HomeMy WebLinkAboutMemo - Mail Packet - 8/13/2019 - Memorandum From Jason Licon, Northern Colorado Regional Airport, Re: 2018 Airport Audit Statement And FindingsNorthern Colorado Regional Airport Page 1 of 1
4900 Earhart Road • Loveland, Colorado 80538
(970) 962-2850 • FAX (970) 962-2855 • TDD (970) 962-2620
DATE: August 2, 2019
TO: Mayor and City Council
THRU: Darin Atteberry, City Manager
FROM: Jason Licon, Northern Colorado Regional Airport Director
RE: 2018 Airport Audit Statement and Findings
Purpose: Provide City Council with an informational summary of the 2018 financial audit and
consolidated annual financial report information for the Northern Colorado Regional Airport.
Background: The Airport is a jointly owned and operated facility with the City of Loveland.
The operation of the Airport is conducted through an intergovernmental agreement where the
City of Loveland provides the administrative oversight and internal support for the Airport,
including some financial management functions. The Northern Colorado Regional Airport
Commission has been provided this information by the auditors, and the Commission
recommended that the information be shared with both City Councils.
The City of Loveland’s Finance Department each year contracts with an external auditing firm,
and for 2018 Rubin Brown was chosen to complete the audit of the Airport’s finances. These
audits are required as part of governmental accounting requirements and those pertaining to the
acceptance of federal and state grant funding in accordance with the governmental accounting
standards board.
Summary: The audited financial report
showed that the Airport’s total operating
expenses increased by 0.42% or $10,393,
revenue increased by 14.8% or $104,477,
and net position decreased by 7.52% or
$1,496,152 due to depreciation of capital
assets. The Airport’s assets exceeded
liabilities by $18,412,446. The increase
in revenues was associated with fuel
sales fees and new land leases for hangar
construction.
Attachments:
• Consolidated Annual Financial Report for the Airport for the Year 2018
• Rubin Brown Report to Governance
2018 2017
Program Revenues $ 808,309 $ 703,831
Program Expenses 2,463,961 2,453,568
Operating Loss (1,655,652) (1,749,737)
Non-operating Revenues
City Contributions 485,000 520,000
Loss on Disposal of Capital Asset (686,640) -
Interest Income 31,930 25,965
Total Non-operating Revenues (169,710) 545,965
Net Loss before Capital Contributions (1,825,361) (1,203,772)
Capital Contributions 329,210 831,535
Change in Net Position (1,496,152) (372,237)
Net Position - Beginning 19,908,598 20,280,835
Net Position - Ending $ 18,412,446 $ 19,908,598
Changes in Net Position
Northern Colorado
Year Regional Ended December Airport 31, 2018
COLORADO
TABLE OF CONTENTS
PAGE
Letter of Transmittal .................................................................................................................................. 2
Independent Auditors’ Report ................................................................................................................... 4
Management’s Discussion and Analysis .................................................................................................... 7
Basic Financial Statements
Statement of Net Position…………………………………………………………………………………………………………... 10
Statement of Revenues, Expenses and Changes in Net Position …………………………………………………. 11
Statement of Cash Flows ................................................................................................................... 12
Notes to Financial Statements .......................................................................................................... 13
Supplementary Information
Budgetary Comparison Schedule (Non-GAAP Budgetary Basis) and Notes ..................................... 21
Other Reporting Required By Governmental Auditing Standards
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 ………………………………………………………….……………23
NORTHERN COLORADO REGIONAL AIRPORT
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May 17, 2019
The Northern Colorado Regional Airport annual financial statements for the year ended December 31, 2018 are
respectfully submitted. This report was prepared by the City of Loveland’s Finance Department. The responsibility
for both the accuracy of the presented data and fairness of the presentation, including all the disclosures rests
with the City of Loveland. The City believes the data, as presented, is accurate in all material respects; that it is
presented in a manner designed to fairly portray the financial position and results of Airport operations as
measured by the Airport’s financial activity; and all disclosures necessary to enable the reader to gain an
understanding of the Airport’s financial affairs have been included.
Generally Accepted Accounting Principles (GAAP) requires management provide a narrative introduction,
overview, and analysis to accompany the basic financial statements in the Management’s Discussion and Analysis
(MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with
it. The Airport’s MD&A can be found immediately following the external auditor letter.
Airport Overview
The Northern Colorado Regional Airport (FNL) has served as a public regional air transportation center since
1964. The Airport is certified by the Federal Aviation Administration as a non-primary commercial service airport
which is administered and operated jointly by the Cities of Fort Collins and Loveland in Northern Colorado. The
Airport accommodates approximately 95,000 aircraft flight operations annually. These operations range from
commercial air carrier, private charter, business and corporate aviation, air ambulance transport, aerial fire
suppression, flight school training, and private transportation flights each year. An estimated 2,500 outbound
passengers (enplanements) traveled from the Airport on charter flight services supported by various air carriers
including Elite Airways, Swift Air, and Sun Country Airlines.
The Airport supports many aviation based businesses including one
full service fixed base operator that provides aircraft fueling and
storage, three flight training schools, two aircraft maintenance and
repair stations, and one avionics center. The Airport is also host to a
variety of private and corporate aviation businesses that provide air
transportation services to remain competitive in today’s global
economy. According to the Economic Impact Study conducted in
2013 by the Colorado Department of Transportation Division of
Aeronautics, the Airport contributes approximately $129 million
annually to the regional economy. This impact is derived through
airport associated activities and area spending from visitors. The
study also identified 826 jobs that were directly associated with the
Airport through administrative and operational support, airport
businesses, capital improvement investments, and visitor spending.
The Northern Colorado Regional Airport Commission is comprised of
elected officials, staff, and appointed citizen members from both
Fort Collins and Loveland. The Commission has been delegated powers and authority from both City Councils in
order to continue to make progress towards the newly adopted strategic plan and the associated Vision and
Mission:
Quick Statistics
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Vision Statement
“The Northern Colorado Regional Airport: Unmatched for its service and innovation. The premier destination for
aviation centered business, research, development, education, and training.”
Mission Statement
“To provide a fiscally sustainable Airport to the region with facilities that meet the highest FAA standards
for safety and efficiency while ensuring the long-term ability of the Airport to serve Northern Colorado as
a transportation hub and a global gateway for commerce.”
The Northern Colorado Regional Airport Commission is charged by the Cities to set policy and direction for the
Airport to achieve the goals and objectives outlined in the various plans including the Airport Master Plan, and
Strategic Plan. Priorities from the Airport’s Strategic Plan include:
• Innovation: Serving as a catalyst and center for innovation focused on aviation, FNL strives to continually
explore and support new technologies.
• Organizational Excellence: Providing a responsive, forward-thinking, and optimal governance structure with
high preforming staff is key to FNL’s success.
• Fiscal Sustainability: FNL is committed to achieving and maintaining a self-sustaining budget to operate a
safe and efficient airport, manage assets, and support industry and economic development.
• Economic Development: FNL actively encourages private and public investments to ensure a strong
economic platform for both on-Airport development and compatible uses within the Airport Influence Area.
• Regional Collaboration: Recognized as an active regional partner, FNL supports a collaborative approach to
transportation, tourism, training, and marketing with its surrounding partners and communities.
The financial outlook for 2019 is positive due to a strong and diverse economy in Northern Colorado. Some of
the highlights include:
• The activation of the Remote Air Traffic Control Tower will occur mid-year 2019. Airport staff and project
managers anticipate this project will elevate the airport to potential aeronautical operators who have
expressed interest in this project’s success. Capital costs will be completely funded by CDOT with the Cities
taking on the operational and maintenance costs once the project is complete in 2021.
• The Airport’s land lease revenues are projected to increase due to new land leases from hangar
development. In 2019, the new lease agreements are projected to provide new airport revenue of $45,000
annually.
• Increased activities and access agreements associated with Aims Community College is anticipated to
positively impact the airport’s bottom line by approximately $35,000 annually.
• Fuel flowage and aviation fuel tax reimbursements are tied to a percentage, relying upon the price of fuel in
addition to the volume of sales. The price of fuel in the coming year will impact the amount of revenues
collected from percentage based fuel flowage and tax reimbursements. The price of fuel has sharply
declined at the end of 2018, which could negatively impact the revenue outlook in 2019 compared to 2018
as a result.
Respectfully,
Jason R. Licon
Airport Director
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MANAGEMENT’S DISCUSSION & ANALYSIS
Our discussion and analysis of the Northern Colorado Regional Airport’s financial performance provides an
overview of the Airport’s financial activities as of and for the year ended December 31, 2018. Please read it in
conjunction with the financial statements, which begin on page 10.
Financial Highlights
• In 2018, net position decreased by $1,496,152 (7.52%) primarily due to increased depreciation on capital
assets.
• Total operating revenues increased to $808,308, an increase of $104,477 (14.8%) compared to 2017.
These revenues were attributed to an increase in the total amount of property under lease in addition to the
estimated 23% increase in the average price of fuel.
• Total operating expenses increased to $2,463,961, an increase of only $10,393 (0.42%) compared to 2017.
Overview of the Financial Statements
The Statement of Net Position presents information on all the Airport’s assets and liabilities. Over time, increases
or decreases in the net position may serve as a useful indicator of whether the financial position of the Airport is
improving or deteriorating.
The Statement of Revenues, Expenses and Changes in Net Position presents information that reflects how the
Airport’s net position changed during the year. All changes in the net position are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of the related cash flows.
The Statement of Cash Flows reports the Airport’s cash flows from operating, capital and non-capital financing
and investing activities. The financial statement demonstrates how the various activities of the Airport impact its
cash balances.
The Notes to Financial Statements provide additional information that is essential for a full understanding of the
data provided in the financial statements.
Entity-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of the Airport’s financial position. As of
December 31, 2018, assets exceeded liabilities by $18,412,446.
Net Position
Net position of the Airport at December
31, 2018 is shown to the left.
The largest portion (86.8%) of the
Airport’s net position is the net
investment in capital assets (land,
buildings, improvements, runways,
leasehold improvements and
equipment). The Airport uses these
capital assets to provide aviation
services to the surrounding
communities. Consequently, these
assets are not available for future
spending. Unrestricted net position may
be used to meet the Airport’s ongoing
obligations.
2018 2017
Current Assets $ 2,645,339 $ 2,613,225
Capital Assets 15,990,533 17,684,896
Total Assets 18,635,872 20,298,121
Current Liabilities 223,426 389,523
Net Position:
Investment in Capital Assets 15,990,533 17,684,896
Unrestricted 2,421,913 2,223,702
Total Net Position $ 18,412,446 $ 19,908,598
Net Position
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Change In Net Position
The Airport’s total revenues of
$1,654,449 were lower than total
expenses of $3,150,601 for a
decrease in net position of
$1,496,152 for 2018.
Debt Administration And Capital Assets
Debt Administration
The Airport currently has no long-term debt.
Capital Assets
At the end of December 31, 2018, the Airport had $15,990,533 invested in capital assets. This represents a net
decrease of $1,694,363, or 9.9%, from 2017. This decrease is due primarily to depreciation. More detailed
information about the Airport’s capital assets is presented in the Notes to Financial Statements.
Budgetary Highlights
The 2018 Airport budget was very much on target with both projected revenues and expenses. The following
are factors that had an effect on operational revenues and expenses in 2018:
• There was an increase in revenues associated with fuel sales tax and flowage fees.
• The Airport experienced a slight increase in aviation fuel related income due to the effect of slowly rising
oil prices on the Airport’s percentage based fuel flowage revenues. The volume of fuel sold was the
same as the previous year.
• Income derived from land leases and hanger income increased due to rates and fees adjustments.
Economic Factors and the 2019 Budget
The Airport plays an important supportive role in the region and its financial health is impacted by economic
trends and regional growth. Northern Colorado has a healthy and diverse economy that continues to
experience increasing demands for all modes of transportation.
• Aviation fuel prices are slowly rising. The rising cost trends could negatively affect the volume of fuel
sold and conversely increase the percentage based fuel flowage revenues.
• Due to fuel price trends and volumes remaining steady, the Colorado Department of Transportation
Division of Aeronautics’ cash balance shifted back into the black in 2018. The discretionary grant
program will be available in late 2019.
2018 2017
Program Revenues $ 808,309 $ 703,831
Program Expenses 2,463,961 2,453,568
Operating Loss (1,655,652) (1,749,737)
Non-operating Revenues
City Contributions 485,000 520,000
Loss on Disposal of Capital Asset (686,640) -
Interest Income 31,930 25,965
Total Non-operating Revenues (169,710) 545,965
Net Loss before Capital Contributions (1,825,361) (1,203,772)
Capital Contributions 329,210 831,535
Change in Net Position (1,496,152) (372,237)
Net Position - Beginning 19,908,598 20,280,835
Net Position - Ending $ 18,412,446 $ 19,908,598
Changes in Net Position
NORTHERN COLORADO REGIONAL AIRPORT
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• The supply of active pilots is a trend that is in a decline nationwide but has remained relatively steady or
is slightly increasing in Northern Colorado. This is due to growth trends in the Denver and Northern
Colorado areas.
• Airport land leases are expected to increase due to new hanger construction and associated long-term
land leases and will add the equivalent of $45,000 annually to airport self-generated revenues.
Requests For Information
This financial report is designed to provide a general overview of the Airport’s finances. If you have questions
about this report or need additional financial information, contact the City of Loveland Finance Department at
500 East Third Street, Loveland, Colorado, 80537.
NORTHERN COLORADO REGIONAL AIRPORT
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The accompanying notes are an integral part of the financial statements.
2018 2017
ASSETS
Current Assets
Equity in Pooled Cash $ 304,431 $ 66,454
Equity in Pooled Investments 2,113,844 1,656,964
Accounts Receivable 56,443 62,272
Grants Receivable 170,621 827,535
Total Current Assets 2,645,339 2,613,225
Noncurrent Assets
Land 563,614 563,614
Construction in Progress - 858,181
Runways 12,031,740 12,031,741
Improvements Other than Buildings 12,369,085 11,788,275
Equipment 2,550,812 2,537,143
Buildings 1,891,645 1,891,645
Total Capital Assets 29,406,896 29,670,599
Accumulated Depreciation (13,416,363) (11,985,703)
Capital Assets, Net 15,990,533 17,684,896
TOTAL ASSETS 18,635,872 20,298,121
LIABILITIES
Current Liabilities
Accounts Payable 139,278 283,000
Rental deposits 10,897 14,838
Accrued Liabilities 73,251 91,685
Total Current Liabilities 223,426 389,523
NET POSITION
Investment in Capital Assets 15,990,533 17,684,896
Unrestricted 2,421,913 2,223,702
TOTAL NET POSITION $ 18,412,446 $ 19,908,598
NORTHERN COLORADO REGIONAL AIRPORT
STATEMENT OF NET POSITION
December 31, 2018
(With Summarized Comparative Totals at December 31, 2017)
NORTHERN COLORADO REGIONAL AIRPORT
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The accompanying notes are an integral part of the financial statements.
2018 2017
OPERATING REVENUES
Hangar Rental $ 117,155 $ 115,834
FBO Rent 98,060 78,216
Gas and Oil Commissions 199,017 152,779
State Aircraft Fuel Tax 94,326 92,088
Land Lease 232,541 193,554
Terminal Lease and Landing Fees 8,331 11,087
Concessions 11 161
Parking 9,940 13,595
Miscellaneous 48,929 46,517
TOTAL OPERATING REVENUES 808,309 703,831
OPERATING EXPENSES
Personal Services 552,484 549,856
Purchased Services 424,873 368,140
Supplies 55,942 41,130
Depreciation 1,430,661 1,494,442
TOTAL OPERATING EXPENSES 2,463,961 2,453,568
OPERATING LOSS (1,655,652) (1,749,737)
NONOPERATING REVENUES
City Contributions 485,000 520,000
Loss on Disposal of Capital Asset (686,640) -
Interest/Investment Income 31,930 25,965
TOTAL NONOPERATING REVENUES (169,710) 545,965
NET LOSS BEFORE CAPITAL CONTRIBUTIONS (1,825,361) (1,203,772)
Capital Contributions 329,210 831,535
CHANGE IN NET POSITION (1,496,152) (372,237)
NET POSITION, Beginning 19,908,598 20,280,835
NET POSITION, Ending $ 18,412,446 $ 19,908,598
NORTHERN COLORADO REGIONAL AIRPORT
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
Year Ended December 31, 2018
(With Summarized Comparative Totals for the year ended December 31, 2017)
NORTHERN COLORADO REGIONAL AIRPORT
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The accompanying notes are an integral part of the financial statements.
2018 2017
Cash Flows from Operating Activities
Cash Received from Customers $ 814,138 $ 682,334
Cash Payments for Goods and Services (628,478) (268,181)
Cash Payments to Employees (570,918) (537,430)
Net Cash Used by Operating Activities (385,259) (123,277)
Cash Flows from Noncapital Financing Activities
Contributions from Cities y p g 485,000 520,000
Cash Flows from Capital and Related Financing Activities
Proceeds from State and Federal Grants 986,124 196,034
Payments for Capital Acquisition (422,938) (878,970)
Net Cash Provided by (Used by) Capital and Related Financing Activities 563,186 (682,936)
Cash Flows from Investing Activities
Purchase of Investments (473,824) (2,254,185)
Proceeds from Sale of Investments - 597,220
Investment Earnings 48,873 25,965
Net Cash Used by Investing Activities (424,951) (1,631,000)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 237,977 (1,917,213)
CASH AND CASH EQUIVALENTS, Beginning 66,454 1,983,667
CASH AND CASH EQUIVALENTS, Ending $ 304,431 $ 66,454
RECONCILIATION OF OPERATING LOSS TO NET CASH
USED BY OPERATING ACTIVITIES
Operating Loss $ (1,655,652) $ (1,749,737)
Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities
Depreciation 1,430,661 1,494,442
Changes in Assets and Liabilities
(Increase)decrease in Accounts Receivable 5,829 (21,497)
Increase(decrease) in Accounts Payable (143,722) 141,089
Increase(decrease) in Accrued Liabilities (22,375) 12,426
Total Adjustments 1,270,393 1,626,460
Net Cash Used by Operating Activities $ (385,259) $ (123,277)
NORTHERN COLORADO REGIONAL AIRPORT
STATEMENT OF CASH FLOWS
Year Ended December 31, 2018
(With Summarized Comparative Totals for the year ended December 31, 2017)
NORTHERN COLORADO REGIONAL AIRPORT
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NOTES TO FINANCIAL STATEMENTS
December 31, 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Northern Colorado Regional Airport (the Airport) have been
prepared in conformity with Generally Accepted Accounting Principles (GAAP) as applied to
governmental units. The more significant accounting policies of the Airport are described below.
Reporting Entity
In accordance with governmental accounting standards, the Airport has considered the possibility
of inclusion of additional entities in its financial statements. The definition of the reporting entity is
based primarily on financial accountability. The Airport is financially accountable for organizations
that make up its legal entity. It is also financially accountable for legally separate organizations if
Airport officials appoint a voting majority of the organization’s governing body and either it is able
to impose its will on that organization or there is a potential for benefits to, or to impose specific
financial burdens on, the Airport. The Airport may also be financially accountable for other
organizations that are fiscally dependent upon it.
Based upon the application of these criteria, no additional organizations are includable within the
Airport’s reporting entity.
The Airport is jointly operated under an Intergovernmental Agreement between the Cities of Fort
Collins and Loveland, Colorado. Only the financial transactions of this joint venture are included in
this report, and the Airport is not included as a component unit of any other government.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The Airport uses an enterprise fund to account for its operations. Enterprise funds are used to
account for operations that are financed and operated in a manner similar to private business
enterprises, where the intent of the governing body is that costs of providing goods or services to
the general public on a continuing basis be financed or recovered primarily through user charges.
The financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when
the liability is incurred, regardless of the timing of related cash flows. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Enterprise funds distinguish operating revenues and expenses from non-operating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods
in connection with the Airport’s principal ongoing operations. Operating expenses include the cost
of sales and services, administrative expenses, and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as non-operating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the Airport’s practice to
use restricted resources first, then unrestricted resources as they are needed.
Cash and Investments
The Airport’s cash and investments are pooled with those of the City of Loveland. The City of
Loveland’s Investment Policy authorizes investments in accordance with State statutes for the
NORTHERN COLORADO REGIONAL AIRPORT
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
investing of public funds. Current investment holdings may include Certificates of Deposit, U.S.
Treasury Notes, U.S. Agency Securities, Municipal Bonds and Corporate Bonds that mature within
seven years. Investments are stated at fair value. Because the investments are part of a pool, the
underlying securities cannot be determined. For the purposes of the statement of cash flows,
management defines cash and cash equivalents as amounts in demand deposits as well as short-
term, highly liquid investments with original maturities of three months or less. Cash equivalents
are both readily convertible to cash and are so near their maturity that they present insignificant risk
of change in value due to interest rate changes. The Airport’s cash is approximately 0.68% of the
City’s cash balance.
Investments are stated at fair value
For purposes of the statement of cash flows, the City defines cash and cash equivalents as amounts
in demand deposits as well as short-term, highly liquid investments with original maturities of three
months or less. Cash equivalents are both readily convertible to cash and are so near their maturity
that they present insignificant risk of change in value due to interest rate changes.
Receivables
Receivables consist primarily of federal and state grants, land and hangar leases, as well as other
miscellaneous receivables. At December 31, 2018, the grants receivable balance was $170,621.
Capital Assets
Capital assets include land, improvements, buildings, runways, leasehold improvements and
equipment. Capital assets are defined by the Airport as assets with an initial, individual cost of more
than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical
cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at
estimated acquisition value at the date of donation.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially
extend asset lives are not capitalized.
Depreciation is computed using the 6-month convention method over the estimated useful lives of
the assets. Buildings are depreciated over a period from 10 to 25 years; improvements from 10 to
20 years, runways are 20 to 25 years, leasehold improvements from 7 to 50 years and equipment
from 3 to 30 years. When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected
in income for the period.
Accrued Liabilities
Accrued liabilities consist primarily of Accrued Compensated Absences and miscellaneous payments
to vendors due in the current year but not actually paid until the following year.
Compensated Absences
Airport employees are allowed to accumulate vacation and sick time as stipulated in the
administrative regulations of the City of Loveland. A liability is recorded on the Airport financial
statements for these accrued compensated absences. At December 31, 2018, the Accrued
Compensated Absence balance was $45,646.
NORTHERN COLORADO REGIONAL AIRPORT
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Position
Net position is restricted when constraints placed on the net assets are externally imposed.
Comparative Data
Comparative total data for the prior year has been presented in the financial statements in order to
provide an understanding of changes in financial position and operations. However, complete
comparative data in accordance with generally accepted accounting principles has not been
presented since its inclusion would make the financial statements unduly complex and difficult to
read. Accordingly, such information should be read in conjunction with the Airport’s financial
statements as of and for the year ended December 31, 2017.
Reclassification
Certain accounts in prior year financial statements have been reclassified for comparative purposes
to conform to the presentation in the current year financial statements.
NOTE 2: CASH AND INVESTMENTS
Cash and investments at December 31, 2018, consisted of the following:
Deposits $ 304,431
Investments 2,113,844
Total $ 2,418,275
Deposits and investments are displayed within this report as follows:
Equity in Pooled Cash $ 304,431
Equity in Pooled Investments 2,113,844
Total $ 2,418,275
Deposits
The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government deposit
cash in eligible public depositories. Eligibility is determined by state regulations. The State banking
commissioner regulates the eligible public depositories. Amounts on deposit in excess of federal
insurance levels must be collateralized by eligible collateral as determined by the PDPA. PDPA allows
the financial institution to create a single collateral pool for all public funds held. The pool is to be
maintained by another institution or held in trust for all the uninsured public deposits as a group.
The market value of the collateral must be at least equal to 102% of the uninsured deposits. At
December 31, 2018 the Airport had $121,802 collateralized with securities held by the financial
institution's agent but not in the Airport's or City of Loveland’s name.
Investments
The City of Loveland of which the Airport is a joint venture has an investment policy which specifies
the investment instruments including rating, maturity and concentration risk criteria in which the
City may invest. These investment instruments may include:
• Obligations of the United States and certain US Agency securities
• Certain international agency securities
• General obligation and revenue bonds of US local government entities
• Commercial paper
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NOTE 2: CASH AND INVESTMENTS (continued)
• Corporate or bank issue debt
• Written repurchase agreements collateralized by certain authorized securities
• Certain money market accounts
• Guaranteed investment contracts
• Local government investment pools
Fair Value
The Airport categorized its fair value measurements within the fair value hierarchy established by
generally accepted accounting principles. See Note 2 Cash and Investments for additional disclosure.
The Airport categorized its fair value measurements within the fair value hierarchy established by
generally accepted accounting principles. The hierarchy is based on the valuation inputs used to
measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical
assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant
unobservable inputs. The Airport’s investments are approximately 1.13% of the City’s investments
and the numbers below are the Airport’s percentage:
The Airport has the following recurring fair value measurements as of December 31, 2018:
U.S. Treasury securities of $509,715 are valued using quoted market prices (Level 1
inputs)
U.S. Agency securities of $1,297,319 are valued using matrix pricing techniques (Level 2
inputs)
Corporate Bonds of $244,095 are valued using matrix pricing techniques (Level 2 inputs)
Municipal Bonds of $45,802 are valued using matrix pricing techniques (Level 2 inputs)
Investments Held in our Colorado Surplus Asset Fund Trust
The Airport invested $64,158 in the Colorado Surplus Asset Fund Trust (CSAFE). CSAFE is valued at amortized cost.
The investments conform to its permitted investments and will meet Standard & Poor’s investment guidelines to
achieve an AAAm rating, the highest attainable rating for a Local Government Investment Pool. Information
related to CSAFE can be found at their website, www.csafe.org.
Investments in ColoTrust
The Airport has invested $21 in Colorado Local Government Liquid Asset Trust Plus+ (ColoTrust). ColoTrust is
valued using the NAV per share (or its equivalent) of the investment. ColoTrust does not have any unfunded
commitments, redemption restrictions or redemption notice periods. ColoTrust has a rating of AAAm.
Information related to ColoTrust can be found on their website, www.colotrust.com.
At December 31, 2018, the Airport had the following investments:
Investment type STANDARD AND
POOR’S RATING
LESS THAN 1 1 TO 3
YEARS
4 TO 5
YEARS
MORE
THAN 5
TOTAL
Certificates of Deposit N/A $5,640 $11,274 $- $- $16,914
U.S. Treasury Notes N/A 33,580 363,710 112,425 509,715
U.S. Agency Securities AA+ 225,005 736,600 222,889 112,825 1,297,319
Corporate Bonds AA-
/A/A+/AA/AA+
55,986 188,109 - 244,095
Municipal Bonds AA/AA+ 11,276 34,526 - 45,802
Total $ 331,487 $ 1,334,219 $ 335,314 $ 112,825 $ 2,113,845
NORTHERN COLORADO REGIONAL AIRPORT
17 | Page
NOTE 2: CASH AND INVESTMENTS (continued)
The Airport participates in the City of Loveland’s pooled cash and investments; therefore the following applies to
the Airport’s cash and investment balances:
1. Interest Rate Risk: State statutes and the City of Loveland’s Investment Policy limit investments
in US Treasury and Agency securities to an original maturity up to seven years with a minimum
credit rating of A+/A1. State Statutes and the City’s Investment Policy require all repurchase
agreements with a maturity of less than 5 years and collateralized with securities allowed by
statute at no less than 102% of fair value. State statutes and the City’s Investment Policy limit
investments in corporate bonds to an original maturity of five years or less.
2. Credit Risk: State statutes and the City of Loveland’s Investment Policy limit investments in US
Agency securities to the highest rating issued by two or more nationally recognized statistical
rating organizations (NRSROs). State statutes and the City's Investment Policy limit investments
in money market funds to those that maintain a constant share price, with a maximum remaining
maturity in accordance with rules governing government investment pools, and either have
assets of one billion dollars or the highest rating issued by a NRSRO. State statues and the City's
Investment Policy limit investments in corporate bonds and Foreign Issues to a minimum credit
rating of “AA- or Aa3” by two or more NRSROs. At December 31, 2018, the City held corporate
bonds with a rating lower than the minimum rating. At the time of purchase, the bonds were
rated at or above minimum. The City's investment policy allows the City to hold on to these
investments until maturity so a large loss is not taken.
3. Custodial Credit Risk: The City of Loveland’s Investment Policy requires that securities purchased
from any bank or dealer, including appropriate collateral, be placed with an independent third
party for custodial safekeeping. The City has entered into an agency agreement with US Bank-
Denver to establish an Investment Management Account pursuant to Colorado Revised Statutes.
The City's pooled cash is invested in this account. The Bank purchases investments for the City
and maintains an internal accounting record of all investments of the City. All investment
transactions are approved by City management. All investments, held and maintained by the
Trust Department of the Bank, are specifically separate from the investments of the bank and
are identified as being investments of the City of Loveland. Investments of Loveland Special
Improvement District #1 are held by other banks in their Trust Departments and are also
specifically identified as being investments of the City of Loveland.
4. Concentration of Credit Risk: The City of Loveland’s Investment Policy does not limit the amount
the City may invest in one issuer. The City had investments in US agency securities greater than
5% of its total portfolio as follows, the Airport’s percent is 1.13% of the City’s total investments:
a. US Treasury Notes (24.11%)
b. Federal Home Loan Bank (18.35%)
c. Federal National Mortgage Association, (10.41%)
d. Federal Home Loan Mortgage Corporation (16.79%)
e. Federal Farm Credit Bank (15.83%).
NOTE 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Budgets and Budgetary Accounting
The budget is developed by the City of Loveland’s staff on a non-GAAP budgetary basis, which
includes budgeting for capital outlay and excludes depreciation. The budget is then submitted to the
Northern Colorado Regional Airport Commission. Upon approval by the Northern Colorado Regional
Airport Commission, the City of Loveland legally adopts the budget before commencement of the
following fiscal year as part of the support role for the City in the Airport Management IGA between
NORTHERN COLORADO REGIONAL AIRPORT
18 | Page
NOTE 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (continued)
the City of Loveland and City of Fort Collins. The budget includes proposed expenditures and the
means of financing them. Expenditures may not legally exceed budgeted appropriations at the fund
level. Revisions that alter total expenditures of the fund must be approved by the City Councils.
Appropriations lapse at year end.
NOTE 4: CAPITAL ASSETS
Capital assets activity for the year ended December 31, 2018 is summarized on the next page:
NOTE 5: RISK MANAGEMENT
The Airport is exposed to various risks of loss related to torts; theft of, damage to, and destruction
of assets; errors and omissions; injuries to employees; and natural disasters. The Cities of Fort Collins
and Loveland carry commercial insurance for these risks of loss. During the last three years, there
have not been any claims that exceeded coverage.
Balances Balances
12/31/17 Additions Deletions 12/31/18
Capital Assets, Not Being Depreciated
Land $ 563,614 $ - $ - $ 563,614
Construction in Progress 858,181 858,181 -
Total Capital Assets, Not Being Depreciated 1,421,795 - 858,181 563,614
Capital Assets, Being Depreciated
Runways 12,031,741 - - 12,031,741
Improvements 10,226,614 580,810 - 10,807,424
Equipment 2,537,143 13,668 2,550,811
Buildings 1,891,645 - 1,891,645
Leasehold Improvements 1,561,661 - - 1,561,661
Total Capital Assets, Being Depreciated 28,248,804 594,478 - 28,843,282
Less Accumulated Depreciation
Runways (5,469,282) (587,858) - (6,057,140)
Improvements (3,863,636) (588,180) - (4,451,816)
Equipment (1,434,255) (130,657) (1,564,912)
Buildings (264,304) (65,253) - (329,557)
Leasehold Improvements (954,226) (58,712) - (1,012,938)
Total Accumulated Depreciation (11,985,703) (1,430,661) - (13,416,363)
Total Capital Assets, Being Depreciated, Net 16,263,101 (836,183) - 15,426,919
Total Capital Assets, Net $ 17,684,896 $ (836,183) $ 858,181 $ 15,990,533
NORTHERN COLORADO REGIONAL AIRPORT
19 | Page
NOTE 6: CONTRACTURAL AGREEMENTS
Facilities Leased to Fixed Base Operator
The City of Loveland, on behalf of the Airport, leases certain facilities to the Fixed Base Operator
(FBO). The 24-year lease agreement includes monthly rent of land and improvements for the first
four years at $4,766 a month. The base monthly rent payments will be set at $6,824 beginning May
1, 2015. However, the annual base rent shall also be increased on May 1, 2018 and on each third
anniversary in an amount equal to the increase, if any, in the “Consumer Price Index”. After the
initial term expiration on April 30, 2035, the Lessee shall have the option to extend the term of the
agreement for two additional periods of five years each. The current rate is $88,408, which is set to
the increase based on CPI on May 1, 2021. The agreement also provides for a fuel flowage fee of 6%
of delivered fuel cost or $.08 per gallon, whichever is higher.
Intergovernmental Agreement
The Airport is jointly operated under an Intergovernmental Agreement between the City of Fort
Collins, Colorado and the City of Loveland, Colorado. This Agreement was approved by the City of
Loveland City Council on May 17, 2016 to reflect the changed airport name and to expand the Airport
Commission’s authority.
Pursuant to the agreement, any needed contributions for annual operating budgets or capital
improvements are shared equally by both cities. Also, either city may invest additional funds in the
Airport as it sees fit.
Since July 3, 1979, ownership of assets vests equally with each city. Assets acquired prior to July 3,
1979 vested one-third with the City of Loveland and two-thirds with the City of Fort Collins.
The agreement provides that if either city does not pay its one-half of agreed expenses in a given
year, it will convey to the other city 10% of its total Airport ownership. Each city contributed
$242,500 in 2018.
Certain administrative services are provided by the City of Loveland. These include legal services,
accounting and purchasing, audit costs, personnel and benefits administration, engineering, facilities
maintenance, general administration, environment services and risk and insurance management. In
2018, the City of Loveland was paid $23,450 for these services.
As part of personnel administration, the employees of the Airport also participate in the City of
Loveland’s 401(a) money purchase plan that was established (and may be amended) by City Council
of the City of Loveland. This Plan requires contributions of 5% from the employer and 3% from the
employee. The Airport contributed $21,679 to the Plan in 2018, representing the required
contributions.
NOTE 7: COMMITMENTS AND CONTINGENCIES
TABOR Amendment
In November 1992, Colorado voters passed an amendment to the State Constitution, Article X,
Section 20, which has several limitations, including raising revenue, spending abilities, and other
specific requirements of state and local governments. The Amendment is complex and subject to
judicial interpretation. The Airport believes it is in compliance with the requirements of the
Amendment.
NORTHERN COLORADO REGIONAL AIRPORT
20 | Page
NOTE 7: COMMITMENTS AND CONTINGENCIES (continued)
The Airport is operated as a unit of each City through the Intergovernmental Agreement; therefore
both the City of Loveland and the City of Fort Collins includes the Airport’s emergency reserves in its
city-wide financial statements.
Claims and Judgments
The City of Loveland receives Federal and State grants for use by the Airport. These grants are
reported as grant revenues in the Airport’s financial statements. However, certain Federal
compliance and reporting requirements remain the responsibility of the City of Loveland. Expenses
financed by grants are subject to audit by the appropriate grantor government. If expenses are
disallowed due to noncompliance with grant program regulations, the Airport may be required to
reimburse the grantor government. As of December 31, 2018, significant amounts of grant expenses
have not been audited but management believes that subsequent audits will not have a material
effect on the overall financial position of the Airport.
Lease Commitments
The Airport is obligated to pay the Fixed Base Operator for modification, upgrade, or replacement
of the Fuel Farm equipment to the extent the cost of such modification, upgrade or replacement,
exceeds $50,000.
NOTE 8: SUBSEQUENT EVENTS
Police Training Campus IGA
On March 19, 2019, the Cities entered into an Intergovernmental Agreement for the use of certain
real property at the Airport for a Regional Police Training Campus. The real property, consisting of
44.068 acres, shall be limited to uses related to the Training Campus in accordance with the
Intergovernmental Agreement for the Construction, Ownership, Operation, Maintenance, and
Management of the Regional Training Campus executed between the two Cities. A rental rate of
$0.186 per square foot per year, in the total amount of $354,677, 50% of which will be paid to
the Airport by each of the two Cities in quarterly installments. The rental rate will by adjusted
annually by using the CPI as published by the Bureaus of Labor Statistics. The term of the rental
period is 50 years.
NORTHERN COLORADO REGIONAL AIRPORT
21 | Page
See the accompanying Independent Auditors’ Report.
DIFFERENCE
WITH FINAL 2017
ORIGINAL FINAL ACTUAL BUDGET ACTUAL
REVENUES
Hangar Rental $ 115,000 $ 115,000 $ 117,155 $ 2,155 $ 115,834
FBO Rent 81,000 81,000 98,060 17,060 78,216
Gas and Oil Commissions 130,000 130,000 199,017 69,017 152,779
State Aircraft Fuel Tax 90,000 90,000 94,326 4,326 92,088
Land Lease 207,500 207,500 232,541 25,041 193,554
Terminal Lease and Landing Fees 10,500 10,500 8,331 (2,169) 11,087
Concessions - - 11 11 161
Parking 12,000 12,000 9,940 (2,060) 13,595
Interest/Investment Income (Losses) 22,812 22,812 31,930 9,118 25,965
Federal and State Grants - 228,021 329,210 101,189 831,535
City Contributions 485,000 485,000 485,000 - 520,000
Miscellaneous 89,540 99,509 48,928 (50,581) 46,517
TOTAL REVENUES 1,243,352 1,481,342 1,654,448 173,106 2,081,331
EXPENDITURES
Personal Services 598,078 598,078 552,483 45,595 549,856
Purchased Services 54,700 64,669 424,873 (360,204) 368,140
Supplies 558,722 558,722 55,942 502,780 41,130
Capital Outlay 365,000 1,066,487 533,819 532,668 878,970
TOTAL EXPENDITURES 1,576,500 2,287,956 1,567,117 720,839 1,838,096
CHANGE IN NET POSITION, Budgetary Basis $ (333,148) $ (806,614) 87,331 $ 893,945 243,235
RECONCILIATION TO GAAP BASIS
Capital Outlay 533,819 878,970
Loss on Disposal of Capital Asset (686,640) -
Depreciation (1,430,661) (1,494,442)
CHANGE IN NET POSITION, GAAP Basis $ (1,496,152) $ (372,237)
BUDGET
2018
NORTHERN COLORADO REGIONAL AIRPORT
BUDGETARY COMPARISON SCHEDULE
(NON-GAAP BUDGETARY BASIS)
Year Ended December 31, 2018
(With Summarized Comparative Totals for the year ended December 31, 2017)
NORTHERN COLORADO REGIONAL AIRPORT
22 | Page
Notes to Budgetary Comparison Schedule:
The Airport follows the City of Loveland’s procedures in establishing the budget as reflected in the financial
statements:
1. Prior to September 20, the City Manager submits to the City Council, a proposed operating budget for the
fiscal year commencing the following January 1. The operating budget includes proposed expenditures
and the means of financing them.
2. Public hearings are conducted to obtain taxpayer comments.
3. Prior to December 15, the budget is legally enacted through passage of an ordinance. This ordinance
authorizes a lump-sum expenditure budget for the City taken as a whole. An appropriation ordinance is
also adopted which allocates the total budget to each individual fund. This allocation of the appropriation
may not be legally exceeded by an individual fund.
4. Supplemental appropriations are approved on an individual fund level basis.
5. All appropriations lapse at year-end per State statutes.
____NORTHERN COLORADO REGIONAL AIRPORT _________
23 | Page
____NORTHERN COLORADO REGIONAL AIRPORT _________
24 | Page
Prepared by:
Finance Department
Accounting Division
COLORADO
Report to Governance
for the year ended
December 31, 2018
Northern Colorado Regional Airport
Northern Colorado Regional Airport
17
For Management And Northern Colorado
Regional Airport Commission Use Only
Page
Introduction 1
Team Introductions 2
Objective And Scope Of Services 3
Auditor Communications 4 - 9
Foresights - Financial Accounting And Reporting 10 - 12
Independent Auditors’ Report On Additional Information 13
Appendices:
A - Adjusting Journal Entries Report
B - Management Representation Letter
Table Of Contents
Northern Colorado Regional Airport
1
For Management And Northern Colorado
Regional Airport Commission Use Only
Introduction
Members of the Northern Colorado
Regional Airport Commission
Airport of Loveland, Colorado
We are pleased to have the opportunity to present to you the results of our audit engagement of the Northern Colorado
Regional Airport (the Airport) for the year ended December 31, 2018. The accompanying report presents information
regarding the scope of our audit and other matters, which summarizes the results of our audit engagement.
We thank you for the opportunity to be of service to the Airport. We have received excellent cooperation and assistance
from both management and staff with respect to access to records, supporting documentation and responses to
inquiries. No limitations were placed upon our ability to perform the audit.
This communication is intended solely for the information and use of management, the Northern Colorado Regional
Airport Commission and others within the organization and is not intended to be, and should not be, used by anyone
other than these specified parties.
Northern Colorado Regional Airport
2
For Management And Northern Colorado
Regional Airport Commission Use Only
Team Introductions
Cheryl Wallace is a Partner in RubinBrown’s Public Sector Group. For the Airport,
Cheryl is responsible for the following:
Authorizing the issuance of the financial statement audits
Ensuring quality and client satisfaction
Overseeing engagement execution
Matthew Marino is a Partner in RubinBrown’s Public Sector Group. For the Airport,
Matthew is responsible for the following:
Overall engagement management, status reporting and communication
Developing and overseeing the execution of the audit plan
Providing training services and industry updates
Northern Colorado Regional Airport
3
For Management And Northern Colorado
Regional Airport Commission Use Only
Objective of
Engagement:
Independent Auditors’
Report On Financial
Statements
Management’s
Responsibility:
Selecting and
applying accounting
policies
Establishing and
maintaining effective
internal controls
Identifying and
ensuring compliance
with applicable laws
and regulations
Designing and
implementing
controls to prevent
and detect fraud
Informing auditors
regarding any
known, suspected or
alleged frauds
Making all financial
records available
Auditors’
Responsibility:
Conducting the
audit in accordance
with generally
accepted auditing
standards
Ensuring that those
charged with
governance are
aware of internal
control-related
matters that are
required to be
communicated
Limitations of the
Engagement:
An audit is designed
to obtain
reasonable, not
absolute, assurance
about whether the
financial statements
are free from
material
misstatement.
An audit is not
designed to detect
immaterial errors or
Northern Colorado Regional Airport
4
For Management And Northern Colorado
Regional Airport Commission Use Only
Auditor Communications
We have audited the basic financial statements of the Airport for the year ended December 31, 2018. Our audit was
performed 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 and are presented in
accordance with accounting principles generally accepted in the United States of America. Our audit involved
performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. We also
assessed the accounting principles used by the Airport and the reasonableness of significant estimates made by the
Airport’s management, as well as evaluated the overall financial statement presentation.
Auditing standards require the auditor to ensure that those charged with governance receive additional information
regarding the scope and results of the audit that may assist the governing body in overseeing the financial reporting and
disclosure process for which management is responsible. The following section describes matters which are required to be
reported to you.
Northern Colorado Regional Airport
5
For Management And Northern Colorado
Regional Airport Commission Use Only
AREA COMMENTS
Our Responsibility Under U.S. Generally Accepted Auditing
Standards and Government Auditing Standards
Our responsibility, as described by professional standards, is to
express an opinion about whether the financial statements
prepared by management with your assistance are fairly
presented, in all material respects, in conformity with
U.S. generally accepted accounting principles and whether the
Airport complied with in all material respects with the applicable
compliance requirements of its major federal programs. Our
audit of the financial statements and compliance does not
relieve you or management of responsibility for the accuracy of
the financial statements and/or compliance with applicable
requirements.
Professional standards also require that we obtain a significant
understanding of the Airport’s internal control to plan the audit.
However, such understanding is required for the purpose of
determining our audit procedures and not to provide any
assurance concerning such internal control. Accordingly, we
express no such assurance.
Reports issued by RubinBrown:
Unmodified report on the Airport’s financial
statements based upon an audit of the
financial statements in accordance with
auditing standards generally accepted in the
United States of America and Government
Auditing Standards
A report on the Airport’s internal control over
financial reporting and compliance and other
matters based upon an audit of the financial
statements in accordance with Government
Auditing Standards
Auditor Communications (Continued)
Northern Colorado Regional Airport
6
For Management And Northern Colorado
Regional Airport Commission Use Only
AREA COMMENTS
Other Information In Documents Containing Audited
Financial Statements
None
Planned Scope And Timing Of The Audit We performed the audit according to the planned scope
and timing communicated in our letter dated January 1,
2019 regarding the timing and extent of our audit
procedures.
Qualitative Aspects Of Accounting Practices
Management is responsible for the selection and use of
appropriate accounting policies. In accordance with
the terms of our engagement letter, we will advise
management about the appropriateness of
accounting policies and their application.
Significant accounting policies are described in Note 1.
No new accounting policies were adopted, and the
application of existing policies was not changed.
We noted no transactions entered into during the year
for which there was a lack of authoritative guidance or
consensus.
No significant transactions have been recognized in a
different period than when the transactions occurred.
Auditor Communications (Continued)
Northern Colorado Regional Airport
7
For Management And Northern Colorado
Regional Airport Commission Use Only
AREA COMMENTS
Management Judgments And Accounting
Estimates
The preparation of the financial statements
requires the use of accounting estimates.
Certain estimates are particularly sensitive due
to their significance to the financial statements
and the possibility that future events may differ
significantly from management’s expectations.
We evaluated the key factors and assumptions used to develop
the estimates in determining that they are reasonable in relation to
the financial statements taken as a whole. The most sensitive
estimate affecting the financial statements is:
Management’s estimate of depreciation is based upon
estimated useful lives of capital assets.
Financial Statement Disclosures The disclosures are neutral, consistent and clear. Certain disclosures
are particularly sensitive because of their significance to the
financial statements users. The most sensitive disclosure affecting
the financial statements is:
Depreciation methods and useful lives
Subsequent event
Auditor Communications (Continued)
Northern Colorado Regional Airport
8
For Management And Northern Colorado
Regional Airport Commission Use Only
AREA COMMENTS
Difficulties Encountered In Performing The Audit There were no difficulties encountered in dealing with
management related to the performance of the audit.
Corrected And Uncorrected Misstatements Management has corrected all audit adjustments considered to
be material (see the attached Adjusting Journal Entries Report in
Appendix A).
Disagreements With Management None
Management Representations Management representation letter received dated May 17, 2019,
which is attached in Appendix B
Management Consultations With Other
Independent Accountants
None
Other Audit Findings Or Issues There were no matters of significant discussion that affected our
retention as the Airport’s auditors.
Auditor Communications (Continued)
Northern Colorado Regional Airport
9
For Management And Northern Colorado
Regional Airport Commission Use Only
AREA COMMENTS
Other Matters (Supplementary Information) With respect to the supplementary information (budgetary
comparison information) accompanying the financial statements:
We made certain inquiries of management and evaluated the
form, content and methods of preparing the information to
determine that the information complies with U.S. generally
accepted accounting principles.
The method of preparing it has not changed from the prior
period.
The information is appropriate and complete in relation to our
audit of the financial statements.
We compared and reconciled the supplementary information
to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
Auditor Communications (Continued)
Northern Colorado Regional Airport
10
For Management And Northern Colorado
Regional Airport Commission Use Only
Foresights - Financial Accounting And Reporting
The Governmental Accounting Standards Board (GASB) Statement
No. 87, Leases
Effective for period beginning after December 15, 2019; fiscal years
ending 2020
Established a single model for lease accounting based on the principal
that leases are financings of the right to use an underlying asset
Application of this standard would go beyond the previous guidance
related to the recording of leased assets and additional leased items
on the books as intangible right-to-use assets and related liabilities.
Northern Colorado Regional Airport
11
For Management And Northern Colorado
Regional Airport Commission Use Only
Foresights - Financial Accounting And Reporting
(Continued)
GASB Statement No. 87, Leases (Continued)
Lessee is required to recognize a lease liability and an intangible right-to-use lease asset.
Lessor is required to recognize a lease receivable and a deferred inflow of resources.
Lease definition
A contract that conveys the right to use another entity’s nonfinancial asset (the underlying
asset) for a period of time in an exchange or exchange-like transaction
The lease term is defined as the period during which a lessee has a noncancellable right to use
the asset, plus any options to extend or terminate if it is reasonably certain that the lease will
continue.
Leases that are excluded:
Short-term leases with a term, at the commencement of the lease term, including renewal
options, of 12 months or less
Leases that transfer ownership (report as a financed purchase instead)
Contracts that meet the definition of a service concession arrangement under GASB 60
Northern Colorado Regional Airport
12
For Management And Northern Colorado
Regional Airport Commission Use Only
Foresights - Financial Accounting And Reporting
(Continued)
GASB Statement No. 87, Leases (Continued)
Note disclosures
A general description of the lease arrangement
Total amount of assets recorded under leases and the related accumulated amortization
(lessee)
The cost of assets on lease or held for leasing, by major class, and the amount of accumulated
deprecation (lessor)
The amount of expense (lessee) or revenue recognized (lessor) during the period
Schedule of future lease payments to be made or received in each of the five subsequent
years and in five-year increments thereafter
Recommended actions
Assign individuals to understand the new standard and lead implementation
Update lease inventories
Review legal agreements and debt covenants
Consider IT needs
Discuss with stakeholders
Northern Colorado Regional Airport
13
For Management And Northern Colorado
Regional Airport Commission Use Only
Independent Auditors’ Report On Additional
Information
Our report on our audit of the financial statements of the business-type activities of the Airport as of
December 31, 2018 appears in the financial statements of the Airport. That audit was conducted for the
purpose of forming an opinion on the basic financial statements taken as a whole. The additional
information in this report is presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information 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
on it.
May 17, 2019
Appendix A
Adjusting Journal Entries Report
35253.0001 - Northern Colorado Regional Airport
2018 AUD - Northern Colorado Regional Airport
12/31/2018
TB Database
3001 - Adjusting Journal Entries Report
Appendix B
Management Representation Letter
fraud.
An audit is not
designed to provide
assurance about
internal controls or to
identify deficiencies
in internal controls.
Objective And Scope Of Services
Conducting the
audit in
accordance with
generally accepted
auditing standards
and the standards
applicable to
financial audits
contained in
Government
Auditing Standards
Ensuring that those
charged with
governance are
aware of internal
control-related
matters that are
required to be
communicated
Independent Auditors’
Report On Financial
Statements
Report On The Airport's
Internal Control Over
Financial Reporting
And Compliance And
Other Matters Based
Upon An Audit Of The
Financial Statements In
Accordance With
Government Auditing
Standards
Report On The Airport's
Compliance For Each
Major Program, Report
On The Airport's Internal
Control Over
Compliance And
Report On The
Schedule Of
Expenditures Of Federal
Awards In Accordance
With The Uniform
Guidance