Port of Redwood City
Presentation to The Board of Commissioners
December 12, 2012
Presented by: Ahmed Badawi, CPA
Partner
Badawi & Associates
Audit of the
Port of Redwood City
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Agenda
About the Firm
Engagement Team
Deliverables and Scope of the Audit
Areas of Primary Emphasis
Auditors Report and Financial Statements
Required Communications
New Accounting Standards
Conclusion & Discussion/Questions
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About the Firm
Badawi & Associates
Formed in February 2012
Located in Oakland, CA
Specialized in auditing governmental agencies,
including cities, counties, special districts and
transportation agencies
Over 15 years of auditing governmental agencies
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Engagement Team
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Engagement Team
Engagement
Partner
Ahmed Badawi,
CPA
Information Technology
Robert Wucher
CISA, CISM, CRISC
Quality Control Partner
Jack Georger, CPA
Manager
Jennifer, Ye
CPA
Senior
Cathy Zhai
Staff
John Neal
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Deliverables and Scope of the Audit
Report of Independent Auditors on Port of Redwood City Basic
Financial Statements
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing
Standards
Communications With Those Charged With Governance
Letter used to summarize communication of various significant
matters to those charged with governance.
Report on Compliance with Requirements Applicable to Each Major
Program and Internal Control over Compliance in Accordance with
OMB Circular A-133 (To be issued)
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Areas of Primary Audit Emphasis
Revenues & Receivables: Improper revenue
recognitions
Test receivables & test revenues/billings
Review the allowance for doubtful accounts: ratio
analysis & review the aged trial balance with
subsequent collections, credit memos, and write-offs
Capital assets: repair/maintenance expenditures may be
capitalized
Test of additions to capital assets
Test of significant deletions to capital assets
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Auditors Report
Unqualified opinion
Audit performed in accordance with Generally
Accepted Auditing Standards and Government
Auditing Standards
Financial statements are fairly presented in all material
respects
Significant accounting policies have been consistently
applied
Estimates are reasonable
Disclosures are properly reflected in the financial
statements
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Port of Redwood City
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Port of Redwood City
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Port of Redwood City
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Port of Redwood City
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Port of Redwood City
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Port of Redwood City
Expense Coverage
2010
2011
2012
Unrestricted Net Assets
$ 9,799,021
$
10,764,924
$
11,749,489
Total Expenses
$ 3,760,250
$
3,850,186
$
4,373,258
Unrestricted Net Asset as
a % of Total Expenses
Number of months
GFOA recommendation
260.59%
279.59%
268.67%
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2-4
Measure of Port's ability to operate with no revenues using available
net assets.
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Other Financial Information
Port’s Annual Pension Cost
The Port’s retirement plan is part of the City of Redwood City’s
retirement plan. Information on the funding progress of this plan can
be obtained from the City’s Comprehensive Annual Financial Report.
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Other Financial Information
Port’s Annual Pension Contribution Rates
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Other Financial Information
Port’s Annual OPEB Cost
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Other Financial Information
Port’s Annual OPEB Contribution Rate
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Other Financial Information
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Required Communications
Our Responsibility
Under U.S GAAS
• Expression of an opinion on
whether financial
statements are fairly stated
in accordance with U.S
GAAP
• Evaluate internal control
over financial reporting
• Evaluate compliance with
laws, contract and grants
• Evaluate the tone at the top
• Ensure financial statements
are clear and transparent
• Communicate with the
governing body
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Required Communications
Management
Responsibility
• Management is responsible for the
financial statements
• Establish and maintain internal control
over financial reporting
• Making all financial records available to
us
• Adjust the financial statements to
correct material misstatements
• Establish internal control to prevent
and detect fraud
• Inform us of all known and suspected
fraud
• Comply with laws and regulations
• Take correction action on audit findings
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Required Communications
Independence
• It is our responsibility to
maintain independence
• We will maintain our
independence by strict
adherence to the AICPA and the
Board of Accountancy rules and
regulations
• No other services performed
that could affect our
independence
Timing of the Audit
• Audit was performed in the time
frame communicated to the Port
in our engagement letter
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Required Communications
Significant Accounting
Policies and Unusual
Transactions
There were no changes to
significant accounting
policies for the year ended
June 30, 2012
Management Judgment
and Accounting
Estimates
Significant management
estimates impacting the
financial statements
include the following:
• Useful lives of Capital
Assets
• Valuation of
Investments
• OPEB Obligation
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Required Communications
Sensitive Disclosures
The most sensitive
disclosures affecting the
Port’s financial statements
are as follow:
• Summary of Significant
Accounting Policies
• Cash and Investments
• Capital Assets
• Pension and OPEB
Difficulties
Encountered in
Performing the Audit
No difficulties were
encountered during our
audits
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Required Communications
Significant Audit
Adjustments and
Unadjusted Differences
Considered by
Management to be
Immaterial
There were no adjustments
and reclassifying entries
during the course of the
audit.
Potential Effect on the
Financial Statements of
Any Significant Risks
and Exposures
No significant risks or
exposures were identified.
Legal matters and potential
liabilities are disclosed in
the financial statements
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Required Communications
Disagreement with
Management
We are pleased to report that
there were no disagreements
with management
Deficiencies in Internal
Control
No significant or material
weaknesses identified during
our audits
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Required Communications
Representations
Requested of
Management
Management representation
letter have been provided to
management for review and
signature (see attached)
Management
Consultation with Other
Accountants
We are not aware of any
significant accounting or
auditing matters for which
management consulted with
other accountants
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Required Communications
Other Material Written
Communications
Other than the engagement
letter and management
representation letter, there
have been no other
significant communications
Material Uncertainties
Related to Events and
Conditions
There were no material
uncertainties relating to
events and conditions
Fraud and Illegal Acts
We have not become aware
of any instances of fraud or
illegal acts
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New Accounting Standards
2012
2013
2014
2015
• Statement 57-Agent OPEB Plans
• Statement 64-Derivative Terminations
• Statement 60-Service Concession Arrangements
• Statement 61-Reporting Entity
• Statement 62-Codification of AICPA and FASB
• Statement 63-Deferrals Presentation
• Statement 65-Assets and Liabilities— Reclassification and Recognition
• Statement 66-Technical Corrections
• Statement 67-Financial Reporting for Pension Plans
• Statement 68-Accounting and Financial Reporting for Pensions
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Questions
Ahmed M. Badawi
abadawi@b-acpa.com
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Thank You
For Allowing Us to Provide Audit Services
to the Port of Redwood City
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