in April
of 2012. The City Treasurer reviewed all procedures with office and accounting
personnel for implementation and clarity of use.
-36-