New Jersey Sports and Exposition Authority
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New Jersey Sports and Exposition Authority (A Component Unit of The State of New Jersey) Consolidated Financial Statements as of and for the Years Ended December 31, 2012 and 2011, Supplemental Schedules for the Year Ended December 31, 2012, and Independent Auditors’ Report NEW JERSEY SPORTS AND EXPOSITION AUTHORITY (A Component Unit of The State of New Jersey) TABLE OF CONTENTS Page INDEPENDENT AUDITORS’ REPORT 1 - 2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 - 17 CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011: Statements of Net Position 18 Statements of Revenues, Expenses and Changes in Net Position 19 Statements of Cash Flows 20 Notes to Consolidated Financial Statements 21 - 38 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 2012: Schedule of Funding Progress — NJSEA Post Retirement Healthcare Plan 39 Seasonal Racing Personnel Retirement Plan: Schedule of Employer Contributions and Funding Progress 40 Schedule of Actuarial Methods and Assumptions 41 - 42 Deloitte & Touche LLP 100 Kimball Drive Parsippany, NJ 07054-0319 USA Tel: +1 973 602 6000 Fax: +1 973 602 5050 www.deloitte.com INDEPENDENT AUDITORS’ REPORT To the Chair and Members of New Jersey Sports and Exposition Authority East Rutherford, New Jersey Report on the Consolidated Financial Statements We have audited the accompanying consolidated statements of net position of the New Jersey Sports and Exposition Authority (the "Authority" or “NJSEA”), a component unit of the State of New Jersey, as of December 31, 2012 and 2011, and the related consolidated statements of revenues, expenses, and changes in net position, and consolidated cash flows for the years then ended, and the related notes to the consolidated financial statements, which collectively comprise the Authority’s consolidated financial statements as listed in the table of contents. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 the consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Authority's preparation and fair presentation of the consolidated 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 Authority'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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Member of Deloitte Touche Tohmatsu Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the net position of the Authority, as of December 31, 2012 and 2011, and the respective changes in net position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter As described in Note 2 to the consolidated financial statements, in 2012, the NJSEA adopted Governmental Accounting Standards Board (“GASB”) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. Our opinion is not modified with respect to this matter. As discussed in Note 1 to the consolidated financial statements, the NJSEA is a component unit of the State of New Jersey. The NJSEA requires significant subsidies from and has material transactions with the State of New Jersey and depends on certain tax revenues that are economically sensitive. Our opinion is not modified with respect to this matter. Other Matters Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 3 through 17, the Schedule of Funding Progress- NJSEA Postretirement Healthcare Plan on page 39, the Seasonal Racing Personnel Retirement Plan (“SRPRP”) Schedule of Employer Contributions and Funding Progress on page 40, and the SRPRP Schedule of Actuarial Methods and Assumptions on pages 41 through 42 be presented to supplement the consolidated financial statements. Such information, although not a part of the consolidated financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the consolidated 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 consolidated financial statements, and other knowledge we obtained during our audits of the consolidated 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. September 20, 2013 - 2 - NEW JERSEY SPORTS AND EXPOSITION AUTHORITY (A Component Unit of the State of New Jersey) MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2012 AND 2011 Introduction to the Annual Report This annual report consists of four parts; Management’s Discussion and Analysis (“MD&A”), Consolidated Financial Statements, Notes to the Consolidated Financial Statements, and Required Supplementary Information. Management’s Discussion and Analysis: • This section of the New Jersey Sports and Exposition Authority’s (the “Authority” or “NJSEA”), a component unit of the State of New Jersey, financial statements presents an overview of the Authority’s financial performance during the years ended December 31, 2012 and 2011. It provides an assessment of how the Authority’s position has improved or deteriorated and identifies the factors that, in management’s view, significantly affected the Authority’s overall financial position. It may contain opinions, assumptions or conclusions by the Authority’s management that should not be considered a replacement for, and must be read in conjunction with, the other financial statements described below. The Consolidated Financial Statements include: • The Consolidated Statements of Net Position, which provide information about the nature and amounts of resources with present service capacity that the Authority presently controls (assets), consumption of net assets by the Authority that is applicable to a future reporting period (deferred outflow of resources), present obligations to sacrifice resources that the Authority has little or no discretion to avoid (liabilities), and acquisition of net assets by the Authority that is applicable to a future reporting period (deferred inflow of resources) with the difference between assets/deferred outflow of resources and liabilities/deferred inflow of resources being reported as net position. • The Consolidated Statements of Operations and Changes in Net Position account for all of the current year’s revenues and expenses, measures the success of the Authority’s operations over the past year and can be used to determine how the Authority has funded its costs. • The Consolidated Statements of Cash Flows which provide information about the Authority’s cash receipts, cash payments, and net changes in cash resulting from operations, investing, and financing activities. The Notes to the Consolidated Financial Statements provide: • Information that is essential to understanding the consolidated financial statements, such as the Authority’s accounting methods and policies. • Details of contractual obligations, future commitments and contingencies of the Authority. • Any other events or developing situations that could materially affect the Authority’s financial position. - 3 - The Required Supplementary Information: • Includes required supplemental information in accordance with Governmental Accounting Standards Board (“GASB”). The Authority’s Business The Authority is engaged in the