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ANNUAL INDEPENDENT AUDIT BY SYMANSKI & MCKNIGHT RECEIVED November 29,2000 ~,C / ~ G LvUJ Mayor Brian Aungst Commissioner Robert Clark, Commissioner J B. Johnson Commissioner Edward Hart Interim City Manager Bill Horn CITY MANAGER'S OFFICE Gentlemen: In compliance with the Jolley Trolley's Funding Agreement with the City I am pleased to submit to each of you a copy of the Annual Independent Audit by the firm of Symanski & McKnight, P,A., CPA's. I am available to each of you should there be any question(s) with regard to the audit or with regard to any aspect of the Jolley Trolley operation. aas:encls. JOLLEY TROLLEY TRANSPORATION OF CLEARWATER, INC. 483 MANDALAY AVE. SUITE 113 CLEARWATER, FL. 33767 (727) 445-1200 FAX (727) 443-3655 ,/ O(J-32) --()() (~) I I I I I I I I I I I I I I I I I I I I JOLLEY TROLLEY TRANSPORTATION OF CLEARWATER, INC. FINANCIAL STATEMENTS Years Ended September 30,2000 and 1999 (With Independent Auditor's Report Thereon) I I I I I I I I I I I I I I I I I I I JOLLEY TROLLEY TRANSPORTATION OF CLEARWATER, INC. TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT 1 FINANCIAL STATEMENTS Statements of Financial Position 2 Statements of Activities 3 Statements of Cash Flows 4 Notes to Financial Statements 5 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 8 I I I I I I I I I I I I I I I I I I I John J, McKnight. Jr., CM Robert P. Symanski, CPA ~y"manski + McKnight, P.A. Certified Public Accountants and Business Advisors Members Florida Institute Of Certified Public Accountants American Institute Of Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To The Board of Directors Jolley Trolley Transportation of Clearwater, Inc. We have audited the statements of financial position of Jolley Trolley Transportation of Clearwater, Inc. (a nonprofit organization) as of September 30, 2000 and 1999 , and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform our 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 our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jolley Trolley Transportation of Clearwater, Inc, as of September 30,2000 and 1999, and the changes in its net assets and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated November 17, 2000, on our consideration of the Organization's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. :5r-L/ /l1~I?,4, November 17, 2000 1301 Seminole Blvd., Suite 115, Largo, Florida 33770 . (727) 584-8186 . Fax (727) 584-9139 1700 McMullen Booth Road, Suite D4, Clearwater, Ftorida 33759 . (727) 725-8272 . Fax (727) 669-0252 I I I I I I I I I I I I I I I I I I I JOLLEY TROLLEY TRANSPORTATION OF CLEARWATER, INC. STATEMENTS OF FINANCIAL POSITION September 30, 2000 and 1999 Assets 2000 1999 Current assets: Cash $ 212,532 $ 170,205 Prepaid and other current assets 14,293 17,315 Total current assets 226,825 187,520 Property and equipment 596,607 496,922 Less accumulated depreciation 377,367 299,589 Net property and equipment 219,240 197,333 Total assets $ 446,065 $ 384,853 Liabilities and Net Assets Current liabilities: Accounts payable and accrued expenses $ 18,467 $ 18,252 Deferred revenue 3,177 2,960 Total current liabilities 21,644 21,212 Net assets - unrestricted 424,421 363,641 Total liabilities and net assets $ 446,065 $ 384,853 See accompanying notes to financial statements. 2 , I ", I JOLLEY TROLLEY TRANSPORTATION OF CLEARWATER, INC. I STATEMENTS OF ACTIVITIES Years ended September 30, 2000 and 1999 I 2000 1999 Support and revenue: Support: I City of Clearwater Operations Grant $ 294,500 $ 294,500 City of Clearwater Vehicle Maintenance Grant 50,000 50,000 Donated facilities and equipment 28,495 28,739 I Total support 372,995 373,239 Revenue: I Fare revenue 61,250 62,757 Advertising revenue 41 ,135 42,668 Interest income 10,942 5,390 Charter revenue 55,821 47,677 I Other revenue 4,728 3,309 Total revenue 173,876 161,801 I Total support and revenue 546,871 535,040 Expenses: I Salaries - drivers 113,435 114,756 Salaries - administrative 65,132 67,007 Salaries - vehicle maintenance 27,019 26,839 I Payroll taxes 17,330 18,220 Worker's compensation insurance 10,578 10,814 Trolley repairs and maintenance 41,936 35,049 Depreciation expense 77,778 92,556 I Insurance expense 33,337 35,954 Fuel expense 32,350 27,159 Office supplies and expenses 15,064 17,647 Personnel costs 4,126 3,200 I Travel 1,416 Utilities 3,400 1,638 Rental expense 37,351 37,680 I Interest expense 375 Professional fees 3,550 4,500 Sales tax and other taxes 1 ,914 I Total expenses 486,091 493,019 I Changes in net assets 60,780 42,021 Net assets - unrestricted, beginning of year 363,641 321 ,620 I Net assets - unrestricted, end of year $ 424.421 $ 363.641 I See accompanying notes to financial statements. I 3 I I I I I I I I I I I I I I I I I I I JOLLEY TROLLEY TRANSPORTATION OF CLEARWATER, INC. STATEMENTS OF CASH FLOWS Years ended September 30,2000 and 1999 2000 1999 Cash flows from operating activities: Changes in net assets $ 60,780 $ 42,021 Adjustments to reconcile excess of support and revenue over expenses to net cash provided by operating activities: Depreciation expense 77,778 92,556 (Increase) decrease in prepaid and other current assets 3,022 (1,930) Increase (decrease) in accounts payable and accrued 215 1,275 Increase in deferred revenue 217 977 Net cash provided by operating activities 142,012 134,899 Cash flows from investing activities: Property and equipment expenditures (99,685) (82,373) Net cash used by investing activities (99,685) (82,373) Net increase in cash 42,327 52,526 Cash at beginning of year 170,205 117,679 Cash at end of year $ 212,532 $ 170,205 Supplemental disclosure of cash flows information: Cash paid for interest $ 375 $ -0- Cash paid for income taxes $ 106 $ -0- See accompanying notes to financial statements. 4 I I I I I I I I I I I I I I I I I I I JOLLEY TROLLEY TRANSPORTATION OF CLEARWATER, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2000 and 1999 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Oroanization Jolley Trolley of ClealWater, Inc. (Organization) is incorporated under the laws of the State of Florida as a nonprofit corporation. Its purpose is to provide a local and tourist public transportation system between the islands of Sand Key and ClealWater Beach and the City of ClealWater. Approximately 63% and 64% of the Organization's support for the years ended September 30,2000 and 1999, respectively, came from City of ClealWater grants. Basis of Accountina The financial statements of Jolley Trolley Transportation of ClealWater, Inc. are presented on the accrual basis. Basis of Presentation The Statement of Financial Accounting Standards (SF AS) No. 117, "Financial Statements of Not-for-Profit Organizations," establishes standards for general purpose external financial statements provided by a not-far-profit organization. It specifies that those statements include a statement of financial position, a statement of activities and a statement of cash flows. The financial position and activities will report information according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. The Organization does not have any temporarily restricted or permanently restricted net assets. Revenue Recoanition Revenue from Operations and Vehicle Maintenance Grants (see Note 4) is recognized over the term of the Grants. All other revenues are recognized when the earnings process is substantially complete and services have been performed. Property and EQuipment Property and equipment are stated at cost. Depreciation is charged against earnings over the estimated useful service period of the assets using the straight-line method. Accountina Estimates 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Donated Services No amounts have been reflected in the financial statements for donated services because the criteria for recognition under SFAS 116 have not been satisfied. 5 I I I I I I I I I I I I I I I I I I I NOTE 2: NOTE 3: NOTE 4: JOLLEY TROLLEY TRANSPORTATION OF CLEARWATER, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2000 and 1999 INCOME TAXES In June 1995, the Organization received a favorable determination from the Internal Revenue Service as to its federal income tax exemption status under Section 501 (a) of the Internal Revenue Code. PROPERTY AND EQUIPMENT Property and equipment at September 30, 2000 and 1999 are as follows: Trolley vehicles Furniture and office Vehicle improvements Leasehold improvements Signage Garage equipment Estimated years of useful 2000 1999 service $ 550,264 $ 450,579 5 24,379 24,379 5 4,102 4,102 5 8,872 8,872 10 2,293 2,293 5 6,697 6,697 5 Total property and equipment $ 596,607 $ 496,922 GRANTS The City of Clearwater has Funding Agreements to the Jolley Trolley Transportation of Clearwater, Inc. for a period of five years commencing October 1, 1996, subject to an annual budgetary appropriation approved by the City of Clearwater Commission. The funding of the Operations Grant and Vehicle Maintenance Grant for the years ended September 30, 2000 and 1999 was $294,000 and $50,000 and $294,500 and $50,000, respectively. Amounts received under the above grants require the fulfillment of certain conditions as set forth in the grant instruments. Failure to fulfill the conditions could result in the return of the funds to the grantor, reduction of funding commitment or termination of agreement. The Board of Directors is of the opinion that Jolley Trolley Transportation of Clearwater, Inc. has complied with all significant provisions of the grants as of September 30,2000 and 1999. The funding agreement is scheduled to terminate as of September 30, 2001, 6 I I I I I I I I I I I I I I I I I I I JOLLEY TROLLEY TRANSPORTATION OF CLEARWATER, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2000 and 1999 NOTE 5: RENT The Organization rents a garage facility on a month-to-month basis for $600 per month plus sales tax. NOTE 6: DONATED FACILITIES AND EQUIPMENT Jolley Trolley Transportation of Clearwater, Inc. entered into an operating lease with the Pinellas Suncoast Transit Authority for two trolley vehicles at a rate substantially below market value. The term of the lease is three years ending December 31, 2002. The lease will automatically renew every three years unless notice is given at least 180 days prior to the renewal date. The annual rental payment is $1.00 per vehicle. The difference between the fair market value of the lease and the amount actually paid is included in the financial statements as support and expense of $15,600 and $15,600 in 2000 and 1999, respectively. The Organization also entered into an operating lease with the City of Clearwater for office space and a garage facility at a rate substantially below market value. The term of this lease was five years, ending in September 2001. The annual rental payment was $1.00. On January 1, 1999, the Organization was moved to a new office facility for which the City of Clearwater is paying $1 ,070 per month in rent. The difference between the fair market value of the lease and the amount actually paid by the Organization is included in the financial statements as both support and expense of $12,840 and $13,139 in 2000 and 1999, respectively. NOTE 7: CONCENTRATION OF CREDIT RISKS The Organization maintains cash balances with its banking institution. Cash amounts at this bank are insured by the FDIC for up to $100,000. Although the Organization's bank accounts were in excess of $100,000 at September 30,2000, management does not believe that the Organization's deposits are at risk of loss at the depository bank. NOTE 8: SUBSEQUENT EVENTS Jolley Trolley Transportation of Clearwater, Inc. voluntarily requested that the City of Clearwater reduce the grants by 5% effective January 1, 2000. It is anticipated that the City will comply with this request. 7 I I I I I I I I I I I I I I I I I I I John J. McKnight. Jr., CM Robert P. Symanski, CM ~y"manski.MCKnight. P.A. Certified Public Accountants and Business Advisors Members Florida Institute Of Certified Public Accountants American Institute Of Certified Public Accountants INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Directors Jolley Trolley Transportation of Clearwater, Inc. We have audited Ihe financial statements of Jolley Trolley Transportation of Clearwater, Inc. (A nonprofit organization) as of and for the years ended September 30, 2000 and 1999, and have issued our report thereon dated November 17, 2000. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether Jolley Trolley Transportation of Clearwater, Inc. 's financial statements are free of material misstatement, we performed tests of its compliance with certain provision of laws, regulations, contracts and grants, 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 that are required to be reported under Government Auditing Standards. Internal Control Over Financial ReportinQ In planning and performing our audit, we considered Jolley Trolley Transportation of Clearwater, Inc.'s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be !TIaterial in relation to the financial statements being audited may occur and not 1301 Seminole Blvd., Suite 115, Largo, Florida 33770 . (727) 584-8186 . Fax (727) 584-9139 1700 McMullen Booth Road, Suite 04, Clearwater, Florida 33759 . (727) 725-8272 . Fax (727) 669-0252 I I I I I I I I I I I I I I I I I I I The Board of Directors Jolley Trolley Transportation of Clearwater, Inc. be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended for the information of the board of directors, management and others within the o~anjZ:;r-'/ 4;if/ /1 November 17, 2000 9