January 30, 2006
The Guam International Airport Authority (Airport) is the first Government of Guam agency to issue its fiscal year (FY) 2005 audited financial statements for the year ending September 30, 2005. The audit was conducted by Ernst and Young, LLP and was completed five months before the required June 30th deadline.
FY 2005 was a notable year for the Airport as net assets increased by nearly $16 million. This was largely attributable to an increase in federal capital grants, income received from operations, and a land transfer received from the Government of Guam.
Federal capital grants increased by $10 million from $6.5 million in FY 2004 to $16.8 million in FY 2005. At the same time, income from operations, before depreciation, generated $18.4 million in revenues, a $1.5 million improvement from the prior year. The government land transfer, appraised at $2.5 million, was recorded as non-operating income and afforded the Airport additional land area of 20,000± square meters. The land transfer was initiated in response to a Federal Aviation Administration request, which required the Airport to seek reimbursement from the Government of Guam for questioned payments of $564,702 related to the construction of Aviation Park (also known as Triangle Park) in Agana Heights.
Overall, operating costs increased by 1 % from $24.5 million in ‘04 to $24.8 million in ‘05. This increase was largely due to the upward adjustment in the allowance for bad debts, which grew from $154,851 to $556,239. Despite this, the Airport was able to reduce its loss from operations by 46% or $1 million from to $2.3 million in the prior year to $1.2 million in FY 2005. Further, legal fees for FY 2005 increased slightly from $571,264 in ’04 to $603,573.
Other areas which experienced cost reductions included personnel services, typhoon, and aircraft emergency expenses. Personnel service expenses declined by 3 % resulting in a savings of $314,701, since the Airport reduced its employee count by 17, from 219 to 202. This savings was offset by the implementation of salary increments, restored to all Airport employees in FY 2005, at a cost of $635,163. Typhoon and aircraft emergency expenses declined by 59%. Individually, typhoon related expenses declined by 78% from $415,980 to $92,442, while aircraft emergency expenses totaled $90,077.
The auditor’s report on Compliance and Internal Controls noted five reportable findings of which none were considered material.
In these findings, the Airport did not comply with requirements regarding:
A separate management letter identified 14 findings, which included findings for accounts receivables, accrued typhoon expenses, parking lot revenues, and information technology (IT). These findings consist of:
Finding No. 2005-2 reported $57,950 in past due travel advances made in 2003 and 2004, which remain unresolved. No travel expense reports were filed for these ’03 and ‘04 advances, although all employees who traveled on official government business have submitted expense reports for FY 2005.
Finding No. 2005-13 revealed a possible misstatement of parking lot revenues, due to weak controls and lack of reconciliation. As a result, other auditors were contracted to review the potential theft of parking lot revenue, and in June 2005, the Airport’s parking lot operation became privatized.
Finding No. 2005-14 cited several high-risk threats to the Airport IT environment. These risks included:
For a detailed analysis, see the Management Discussion and Analysis.