Financial Statements Audit Report King County Ferry District
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English

Financial Statements Audit Report King County Ferry District

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Washington State Auditor’s Office Financial Statements Audit Report King County Ferry District Audit Period January 1, 2008 through December 31, 2008 Report No. 1002566 Issue Date December 7, 2009 Washington State Auditor Brian Sonntag December 7, 2009 Board of Supervisors King County Ferry District Seattle, Washington Report on Financial Statements Please find attached our report on the King County Ferry District’s financial statements. We are issuing this report in order to provide information on the District’s financial condition. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021  (360) 902-0370  TDD Relay (800) 833-6388 FAX (360) 753-0646  http://www.sao.wa.gov Table of Contents King County Ferry District January 1, 2008 through December 31, 2008 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with Government Auditing Standards ........................................................................................................................ 1 Independent Auditor’s Report on Financial Statements ............................... 3 Financial Section ......................... 5 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with ...

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Washington State Auditor’s Office

Financial Statements Audit Report






King County Ferry District



Audit Period
January 1, 2008 through December 31, 2008


Report No. 1002566

Issue Date
December 7, 2009





Washington State Auditor
Brian Sonntag



December 7, 2009


Board of Supervisors
King County Ferry District
Seattle, Washington


Report on Financial Statements

Please find attached our report on the King County Ferry District’s financial statements.

We are issuing this report in order to provide information on the District’s financial condition.

Sincerely,

BRIAN SONNTAG, CGFM
STATE AUDITOR


Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021  (360) 902-0370  TDD Relay (800) 833-6388
FAX (360) 753-0646  http://www.sao.wa.gov

Table of Contents

King County Ferry District
January 1, 2008 through December 31, 2008


Independent Auditor’s Report on Internal Control over Financial Reporting and on
Compliance and Other Matters in Accordance with Government Auditing
Standards ........................................................................................................................ 1
Independent Auditor’s Report on Financial Statements ............................... 3
Financial Section ......................... 5



Independent Auditor’s Report on Internal
Control over Financial Reporting and on
Compliance and Other Matters in Accordance
with Government Auditing Standards

King County Ferry District
January 1, 2008 through December 31, 2008


Board of Supervisors
King County Ferry District
Seattle, Washington


We have audited the basic financial statements of the King County Ferry District, King County,
Washington, as of and for the year ended December 31, 2008, and have issued our report
thereon dated October 15, 2009.

We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to the financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States.

INTERNAL CONTROL OVER FINANCIAL REPORTING

In planning and performing our audit, we considered the District’s internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the District’s internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the District’s internal control over financial reporting.

A control deficiency exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect misstatements on a timely basis. A significant deficiency is a control
deficiency, or combination of control deficiencies, that adversely affects the District's ability to
initiate, authorize, record, process or report financial data reliably in accordance with generally
accepted accounting principles such that there is more than a remote likelihood that a
misstatement of the District's financial statements that is more than inconsequential will not be
prevented or detected by the District's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the District’s internal control.

Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in internal control that might be significant deficiencies or material weaknesses. We did not
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Washington State Auditor's Office
1
identify any deficiencies in internal control over financial reporting that we consider to be
material weaknesses, as defined above.

COMPLIANCE AND OTHER MATTERS

As part of obtaining reasonable assurance about whether the District’s financial statements are
free of material misstatement, we performed tests of the District’s compliance with certain
provisions of laws, regulations, contracts and grant agreements, 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 or other matters that are
required to be reported under Government Auditing Standards.

This report is intended for the information and use of management and the Board of
Supervisors. However, this report is a matter of public record and its distribution is not limited.
It also serves to disseminate information to the public as a reporting tool to help citizens assess
government operations.


BRIAN SONNTAG, CGFM
STATE AUDITOR

October 15, 2009


_________________________________________________________________________________________________________
Washington State Auditor's Office
2
Independent Auditor’s Report on Financial
Statements

King County Ferry District
January 1, 2008 through December 31, 2008


Board of Supervisors
King County Ferry District
Seattle, Washington


We have audited the accompanying basic financial statements of the King County Ferry District,
King County, Washington, as of and for the year ended December 31, 2008, as listed on
page 5. These financial statements are the responsibility of the District’s management. Our
responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United
States of America 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 the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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
that our audit provides 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 the King County Ferry District, as of December 31, 2008, and the
changes in financial position and cash flows thereof for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report on our
consideration of the District’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide
an opinion on the internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.

The management’s discussion and analysis on pages 6 through 7 is not a required part of the
basic financial statements but is supplementary information required by the Governmental
Accounting Standards Board. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation
_________________________________________________________________________________________________________
Washington State Auditor's Office
3
of the required supplementary information. However, we did not audit the information and
express no opinion on it.


BRIAN SONNTAG, CGFM
STATE AUDITOR

October 15, 2009


_________________________________________________________________________________________________________
Washington State Auditor's Office
4

Financial Section

King County Ferry District
January 1, 2008 through December 31, 2008


REQUIRED SUPPLEMENTAL INFORMATION

Management’s Discussion and Analysis – 2008


BASIC FINANCIAL STATEMENTS

Statement of Net Assets – 2008
Statement of Revenues, Expenses and Changes in Net Assets – 2008
Statement of Cash Flows – 2008
Notes to Financial Statements – 2008


_________________________________________________________________________________________________________
Washington State Auditor's Office
5
MANAGEMENT DISCUSSION AND ANALYSIS


Management’s Discussion and Analysis (MD&A) presents a narrative overview and analysis of
the financial activities of the King County Ferry District (the District) for the fiscal year ended
December 31, 2008. As this information is presented in summary form, it should be read in
conjunction with the financial statements and footnotes as a whole.

The District was established in April 2007 to provide passenger-only ferry services to King
County residents. The District currently consists solely of its governing body, King County
Council. The District contracts with a management consultant to oversee the District’s
operations and represent the District on behalf of the governing body. To provide ferry services,
the District contracts with King County Marine Division, utilizing King County’s technical
expertise and personnel, to manage the existing routes and develop future routes in the Puget
Sound area.

Financial Highlights

The District started levying property taxes and operating ferry services in January 2008. The
District’s financial statements have reflected its first year operating revenues and expenses as
well as non-operating revenues and expenses.

• Total fare box revenues from two existing ferry routes was $419,108 for 2008.
• Total operating expenses was $2,805,712 for 2008.
• Non-operating revenues consist of property taxes, investment interests and state forest
timber sales. Property taxes are the District’s major revenue source. Total property tax
revenues levied was $18,626,299 for 2008.
• Total net assets at December 31, 2008 was $16,590,594.

Overview of the Financial Statements

The District’s financial statements are prepared in conformity with United States generally
accepted accounting principles (GAAP) as applied to government units. The 2008 financial
statements are presented using the economic resource measurement focus and accrual basis
of accounting. As the District comprises a single proprietary fund, no fund level financial
statements are shown.

In accordance with GAAP, all revenues are recognized in the period in which they are earned
and expenses are recognized in the period in which they are incurred. All assets and liabilities
associated with the operation of the District are included in the Balance Sheet. The financial
statements provide both long-term and short-term information about the District’s overall
financial status as well as the District’s net assets. The amount of net assets is the difference
between assets and liabilities, and over time may serve as a useful indicator of the District’s
financial position. The financial statements also include footnotes that provide additional
information that is essential to a full understanding of the information provided.




_________________________________________________________________________________________________________
Washington State Auditor's Office
6Balance Sheet
Cash and Investments $ 17,687,049
Taxes Receivables 343,882
Construction in Progress 114,828
Total Assets $ 18,145,759
Accounts Payable $ 1,555,165
Total Liabilities 1,555,165
Invested in Capital Assets, Net of Related Debt 114,828
Net assets, Unrestricted 16,475,766
Total Net Assets 16,590,594
Total Liabilities and Net Assets $ 18,145,759

The Balance Sheet represents assets, liabilities and net assets. The total assets of the District
were $18,145,759 at December 31, 2008, including cash and investments $17,687,049, taxes
receivables of $343,882, and construction in progress of $114,828. The total liabilities of
$1,555,165 were current payables to vendors and contractors. The total net assets was
$16,590,594, including invested in capital assets, net of related debt of $114,828 and
unrestricted net assets of $16,475,766 for the District’s operations.

Statement of Revenues, Expenses and Changes in Net Assets
Operating Revenues $ 421,584
Operating Expenses 2,805,712
Net Loss from Operations (2,384,128)
Non-operating Revenues 18,984,991
Non-operating Expenses 10,269
Net Income from Non-operating 18,974,722
Change in Net Assets $ 16,590,594

Operating revenues are farebox revenues earned from ferry services provided to passengers
and other revfrom advertising and promotions. Operating expenses includes leased ferry
services of $1,189,226 from Argosy and Washington State Ferries, contracted labor of $527,800
from King County Marine Division, professional fees $693,314, fuel costs $292,384 and other
operating expenses $102,988. The District had an operating loss of $2,384,128 for 2008.

Non-operating revenues consist of property taxes, investment interest income, and state forest
timber sales tax. The total non-operating revenues were $18,984,991, including property taxes
of $18,626,299.

Economic Factors and Next Year’s Budget

The District’s property taxes assessed for 2009 amounted to $19,330,214, a rate of $0.05018
per thousand of assessed value. The economic recession may have adverse impacts on the
District’s tax collections. Economic forecasts predict that the King County economy will remain
in recession throughout much of 2009. The District has estimated total property tax receipts of
$18,670,310 for 2009.

The District has projected significant capital acquisitions, improvements and constructions in
2009. Total costs for the capital projects of $10,123,917 have been budgeted. The District has
also budgeted $5,667,653 for ferry operating costs and $969,500 for other operating
expenditures.
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Washington State Auditor's Office
7

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