HomeMy WebLinkAbout2017-18 SSFCC Annual Financial Statement Audit Report FINALCITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
FINANCIAL REPORT
JUNE 30, 2018
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CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS
PAGE NO.
INDEPENDENT AUDITOR’S REPORT..............................................................................................1 - 3
MANAGEMENT’S DISCUSSION AND ANALYSIS .........................................................................4 - 9
BASIC FINANCIAL STATEMENTS:
Statement of Net Position -June 30, 2018 with Comparative Totals for June 30, 2017 .....................10
Statement of Revenues, Expenses and Changes in Net Position for the Fiscal
Year Ended June 30, 2018 with Comparative Totals for the
Fiscal Year Ended June 30, 2017 .............................................................................................11
Statement of Cash Flows for the Fiscal Year Ended June 30, 2018
with Comparative Totals for the Fiscal Year Ended June 30, 2017 .........................................12
NOTES TO BASIC FINANCIAL STATEMENTS ...............................................................................13 - 26
SUPPLEMENTAL INFORMATION:
Schedule of Revenues, Expenditures and Changes in Net Position
(Budget Basis) for Each of the Last Five Fiscal Years .............................................................27
Reconciliation of Changes in Revenues over Expenditures (Budget Basis)
to Net Position (GAAP Basis) for Each of the Last Five Fiscal Years .....................................28
Schedule of Revenues, Expenditures and Changes in Net Position –
Budget and Actual (Budget Basis) for the Fiscal Year Ended June 30, 2018 ...........................29
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 ........................................................................................30 -31
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INDEPENDENT AUDITOR’S REPORT
Members of the City of South San Francisco Conference Center
Authority Board and Executive Director
South San Francisco, California
Report on the Financial Statements
We have audited the accompanying financial statements of the business-type activities of the
City of South San Francisco Conference Center Authority (the “Authority”), a component unit
of the City of South San Francisco, California, as of and for the year ended June 30, 2018 and
2017, which collectively comprise the Authority’s basic financial statements as listed in the
table of contents.
Management’s Responsibility for the Financial Statements
The Authority’s 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, 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.
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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 of the business-type activities of the
Authority, as of June 30, 2018 and 2017, and the respective changes in financial position for
the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 4-9 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.
Supplemental Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Authority’s basic financial statements. The accompanying
supplemental information, as listed in the table of contents,are presented for purposes of
additional analysis and are not a required part of the basic financial statements.
The supplemental information, as listed in the table of contents, is the responsibility of
management and was derived from and relates directly to the underlying accounting and other
records used to prepare the basic financial statements. Such information, except for the
unaudited budgetary information and fiscal years presented prior to 2017,has been subjected
to the auditing procedures applied in the audit of the basic financial statements and certain
additional procedures, including comparing and reconciling such information directly to the
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Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] •www.cnallp.com
underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the
information is fairly stated,in all material respects,in relation to the basic financial statements
as a whole.
The budgetary information included in the schedule of revenues, expenditures and changes in
net position budget and actual (budget basis) has not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on it.
The supplemental schedules as listed in the supplemental section refer to financial information
years ended prior to June 30, 2017, this information was audited by another auditor who
expressed an unmodified opinion on those statements.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
November 6, 2018 on our consideration of the 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 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
Authority’s 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 the Authority’s internal control over financial reporting and compliance.
San Jose, California
November 6, 2018
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Page | 4
The City of South San Francisco Conference Center Authority’s (the Authority) management’s
discussion and analysis is designed to (a) assist the reader in focusing on significant financial
issues, (b) provide an overview of the Authority’s financial activity, (c) identify changes in the
Authority’s financial position (its ability to address the next and subsequent year challenges), and
(d) identify individual fund issues or concerns.
Since the Management’s Discussion and Analysis (MD&A) is designed to focus on the current
years activities, resulting changes and currently known facts, please read it in conjunction with
the Authority’s financial statements (beginning on page 10).
USING THIS ANNUAL REPORT
The following graphic outlining the format of this report is provided for your review:
MD&A
~ Management’s Discussion
and Analysis (Required Supplementary Information)~
Basic Financial Statements
~ Fund Financial Statement ~
~ Notes to Financial Statements ~
Other Supplementary Information
~ Supplementary Information ~
FINANCIAL HIGHLIGHTS
The Authority’s net position increased by $634,465 (or 10%) during 2018 compared with
$792,543 (or 15%) during 2017. Of this amount, $403,604 was an increase in the
Authority’s net investment in capital assets.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Page | 5
The Authority’s revenue increased by $307,428 (or 8%) from $4,017,947 in 2017 to
$4,325,375 in 2018. This increase was primarily due to an increase in charges for
services, mostly related to rental income.
The total expenses of all Authority’s programs increased by $465,506 (14%) from
$3,225,404 in 2018 to $3,690,910 in 2017 primarily due to an increase in salary expense
for an addition of two staff positions.
FUND FINANCIAL STATEMENTS
The Authority consists of exclusively one Enterprise Fund. Enterprise funds utilize the full
accrual basis of accounting. The Enterprise method of accounting is similar to accounting
utilized by the private sector accounting.
Statement of Net Position: The focus of the Statement of Net Position (the “Unrestricted Net
Position”) is designed to represent the available liquid (non-capital) assets, net of liabilities, for
the entire Authority. Net Position is reported in three broad categories:
Invested in Capital Assets, Net of Related Debt: This component of Net Position consists
of all Capital Assets, reduced by the outstanding balances of any bonds, mortgages, notes
or other borrowings that are attributable to the acquisition, construction, or improvement
of those assets.
Restricted Net Position: This component of Net Position consists of restricted assets;
when constraints are placed on the asset by creditors (such as debt covenants), grantors,
contributors, laws, regulations, etc.
Unrestricted Net Position: Consists of Net Position that do not meet the definition of
“Invested in Capital Assets, Net of Related Debt”, or “Restricted Net Position”.
Statement of Revenues, Expenses and Changes in Net Position:(similar to an Income Statement)
This Statement includes Operating Revenues (rental income, event services and food services),
Operating Expenses (administrative, utilities, maintenance and depreciation), and Non-Operating
Revenues and Expenses (occupancy tax, investment income and interest expense).
The focus of the Statement of Revenues, Expenses and Changes in Net Position is the “Change
in Net Position," which is similar to Net Income or Loss.
Statement of Cash Flows: This statement discloses net cash provided by, or used for, operating
activities, non-capital financing activities,capital and related financing activities, and investing
activities.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Page | 6
STATEMENT OF NET POSITION
Table 1 reflects the condensed Statement of Net Position compared to prior year. The Authority
is engaged only in Business-Type Activities.
TABLE 1
STATEMENT OF NET POSITION
June 30, 2018 June 30, 2017
Increase
(Decrease)
Percent
Increase
(Decrease)
Assets
Current and Other As sets and 4,649,954$ 4,088,325$ 561,629$ 13.7%
Capital Assets 3,578,177 3,619,573 (41,396) -1.1%
Total Assets 8,228,131$ 7,707,898$ 520,233$ 6.7%
Deferre d Outflo ws -$ 24,304$ (24,304)$ -100.0%
Liabilities
Long-T erm Liabilitie s -$ 460,000$ (460,000)$ -100.0%
Other Liabilitie s 1,388,646 1,067,182 321,464 30.1%
Total Liabilitie s 1,388,646$ 1,527,182$ (138,536)$ -9.1%
Net Po sitio n
Net Investment in Capital Assets 3,118,177$ 2,714,573$ 403,604$ 14.9%
Restricted 482,596 480,922 1,674 0.3%
Unrestricted 3,238,712 3,009,525 229,187 7.6%
Total Net Position 6,839,485$ 6,205,020$ 634,465$ 10.2%
For more detailed information, see page 10 for the Statement of Net Position.
Major Factors Affecting the Statement of Net Position
Current and other assets increased by $561,629 (or 14%)due to the revenues exceeding
expenses for the year 2018.
Capital assets decreased by $41,396 (or 1%) due to current year additions and
depreciation.
Long-term liabilities decreased by $460,000 due scheduled and required debt service
payments.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Page | 7
STATEMENT OF CHANGES IN NET POSITION
Table 2 compares the revenues and expenses for the current and previous fiscal year. The
Authority is engaged only in Business-Type Activities.
TABLE 2
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
June 30, 2018 June 30, 2017
Increase
(decrease)
Percent
Increase
(decrease)
Revenues
Operating revenues
Charges for services 2,146,762$ 1,852,250$ 294,512$ 15.9%
Non-operating revenues:
Conference center tax 2,150,818 2,146,545 4,273 0.2%
Interest in come 27,795 19,152 8,643 45.1%
Total Revenues 4,325,375 4,017,947 307,428 7.7%
Ex penses
Operating exp enses
Personnel services 1,252,899 968,338 284,561 29.4%
Ad ministrative costs 191,529 175,069 16,460 9.4%
Other supplie s and expenses 161,713 141,713 20,000 14.1%
Repair and maintenance 497,469 473,078 24,391 5.2%
Contractual services 133,607 110,925 22,682 20.4%
Rent 484,080 477,504 6,576 1.4%
Insurance claims and expenses 33,989 28,523 5,466 19.2%
Marketing services 340,563 285,903 54,660 19.1%
Am ortization 25,826 28,176 (2,350) -8.3%
Depreciation 538,790 474,542 64,248 13.5%
Miscella neous 14,304 22,333 (8,029) -36.0%
Non-operating exp enses:
Interest expense and fiscal charges 16,141 39,300 (23,159) -58.9%
Total Exp enses 3,690,910 3,225,404 465,506 14.4%
Change Net Position 634,465$ 792,543$ (158,078)$ -19.9%
Major Factors Affecting the Statement of Revenues,Expenses and Changes in Net Position:
Charges for services increased by 16% because catering services performed better than
expected in 2017-18.
Other income increased by 45% due to a CalWater refund.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Page | 8
Contractual services decreased by 20% as the Authority didn’t contract for an expansion
study in fiscal year 2017-18 as was performed in 2016-17.
CAPITAL ASSETS
As of June 30, 2018, the Authority had $3,578,177 invested in capital assets as reflected in the
following schedule, which represents a $41,396 net decrease during the year.
TABLE 3
CAPITAL ASSETS (NET OF DEPRECIATION)
June 30, 2018 June 30, 2017
Increase
(decrease)
Percent
Increase
(decrease)
Construction in progress 43,289$ -$ 43,289 100.0%
Buildin g im provements 11,148,265 10,822,457 325,808 3.0%
Furniture and fixt ures 880,168 781,465 98,703 12.6%
Machinery and equipment 203,239 173,645 29,594 17.0%
Kitchen tableware 63,912 63,912 - 0.0%
Total Capital Assets 12,338,873 11,841,479 497,394 4.2%
Less accumulated depreciation (8,760,696) (8,221,906) (538,790) 6.6%
Capital assets, net 3,578,177$ 3,619,573$ (41,396)$ -1.1%
DEBT ADMINISTRATION
As of June 30, 2018, the Authority had $460,000 in debt (bonds) outstanding as follows:
TABLE 4
OUTSTANDING DEBT
June 30, 2018 June 30, 2017
Increase
(decrease)
Percent
Increase
(decrease)
Revenue Bonds 460,000$ 905,000$ (445,000)$ -49.2%
Less: Current Portion (460,000) (445,000) (15,000) 3.4%
Long-T erm Debt -$ 460,000$ (460,000)$ -100.0%
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Page | 9
ECONOMIC FACTORS
The Authority continued to see a positive interest in available dates and space in the Conference
Center as the economy continues to remain strong. With a new direction in sales and marketing
programs, the Conference Center is experiencing continued growth. Also, with an emphasizes on
placing groups/events that will best utilize the space and dates for their meetings and avoiding
one day programs in the middle of the week.
FINANCIAL CONTACT
The individual to be contacted regarding this report is Katie Leung,CFO,of the South San
Francisco Conference Center, at (650) 877-3994. Specific requests may be submitted to Dean
Grubl, Executive Director of the South San Francisco Conference Center, 255 South Airport
Blvd., South San Francisco, CA 94080.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
STATEMENT OF NET POSTION
JUNE 30, 2018
WITH COMPARATIVE TOTALS FOR JUNE 30, 2017
The notes to the basic financial statements are an integral part of this statement.
Page | 10
2018 2017
Assets
Cash and in vestments 3,844,563$ 3,240,137$
Restricted cash and in vestments 482,596 480,922
Receivables, net 315,398 325,234
Bond is suance costs - 1,522
Deposits 7,397 40,510
Capital assets, net 3,578,177 3,619,573
Total Assets 8,228,131$ 7,707,898$
Deferre d Outflo ws Of Reso urces
Am ounts deferred from debt refunding -$ 24,304$
Liabilities
Current Liabilitie s:
Ac counts payable and accrued expenses 432,698$ 306,554$
Ac crued personnel exp enses 72,949 51,003
Interest payable - 11,881
Deposits 422,999 252,744
Long term debt - current portion 460,000 445,000
Total Current Liabilitie s 1,388,646 1,067,182
Long Term Liabilitie s:
Long term debt - noncurrent portion - 460,000
Total Lia bilitie s 1,388,646$ 1,527,182$
Net Po sition
Net in vestment in capital assets 3,118,177$ 2,714,573$
Restricted for debt service 482,596 480,922
Unrestricted 3,238,712 3,009,525
Total Net Position 6,839,485$ 6,205,020$
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
STATEMENT OF REVENUES,EXPENSES
AND CHANGES IN NET POSITION
FOR THE FISCAL YEAR ENDED JUNE 30,2018
WITH COMPARATIVE TOTALS FOR THE FISCAL YEAR ENDED JUNE 30, 2017
The notes to the basic financial statements are an integral part of this statement.
Page | 11
2018 2017
Operating revenues:
Charges for services - rent 1,148,296$ 805,776$
Charges for services - food & beverage 711,086 778,270
Charges for services - events 287,380 268,204
Total operating revenues 2,146,762 1,852,250
Operating exp enses:
Personnel services 1,252,899 968,338
Ad ministrative costs 191,529 175,069
Other supplie s and expenses 161,713 141,713
Repair and maintenance 497,469 473,078
Contractual services 133,607 110,925
Rent 484,080 477,504
Insurance claims and expenses 33,989 28,523
Marketing services 340,563 285,903
Am ortization 25,826 28,176
Depreciation 538,790 474,542
Miscella neous 14,304 22,333
Total operating exp enses 3,674,769 3,186,104
Operating loss (1,528,007) (1,333,854)
Non-operating revenues(expenses):
Conference center tax 2,150,818 2,146,545
Interest in come 27,795 19,152
Interest expense and fiscal charges (16,141) (39,300)
Total non-operating revenues (expenses)2,162,472 2,126,397
Change in Net Position 634,465 792,543
Total Net Position - Begin ning 6,205,020 5,412,477
Total Net Position - Ending 6,839,485$ 6,205,020$
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
WITH COMPARATIVE TOTALS FOR THE FISCAL YEAR ENDED JUNE 30, 2017
The notes to the basic financial statements are an integral part of this statement.
Page | 12
2018 2017
Cash flows from operating activities:
Cash received from customers 2,326,853$ 1,646,014$
Cash paid for go ods and services (1,213,917) (1,271,482)
Cash paid for employee services (1,230,953) (964,429)
Cash paid for rent (484,080) (477,504)
Net cash provided (used) by operating activities (602,097) (1,067,401)
Cash flows from non capital fin ancing activities:
Cash received from occupancy taxes 2,150,818 2,185,537
Net cash provided (used) by non capital fin ancing activities 2,150,818 2,185,537
Cash flows from capital and related financing activities:
P rincipal paid on capital debt (445,000) (425,000)
Interest paid on capital debt (28,022) (44,613)
Net cash provided (used) by capital and related financing activities (473,022) (469,613)
Cash flows from in vesting activities:
Interest received 26,121 33,354
Acquisition of capital assets (497,394) (272,535)
Net cash provided (used) by in vesting activities (471,273) (239,181)
Net in crease (decrease) in cash and cash equivalents:604,426 409,342
Begin ning cash and cash equivalents 3,240,137 2,830,795
Ending cash and equivalents 3,844,563$ 3,240,137$
Reconcilia tion of operating income (loss) to net operating cash:
Operating income (loss)(1,528,007)$ (1,333,854)$
Ad justments:
Amortization 25,826 28,176
Depreciation 538,790 474,542
Changes in :
Receivables 9,836 (77,668)
Deposits paid 33,113 (40,510)
Ac counts payable and accrued expenses 126,144 6,572
Ac crued personnel exp enses 21,946 3,909
Due to City of South San Francisco General Fund - -
Deposits received 170,255 (128,568)
Net cash provided (used) by operating activities (602,097)$ (1,067,401)$
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 13
1.REPORTING ENTITY
The financial statements of the City of South San Francisco Conference Center Authority
have been prepared in conformity with Generally Accepted Accounting Principles (GAAP)
as applied to governmental units. The Government Auditing Standards Board (GASB) is
the accepted standard setting authority for establishing governmental accounting and
financial reporting principles.
The City of South San Francisco, California (the “City”) Conference Center Authority (the
“Authority”)was established to renovate and operate a leased building as a conference
center. The Center was opened in April 1993. The Authority’s operations are financed by
a voter-approved surtax on hotel occupancies of $2.50 per room per day and charges for
rental of the facilities.
The Authority is governed by a Board of nine commissioners consisting of two Council
members and seven representatives from various businesses and resident communities
appointed by the City Council. As the City is financially accountable for the Authority, the
Authority is a component unit of the City and is reported in the general-purpose financial
statements of the City. The activities of the Authority are accounted for in a single
enterprise fund because operations are financed and are operated in a manner similar to that
of a private business enterprise where the intent is to provide service to the general public
and partially recover such costs through user charges.
2. BASIS OF PRESENTATION
Statement of Net Position -The statement of net position is designed to display the
financial position of the Authority. The Authority’s fund equity is reported as net position,
which is broken down into three categories defined as follows:
Net investment in capital assets -This component of net position consists of capital
assets including restricted capital assets, net of accumulated depreciation and
reduced by the outstanding balances of any bonds, notes, or other borrowings that
are attributable to the acquisition, construction, or improvement of those assets.
Restricted -This component of net position consists of constraints placed on net
asset use through external constraints imposed by creditors (such as through debt
covenants), grantors, contributors, or law or regulations of other governments. It
also pertains to constraints imposed by law or constitutional provisions or enabling
legislation.
Unrestricted -This component of net position consists of net assets that do not meet
the definition of “restricted” or “invested in capital assets, net of related debt.”
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 14
Statement of Revenues, Expenses and Changes in Net Position -The statement of
revenues, expenses and changes in net position is the operating statement for proprietary
funds. Revenues are reported by major source. This statement distinguishes between
operating and non-operating revenues and expenses and presents a separate subtotal for
operating revenues, operating expenses and operating income/loss.
3.BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting refers to when revenues and expenses are recognized in the accounts
and reported in the financial statements. Basis of accounting relates to the timing of
measurements made regardless of the measurement focus applied. The Authority uses the
accrual basis of accounting. Revenues are recognized when they are earned and expenses
are recognized when they are incurred. The Authority applies all applicable Governmental
Accounting Standards Board (GASB) pronouncements in its accounting and reporting.
Proprietary Funds
The Authority accounts for their business-type activities in a Proprietary fund. Proprietary
funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund’s principal ongoing operations. The
principal operating revenues for the Authority is charges to customers for sales and
services. Operating expenses include personnel services, employee benefits, repairs and
maintenance, professional services, transportation, materials and supplies, claims and
judgments, rent, insurance, utilities, communications, general administration and
depreciation on capital assets. All revenues and expenses not meeting this definition are
reported as non-operating revenues and expenses.
Budgets and Budgetary Accounting
The Authority operates under the general laws of the State of California (the State) and
annually adopts a budget effective July 1 for the ensuing fiscal year ended.
From the effective date of the budget, which is approved by the Authority and whereas, the
South San Francisco Municipal Code 2.78.100 requires that the South San Francisco
Conference Center budget be approved by the South San Francisco City Council, the
amounts stated therein as proposed expenses become appropriations. The Authority may
amend the budget by a resolution during the fiscal year. Transfers of funds exceeding
$5,000 between budget categories require the approval of the Authority.
Budgets are presented in component unit financial statements as amended. Budgets are
generally prepared on a Generally Accepted Accounting Principles (GAAP) basis except
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 15
for capital outlay, depreciation and interest expense, which are budgeted on a cash basis. A
reconciliation of budget basis change in net position (net income)to the GAAP basis
change in net position as reported in the Statement of Revenues, Expenses and Changes in
Net Position -Budget and Actual for the years ended June 30, 2018 and 2017 is as follows:
June 30, 2018 June 30, 2017
Budgeted Change in Net Position 256,687$ 479,816$
Capital Improvements 497,394 390,445
Prin cipal Payments 445,000 425,000
Depreciation (538,790) (474,542)
Am ortization (25,826) (28,176)
Other - -
Change in Net Position GAAP 634,465$ 792,543$
Cash Equivalents
The Authority considers all highly liquid investments with a maturity of three months or
less when purchased to be cash equivalents. This includes funds invested in the State
Treasurer’s Investment Pool (Local Agency Investment Fund) which are available for use.
For purpose of the statement of cash flows, restricted cash and investment held by the fiscal
agent for debt service is not considered as cash equivalents.
Investments
The California Government Code authorizes an agency to invest in their own bonds, certain
time deposits, obligations of the U.S. Treasury, agencies and instrumentalities, commercial
paper, bankers’acceptances with maturities not to exceed 270 days, and medium-term
notes issued by corporations operating within the U.S., commercial paper rated P-1 or
higher by Moody’s or A-1 by Standard & Poor’s commercial paper record, repurchase
agreements of obligations of the U.S. Government or its agencies for a term of one year or
less and the Local Agency Investment Fund.
Investments are recorded at fair value in accordance with GASB Statement No. 72, Fair
Value Measurement and Application. Accordingly, the change in fair value of investments
is recognized as an increase or decrease to investment assets and investment income. This
statement changed the definition of fair value and is effective for periods beginning after
June 15, 2015.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 16
The following is a summary of the definition of fair value:
Fair value is defined as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction. In determining this amount, three valuation techniques
are available:
Market approach -This approach uses prices generated for identical or similar assets or
liabilities. The most common example is an investment in a public security traded in an
active exchange such as the NYSE.
Cost approach -This technique determines the amount required to replace the current
asset. This approach may be ideal for valuing donations of capital assets or historical
treasures.
Income approach -This approach converts future amounts (such as cash flows) into a
current discounted amount.
Each of these valuation techniques requires inputs to calculate a fair value. Observable
inputs have been maximized in fair value measures, and unobservable inputs have been
minimized.
Accounts Receivable
Accounts receivable represents amounts due to the Authority for previously recognized net
services. The Authority does not maintain an allowance for doubtful account.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 17
Capital Assets
Capital assets are carried at historical costs, net of accumulated depreciation. Depreciation
is computed on the straight-line basis over the shorter of the estimated useful lives of the
assets or, for building improvements, the term of the lease.
Estimated useful lives are as follows:
Years
Building(s)30 - 40
Building improvements 5 - 10
Improvement of site 5 - 10
Furniture and fixtures 5 - 10
Food service equipment 5 - 15
Kitchen tableware 5 - 10
Machinery and vehicles 5 - 10
Office equipment 2 - 5
Computers, tablets and mobile devices 2 - 5
Telecommunications 2 - 5
Maintenance equipment 2 - 5
Deferred Outflows and Inflows of Resources
A deferred outflow of resources is defined as a consumption of net position that applies to a
future period(s) and so will not be recognized as an outflow of resources
(expenses/expenditure) until then. A deferred inflow of resources is defined as an
acquisition of net position that applies to a future period(s) and so will not be recognized as
an inflow of resources (revenues) until that time.
When applicable, unamortized portions of the gain and loss on refunding debt are reported
as deferred inflows and deferred outflows of resources,respectively. Deferred outflows and
inflows of resources are reported for the changes related to benefit plans.
Accrued Vacation
Accrued vacation is accrued as earned and expensed as a current operating expense, salary
and benefits. In the event of termination, employees are reimbursed for all unused
accumulated vacation days up to two years at their current hourly rates. Accrued vacation
is not budgeted by the Authority.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 18
Long-Term Debt
Long-term debt and other long-term obligations are reported as liabilities in the proprietary
fund statements. Bond premiums and discounts are deferred and amortized over the life of
the bonds using the effective interest method. Bonds payable are reported net of the
applicable premiums and discounts. Issuance costs are reported as deferred charges.
Net Position
Net position represents the difference between assets and liabilities. Net position invested
in capital assets, net of related debt consists of capital assets, net of accumulated
depreciation, reduced by the outstanding balances of any borrowings used for the
acquisition, construction, or improvement of those assets. Net position is reported as
restricted when there are limitations imposed on their use either through the enabling
legislation adopted by the Authority or through external restrictions imposed by creditors,
grantors, laws or regulations of other governments. The Authority applies restricted
resources when an expense is incurred for purposes for which both restricted and
unrestricted revenues are available.
Use of Estimates
The preparation of financial statements in conformity with Generally Accepted Accounting
Principles requires management to make estimates and assumptions that affect the report
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
Subsequent Events
Management has reviewed subsequent events and transactions that occurred after the date
of the financial statements through the date the financial statements were issued. The
financial statements include all events or transactions, including estimates, required to be
recognized in accordance with Generally Accepted Accounting Principles. Management
has determined that there are no non-recognized subsequent events that require additional
disclosure.
Implemented New Accounting Pronouncements
GASB 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 by providing guidance for transactions in which cash and
other monetary assets acquired with only existing resources—resources other than the
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 19
proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of
extinguishing 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.The requirements of this Statement are effective for financial
statements for periods beginning after June 15, 2017.Earlier application is encouraged.
The statement did not have an impact on the Authority’s financial statements.
Upcoming Accounting and Reporting Changes
GASB Statement No. 83, Certain Asset Retirement Obligations.-This Statement
addresses accounting and financial reporting for certain asset retirement obligations
(AROs). An ARO is a legally enforceable liability associated with the retirement of a
tangible capital asset. A government that has legal obligations to perform future asset
retirement activities related to its tangible capital assets should recognize a liability based
on the guidance in this Statement. The requirements of this Statement are effective for
financial statements for periods beginning after June 15, 2018. Earlier application is
encouraged.
The Authority doesn’t believe this statement will have a significant impact on the
Authority’s financial statements.
GASB Statement No. 84, Fiduciary Activities.-The objective of this Statement is to
improve guidance regarding the identification of fiduciary activities for accounting and
financial reporting purposes and how those activities should be reported.
This Statement establishes criteria for identifying fiduciary activities of all state and local
governments. The focus of the criteria generally is on (1) whether a government is
controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a
fiduciary relationship exists. Separate criteria are included to identify fiduciary component
units and postemployment benefit arrangements that are fiduciary activities.The
requirements of this Statement are effective for financial statements for periods beginning
after December 15, 2018. Earlier application is encouraged.
The Authority doesn’t believe this statement will have a significant impact on the
Authority’s financial statements.
GASB issued Statement No. 87, Leases. -The objective of this statement is to better meet
the information needs of financial statement users by improving accounting and financial
reporting for leases by governments. This statement increases the usefulness of
governments’ financial statements by requiring recognition of certain lease assets and
liabilities for leases that previously were classified as operating leases and recognized as
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 20
inflows of resources or outflows of resources based on the payment provisions of the
contract. It establishes a single model for lease accounting based on the foundational
principle that leases are financings of the right to use an underlying asset. Under this
statement, a lessee is required to recognize a lease liability and an intangible right-to-use
lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of
resources, thereby enhancing the relevance and consistency of information about
governments’ leasing activities. The requirements of this statement are effective for the
Authority’s fiscal year ending June 30, 2021.
The Authority anticipates recording a lease liability and an intangible right-to-use lease
asset for the lease noted in Note 7.
GASB Statement No. 88,Certain Disclosures Related to Debt, Including Direct
Borrowings and Direct Placements.-This Statement addresses additional information to
be disclosed in the notes to the financial statements regarding debt, including unused lines
of credit; assets pledged as collateral for the debt; and terms specified in debt agreements
related to significant events of default with finance-related consequences, significant
termination events with finance-related consequences,and significant subjective
acceleration clauses. The requirements of this Statement are effective for financial
statements for periods beginning after June 15, 2018. Earlier application is encouraged.
The Authority doesn’t believe this statement will have a significant impact on the
Authority’s financial statements.
GASB Statement No. 89,Accounting for Interest Cost Incurred Before the End of the
Construction Period.-This Statement addresses interest costs incurred before the end of a
construction period be recognized as an expense in the period in which the cost is incurred
for financial statements prepared using the economic resources measurement focus. As a
result, interest cost incurred before the end of a construction period will not be included in
the historical cost of a capital asset reported in a business-type activity or enterprise fund.
The requirements of this Statement are effective for financial statements for periods
beginning after December 15, 2019. Earlier application is encouraged.
The Authority doesn’t believe this statement will have a significant impact on the
Authority’s financial statements.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 21
4. CASH AND INVESTMENTS
The following is a summary of the Authority’s cash and investments as of June 30, 2018:
Av aila ble for
Operations Restricted Total
Investment
Rating
Weigh ted
Av erage
Maturity
US Debt Mutual Fund -$ 482,596$482,596$ Aa a-mf 29 Days
LAIF 3,167,864 - 3,167,864 Not Rated N/A
Total Investments 3,167,864 482,596 3,650,460
Cash Deposits with Banks 676,699 - 676,699
Total Cash and Investments 3,844,563$ 482,596$4,327,159$
The following is a summary of the Authority’s cash and investments as of June 30,2017:
Av aila ble for
Operations Restricted Total
Investment
Rating
Weigh ted
Av erage
Maturity
US Debt Mutual Fund -$ 480,922$480,922$ AAAm /Aaa-mf 39 Days
LAIF 2,712,089 - 2,712,089 Not Rated N/A
Total Investments 2,712,089 480,922 3,193,011
Cash Deposits with Banks 527,949 - 527,949
Cash on hand 99 - 99
Total Cash and Investments 3,240,137$ 480,922$3,721,059$
Investment Risks
Investments are subject to certain types of risks, including interest rate risk,custodial credit
risk, credit risk, and concentration of credit risk. The following describes those risks.
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair
value of an investment. Generally, the longer the maturity of an investment the greater the
sensitivity of its fair value to changes in market interest rates. The Authority does not have
a formal policy regarding interest rate risk. However, the Authority’s practice to manage its
exposure to interest rate risk is by purchasing a combination of shorter term and longer-
term investments and by timing cash flows from maturities so that a portion of the portfolio
is maturing or coming close to maturity evenly over time as necessary to provide the cash
flow and liquidity needed for operations.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 22
Custodial Credit Risk
The California Government Code requires California banks and savings and loan
associations to secure an agency’s deposits by pledging government securities as collateral.
The market value of pledged securities must equal at least 110% of an agency’s deposits.
California law also allows financial institutions to secure an agency’s deposits by pledging
first trust deed mortgage notes having a value of at least 150% of an agency’s total
deposits. With respect to investments, custodial credit risk does not apply to a local
government’s indirect investment in securities through the use of mutual funds or
government investment pools such as LAIF. The Authority does not have a policy for
custodian credit risk on deposits.
The cash balances with banks were $621,922 as of June 30, 2018 and were insured up to
$250,000 by the Federal Depository Insurance Corporation (FDIC). The remaining
uninsured balance of $371,922 was secured by pledged government securities as collateral.
The market value of pledged securities must equal at least 110%of the Authority’s deposit.
Differences between the carrying amount and bank balances are due to reconciling items
such as deposits in transit and outstanding checks.
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation
to the holder of the investment. This is measured by the assignment of a rating by a
nationally recognized statistical rating organization. The Authority does not have a formal
policy regarding credit risk. LAIF does not receive a rating from a nationally recognized
statistical rating organization.
Concentration of Credit Risk
The investment policy of the Authority contains no limitations on the amount that can be
invested in any one issue beyo nd that stipulated by the California Government Code.
The LAIF created by California statute is part of a pooled money investment account. The
LAIF has oversight by the Lo cal Investment Advisory Board, which consists of five
members designated by statute.The Chairman is the State Treasurer, or his designated
representative.
Restricted Cash and Investments
Provisions of the 2003 revenue bonds require that amounts equal to the maximum annual
principal and interest payment be set aside and held by the trustee. As of June 30, 2018 and
2017, restricted cash and investments for the 2003 revenue bonds totaled $482,596 and
$480,922, respectively.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 23
Fair Value Measurements
GASB 72 established a hierarchy of inputs to the valuation techniques above. This
hierarchy has three levels:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities.
Level 2 inputs are quoted market prices for similar assets or liabilities, quoted prices
for identical or similar assets or liabilities in markets that are not active, or other than
quoted prices that are not observable
Level 3 inputs are unobservable inputs, such as a property valuation or an appraisal.
The District has the following recurring fair value measurements as of June 30, 2018:
California Local Agency Investment Fund (LAIF) of $3,161,930; valued using Level
1 and 2 inputs.
Mutual Fund of $482,596; valued using Level 2 inputs.
5.CAPITAL ASSETS
The following is a summary of the Authority’s capital assets as of June 30, 2018:
June 30, 2017 Ad ditions Deletions June 30, 2018
Construction in Progress -$ 43,289$ -$ 43,289$
Buildin g im provements 10,822,457 325,808 - 11,148,265
Furniture and fixt ures 781,465 98,703 - 880,168
Machinery and equipment 173,645 29,594 - 203,239
Kitchen tableware 63,912 - - 63,912
Total Capital Assets 11,841,479 497,394 - 12,338,873
Less accumulated depreciation (8,221,906) (538,790) - (8,760,696)
Capital assets, net 3,619,573$ (41,396)$ -$ 3,578,177$
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 24
The following is a summary of the Authority’s capital assets as of June 30, 2017:
June 30, 2016 Ad ditions Deletions June 30, 2017
Buildin g im provements 10,654,098$ 280,006$ (111,647)$ 10,822,457$
Furniture and fixt ures 714,158 67,307 - 781,465
Machinery and equipment 142,984 43,127 (12,466) 173,645
Kitchen tableware 63,912 - - 63,912
Total Capital Assets 11,575,152 390,440 (124,113) 11,841,479
Less accumulated depreciation (7,871,477) (474,542) 124,113 (8,221,906)
Capital assets, net 3,703,675$ (84,102)$ -$ 3,619,573$
6.REVENUE BONDS PAYABLE
On June 1, 2003, the City of South San Francisco Capital Improvement Financing
Authority (the CIFA) issued $5,865,000 of 2003 revenue bonds. The CIFA was created
through a joint exercise of powers agreement between the City and the CIFA for the
purpose of obtaining financing for capital improvements. The 2003 revenue bonds are
obligations of the CIFA although the Authority is required to make the bond principal and
interest payments in return for the use and ownership of the improvements to the leased
building that comprise the Conference Center’s facilities. The Authority has pledged the
$2.50 tax imposed on the City’s hotel occupants on a per day per room basis as the sole
source of repayment of these obligations. The 2003 revenue bonds are, in substance,
obligations of the Authority and have therefore been recorded as such in these component
unit financial statements.
The following is a summary of the revenue bonds as of June 30, 2018 and 2017:
June 30, 2018 June 30, 2017
Begin ning Balance 905,000$ 1,330,000$
Ad ditions - -
Payments (445,000) (425,000)
Ending Balance 460,000 905,000
Current Portion (460,000) (445,000)
Noncurrent Portion -$ 460,000$
The 2003 revenue bonds were issued for the purpose of refunding the 1993 revenue bonds.
The refunding reduced required interest payments and did not extend the maturities on the
bonds. The advance refunding reduced the Authority’s total debt service payments by
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 25
$846,859 and resulted in an accounting loss of $401,345. This loss is being amortized over
the remaining life of the old debt and the remaining balance is reported as a deferred
outflow of resources.
The 2003 revenue bonds bear interest rates ranging from 2.25% to 4.00% and matured on
September 1, 2018. The Authority had a final payment of $460,000 with $18,400 in
interest which will be reported in fiscal year ending June 30, 2019.
7.FUTURE MINIMUM LEASE COMMITMENTS
The Authority sublet land from the City of South San Francisco under an operating lease
with a 30-year term commencing on January 1, 1999 and ending January 31, 2029. The
rent amount is subject to re-negotiation, at the option of either party, between January 1 and
February 28, 2009 and 2019. Future minimum lease payments as of June 30, 2018 are as
follows:
Year Ending June 30
Minim um
Lease
Payments
2019 420,000$
2020 420,000
2021 420,000
2022 420,000
2023 420,000
2024-2028 2,100,000
2029 150,000
Total Minim um Lease Payments 4,350,000$
8.DEFINED CONTRIBUTION PLANS
401K Qualified Plan:
The Authority provides pension benefits for all employees through a defined contribution
plan. In a defined contribution plan, benefits depend solely on amounts contributed to the
plan plus investment earnings. The Authority contributes 8.5% of the employees’
compensation and employees contribute an additional 7.5%. Employees vest 100% after
completing five years of service. The Authority contributions and interest forfeited by
employees who leave employment before five years of service are used to reduce the
Authority’s future contribution requirements.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2018
Page | 26
457 Deferred Compensation Plan:
The Authority has adopted a deferred compensation plan for the benefit of its employees.
All eligible employees of the Authority may defer receipt of a portion of their salary and,
therefore, defer taxation on that amount, until they are separated from service or face an
unforeseeable emergency. The participants direct the plan administrator, ICMA Retirement
Corporation, to invest the deferred amounts in investments of their choice. The Authority
contributes for the employees who decline medical benefits based on the cost of these
benefits.
For the year ended June 30, 2018, the Authority’s total and covered payroll was $908,847,
with employer contributions of $92,453 and $0 and plan member contributions of $80,908
and $54,000,respectively, to the 401K and 457 plans. For the year ended June 30, 2017, the
Authority’s total and covered payroll was $671,664, with employer contributions of
$57,828 and $7,800 and plan member contributions of $51,025 and $30,900, respectively,
to the 401K and 457 plans.
9.RISK MANAGEMENT
The Authority is covered by the City’s insurance group called the Association of Bay Area
Governments (ABAG) plan for general liability and property. There were no significant
reductions in insurance coverage from coverage in the prior year. The Authority has
purchased commercially available workers’ compensation insurance.
SUPPLEMENTAL INFORMATION
The accompanying supplemental information is included to provide the user with (1) a five-year trend of
the Authority’s operating statements prepared on the Authority’s Budget basis, (2) a reconciliation from
the audited financial statements presented on a Generally Accepted Accounting Principles (GAAP) basis
to the Authority’s Budget basis operating statement, and (3) a statement of revenues and expenses on
budget basis.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN NET POSITION (BUDGET BASIS)
FOR EACH OF THE LAST FIVE FISCAL YEARS
See accompanying independent auditor’s report.
Page | 27
2018 2017 2016 2015 2014
Revenues:
Occupancy tax 2,150,818$ 2,146,545$ 2,172,208$ 2,215,145$ 2,108,728$
Rent 1,148,296 805,776 764,257 755,948 763,403
Food and beverage 711,086 778,270 617,910 487,958 516,811
Event services 287,380 268,204 237,651 182,010 200,374
Interest in come 27,795 19,152 9,204 9,416 5,697
Total Revenues 4,325,375 4,017,947 3,801,230 3,650,477 3,595,013
Expenditures:
Capital improvements 497,394 390,445 481,127 273,682 192,206
Debt service:
Interest and fiscal charges 16,141 39,300 55,058 69,748 85,524
P rincipal payments 445,000 425,000 410,000 395,000 385,000
Personnel 1,252,899 968,338 936,668 941,886 936,237
Repairs and maintenance 497,729 473,078 454,693 434,804 418,247
Supplie s 68,614 56,097 128,330 114,969 99,608
Marketing services 340,563 285,903 288,051 253,739 231,900
Professional services 226,879 196,541 212,185 140,608 98,971
Insurance 33,989 28,523 28,523 28,523 28,523
Utilitie s 191,529 175,069 180,740 176,421 176,227
Other 13,871 22,333 22,709 27,338 26,786
Subtotal 3,584,608 3,060,627 3,198,084 2,856,718 2,679,229
Rent 484,080 477,504 491,809 501,402 501,846
Total Expenditures 4,068,688 3,538,131 3,689,893 3,358,120 3,181,075
Changes in Net P osition 256,687$ 479,816$ 111,337$ 292,357$ 413,938$
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
RECONCILIATION OF CHANGES IN REVENUES OVER EXPENDITURES
(BUDGET BASIS) TO NET POSITION (GAAP BASIS)
FOR EACH OF THE LAST FIVE FISCAL YEARS
See accompanying independent auditor’s report.
Page | 28
(5 )Ne t Position Ne t Position
Change in (1 )(2)(3 )(4 )Change i n Prior Be ginni ng End
Ne t Position Capi tal Principal Net Position Period of Ye ar of Ye ar
Ye ar (Budge t)Improvements Payme nt s De pr eciation Am ortizat ion (GAAP )Ad justment (GAAP )(GAAP )
2018 256,687$ 497,394$ 445,000$ (538,790)$ (25,826)$ 634,465$ -$ 6,205,020$ 6,839,485$
2016 479,816 390,445 425,000 (474,542) (28,176) 792,543 - 5,412,477 6,205,020
2015 111,337 481,127 410,000 (455,271) (28,176) 519,017 - 4,893,460 5,412,477
2014 292,357 273,682 395,000 (430,419) (28,176) 502,444 - 4,391,016 4,893,460
2013 413,938 192,206 385,000 (417,794) (28,176) 545,174 - 3,845,842 4,391,016
No tes:
(1)
(2)
(3)
(4)
(5)
GAAP Bas is Re conciling It ems
Capi tal expe nditures ar e recorded as increases to fixed assets unde r GAAP and as e xpe ndi tures unde r the budge t bas is.
Principal payme nt s on lease obligat ions are recorded as de creases to debt unde r GAAP and as e xpe ndi tures unde r the budge t bas is.
De pr eciation e xpe nse represents nonc as h us age o f fixed assets and i s de duc ted for GAAP pur po ses, no t de duc ted for budge t bas is purpo ses.
Am ortizat ion r epresents no nc as h c har ge s for de ferred bo nd r efunding l osses and issuanc e costs, and is expe nsed f or GAAP pur po ses.
Ac count f or a pr ior period adjus tme nt by r estating t he pr ior pe riod f inanc ial statements.
CITY OF SOUTH SAN FRANCISCO
CONFERENCE CENTER AUTHORITY
SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN NET POSITION
BUDGET AND ACTUAL (BUDGET BASIS)
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
See accompanying independent auditor’s report.
Page | 29
Ac tual
(Budget Basis)Va riance
Operating Revenues:
Rent 1,027,000$ 1,148,296$ 121,296$
Food and beverage 789,000 711,086 (77,914)
Event services 250,000 287,380 37,380
Total Operating Revenues 2,066,000 2,146,762 80,762
Operating Expenses:
Personnel 1,279,976 1,252,899 27,077
Repairs and maintenance 534,700 497,729 36,971
Supplie s 49,500 68,614 (19,114)
Marketing services 258,500 340,563 (82,063)
Professional services 268,650 226,879 41,771
Insurance 37,079 33,989 3,090
Utilitie s 192,700 191,529 1,171
Other 22,100 13,871 8,229
Subtotal 2,643,205 2,626,073 17,132
Rent 484,405 484,080 325
Operating Exp enses before
Capital Outlay 3,127,610 3,110,153 17,457
Capital Outlay 451,350 497,394 (46,044)
Total Operating Exp enses 3,578,960 3,607,547 (28,587)
Operating Income (Loss)(1,512,960) (1,460,785) 52,175
Non Operating Revenues (Expenses):
Conference center tax 2,250,746 2,150,818 (99,928)
Interest in come 14,500 27,795 13,295
Debt service (474,022) (461,141) 12,881
Net Non Operating Revenues 1,791,224 1,717,472 (73,752)
Change in Net P osition 278,264$ 256,687$ (21,577)$
Budget
(Unaudited)
Page | 30 1475 Saratoga Ave, Suite 180, San Jose,CA 95129
Tel: 408-217-8749 • E-Fax: 408-872-4159
[email protected] •www.cnallp.com
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
Members of the City of South San Francisco Conference Center
Authority Board and Executive Director
South San Francisco, California
We have audited, 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, the financial statements of the
business-type activities of the City of South San Francisco Conference Center Authority (the
“Authority”), a component unit of the City of South San Francisco, California, as of and for the
ye ar ended June 30, 2018, and the related notes to the financial statements, which collectively
comprise the Authority’s basic financial statements, and have issued our report thereon dated
November 6, 2018.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Authority’s
internal control over financial reporting (internal control) 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 the
Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of the
Authority’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees,in the normal course of performing their assigned functions,to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity’s financial statements will not be prevented,
or detected and corrected on a timely basis. 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 control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies in
internal control over financial reporting that might be material weaknesses or significant
deficiencies. Given these limitations, during our audit we did not identify any deficiencies in
internal control over financial reporting that we consider to be material weaknesses.However,
material weaknesses may exist that have not been identified.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority’s financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct
and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control 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.
November 6, 2018
San Jose, California