WUKY Radio a Public Telecommunications Entity an Organizational Unit of the University of Kentucky Financial Statements Years Ended June 30, 2019 and 2018
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WUKY Radio A Public Telecommunications Entity An Organizational Unit of the University of Kentucky Financial Statements Years Ended June 30, 2019 and 2018 CONTENTS PAGE Independent Auditor’s Report 1 Management’s Discussion and Analysis 3 Financial Statements Statements of Net Position 8 Statements of Revenues, Expenses and Changes in Net Position 9 Statements of Cash Flows 10 Notes to Financial Statements 11 Independent Auditor’s Report Board of Trustees University of Kentucky WUKY Radio Lexington, Kentucky We have audited the accompanying financial statements of the University of Kentucky WUKY Radio (WUKY Radio), an organizational unit of the University of Kentucky (University), as of and for the years ended June 30, 2019 and 2018, and the related notes to the financial statements, which collectively comprise the WUKY Radio'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 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 an opinion on these 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 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1 Board of Trustees University of Kentucky WUKY Radio Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WUKY Radio as of June 30, 2019 and 2018, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1, the financial statements of WUKY Radio are intended to present the financial position, the changes in financial position and cash flows of only that portion of the business-type activities that is attributable to the transactions of WUKY Radio. They do not purport to, and do not, present fairly the financial position of the University as of June 30, 2019 and 2018, the changes in its financial position or its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis as listed in the table of contents 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. Louisville, Kentucky October 8, 2019 2 WUKY RADIO A PUBLIC TELECOMMUNICATIONS ENTITY AN ORGANIZATIONAL UNIT OF THE UNIVERSITY OF KENTUCKY MANAGEMENT'S DISCUSSION AND ANALYSIS YEARS ENDED JUNE 30, 2019 AND 2018 WUKY Radio’s Management’s Discussion and Analysis (MD&A) of its financial condition provides an overview of the financial performance of WUKY Radio for the years ended June 30, 2019 and 2018. Management has prepared this discussion, which provides summary financial information. MD&A should be read in conjunction with the accompanying financial statements and related footnotes. Financial Highlights • Total assets decreased $50,604 or 4.9%. This change was primarily due to a decrease in capital assets, net of $52,469. • Total liabilities increased $9,335 or 49.1%. This change was due to an increase in accounts payable and accrued liabilities of $11,508, offset by a decrease in unearned revenue of $2,173. • Net position decreased $59,939 or 5.9% to $956,459. • Operating revenues decreased $95,620 or 20.2% to $377,896. • Operating expenses increased $44,006 or 3.2% to $1,426,382. Using the Financial Statements This financial report consists of three financial statements: the Statement of Net Position; the Statement of Revenues, Expenses and Changes in Net Position; and the Statement of Cash Flows. These financial statements are prepared in accordance with Governmental Accounting Standards Board (GASB) Statement No. 35, Basic Financial Statements – and Management’s Discussion and Analysis – for Public Colleges and Universities. One of the most important questions asked about its finances is whether WUKY Radio is better off as a result of the year’s activities. One key to answering this question is the financial statements of WUKY Radio. The Statement of Net Position, Statement of Revenues, Expenses and Changes in Net Position, and the Statement of Cash Flows present financial information on WUKY Radio in a format similar to that used by corporations, and present a long-term view of WUKY Radio’s finances. WUKY Radio’s net position (the difference between assets, deferred outflows of resources, liabilities and deferred inflows of resources) is one sign of its financial health. Over time, increases or decreases in net position indicate the improvement or erosion of WUKY Radio’s financial health. The Statement of Net Position includes all assets, deferred outflows of resources, liabilities and deferred inflows of resources. It is prepared on the accrual basis of accounting, whereby revenues and assets are recognized when the service is provided and expenses and liabilities are recognized when others provide the service, regardless of when cash is exchanged. The Statement of Revenues, Expenses and Changes in Net Position presents the revenues earned and expenses incurred during the year. Activities are reported as either operating or nonoperating. Another important factor to consider when evaluating financial viability is WUKY Radio’s ability to meet financial obligations as they become due. The Statement of Cash Flows presents information related to cash inflows and outflows, summarized by operating, noncapital financing, capital and related financing, and investing activities. Reporting Entity WUKY Radio is an organizational unit of the University of Kentucky (the University), which is a component unit of the Commonwealth of Kentucky (the Commonwealth) and is included in the basic financial statements of the 3 Commonwealth. WUKY Radio is owned and operated by the University. Funds for operations are received from the University. Condensed Statements of Net Position 2019 2018 2017 ASSETS Current assets $ 258,411 $ 251,508 $ 281,292 Capital assets, net 688,242 740,711 656,400 Other noncurrent assets 38,165 43,203 127,132 Total assets 984,818 1,035,422 1,064,824 LIABILITIES Current liabilities 28,359 19,024 62,798 Total liabilities 28,359 19,024 62,798 NET POSITION Net investment in capital assets 688,242 740,711 656,400 Restricted Nonexpendable 30,224 22,537 20,052 Expendable 133,686 140,072 128,028 Unrestricted 104,307 113,078 197,546 Total net position $ 956,459 $ 1,016,398 $ 1,002,026 Assets. As of June 30, 2019, WUKY Radio’s assets totaled $984,818. Capital assets, net represented WUKY Radio’s largest asset, totaling $688,242 or 69.9% of total assets. Total assets decreased $50,604 during the year ended June 30, 2019. This decrease was primarily due to a decrease in capital assets, net of $52,469. Liabilities. At June 30, 2019, WUKY Radio’s liabilities totaled $28,359. Accounts payable and accrued liabilities totaling $27,759 represented WUKY Radio's largest liability at 97.9% of total liabilities. Accounts payable and accrued liabilities increased $11,508 primarily due to timing differences in payments to vendors. Net Position. Net position at June 30, 2019 totaled $956,459 or 97.1% of total assets. Net investment in capital assets totaling $688,242 comprise 72.0% of total net position. Total net position decreased $59,939 during the year ended June 30, 2019. Net investment in capital assets decreased $52,469 primarily due to depreciation expense.