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FY2018 Audit Report AirportBlair Airport Authority FINANCIAL STATEMENTS For the year ended September 30, 2018       TABLE OF CONTENTS PAGE INDEPENDENT AUDITORS’ REPORT 3 - 5 MANAGEMENT’S DISCUSSION AND ANALYSIS 6 - 12 BASIC FINANCIAL STATEMENTS Statement of net position 13 Statement of activities 14 Balance sheet - governmental funds 15 Reconciliation of the balance sheet of governmental funds to the statement of net position 16 Statement of revenues, expenditures, and changes in fund balance - governmental funds 17 Reconciliation of the statement of revenues, expenditures and changes in fund balances of governmental funds to the statement of activities 18 NOTES TO FINANCIAL STATEMENTS 19 - 31 REQUIRED SUPPLEMENTAL INFORMATION Budgetary comparison schedule - general fund 33 OTHER INFORMATION Fund balances for the last five years 35       TABLE OF CONTENTS - CONTINUED PAGE 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 SCHEDULE OF FINDINGS AND RESPONSES 38 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 39 INDEPENDENT AUDITOR’S REPORT Honorable Chairman and Board Members Blair Airport Authority Blair, Nebraska Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, and each major fund of Blair Airport Authority (the Airport), as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise the Airport’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as, evaluating the overall presentation of the financial statements. www.hayes-cpa.comWestroads Pointe | 1015 N. 98th St., Suite 200 | Omaha, NE 68114 | T 402-390-2480 134 W. Broadway | Council Bluffs, IA 51503 | T 712-322-5503 - 4 - We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, 2018, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 6 - 12 and 33 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 responses 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Blair Airport Authority’s basic financial statements. The fund balances for the last five years is presented for purposes of additional analysis and is not a required part of the basic financial statements. The fund balances for the last five years have 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. - 5 - Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 14, 2019, 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Blair Airport Authority’s internal control over financial reporting and compliance. Hayes & Associates Omaha, Nebraska January 14, 2019 Blair Airport Authority MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2018 - 6 -  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, 2018. 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 position presents information on all of the Airport’s assets, deferred outflows, liabilities, and deferred inflows with the difference between the remainder reported as net position. Over time, increases or decreases in net position 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 position changed during the most recent fiscal year. All changes in net position 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 For the year ended September 30, 2018 - 7 -  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 position 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 97.8% 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, 2.2% of the governmental assets are cash and equivalents. The following chart shows the Airport’s net position for 2018: SEE TABLE 1 2018 2017 Change Current and other assets 381,908$ 408,238$ (26,330)$ Capital assets 16,751,017 16,905,328 (154,311) Total assets 17,132,925$ 17,313,566$ (180,641)$ Other liabilities 89,399$ 66,756$ 22,643$ Long-term debt outstanding 2,832,526 2,946,638 (114,112) Total liabilities 2,921,925$ 3,013,394$ (91,469)$ NET POSITION Net investment in capital assets 13,918,491$ 13,958,690$ (40,199)$ Restricted 120,468 124,805 (4,337) Unrestricted 172,041 216,677 (44,636) Total net position 14,211,000$ 14,300,172$ (89,172)$ MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED Blair Airport Authority - 8 - TABLE 1 ASSETS LIABILITIES September 30, 2018 SUMMARY OF NET POSITION See independent auditor's report Blair Airport Authority MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED For the year ended September 30, 2018 - 9 - OVERVIEW OF FINANCIAL STATEMENTS - CONTINUED At the end of the current fiscal year, the Airport reported a positive balance in both net investment in capital assets and in unrestricted net position. 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 position by $89,172. Key elements of the governmental activities are as follows:  The negative change in net position from fiscal years 2017 to 2018 was primarily the result of increased maintenance on the Airport entrance road and $40,000 of engineering costs on the hangar remodel for the City of Omaha Police Department Helicopter unit which will be reimbursed in fiscal year 19 as part of the project. 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, unassigned 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 $300,444, a decrease of $49,092 from the prior year. The Airport’s fund balances for the past five years are presented in a table format on page 30. 2018 2017 Change Program revenues Charges for services 218,779$ 210,888$ 7,891$ Capital grants and contributions 146,336 113,177 33,159 General revenues Property taxes 154,267 168,561 (14,294) Other taxes 7,971 8,446 (475) Interest and other revenue 1,780 10,999 (9,219) Insurance recovery and gain - - - Total revenues 529,133 512,071 17,062 EXPENSES General government 539,664 609,422 (69,758) Interest on debt 78,641 79,752 (1,111) Total expenses 618,305 689,174 (70,869) CHANGE IN NET POSITION (89,172) (177,103) 87,931 NET POSITION, BEGINNING OF YEAR 14,300,172 14,477,275 (177,103) NET POSITION, END OF YEAR 14,211,000$ 14,300,172$ (89,172)$ September 30, 2018 - 10 - TABLE 2 REVENUES Blair Airport Authority MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED CHANGES IN NET POSITION See independent auditor's report Blair Airport Authority MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED For the year ended September 30, 2018 - 11 - 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 P o s i t i v e Account (Negative) Reason ______ Grant Income ($186,664) The airport had budgeted to receive grant funds from the FAA to complete the Airport Layout Plan (ALP) update. The ALP has not been completed due to the FAA not completing their review. The Airport also budgeted for FAA grant funds to extend a taxi lane. Although the airport did not receive FAA grant funds to extend the taxi lane, it was able to obtain a State grant to do a smaller taxi lane extension. Therefore, projected revenues weren’t received. The balance of ALP grant funds will be realized in Fiscal Year 2019. Capital Outlay $173,019 The airport had anticipated construction of a larger new taxi lane in Fiscal Year 2018 and the completion of the ALP. Due to lack of FAA funding for the taxi lane extension, the airport did a smaller taxi lane extension utilizing State grant funds. The smaller extension and carry over of the ALP due to lack of FAA review allowed for less capital expense than projected. Completion of the ALP was carried over to Fiscal Yr. 19. Debt Principle Expense $6,388 Actual debt principle payments where less than anticipated. Variances in Assets and Liabilities: Capital assets: The Airport’s government-wide capital assets, net of accumulated depreciation, increased due to significant repairs of existing property needed at this time. Additional information, as well as, a detailed classification of the Airport’s net investment in capital assets can be found in the notes to the Financial Statements. Blair Airport Authority MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED For the year ended September 30, 2018 - 12 - Long-term debt: The long-term debt of the Airport decreased by $114,112 as a result of timely debt service payments on long-term debt. All bonds had been refinanced in Fiscal year 2016. This year’s budget and rates: The property tax levy request for the Airport Authority for the fiscal year beginning October 1, 2017, was set at $.028953 per one hundred dollars of valuation. The budget for fiscal year 2018 began October 1, 2017 required a levy for City operations of $.358163 and Airport levy of $.028953 or a combined levy of $.387116. The Airport levy continues to solely support long term debt and the Airport would anticipate the levy staying at or near the statutory levy limit of $0.035 per hundred dollars of actual valuation. Per Airport statutes the Airport could levy an additional $0.035 or up to $0.07 per $100 dollars of valuation with concurrence of the City Council. Additional Notes: The Airport received a FAA grant in 2016 to fund an ALP update project which was anticipated to take about 18 to 24 months to complete. The study should conclude in 2019. No new expansion projects are anticipated until the ALP has been completed and approved by the FAA, although the Airport anticipates additional projects for extension of taxi lanes, apron, new hangars, and possibly service road improvements as additional FAA entitlement grant funds and State NDOT – Division of Aeronautics grant funds become available over the next two to five years. The Airport continues to see an increase in traffic since Skywerx Aviation, LLC has located their FBO business at the Airport. Skywerx provides maintenance, fuel sales, and management services for private airplane operators. Skywerx Aviation completed an additional hangar in Fiscal Year 2016 and an additional hangar in Fiscal Year 2017. The Airport continues to negotiate with other individuals and/or businesses on land leases to build additional hangars with an additional private hangar scheduled to be built at start of Fiscal Year 2018. Request for information: The financial report is designed to provide a general overview of the Airport’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Blair Airport Authority, 218 S. 16th Street, Blair, NE 68008.  Cash and cash equivalents 351,117$ Due from County Treasurer 13,448 Other receivables 9,388 Prepaid expenses 7,955 Capital assets Land 8,028,400 Construction in Progress 34,700 Buildings and runways 11,286,326 Equipment 937,387 Accumulated depreciation (3,535,796) Total assets 17,132,925$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Accounts payable 41,205$ Accrued interest 25,932 Prepaid leases 14,933 Deposits 7,329 Long-term debt Due within one year 114,112 Due in more than a year 2,718,414 Total liabilities 2,921,925 NET POSITION Net investment in capital assets 13,918,491 Restricted 120,468 Unrestricted 172,041 Total net position 14,211,000 Total liabilities, deferred inflow, and net position 17,132,925$ Blair Airport Authority STATEMENT OF NET POSITION September 30, 2018 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES - 13 - See independent auditor's report Net (Expenses)Revenues and Changes in Net Position Ch a r g e s f o r G r a n t s a n d G o v e r n m e n t a l FU N C T I O N S / P R O G R A M S Ex p e n s e s S e r v i c e s C o n t r i b u t i o n s A c t i v i t i e s Go v e r n m e n t a l a c t i v i t i e s Ge n e r a l g o v e r n m e n t 53 9 , 6 6 4 $ 21 8 , 7 7 9 $ 14 6 , 3 3 6 $ (174,549)$ In t e r e s t o n l o n g - t e r m d e b t 78 , 6 4 1 - - (78,641) To t a l G o v e r n m e n t a c t i v i t i e s 61 8 , 3 0 5 $ 21 8 , 7 7 9 $ 14 6 , 3 3 6 $ (253,190) Ge n e r a l r e v e n u e s Ta x e s Pr o p e r t y t a x e s 154,267 Ot h e r t a x e s 7,971 Un r e s t r i c t e d i n v e s t m e n t e a r n i n g s 29 Ot h e r i n c o m e 1,751 To t a l g e n e r a l r e v e n u e s 164,018 CH A N G E S I N N E T P O S I T I O N (89,172) NE T P O S I T I O N , B E G I N N I N G O F Y E A R 14,300,172 NE T P O S I T I O N , E N D O F Y E A R 14,211,000 $ ST A T E M E N T O F A C T I V I T I E S Bl a i r A i r p o r t A u t h o r i t y Fo r t h e y e a r e n d e d S e p t e m b e r 3 0 , 2 0 1 8 Se e i n d e p e n d e n t a u d i t o r ' s r e p o r t - 1 4 - Re v e n u e s Pr o g r a m General Debt Fund Fund Total Cash and cash equivalents 234,055$ 117,062$ 351,117$ Due from County Treasurer - 13,448 13,448 Other receivables 9,388 - 9,388 Total assets 243,443$ 130,510$ 373,953$ LIABILITIES Accounts payable 41,205$ - $ 41,205$ Prepaid leases 14,933 - 14,933 Deposits 7,329 - 7,329 Total liabilities 63,467 - 63,467 DEFERRED INFLOW OF RESOURCES Property Taxes - 10,042 10,042 FUND BALANCE Restricted - 120,468 120,468 Unassigned 179,976 - 179,976 Total fund balance 179,976 120,468 300,444 Total liabilities, deferred inflows, and fund balance 243,443$ 130,510$ 373,953$ September 30, 2018 See independent auditor's report - 15 - ASSETS Blair Airport Authority BALANCE SHEET GOVERNMENTAL FUNDS Fund balance of governmental funds 300,444$ 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 16,751,017 Deferred revenues that are not current financial resources but that are recognized in the government wide statements 10,042 Notes and bonds payable are not current financial liabilities. Therefore, they are not included in the governmental funds (2,832,526) Prepaid expenses are counted as assets on the statement of net assets and are reported as expenses in governmental funds 7,955 Interest accrued on long-term debt (25,932) Net position of governmental activities 14,211,000$ Blair Airport Authority RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS For the year ended September 30, 2018 TO THE STATEMENT OF NET POSITION - 16 - See independent auditor's report General Debt Fund Fund Total REVENUES Taxes -$ 162,663$ 162,663$ Charges for services 218,779 - 218,779 Intergovernmental 146,336 - 146,336 Interest income 29 - 29 Other revenues 1,751 - 1,751 Total revenues 366,895 162,663 529,558 EXPENDITURES Administration 205,557 2,965 208,522 Capital outlay 176,981 - 176,981 Debt service Principal 29,112 85,000 114,112 Interest - 79,035 79,035 Total expenditures 411,650 167,000 578,650 REVENUES OVER (UNDER) EXPENDITURES (44,755) (4,337) (49,092) FUND BALANCE, BEGINNING OF YEAR 224,731 124,805 349,536 FUND BALANCE, END OF YEAR 179,976$ 120,468$ 300,444$ See independent auditor's report - 17 - For the year ended September 30, 2018 Blair Airport Authority STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS Net changes in fund balance - total governmental funds (49,092)$ 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 176,981 Depreciation expense (331,292) Revenue reported in the statement of activities that do not provide current financial resources are not reported as revenue in the governmental funds (425) 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 114,112 Prepaid expenses are counted as assets on the statement of net assets and are reported as expenses in governmental funds 150 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 394 Change in net assets of governmental activities (89,172)$ Blair Airport Authority RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS For the year ended September 30, 2018 - 18 - See independent auditor's report TO THE STATEMENT OF ACTIVITIES Blair Airport Authority NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 19 -   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 position and a statement of activities (including changes in net position). 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 THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 20 -   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 position. The statement of activities presents changes in net position. 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 position 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 position as presented in these statements to the net position 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 THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 21 -   NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 2. Basis of Accounting/Measurement Focus - Continued Governmental Fund Financial Statements - 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 (30 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 THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 22 -   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 fund’s 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 THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 23 -   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 Road overlays and concrete 15-25 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. Blair Airport Authority NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 24 -   NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 7. Property Taxes - Continued The Airport’s December 31, 2017, valuation was included with the City of Blair’s valuation of $528,436,821. The levy for the Airport for the year ending September 30, 2018 was $0.028953 per $100 of value. The total tax levy was $153,000. 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. 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 Position. 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. 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 THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 25 -   NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 11. Inter-fund 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 inter-fund loans are reported as “inter-fund receivables and payables.” Long- term inter-fund loans (noncurrent portion) are reported as “advances from and to other funds.” Inter-fund receivables and payables between funds are eliminated in the statement of net position. 12. 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, 2018. 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. At September 30, 2018, no deposits were uninsured. The Airport has no investment policy that would further limit its deposits. The carrying amount of bank balances at September 30, 2018, was $351,117. Blair Airport Authority NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 26 -   NOTE C. RELATED PARTIES The Airport’s operating, administrative, and accounting functions are performed by the administrative offices of the City of Blair. The Airport incurs no cost for the resources used by the City of Blair in performing these functions. NOTE D. CAPITAL ASSETS Capital assets as of September 30, 2018 consisted of the following: Balance Balance 9/30/2017 Increases Decreases 9/30/2018 Capital assets not depreciated Land 8,028,400$ - $ - $ 8,028,400$ Construction in Progress 12,800 34,700 (12,800) 34,700 Total capital assets not depreciated 8,041,200 34,700 (12,800) 8,063,100 Other capital assets Buildings and runways 11,131,245 155,081 - 11,286,326 Equipment 937,387 - - 937,387 Less accumulated depreciation Buildings and runways (2,939,925) (289,244) - (3,229,169) Equipment (264,579) (42,048) - (306,627) Other capital assets, net 8,864,128 (176,211) - 8,687,917 Governmental activities capital assets, net 16,905,328$ (141,511) $ (12,800) $ 16,751,017$ Depreciation expense of $331,292 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 THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 27 -   NOTE F. NET POSITION CATEGORIES In the government-wide financial statements net position are classified in the following categories: Net Investment in Capital Assets This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and debt liabilities used to purchase capital assets reduce this category. Restricted Net Position 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 Position This category represents the net position of the Airport that is 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.                         Blair Airport Authority NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 28 -   NOTE G. LONG TERM DEBT Long term debt at September 30, 2018 consisted of the following:     Interest Beginning Ending Dated Description Rate Balance Additions Reductions Balance 8/23/2006 Project H-01 Note 0% 72,150 - (13,320) 58,830 6/20/2013 Project H-02 Note 0% 89,488 - (15,792) 73,696 3/24/2016 Refunding Bonds 1.00-3.65% 1,495,000 - (85,000) 1,410,000 3/24/2016 Refunding Bonds 1.40-3.50% 1,290,000 - - 1,290,000 2,946,638 $ - $ (114,112) $ 2,832,526 $ Blair Airport Authority NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 29 -   NOTE G. LONG TERM DEBT - CONTINUED The 2016 refunding 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, 2018, annual debt service requirements of governmental activities to maturity are as follows: Year ending September 30, Principal Requirements Interest Requirements Total Requirements 2019 114,112 77,781 191,893 2020 119,112 76,358 195,470 2021 119,112 74,760 193,872 2022 154,112 72,783 226,895 2023 141,078 70,353 211,431 2024-2028 680,000 304,278 984,278 2029-2033 775,000 196,009 971,009 2034-2037 730,000 51,975 781,975 2,832,526$ 924,297$ 3,756,823$ NOTE H. 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. NOTE I. FUND BALANCES 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 ar e l e g a l l y o r contractually required to be maintained intact. Blair Airport Authority NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 30 -   NOTE I. FUND BALANCES - CONTINUED 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 J. CONTINGENCIES The Airport participates in 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. NOTE K. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS In March 2016, GASB issued Statement No. 81 Irrevocable Split-Interest Agreements. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. In March 2017 GASB issued Statement No. 85 Omniubs 2017. The objective of this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits. Blair Airport Authority NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2018   - 31 -   NOTE K. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS - CONTINUED In May 2017 GASB issued Statement No. 86 Certain Debt Extinguishment Issues. The primary objective of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. Adoption of these pronouncement did not have a significant effect on the financial statements of the Authority. NOTE L. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In November 2016, GASB issued Statement No. 83 Certain Asset Retirement Obligations. The objective of this Statement is to establish criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for asset retirement obligations. This Statement is effective for the Authority’s year ending September 30, 2019. NOTE M. SUBSEQUENT EVENT As of November 8, 2018, the Airport has entered into a lease agreement with the City of Omaha Police Department for the lease of Airport hangar space. The agreement calls for the addition of office space and improvements to the Airport hangar with an approximate cost of $1,150,000. The total costs will be paid by the City of Omaha upon move-in and will be financed during construction through the draw-down of bonds.     REQUIRED SUPPLEMENTAL INFORMATION Variance Original/Final Positive Budget Actual (Negative) REVENUES Rent income 216,972$ 218,779$ 1,807$ Interest 50 29 (21) Grants 333,000 146,336 (186,664) Miscellaneous income 31,200 1,751 (29,449) Total revenues 581,222 366,895 (214,327) EXPENDITURES General government 236,350 205,557 30,793 Capital outlay 350,000 176,981 173,019 Debt principal 35,500 29,112 6,388 Interest expense - - - Total expenditures 621,850 411,650 210,200 REVENUES OVER (UNDER) EXPENDITURES (40,628) (44,755) (4,127) OTHER FINANCING SOURCES (USES)- - REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (40,628) (44,755) (4,127)$ FUND BALANCE, BEGINNING OF YEAR 224,731 224,731 FUND BALANCE, END OF YEAR 184,103$ 179,976$ - 179,976$ - 33 - See independent auditor's report Blair Airport Authority BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the year ended September 30, 2018 An explanation of the differences between budgetary inflows and outflows and revenues and expenditures determined in accordance with generally accepted accounting principles follows: 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 as reported on the statement of revenues, expenditures, and changes in fund balances—governmental funds OTHER INFORMATION Ye a r e n d i n g S e p t e m b e r 3 0 , Fu n d B a l a n c e s P r o p e r t y T a x e s G a s S a l e s G a s C o s t R e n t I n c o m e O p e r a t i n g E x p e n s e s 20 1 4 (1 , 4 9 1 , 9 8 2 ) 16 7 , 0 8 4 - - 17 8 , 6 3 9 136,233 20 1 5 (2 , 7 6 9 , 8 1 9 ) 17 6 , 8 0 2 - - 18 8 , 9 0 1 389,020 20 1 6 51 0 , 9 0 9 18 5 , 4 7 9 - - 18 9 , 3 5 6 221,255 20 1 7 34 9 , 5 3 6 17 1 , 9 2 5 - - 19 1 , 6 3 3 275,937 20 1 8 30 0 , 4 4 4 16 2 , 6 6 3 - - 20 1 , 5 0 4 205,557 Bl a i r A i r p o r t A u t h o r i t y FU N D B A L A N C E S F O R T H E L A S T F I V E Y E A R S Se p t e m b e r 3 0 , 2 0 1 8 - 3 5 - Se e i n d e p e n d e n t a u d i t o r ' s r e p o r t 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 Honorable Chairman and Board Members Blair Airport Authority Blair, Nebraska We have audited, in accordance with the 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, the financial statements of the governmental activities, and each major fund of Blair Airport Authority, as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise Blair Airport Authority’s basic financial statements, and have issued our report thereon dated January 14, 2019. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Blair Airport Authority’s internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Blair Airport Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of Blair Airport Authority’s internal control. A deficiency in internal control over financial reporting 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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal controls 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 that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. www.hayes-cpa.comWestroads Pointe | 1015 N. 98th St., Suite 200 | Omaha, NE 68114 | T 402-390-2480 134 W. Broadway | Council Bluffs, IA 51503 | T 712-322-5503 - 37 - Compliance and Other Matters As part of obtaining reasonable assurance about whether Blair Airport Authority’s financial statements are free from 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. Purpose of this Report The purpose of this report is solely 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 effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Hayes & Associates Omaha, Nebraska January 14, 2019 Blair Airport Authority SCHEDULE OF FINDINGS AND RESPONSES For the year ended September 30, 2018 - 38 - I. SUMMARY OF AUDIT RESULTS Financial Statements Type of auditor’s report issued: Unmodified Internal controls over financial reporting: Material weaknesses identified:None Reported Significant deficiencies identified:None Reported Noncompliance material to financial statements noted: None Reported II. FINDINGS — FINANCIAL STATEMENTS None reported. Blair Airport Authority SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the year ended September 30, 2018 - 39 - II. FINDINGS—FINANCIAL STATEMENTS None reported.