202o Audit Results - Granicus

MOSSADAMS

202o Audit ResultsNovember 12, 2020

Presented by: Olga A. Darlington, Partner

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Los Angeles World Airports

(“LAWA”) and Los Angeles

International Airport (“LAX”)

Board of Airport Commissioners

Dear Audit Committee members:

Thank you for your engagement of Moss Adams LLP. We are pleased

to have the opportunity to meet with you to discuss the results of our

audit of the financial statements and federal program compliance of

LAWA for the year ended June 30, 2020.

The accompanying report, which is intended solely for the use of the

Board of Airport Commissioners and Management, and not intended

to be and should not be used by anyone other than these specified

parties, presents important information regarding LAWA’s financial

statements and our audit that we believe will be of interest to you.

We conducted our audit with the objectivity and independence that

you expect. We received the full support and assistance of LAWA’s

personnel. We are pleased to serve and be associated with LAWA as

its independent public accountants and look forward to our continued

relationship.

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1. Auditor Reports Issued

2. Areas of Audit Emphasis

3. Matters Required to be Communicated

4. Upcoming Accounting Pronouncements

5. Other Information

Agenda

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Audit Reports Issued• Unmodified opinions on financial statements of LAWA and LAX,

which are presented fairly and in accordance with US GAAP as required by Government Accounting Standards Board (GASB)

• Auditors’ reports on LAWA’s and LAX’s schedules of Passenger Facility Charge (PFC) receipts and expenditures and related internal controls• No findings of noncompliance noted

• Auditor’s reports on LAWA’s and LAX’s schedules of Customer Facility Charge (CFC) receipts and expenditures and related internal controls• No findings of noncompliance noted

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Report on Internal Control Over Financial Reporting and on Compliance and Other Matters in accordance with Government Auditing Standards

Other Audit Reports Issued for LAWA

• No significant deficiencies or material weaknesses in internal control over financial reporting identified.

• No compliance findings reported.

Report on Compliance with Requirements that could have a Direct and Material Effect on the Major Federal Programs and on Internal Control Over Compliance in accordance with the Uniform Guidance for Federal Awards (2 CFR Part 200)

• Expected to be issued in late November/early December

• No control findings note at this time.• No compliance findings noted at this

time.

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Areas of Audit Emphasis

• Internal control environment

o Cash receipts/receivables, cash disbursements/payables, payroll, bond and investment transactions, general IT controls, administration of federal awards;

• Capital assets

o Consideration of capitalization policies and potential impairment, testing of CIP additions, asset retirements, overhead application, and depreciation;

• Bond activity

o Tested the issuance of revenue and refunding bonds during FY 2020 –2019 Series F for $412 million and 2020 Series A for $739 million;

o Confirmed debt repayments, tested amortization of discounts and premiums, and reviewed compliance with covenants;

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Areas of Audit Emphasis (continued)• Management estimates

o Legal and insurance contingencies/ recoveries, depreciation, allowance for doubtful accounts, pension and OPEB actuarial valuations for benefit plans;

• Leases and operating agreements and revenue recognition

o Operating revenue analysis of landing fees according to the agreements with airlines;o Leases and concessions revenue;o PFC, CFC, and federal grants;o Passenger Airline Temporary Relief Program and Concessionaires and Services

Temporary Relief Programo Consideration of the collectability of related receivables;

• One major federal program tested this year –o Airport Improvement Program $99.3 Milliono Of which $52.4 Million was from CARES Act Funding

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Revenue trends – 2017-2020

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Concession Revenue trends – 2010-2020

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Communication with Those Charged with Governance

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Our Responsibility Under US Generally Accepted Auditing Standards and Government Auditing Standards

To express our opinion on whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, and in accordance with U.S. GAAP. However, our audit does not relieve you or management of your responsibilities.

To consider internal control over financial reportingas a basis for designing audit procedures but not for the purpose of expressing an opinion on its effectiveness or to provide assurance concerning such internal control.

To perform an audit in accordance with generally accepted auditing standards issued by the AICPA and Government Auditing Standards issued by the Comptroller General of the United States, and design the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement.

To communicate findings that, in our judgment, are relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

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Required Communications

•Audit was performed according to the planned scope

•Significant accounting policies are summarized in Note 1 to the financial statements. o There were no changes to significant accounting policies for the year ended June 30, 2020.

o New GASBs adopted in FY 2020 – GASB 84, GASB 90 and GASB 95

•Difficulties encountered during the audit o None

•Financial statement disclosures were consistent, clear and understandable

•During the audit, no correcting journal entries were identified•There were no disagreements with managemento Weekly audit status meetings were held between Moss Adams and LAWA’s management and

staff throughout the audit term

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Required Communications (continued)

•Potential Effect on the Financial Statements of Significant Risks, Exposures & Uncertaintieso LAWA is subject to potential legal proceedings and claims that arise in the ordinary course of

business, which are disclosed in the notes to the financial statements, in Notes 15 and 16

• Consultation with other independent auditorso MGO are the auditors for the City of Los Angeles

• Ability to continue as a going concern (no disclosure necessary)o Disclosures related to impact of the pandemic on the airports have been included in Management

Discussion & Analysis and Notes 8 and 11

• Consideration of fraud in a financial statement audito We have not become aware of any instances of fraud or noncompliance with laws and regulations.

• Moss Adams is independent with respect to LAWA

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• GASB 87 – Leases (effective in 2022): Addresses recognition of certain lease assets and liabilities for leases that previously were classified as operating leases. We will work with management to plan for the implementation of this standard.

• GASB 91 – Conduit Debt Obligations (effective in 2022): Addresses the existing definition of a conduit debt obligation and improves required note disclosures. We will work with management to plan for the implementation of this standard.

• GASB 92 – Omnibus 2020 (effective in 2022): Enhances comparability in the application of accounting and financial reporting requirements and aims to improve the consistency of authoritative literature. We will work with management to plan for the implementation of this standard.

• GASB 93 – Replacement of Interbank Offered Rates (effective in 2021): Addresses accounting and financial reporting implications that will result from the replacement of an IBOR.

Upcoming Accounting Pronouncements

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[email protected](425) 551-5712

Olga A. Darlington, CPA, Partner+ Matt Parsons, CPA, Senior Manager+ Anna Waldren, CPA, Manager+

Contact Us



mailto:[email protected]



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202o Audit Results - Granicus

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