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Guam International Airport Authority FY 2019 Financial Audit Reports

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Guam International Airport Authority FY 2019 Financial Audit Reports 4/29/2020 Guam Legislature Mail - M&C Fwd: Guam International Airport Authority FY 2019 Financial Audit Reports Guam Legislature Clerks <[email protected]> M&C Fwd: Guam International Airport Authority FY 2019 Financial Audit Reports 1 message Speaker's Office <[email protected]> To: Clerks Office <[email protected]> Cc: Rennae Meno <[email protected]> Guam International Airport Authority FY 2019 Financial Audit 04-28-20 9:24 AM 04-28-20 Reports.* Office of Public Accountability Sinseru yan Minagåhet, Office of the Speaker ● Tina Rose Muña Barnes Committee on Public Accountability, Human Resources & the Guam Buildup 35th Guam Legislature I Mina’trentai Singko na Liheslaturan Guåhan Guam Congress Building | 163 Chalan Santo Papa | Hagatna, GU 96910 T: (671) 477-2520/1 [email protected] This e-mail message is intended only for the use of the individual or entity named above and may contain confidential and privileged information. If you are not the intended recipient, any disclosure, copying, distrib contained in this transmission is strictly PROHIBITED. If you have received this transmission in error, please immediately notify us by replying to [email protected] and delete the message immediate Gumai pribilehu yan konfedensia este siha na mensåhi. Solo espesiåtmente para hågu ma entensioña pat ma aturisa para unrisibi. Sen prubidu kumu ti un ma aturisa para manribisa, na’setbe, pat mandespåtcha. Yang mensåhi , put fabot ago’ guatu gi I numa’huyong gi as [email protected] yan despues destrosa todu siha I kopian mensåhi. Si Yu’os ma’åse’. ---------- Forwarded message --------- From: Andriana Quitugua <[email protected]> Date: Tue, Apr 28, 2020 at 9:34 AM Subject: Guam International Airport Authority FY 2019 Financial Audit Reports To: Benjamin Cruz <[email protected]> Cc: Thyrza Bagana <[email protected]> Hafa Adai, Transmitted electronically are Guam International Airport Authority FY 2019 Financial Highlights, Financial Statements, Report on Compliance and Internal Control, Management Letter, Letter to Those Schedule of Passenger Facility Charges, Corrective Action Plan, and Corrective Action Plan – Passenger Facility Charges. These reports may also be found at http://www.opaguam.org. Best Regards, Andriana U.C. Quitugua, CFE Auditor Ofice of Public Accountability www.opaguam.org Tel. (671) 475-0390 ext. 203 Fax (671) 472-7951 This e-mail transmission and accompanying attachment(s) may contain conidential or privileged information. If you are not the intended recipient of this e-mail, please inform the sender and delete it and any oth immediately. Please do not distribute or disclose the contents to anyone. Thank you. 8 attachments GIAA_HL19.pdf 65K GIAA_FS19.pdf 2609K GIAA_COMP19.pdf 77K GIAA_ML19.pdf 51K GIAA_SAS19.pdf 5371K GIAA_PFC19.pdf https://mail.google.com/mail/u/0?ik=553f5b18c8&view=pt&search=all&permthid=thread-f%3A1665198857129688176%7Cmsg-f%3A16651988571296… 1/2 Doc. No. 35GL-20-1733.* 4/29/2020 Guam Legislature Mail - M&C Fwd: Guam International Airport Authority FY 2019 Financial Audit Reports 67K GIAA_CAP19.pdf 110K GIAA_CAP-PFC19.pdf 96K https://mail.google.com/mail/u/0?ik=553f5b18c8&view=pt&search=all&permthid=thread-f%3A1665198857129688176%7Cmsg-f%3A16651988571296… 2/2 Doc. No. 35GL-20-1733.* OFFICE OF PUBLIC ACCOUNTABILITY Suite 401 DNA Building, 238 Archbishop Flores Street, Hagåtña, Guam 96910 Tel (671) 475‐0390 ∙ Fax (671) 472‐7951 ∙ Hotline: 47AUDIT (472‐8348) www.opaguam.org A. B. Won Pat International Airport Authority – FY 2019 Financial Highlights April 28, 2020 Hagåtña, Guam – The Office of Public Accountability released the Antonio B. Won Pat International Airport Authority’s (Airport) Fiscal Year (FY) 2019 financial statements, reports on compliance and internal control, management letter, auditor’s communication with those charged with governance, and schedule of passenger facility charges collected and expended, and corrective action plans. Independent auditors Ernst & Young, LLP rendered an unmodified (clean) opinion on the Airport’s financial statements and compliance over major federal programs. The Airport closed FY 2019 with an increase in net position (net income) of $3.3 million (M), which increased by $2M from FY 2018’s net income of $1.2M. The Airport recognizes pension and other post-employment benefits (OPEB) liabilities for the plans it participates in. As of September 30, 2019, total pension and OPEB liabilities amounted to $78.9M while related expenses totaled $7.5M. For FY 2019, the Airport did not qualify as a low-risk auditee after four consecutive years of low- risk status. This was due to a material weakness over the FY 2018 financial reporting. For FY 2019, the independent auditors identified one significant deficiency over major federal programs. Operating Revenues Slightly Increased by $23K Total operating revenues of $68.9M in FY 2019 slightly increased by $23 thousand (K). Facilities and systems usage charges of $31.3M increased by $3M due to an increase in passenger and airline activities. However, this was offset by a $3M decrease in Miscellaneous Revenue, due to a $3M decrease in legal fees reimbursements from the ongoing litigation with DFS Guam L.P. (DFS). Operating Costs and Expenses Increased by $2.2M Operating costs and expenses increased by $2.2M, from $42.7M in FY 2018 to $44.9M in FY 2019. The increase was attributed primarily to the $4.2M increase in personnel services, which was offset by the $2.1M decrease in contractual services. Personnel services increased due to a $3.7M increase in pension and OPEB expenses, as well as for overtime pay during Category 5 typhoons. Contractual services decreased mainly from the $3M reduction in legal services paid for ongoing DFS litigation, from $4.5M in FY 2018 to $1.5M in FY 2019. Net non-operating revenue (expenses) significantly decreased by $4.4M, from a negative $4.8M in FY 2018 to a negative $477K in FY 2019. This was due primarily to the $2.2M decrease in interest expense from a reduction in debt service and liabilities without incurring additional debts. Litigation The Airport is involved in ongoing disputes with its former concessionaire, DFS, over DFS’ concession agreement that expired in 2013. DFS initiated arbitration in 2014, and in 2016, the arbitration panel awarded DFS $1.9M in damages plus pre-award interest, attorneys’ fees, arbitration costs, and post-award interest. In December 2018, the Superior Court of Guam confirmed the arbitration award, which the Airport appealed. However, because of pending motions Doc. No. 35GL-20-1733.* OFFICE OF PUBLIC ACCOUNTABILITY Suite 401 DNA Building, 238 Archbishop Flores Street, Hagåtña, Guam 96910 Tel (671) 475‐0390 ∙ Fax (671) 472‐7951 ∙ Hotline: 47AUDIT (472‐8348) www.opaguam.org by the parties in the Superior Court, the Supreme Court of Guam does not yet have jurisdiction to hear the appeal. In January 2019, DFS demanded that the Airport immediately pay $2.2M due under the arbitration award plus interest. In February 2020, the Airport filed a motion to reverse the Confirmation Order and vacate the arbitration award. In the event the Airport must pay any judgment on the arbitration award, the range of loss amounts to approximately $1.9M to $3.4M. As of September 30, 2019, the Airport recorded a provision for loss of approximately $3.1M. Operational Achievement For three consecutive years, the Airport achieved a perfect 100% score in its Federal Aviation Regulations (FAR) Part 139 certification inspection conducted in October 2018. In recognition, it was bestowed the prestigious 2019 Airport Safety Award by the Federal Aviation Administration’s Western Pacific Region Office in June 2019. Report on Compliance and Internal Control The independent auditors identified one significant deficiency in internal control over compliance of major federal programs. This pertained to six reimbursements totaling $380K, which were requested by the Airport prior to the actual payment to vendors for program costs. The independent auditors recommended that the Airport modify its internal control procedures to prevent the processing of reimbursements before payment of program costs and ensure compliance with federal requirements. In a separate Report on Compliance and Internal Control over Passenger Facility Charges (PFC), the independent auditors noted one repeat significant deficiency relative to certain air carriers remitting PFC collections later than the required due date of the last day of the following calendar month when collections were received. These carriers continue to make late payments despite the Airport’s efforts to remind them. Management Letter A separate management letter was issued identifying two repeat deficiencies in internal control pertaining to the Airport (1) not charging a 10% interest on the air carriers with late remittances and not depositing the collections on custom fees within five days of receipt; as well as (2) not formalizing standard operating procedures on federal awards recordkeeping. FY 2020 Outlook On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organizations, declared the novel corona virus (COVID-19) outbreak as “Public Health Emergency of International Concern”. As the Airport’s main business operations are dependent on visitors primarily from Japan, Korea, and the Philippines, the continued rise of COVID 19 cases in these countries has affected inbound/outbound flights. From February 2020 through April 2020, more than 948 flights (equal to approximately 175,000 seats) had been canceled. The Airport estimates approximately $9M in revenue loss, which may be exacerbated if the pandemic continues. For more details, see the Management’s Discussion and Analysis in the audit report. These reports may be downloaded at www.guamairport.com or at www.opaguam.org. Doc. No. 35GL-20-1733.* Financial Statements, Required Supplementary Information, and Supplementary and Other Information Antonio B. Won Pat International Airport Authority, Guam (A Component Unit of the Government of Guam) Years ended September 30, 2019 and 2018 with Report of Independent Auditors Doc. No. 35GL-20-1733.* Antonio B.
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