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Audit - 2007 I I I I I I I I I I I I I I I I I I I COMMUNITY ACCESS TELEVISION OF SALINA, INC. Salina, Kansas FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT December 31, 2007 CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS SALINA, KANSAS ., J I I I I I I I I I I I I I I I I I I !I I I I I I I I I I I I I I I I I I I COMMUNITY ACCESS TELEVISION OF SALINA, INC. Salina; Kansas IN D EX Paqe INDEPENDENT AUDITORS' REPORT 1 STATEMENT OF ASSETS, LIABILITIES AND NET ASSETS - - MODIFIED CASH BASIS - Exhibit I . 2 STATEMENT OF REVENUES, EXPENSES AND OTHER CHANGES IN NET ASSETS - MODIFIED CASH BASIS - Exhibit II 3 STATEMENT OF CASH FLOWS - MODIFIED CASH BASIS - Exhibit III 4 NOTES TO THE FINANCIAL STATEMENTS 5-6 I, " I I I I I I I I I I I I I I I I I I ,. I I I I CLUBlNE& RETIELE CHARfERED Certified Public Aavuntants v I I I Robert I. Clubine, C.PA David A. ReUele, C.P.A. Jay D. Langley, C.PA Jon K. Bell, C.P.A. Leslie M. Corbett, C.P.A. Stacy J. Sokol, C.PA Marci K. Fox, C.P.A. John T. Millikin, C.P.A. Linda A. Sue Iter, C.P.A. I I I I I I I I 218 South Santa Fe P.O. Box 2267 Salina, Kansas 67402-2267 Salina 785/825-5479 Salina Fax 785 / 825-2446 I I I Ellsworth 785/472-3915 Ellsworth Fax 785/472-5478 INDEPENDENT AUDITORS' REPORT To: The Board of Directors Community Access Television of Salina, Inc. We have audited the accompanying statement of assets, liabilities and net assets - modified cash basis of Community Access Television of Salina, Inc. as of December 31, 2007, and the related statements of revenues, expenses and other changes in net assets - modified cash basis, and cash flows - modified cash basis, for the year then ended. These financial statements are the responsibility of Community Access Television of Salina, Inc.'s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1, these financial statements were prepared on the basis of cash receipts and expenditures except that the statements include a provision for depreciation of property and equipment and accrued payroll taxes. This basis is a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and net assets of Community Access Television of Salina, Inc. as of December 31,2007, and its revenues collected and expenses paid for the year then ended, on the basis of accounting described in Note 1. CLUBINE AND RETTELE, CHARTERED ~.~~ June 23, 2008 (1) I, 111 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I COMMUNITY ACCESS TELEVISION OF SALINA, INC. Salina, Kansas STATEMENT OF ASSETS, LIABILITIES AND NET ASSETS MODIFIED CASH BASIS December 31, 2007 ASSETS Current Assets Cash in bank Donated facilities, current portion Total Current Assets Property and Equipment, at cost Building improvements Equipment Deduct - Accumulated depreciation Total Property and Equipment Other Assets Donated facilities, less current portion Total LIABILITIES AND NET ASSETS Current Liabilities Accrued payroll taxes and with holdings Net Assets Unrestricted Undesignated Designated for equipment repair Designated for construction project Designated for youth programs Total Unrestricted Temporarily restricted Total Net Assets Total See accompanying notes which are an integral part of the financial statements. . (2) Exhibit I $ 200,509 85,200 285,709 153,097 861,205 1,014,302 (897,936) 116,366 237,200 $ 639,275 $ 104 306,229 2,391 4,800 3,351 316,771 322,400 639,171 $ 639,275 I ~ I I I I I I I I I I I I I I I I I I -I COMMUNITY ACCESS TELEVISION OF SALINA, INC. Salina, Kansas I STATEMENT OF REVENUES, EXPENSES AND OTHER CHANGES IN NET ASSETS - MODIFIED CASH BASIS For the Year Ended December 31,2007 I Changes in Unrestricted Net Assets Revenue and Reclassifications Revenue Cable franchise City ordinance Grant Contributions Tapes Sponsorship Fees and classes Interest Miscellaneous Total Revenue Net Assets Released From Restrictions I I I I Total Revenue and Reclassifications I Program Expenses Accounting Legal Office supplies Postage and mailing Printing Repairs and maintenance Telephone and cable Sainet Board contingency Dues and publications Miscellaneous Tapes and expendables Community relations Community grant expenses Advertising Wages Payroll taxes Retirement plan Continuing education Underwriting usage Insurance Travel and recruitment Depreciation Donated facilities rent Total Program Expenses Other Changes in Net Assets Loss on sale of assets Total Changes in Unrestricted Net Assets Changes in Temporarily Restricted Net Assets Donated facilities revenue Net assets released from restrictions Total Changes in Temporarily Restricted Net Assets Change in Net Assets Net Assets at Beginning of Year Net Assets at End of Year I I I I I I I I I I See accompanying notes which are an integral part of the financial statements. I (3) ! . Exhibit II $ 86,995 275,529 3,841 6,633 2,483 4,115 4,208 7,591 5,205 396,600 70,300 466,900 5,765 50 2,149 1,872 3,610 6,795 4,148 559 129 1,100 4,809 4,825 1,359 261 5,262 250,420 19,388 5,220 1,315 710 10,852 6,488 52,961 70,300 460,347 (96) 6,457 $ 388,500 (70,300) 318,200 324,657 314,514 639,171 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I COMMUNITY ACCESS TELEVISION OF SALINA, INC. Salina, Kansas Exhibit III STATEMENT OF CASH FLOWS MODIFIED CASH BASIS For the Year Ended December 31, 2007 Cash Flows From Operating Activities Cash received from cable contracts and others Interest received Cash paid to suppliers and others Net Cash Provided by Operating Activities $ 389,009 7,591 (340,153) 56,447 Cash Flow From Investing Activities Proceeds from sale of equipment Purchase of property and equipment Net Cash Used by I nvesting Activities 2,400 (38,842) (36,442) Net Increase in Cash Cash at Beginning of Year 20,005 180,504 Cash at End of Year $ 200,509 RECONCILIATION OF DECREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING ACTIVITIES Increase in Net Assets $ 324,657 Adjustments to reconcile decrease in net assets to net cash provided by operating activities Decrease in accrued payroll taxes and with holdings Donated facilities, net Loss on sale of equipment Depreciation Total Adjustments (3,067) (318,200) 96 52,961 (268,210) Net Cash Provided by Operating Activities $ 56,447 See accompanying notes which are an integral part of the financial statements. (4) I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I COMMUNITY ACCESS TELEVISION OF SALINA, INC. Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 2007 1. Community Access Television of Salina, Inc. was organized as a Kansas not-for-profit corporation with exempt status under Internal Revenue Code Section 501 (c)(3) on April 15, 1991. The organization operates cable television channels to distribute noncommercial, educational, community-based media programs and information to local citizens and provides equipment and technical knowledge for local citizens who produce the programs. The following is a summary of the significant accounting policies: A. The accounting records are maintained and the financial statements prepared on the modified cash basis of accounting. Under the cash basis, receipts are recognized when collected and disbursements are recognized when paid rather than when incurred. This method is modified to include a provision for depreciation of property and equipment and for accrued payroll taxes. B. The organization's expenses are primarily program related with an insignificant amount of expenses related to administration and fund raising. Thus, the Statement of Functional Expenses is not presented. C. F9r the purposes of the Statement of Cash Flows - Modified Cash Basis, cash equivalents inciude bank checking accounts, certificates of deposit and bank repurchase agreements. D. Property and equipment are recorded at cost. Depreciation is determined using the straight-line method over estimated lives of 5 to 15 years. E. The preparation of financial statements in conformity with generally accepted accounting 'principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. A contract with the City of Salina dated March 23, 1992, provided for funds to be paid to Community Access Television of Salina, Inc. in exchange for providing the services in Note 1. The term of the agreement was five years commencing April 4, 1992, and could be extended by mutual agreement for two additional five year periods. On January 27,1997, both parties involved agreed to extend this contract an additional five years to April 3, 2002. On March 14, 2002, the parties agreed to a contract extension to February 3, 2007. On April 2, 2007, the parties agreed to a new contract beginning April 4, 2007, and terminating December 31,2011. The contract may be renewed for periods of five years at a time. In 2007 and subsequent years, revenue will be substantially reduced under the new contract with the City of Salina. The reduction is due to Kansas legislation passed in 2006 which eliminated local franchise relationships between municipalities and video service providers. This contract contains a declining revenue provision as follows: 70% for April 4, 2007 through December 31,2007,65% for 2008,60% for 2009, 55% for 2010 and 50% for2011. Under the terms of the agreement, the City of Salina furnishes a building and utilities for the operations of Community Access Television of Salina, Inc. The estimated fair rental value for the life of the new contract of this facility, including utilities, was estimated to be $388,500, and recognized as restricted revenue in 2007. For 2007, the revenue released from restrictions of $70,300 is shown as a reclassification and the expense of $70,300 is shown under the caption "Donated Facilities" on the Statement of Revenues, Expenses and Other Changes in Net Assets - Modified Cash Basis, in accordance with SFAS No. 116. The City of Salina maintains a security interest in all assets and upon termination of the agreement, all real estate, equipment, deposit accounts or other assets become the property of the City of Salina. (5) .... , I I I Ii I I I I I I I I I I I I I I I I :i I I I I I I I I I I I I I I I I I I 3. Revenues from the cable franchisee represent an additional amount billed to each cable subscriber and remitted quarterly to Community Access Television of Salina, Inc. This agreement was not renewed, therefore a payment for the period from April to June, 2007 will be the last received. Revenues from the city ordinance represent a percentage of fees paid to the City of Salina by the cable franchisee. These are remitted quarterly to Community Access Television of Salina, Inc. The fourth quarter payment for 2007 of $81 ,510 was not payable until after year-end. From time to time, additional funds may be provided by the City of Salina and the cable franchisee for equipment purchases at the request of Community Access Television of Salina, Inc. This revenue is recorded under the caption "City equipment reserve" when received. In 2007, no such funds were received. All of the revenues from the City of Salina are subject to the perpetuity of the contract mentioned in Note 2. 4. The organization does not recognize any revenues or expenses from services contributed by volunteers. If any revenues or expenses were recorded, it would be determined based on the difference of any amount paid to an individual and the comparable compensation which would be paid to an individual if they were to occupy those paid positions. The organization had no contributed services which would require reporting in accordance with SFAS No. 116. 5. The cash in bank includes $124,198 invested with a bank under a repurchase agreement which is not insured by the Federal Deposit Insurance Corporation. 6. Certain employees of the organization are entitled to paid vacation and sick days depending on various factors which can be carried over to following years up to certain limits. The liability for these compensated absences at December 31,2007, is estimated to be $21,433. This estimated liability has not been reflected in these financial statements. 7. The organization sponsors a Simple IRA Plan which began January 1, 1999. Contributions to the pension plan were $5,220 for the year ended December 31,2007. 8. The "Community Grant Expenses" on Exhibit II are for a grant to help increase community awareness about recycling and waste reduction through educational programs. Upon completion, the expenses are summarized and submitted for reimbursement. This process was completed during 2007. (6) I I I I I I I I I I I I I I I I I I I