STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
Report on Audit of Financial Statements
June 30, 2019
STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
TABLE OF CONTENTS
June 30, 2019
1-2Independent Auditor’s Report
Financial Statements:
Statement of Net Position
Statement of Revenues, Expenses and Changes in Net Position
Statement of Cash Flows
Notes to Financial Statements
Independent Auditor’s Report on Internal Control over Financial Reportingand on Compliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance With Government AuditingStandards
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220 W, Main Street
PO Box 746, Stroud, OK 74079Ph; 918-968-3511 / Fax: 918-968-3512JUDITH K. BALLARD, CPA, PC
CERTIFIED PUBLIC ACCOUNTANT«. A.
Independent Auditor’s Report
Board of Trustees
Stroud Industrial AuthorityStroud, Oklahoma
Report on the Financial Statements
I have audited the accompanying financial statements of Stroud Industrial Authority (the Authority), as of
and for the year ended June 30, 2019, and the related notes to the financial statements, which collectivelycomprise the Authority’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud orerror.
Auditor’s Responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I conductedmy audit in accordance with auditing standards generally accepted in the United States of America andthe standards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States. Those standards require that I plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of 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 theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity’s internal control. Accordingly, I express no such opinion. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant accounting estimatesmade by management, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for myaudit opinion.
Opinion
In my opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of Stroud Industrial Authority, as of June 30, 2019, the changes in financial position, andcash flows thereof, for the year then ended in accordance with accounting principles generally acceptedin the United States of America.
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other Matters
Required Supplementary Information
Stroud Industrial Authority has not presented the Management’s Discussion and Analysis that accountingprinciples generally accepted in the United States of America require to be presented to supplement thebasic financial statements. Such missing information, although not a part of the basic financialstatements, is required by the Governmental Accounting Standards Board, who considers it to be anessential part of financial reporting for placing the basic financial statements in an appropriateoperational, economic, or historical context. My opinion on the basic financial statements is not affectedby this missing information.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, I have also issued my report dated January 13, 2020on my consideration of Stroud Industrial Authority’s internal control over financial reporting and on mytests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements andother matters. The purpose of that report is to describe the scope of my testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion on theinternal control over financial reporting or compliance. That report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the Authority’s internalcontrol over financial reporting and compliance.
Stroud, Oklahoma
January 13, 2020
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STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
STATEMENT OF NET POSITION
June 30, 2019
Assets
Current Assets
Cash $ 1,082,280
Total current assets 1,082,280
Noncurrent Assets
Loans receivable
Land
Buildings, net of accumulated depreciation
7,492
275,834
2,325,372
Total noncurrent assets 2,608,698
Total assets $ 3,690,978
Liabilities
Current liabilities:
Accounts payable and accrued liabilities
Due to Stroud Hospital and Development AuthorityCurrent portion of long-term debt
86
850
61,724
Total current liabilities 62,660
Non-current liabilities:
Notes payable 549,468
Total non-current liabilities 549,468
Total liabilities 612,128
Net position
Invested in capital assets, net of related debtUnrestricted
1,990,014
1,088,836
Total net position $ 3,078,850
See notes to financial statements
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STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
STATEMENT OF REVENUES, EXPENSES ANDCHANGES IN NET POSITION
Year ended June 30, 2019
Operating revenues:Rental revenue
Fuel revenue
Hangar revenueMiscellaneous revenue
Total operating revenues
$ 249,133
5,259
10,500
7,219
272,111
Operating expenses:
Legal and professional expense
Industrial park expenseAirport expenseConsulting expense
Miscellaneous expenseCredit card expenseFuel expenseTelephone expense
Economic development expenseInterest expense
Depreciation expense
2,671
4,299
41,286
5,074
3,608
(118)8,138201
29,625
38,175
140,674
Total operating expenses 273,633
Operating income (loss) (1,522)
Non-operating revenues/(expenses):Donation revenue
Interest and investment income 2,871
Total non-operating revenues 2,871
Income (loss) before other revenues, expenses, lossesand transfers
1,349
Capital Contributions, Special and Extraordinary Items and TransfersTransfer from primary government
Change in net position 1,349
Net position, beginning of year 3,077,501
Net position, end of year $3,078,850
See notes to financial statements
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STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
STATEMENT OF CASH FLOWS
For the year ended June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payment to suppliersPayments to employees
Net cash provided (used) by operatingactivities
$245,556
(98,520)
147,036
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfer from primary government
Net cash provided (used bynoncapital financing activities)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Acquisition of capital assets, net
Principal paid/received on notes payable/receivableInterest expenseDonations received
Net cash provided (used) by capital andrelated financing activities
0
(52,409)
(38,175)0
(90,584)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Net cash provided (used) by investing activities
2,871
2,871
Net increase (decrease) in cash equivalents 59,323
Cash and cash equivalents, beginning of the year 1,022,957
Cash and cash equivalents, end of the year $1,082,280
Reconciliation of Operating Income (Loss) to Net CashProvided by Operating Activities:
Operating income/(loss)Increase in due to other funds
Depreciation expenseInterest expense
Decrease in accounts payable
(1,522)
(26,555)140,674
38,175
(3,736)
Net cash provided by (used in) operating activities $147,036
See notes to financial statements
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STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
NOTES TO FINANCIAL STATEMENTS
June 30, 2019
Note 1- Summary of Significant Accounting Policies
Organization
The Stroud Industrial Authority (the Authority) ( a Component Unit of the City of Stroud, Oklahoma) is apublic trust created February 25, 1974, with the City of Stroud, Oklahoma as beneficiary. The trust ismanaged by a five member board, one from the members of the City Council, and each of the other fouris subject to approval by the City Council of the City of Stroud, Oklahoma (the City). The City isseparately audited by an independent auditor.
The purpose of the Authority is to promote economic development within and near Stroud, Oklahomathrough financing of various facilities. Its activities primarily consist of arranging financing to industrial,commercial and other organizations.
Basis of presentation
The financial statements of the Authority have been prepared using themeasurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets andliabilities from exchange and exchange-like transactions are recognized when the exchange transactiontakes place. Operating revenues and expenses include exchange transactions. Investment income isincluded in non-operating revenues and expenses.
The Authority prepares its financial statements as a business-type activity in conformity with generallyaccepted accounting principles (GAAP) as applied to governmental units. The Governmental AccountingStandards Board (GASB) is the standard-setting body for governmental accounting and financialreporting. The GASB periodically updates its codification of the existing Governmental Accounting andFinancial Reporting Standards, which, along with subsequent GASB pronouncements (Statements andInterpretations), constitutes GAAP for governmental units.
Capital assets
Capital assets are recorded at cost and are depreciated under the straight-line method over the estimateduseful lives of the respective assets. Maintenance and repairs are charged to operations when incurred,and improvements are capitalized.
Income taxes
economic resources
No provision has been made for federal and state income taxes since the Authority is a tax-exemptorganization as an agency of the State of Oklahoma.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.
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STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
NOTES TO FINANCIAL STATEMENTS
June 30, 2019
Net position
The Authority’s net position is classified as follows:
Invested in capital assets: This represents the Authority’s total investment in capital assets, net ofoutstanding debt obligations and accounts payable related to those capital assets.
Restricted net assets: Restricted net assets include resources in which the Authority is legally orcontractually obligated to spend resources in accordance with restrictions imposed by external thirdparties.
Unrestricted net assets: Unrestricted net assets represent resources derived from all other sources notincluded in the other two categories.
Ciassification of revenues
The Authority has classified its revenues as either operating or non-operating revenues according to thefollowing criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchangetransactions.
Non-operating revenues: Non-operating revenues include activities that have the characteristics ofexchange transactions, such a gifts and contributions, and other revenue sources that are defined asnon-operating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable TrustFunds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, BasicFinancial Statements - and Management’s Discussion and Analysis - for State and Local Governmentsinvestment income.
non-
Note 2- Cash and Investments
The Authority’s cash and cash equivalents are considered to be cash on hand, demand deposits, savingsaccounts, money market accounts, and certificates of deposit or short-term investments with originalmaturities of three months or less from the date of acquisition.
Custodial credit risk is the risk that in the event of bank failure, the Authority’s deposits may not bereturned to it. The Authority’s deposits were fully insured with FDIC insurance and securities held by thepledging financial institution’s trust department or agent in the entity’s name at June 30, 2019.
Note 3- Capital Assets
Capital assets are valued at historical cost. Donated capital assets are valued at the estimated fair valueat the date of donation. Depreciation is provided over the estimated useful lives using the straight-linemethod. Depreciation expense is $140,674 for the year ended June 30, 2019.
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STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
NOTES TO FINANCIAL STATEMENTS
June 30, 2019
A summary of the changes in capital assets is as follows:
Balance
June 30, 2018 Additions
Balance
Disposals June 30, 2019
Capital assets, not being depreciated:Land
Construction-in-progress275,834 275,834
Total capital assets, not depreciated 275,834 275,834
Capital assets, being depreciated:BuildingsEquipmentVehicles
3,375,303
14,500
2,000
3,375,303
14,500
2,000
Total capital assets, being depreciated 3,391,803 3,391,803
Accumulated depreciationBuildingsEquipmentVehicles
(919,766) (139,421)(5,157) (967)
(1,059,187)(6,124)(1,120)(834) (286)
Total accumulated depreciation (925,757) (140,674) (1,066,431)
Capital assets, net 2,741,880 (140,674) 2,601,206
Note 4- Rental Income
Stroud Industrial Authority owns land and buildings in the Stroud Midway Industriai Park as wellbuilding at the airport facility which are rented by various companies for their use. During the year, rentalincome of $177,014 was received from the various companies.
Note 5 - Mint Turbine Airport Project
Stroud Industrial Authority leases a building and land at the Stroud Municipal Airport to Mint Turbines,LLC. The agreement, dated May 14, 2010, calls for 240 monthly lease payments of $6,010 each. For theyear ended June 30, 2019, lease revenue of $72,119 was received. At the end of the 20 year lease term.Mint Turbines LLC has the option to purchase the property for one dollar. An early buy-out is prohibitedby the grant specifications.
Note 7- Long-term debt
Long-term liabilities of the Authority as of June 30, 2019 are summarized as follows:
as a
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STROUD INDUSTRIAL AUTHORITY
(a Component Unit of the City of Stroud, Oklahoma)
NOTES TO FINANCIAL STATEMENTS
June 30, 2019
$800,000 promissory note, to RGB, dated September 2010, payable in monthlyinstallments of $6,010 over 20 years including interest at 6.50%
$125,000 Lincoln County Industrial Authority promissory note, dated June 2016payable in quarterly payments of $6,250 at an interest rate of 0%.
$561,192
$50,000
Long-term liabilities transactions for the year ended June 30, 2019, and changes therein were as follows:
Amounts
Due Within
One Year
BeginningBalance Increases
EndingDecreases Balance
RGB Bank
Lincoln County Industrial Authority595,137
75,000(33,945)(25,000)
561,192
50,000
36,724
25,000
Total Long-term Debt 670,137 (58,945) 611,192 61,724
The following is a summary of the Authority’s future annual debt requirements:
Fiscal Year Ending
2020
Principal
$61,72464,18341,80744,60747,594
290,27461,003
$611,192
Interest Total
$ 97,12097,12072,12072,12072,120
360,60062,918
$ 834,118
$ 35,39632,93730,31327,51324,52670,3261.915
$222,926
2021
2022
2023
2024
2025-2029
2030-2034
Totals
Note 8- Risk Management
The Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction ofassets; errors and omissions; and natural disasters. The Authority is covered under the general liabilityinsurance plan of the City of Stroud, OK.
Note 9- Subsequent Events
The Authority has considered subsequent events through January 9, 2020, the date which the financialstatements were available for release. The Authority is not aware of any items which need to bedisclosed during that period.
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JUDITH K. BALLARD, CPA, PC„ CERTIFIED PUBLIC ACCOUNTANT
220 W. Main Street
PO Box 746, Stroud, OK 74079Ph: 918-968-3511 / Fax; 918-968-3512
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGAND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of Trustees
Stroud Industrial AuthorityStroud, Oklahoma
I have audited, in accordance with the auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General ofthe United States, the financial statements of Stroud Industrial Authority (the Authority), as of and for the year ended June30 2019’ and the related notes to the financial statements, which collectively the Authority’s basic financial statementsand have issued my report thereon dated January 13, 2020.
Internal Control Over Financial ReportingIn planning and performing my audit of the financial statements, I considered the Authority’s internal control over financialreporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of
opinion on the financial statements, but not for the purpose of expressing an opinion on the effectivenessof the Authority’s internal control. Accordingly, I do not express an opinion on the effectiveness of the Authority’s internalcontrol.
A deficiency in internai controi 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 timelybasis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there r -reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detectedand corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internalcontrol that is less severe than a material weakness, yet important enough to merit attention by those charged withgovernance. ^
IS a
My consideration of internal control was for the limited purpose described in the first paragraph of this section and was notdesigned to identify all deficiencies in internal control that might be material weaknesses or, significant deficienciesGiven these limitations, during my audit I did not identify any deficiencies in internal control that I consider to be materialweaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority’s financial statements are free of materialmisstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grantagreements noncompliance with which could have a direct and material effect on the determination of financial statementamounts. However, providing an opinion on compliance with those provisions was not an objective of my audit, andaccordingly I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or othermatters that are required to be reported under Government Auditing Standards.
Purpose of this Report
solely to describe the scope of my testing of internal control and compliance and the resultsof that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. Thisreport is an integral part of an audit performed in accordance with Government Auditing Standards in considering theentity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
aPi PcStroud, Oklahoma
January 13, 2020
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