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Audit - 2005 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 31,2005 CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS SALINA, KANSAS 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 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 CLUBlNE& RElTELE CHARfERED I I I I I I I I I I I I I Certified Public Accountants (fI1 Robert I. Clubine, C.PA David A. Rettele, C.PA Jay D. Langley, C.PA Jon K. Bell, C.PA Leslie M. Corbett, C.PA Stacy J. Sokol, C,PA Marci K. Fox, C.PA Delores K. Longenecker, C.PA John T. Millikin, C.PA Linda A. Suelter, C.PA 218 South Santa Fe P.O. Box 2267 Salina, Kansas 67402-2267 I I I I I Salina 785/825-5479 Salina Fax 785 / 825-2446 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, 2005, 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 31,2005, 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 (C~t-t-JL{/~~ cvv~ ~~~ June 20, 2006 (1 ) 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 31,2005 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 Net Assets Unrestricted Undesignated Designated for equipment repair Designated for construction project Designated for youth programs Temporarily restricted Total Net Assets Total See accompanying notes which are an integral part of the financial statements. (2) Exhibit I $ 156,895 51,600 208,495 153,097 795,044 948,141 (774,186) 173,955 4,200 $ 386,650 $ 141 323,828 1,781 1,878 3,222 55,800 386,509 $ 386,650 I COMMUNITY ACCESS TELEVISION OF SALINA, INC. Salina, Kansas Exhibit II I STATEMENT OF REVENUES, EXPENSES AND OTHER CHANGES IN NET ASSETS - MODIFIED CASH BASIS For the Year Ended December 31,2005 I Changes in Unrestricted Net Assets Revenue and Reclassifications Revenue Cable franchise $ 134,999 I City ordinance 191,099 Contributions 7,617 Tapes 5,705 I Fees and classes 3,815 Interest 3,402 Miscellaneous 5,299 I Loss on disposed equipment (507) Total Revenue 351,429 Net Assets Released From Restrictions 53,700 I Total Revenue and Reclassifications 405,129 Expenses I Accounting 5,600 Legal 645 Office supplies 2,243 Postage and mailing 2,255 I Printing 2,772 Repairs and maintenance 6,560 Telephone and cable 5,024 I Salnet 249 Board contingency 93 Dues and publications 1,189 Miscellaneous 2,084 I Tapes and expendables 9,234 Community relations 1,743 Youth programs 1,377 I Advertising and fund raising 5,145 Wages 215,078 Payroll taxes 16,440 Retirement plan 4,350 I Contract labor 420 Continuing education 773 Underwriting usage 947 I Insurance 16,668 Travel and recruitment 5,488 Depreciation 82,652 Donated facilities 53,700 I Total Expenses 442,729 Total Changes in Unrestricted Net Assets (37,600) I Changes in Temporarily Restricted Net Assets Net Assets Released From Restrictions Donated facilities (53,700) I Change in Net Assets (91,300) Net Assets at Beginning of Year 477,809 I Net Assets at End of Year $ 386,509 See accompanying notes which are an integral part of the financial statements. I (3) 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 31,2005 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 $ 348,534 3,402 (306,288) 45,648 (44,568) 1,080 155,815 $ 156,895 Net Cash Used by Investing Activities Purchase of property and equipment Net Increase in Cash Cash at Beginning of Year Cash at End of Year RECONCILIATION OF DECREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING ACTIVITIES Decrease in Net Assets $ (91,300) Adjustments to reconcile decrease in net assets to net cash provided by operating activities Increase in accrued payroll taxes Donated facilities, net Loss on disposed equipment Depreciation Total Adjustments 89 53,700 507 82,652 136,948 Net Cash Provided by Operating Activities $ 45,648 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 COMMUNITY ACCESS TELEVISION OF SALINA, INC. Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31,2005 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. In 1996, the organization adopted Statement of Financial Accounting Standards (SFAS) No. 117, "Financial Statements of Not-For-Profit Organizations". Under SFAS No. 117, the organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. As permitted by this new statement, the corporation has discontinued its use of fund accounting and, accordingly, has reclassified its financial statements to present the three classes of net assets required. C. The organization also adopted SFAS No. 116, "Accounting for Contributions Received and Contributions Made," whereby contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Restricted net assets are reclassified to unrestricted net assets upon satisfaction of the time or purpose restrictions. D. 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. E. For the purposes of the Statement of Cash Flows - Modified Cash Basis, cash equivalents include bank checking accounts, certificates of deposit and bank repurchase agreements. F. Property and equipment are recorded at cost. Depreciation is determined using the straight-line method over estimated lives of 5 to 15 years. G. 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, provides 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. 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 fair rental value for the life of the second contract extension of this facility, including utilities, was estimated to be $268,800, and recognized as revenue in 2002. The expense for 2005 of $53,700 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 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. The fourth quarter payment for 2005 of $33,893 was not payable until after year-end. 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 2005 of $47,654 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 2005, no such funds were received. All of the revenues from the cable franchisee and 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 $62,000 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 31,2005, is estimated to be $20,900. 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 $4,350 for the year ended December 31, 2005. 8. In 2006, Kansas legislation was passed which could cause a significant reduction in the organization's revenue beginning in 2007 I I I I I (6)