PASA
DENA COMMUNITY ACCESS CORPORATION
(A COMPONENT UNIT OF THE CITY OF
PASADENA, CALIFORNIA)
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
PASADENA COMMUNITY ACCESS CORPORATION
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021
INDEPENDENT AUDITORS’ REPORT 1
MANAGEMENT’S DISCUSSION AND ANALYSIS 3
BASIC FINANCIAL STATEMENTS
STATEMENT OF NET POSITION 7
STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN NET
POSITION 8
STATEMENT OF CASH FLOWS 9
NOTES TO BASIC FINANCIAL STATEMENTS 10
INDEPENDENT AUDITORS’ 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 19
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CliftonLarsonAllen LLP
CLAconnect.com
INDEPENDENT AUDITORS’ REPORT
Board of Directors
Pasadena Community Access Corporation
Pasadena, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Pasadena Community Access Corporation (the Corporation), a component unit of the City of Pasadena, California, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Corporation’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Board of Directors
Pasadena Community Access Corporation
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Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Pasadena Community Access Corporation, as of June 30, 2021, and the changes in its financial position and its cash for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Prior Year Summarized Financial Information
The June 30, 2020 financial statements were audited by White Nelson Diehl Evans LLP, whose practice became part of CliftonLarsonAllen LLP as of November 1, 2020, and whose report dated October 30, 2020, expressed an unmodified opinion on the respective financial statements of Pasadena Community Access Corporation from which the prior year summarized financial information was derived.
Report on Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to s upplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the informat ion because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our report dated November 2, 2021, on our consideration of the Corporation’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 effectiveness of the Corporation’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Corporation’s internal control over financial reporting and compliance.
CliftonLarsonAllen LLP
Irvine, California
November 2, 2021
PASADENA COMMUNITY ACCESS CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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Our discussion and analysis of the Pasadena Community Access Corporation’s (a component unit of the City of Pasadena, California) (the Corporation) financial performance provides an overview of the Corporation’s financial activities for the fiscal year ended June 30, 2021. Please read it in conjunction with the Corporation’s financial statements, which begin on page 7.
FINANCIAL HIGHLIGHTS
The Corporation’s net position for the fiscal year ending June 30, 2021 was $425,140, a decrease of $91 or 0%.
During the year, the Corporation had operating expenses that were $138 more than the $1,014,588 generated from the operating agreement, service contracts, and other revenues from the Corporation’s programs from the fisc al year ended June 30, 2021. This compares to last year, when operating expenses exceeded revenues by $40,319. Excluding depreciation, this year’s operating expenses were $48,563 less than operating revenue, while last year’s operating expense were $465 less than operating revenue.
Total operating cost of all the Corporation’s programs was $1,014,726. The programmatic activities of the Corporation remained unchanged.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Net Position (on pages 7 and 8) provide information about the activities of the Corporation as a whole and present a long-term view of the Corporation’s finances. As the Corporation operates as a business-type activity, no additional fund statements are necessary. When the Corporation char ges customers for the services it provides— whether to outside customers or to the City of Pasadena or other governments—these services are reported similarly to the way a business operates.
A Statement of Cash Flows is also presented using the direct method, which portrays inflows and outflows for specific classes of operations along with an indirect reconciliation of increases to net cash provided by operations. There were no non-cash entries during the year.
Reporting the Corporation’s Results as a Whole
Our analysis of the Corporation as a whole begins on page 4. One of the most important questions asked about the Corporation’s finances is, “Is the Corporation as a whole better off or worse off as a result of this year’s activities?” The Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Net Position report information about the Corporation as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting , which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.
PASADENA COMMUNITY ACCESS CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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These two statements report the Corporation’s net position and changes in them. You can think of the Corporation’s net position—the difference between assets and liabilities—as one way to measure the Corporation’s financial health, or financial position. Over time, increases or decreases in the Corporation’s net position are one indicator of whether its financial health is improving or deteriorating.
You will need to consider other nonfinancial factors, however, such as changes in the Corporation’s long-term contractual revenues and the condition of the Corporation’s equipment and other assets, to assess the overall health of the Corporation.
THE CORPORATION AS A WHOLE
The Corporation’s net position decreased from a year ago, from $425,231 to $425,140. Our analysis below focuses on the net position (Table 1) and changes in net position (Table 2) of the Corporation’s activities.
June 30, 2021 June 30, 2020
Current and Other Assets 681,979 $ 481,832 $
Capital Assets, Net 131,413 180,114
Total Assets 813,392 661,946
Current Liabilities (388,252) (236,715)
Net Position:
Net Investment in Capital Assets 131,413 180,114 Unrestricted 293,727 245,117
Total Net Position 425,140 $ 425,231 $
Table 1
Unrestricted Net Position —The part of net position that can be used to finance day-to-day operations without constraints established by debts, contribution restrictions, or other legal requirements— changed from $245,117 at June 30, 2020, to $293,727 at end of the fiscal year. Unless restricted by donation or grant covenant (of which the Corporation has no such restrictions at the present time), the Corporation generally can use this net position to finance continuing operations in the coming fiscal year.
PASADENA COMMUNITY ACCESS CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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Percentage
Changes
June 30, 2021 June 30, 2020 from 2020
Revenues:
Operating Revenues:
Operating Agreement 967,000 $ 967,000 $ - % Service Contracts 10,145 18,000 (43.6) Production and Other Operating Revenue 37,443 29,619 26.4 Total Operating Revenues 1,014,588 1,014,619 - Nonoperating Revenues:
Public, Education and Gov’t (PEG) Revenue 41,066 300,050 (86.3) Interest Income 47 38 23.7 Total Nonoperating Revenues 41,113 300,088 (86.3) Total Revenues 1,055,701 1,314,707 (19.7) Operating Expenses:
Salaries and Benefits 678,454 740,741 (8.4) Production Expense 18,701 17,307 8.1 Occupancy Expense 210,250 197,713 6.3 Contractual Services 29,100 26,225 11.0 General and Administrative 29,520 32,168 (8.2) Depreciation 48,701 40,784 19.4 Total Operating Expenses 1,014,726 1,054,938 3.8 Nonoperating Expenses:
PEG Grants Awarded to Other Agencies 41,066 203,000 (79.8) Total Nonoperating Expenses 41,066 203,000 (79.8) Total Expenses 1,055,792 1,257,938 (16.1) (100.2)
Changes in Net Position (91) 56,769 Net Position - Beginning of Year 425,231 368,462 15.4 Net Position - End of Year 425,140 $ 425,231 $ - Table 2
Year Ended
Although the Corporation’s total cost of programs and services had a net decrease of 16.1% ($202,146), a closer look shows that Operating expenses decreased 3.8% ($40,212), while PEG grants awarded to other agencies decreased from $203,000 to $41,066. The Corporation’s revenues had a net decrease of 19.7% ($259,006), resulting from a combination of virtually flat operating revenue and decreased unearned revenue recognition of PEG revenue in nonoperating revenue.
Budgetary Highlights
Over the course of the year, the board of directors reviewed the budget during meetings. There were no budget reforecasts submitted for approval.
The Corporation’s adopted operating budget was $1,056,900 for the fiscal year ended June 30, 2021.
Actual operating revenues were $42,312 less than budget, and operating expenses were $42,174 less than budget.
PASADENA COMMUNITY ACCESS CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
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CAPITAL ASSETS
At the end of 2021, the Corporation had $131,411 invested in capital assets, net of accumulated depreciation. (See Table 3 below.) This amount represents a net decrease (including additions and disposals) of $48,701 or 27% less than last year.
June 30, 2021 June 30, 2020
Production Equipment 437,420 $ 437,420 $
Leasehold Improvements 93,897 93,897
Less: Accumulated Depreciation (399,904) (351,203) Property and Equipment, Net 131,413 $ 180,114 $ Table 3
More detailed information about the Corporation’s capital assets is presented in Note 3 to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The Corporation’s Board of Directors considered many factors when setting the fiscal year 2022 budget. Significant budget expense increases include occupancy costs of the rent escalator and common area expenses built into the lease and personnel health insurance increases. Revenue from the Operating Agreement is expected to be flat due to the COVID-19 pandemic. A transfer from the emergency reserve account is necessary to balance the budget.
CONTACTING THE CORPORATION’S FINANCIAL MANAGEMENT
This financial report is designed to provide our stakeholders including donors, customers, and the City of Pasadena’s officials with a general overview of the Corporation’s finances and to show the Corporation’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Corporate Office at 150 S. Los Robles Avenue, Suite 101, Pasadena, California 91101. Our main office number is 626-794-8585 and our email is [email protected].
PASADENA COMMUNITY ACCESS CORPORATION
STATEMENT OF NET POSITION
JUNE 30, 2021
(WITH SUMMARIZED FINANCIAL INFORMATION AS OF JUNE 30, 2020)
See accompanying Notes to Basic Financial Statements.
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2021 2020
ASSETS
CURRENT ASSETS
Cash 331,578$ 288,564 $
Accounts Receivables 2,740 1,813
Prepaid Assets 3,587 2,828
Deposits 12,420 12,420
Restricted Cash 331,654 176,207
Total Current Assets 681,979 481,832
NONCURRENT ASSETS
Capital Assets, Net of Accumulated Depreciation 131,413 180,114 Total Assets 813,392 661,946
LIABILITIES
CURRENT LIABILITIES
Accounts Payable 3,645 8,869
Accrued Salaries and Benefits 19,134 19,348 Compensated Absences 33,819 32,291
Unearned Revenue 331,654 176,207
Total Current Liabilities 388,252 236,715
Total Liabilities 388,252 236,715
NET POSITION
Investment in Capital Assets 131,413 180,114 Unrestricted 293,727 245,117
Total Net Position 425,140 $ 425,231 $
PASADENA COMMUNITY ACCESS CORPORATION
STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2021
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2020)
See accompanying Notes to Basic Financial Statements.
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2021 2020
OPERATING REVENUES
Operating Agreement 967,000 $ 967,000 $
Service Contracts 10,145 18,000
Production and Other Operating Revenue 37,443 29,619 Total Operating Revenues 1,014,588 1,014,619
OPERATING EXPENSES
Salaries and Benefits 678,454 740,741
Production Expense 18,701 17,307
Occupancy Expense 210,250 197,713
Contractual Services 29,100 26,225
General and Administrative 29,520 32,168
Depreciation Expense 48,701 40,784
Total Operating Expenses 1,014,726 1,054,938
OPERATING LOSS (138) (40,319)
NONOPERATING REVENUES (EXPENSES)
Public, Education, and Government (PEG) Revenue 41,066 203,000 PEG Grants Awarded to Other Agencies (41,066) (203,000) Interest Income 47 38
Total Nonoperating Revenues 47 38
LOSS BEFORE CAPITAL CONTRIBUTIONS (91) (40,281) CAPITAL CONTRIBUTIONS - 97,050
CHANGES IN NET POSITION (91) 56,769
Net Position - Beginning of Year 425,231 368,462 NET POSITION - END OF YEAR 425,140$ 425,231 $
PASADENA COMMUNITY ACCESS CORPORATION
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2021
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED JUNE 30, 2020)
See accompanying Notes to Basic Financial Statements.
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2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers 37,443 $ 29,619 $ Cash Received from Contracts 976,218 985,135 Cash Paid to Employees for Services (677,140) (728,959) Cash Paid to Suppliers for Goods and Services (293,554) (270,383) Net Cash Provided by Operating Activities 42,967 15,412
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
PEG Grant Funding Received from City of Pasadena 196,513 248,977 PEG-Eligible Grants Awarded (41,066) (203,000) Net Cash Provided by Noncapital Financing Activities 155,447 45,977
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of Capital Assets - (97,050)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income 47 38
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 198,461 (35,623)
Cash - Beginning of Year 464,771 500,394
CASH - END OF YEAR 663,232$ 464,771 $
RECONCILIATION TO STATEMENT OF NET POSITION
Cash 331,578$ 288,564 $
Restricted Cash 331,654 176,207
Total Reconciliation to Statement of Net Position 663,232$ 464,771 $
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating Loss (138)$ (40,319) $
Adjustments to Reconcile Operating Loss to Net
Cash Provided by Operating Activities:
Depreciation 48,701 40,784
(Increase) Decrease in Accounts Receivable (927) 135 (Increase) Decrease in Prepaid Assets (759) 308 Increase (Decrease) in Accounts Payable and Accrued Expenses (3,910) 14,504 Total Adjustments 43,105 55,731
Net Cash Provided by Operating Activities 42,967$ 15,412 $
NONCASH NONCAPITAL FINANCING ACTIVITIES
Recognition of Unearned PEG Revenue as Nonoperating Revenue 41,066$ 203,000 $
NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES
Recognition of Unearned PEG Revenue as Capital Contributions -$ 97,050$
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The Pasadena Community Access Corporation (the Corporation) was organized in 1983 as a nonprofit, telecommunications resource for the City of Pasadena, California (the City). The Corporation was organized to perform the community access function of the Pasadena telecommunications system pursuant to the Cable Communications Ordinance of the City. In 2011, the City Council determined that the Corporation should be reported as a discretely presented component unit of the City in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
The board of directors consists of 11 members with representatives from each of the seven City Council Districts, the Mayor, the City Manager, Pasadena Community College (PCC), and Pasadena Unified School District (PUSD). Residency is required except for the City Manager, PCC, and PUSD representatives. These operations constitute part of the overall financial reporting entity of the City and are accounted for as a discretely presented component unit in the City’s Comprehensive Annual Financial Report consistent with U.S. GAAP. Revenues and expenses of the Corporation include direct revenues and expenses and certain allocations from the City.
B. Basis of Presentation
The Corporation’s basic financial statement s are presented in conformance with Governmental Accounting Standards Board (GASB) Statement No. 34, which established standards for external financial reporting for all state and local governmental entities. The basic financial statements include the statement of net position, statement of revenues, expenses, and changes in net position, and statement of cash flows.
C. Basis of Accounting
The Corporation is accounted for as an enterprise fund (proprietary fund type). A fund is an accounting entity with a self-balancing set of accounts established to record the financial position and results of operations of a specific governmental activity. The activities of enterprise funds closely resemble those of ongoing businesses in which the purpose is to conserve and add to basic resources while meeting operating expenses from current revenues. Enterprise funds account for operations that provide services on a continuous basis and are substantially financed by revenues derived from user charges. The Corporation utilizes the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred.
D. Classification of Revenues and Expenses
The Corporation classifies its revenues and expenses into the following classifications:
operating revenues, operating expenses, nonoperating revenues, and nonoperating expenses.
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Classification of Revenues and Expenses (Continued)
Operating revenues consist of management and operating fees, production services fees, and program services fees, with relating costs to provide these services considered operating expenses. Nonoperating revenues consist of voluntary nonexchange grants revenue and investment earnings. Nonoperating expenses consist of capital grants made to PCC and PUSD for cable telecommunications equipment.
E. Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates, and have an original maturity date of three months or less.
F. Prepaid Assets
Certain payments to vendors, which reflect costs applicable to future accounting periods, are recorded as prepaid assets.
G. Capital Assets
The Corporation capitalizes capital assets having an estimated useful life in excess of one year and acquisition cost of at least $5,000. Capital assets, which include production equipment are recorded at cost and are depreciated over the estimated useful life of the asset using the straight-line method of depreciation. Donated capital assets are recorded at acquisition value as of the date of the donation. All significant expenditures exceeding $5,000 for repairs, renewals, and betterments that materially prolong the useful lives of the assets are capitalized.
The estimated useful lives of the assets are as follows:
Leasehold Improvements 6 Years
Furniture and Fixtures 5 Years
Production Equipment 5 Years
H. Compensated Absences
Regular full-time and part-time employees accrue vacation. Vacation time is accrued two to four weeks per year, depending on how long an employee has been with the Corporation. Part-time employees who work 20 hours per week or more are eligible to accrue vacation on a pro rata basis. It is the Corporation’s policy to permit employees to accumulate earned but unused vacation benefits from year-to-year up to a maximum of two times a full-time employee’s annual vacation amount. All accumulated compensated absences are recorded as an expense and a liability at the time the benefit is earned.
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Net Position
Net position represents the difference between assets and liabilities on the statement of net position. Net positions were classified in the following categories: net investment in capital assets and unrestricted.
Net investment in capital assets consists of the cost of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction, or improvement of those assets, as applicable.
Net position is reported as restricted when there are limitations imposed on the use either through the enabling legislation adopted by the Corporation’s Board of Directors, or through external restrictions imposed by cr editors, grantors, or laws or regulations of other governments. All other net position is reported as unrestricted.
When both restricted and unrestricted resources are available for use, it is the Corporation’s policy to use unrestricted resources first, and then restricted resources as they are needed.
J. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
K. Prior Year Data
Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with U.S. GAAP.
Accordingly, such information should be read in conjunction with the Corporation’s prior year financial statements, from which this selected financial data was derived. Some of the prior year data has been reclassified to conform with the current year presentation.
Advances from other agencies has ben reclassified as unearned revenue on the statement of net position. A portion of nonoperating PEG revenue has been reclassified to capital contributions on the statement of revenues, expenses, and changes in net position. Capital grants received and PEG-eligible capital grant made have been reclassified as noncapital financing activities on the statement of cash flows and renamed, PEG grant funding received from City of Pasadena and PEG-eligible grants awarded, respectively. Information on noncash activities was also added to the statement of cash flows.
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 2 CASH AND INVESTMENTS
Summary of Cash
As of June 30, 2021, cash were reported in the accompanying financial statements:
Cash on Hand 200 $
Deposits with Financial Institutions 331,378
Deposits with Financial Institutions - Restricted 331,654 Total Cash 663,232 $
Deposits
At June 30, 2021, the carrying amount of the Corporation’s deposits was $663,032 and the bank balance was $664,289. The $1,257 difference represents outstanding checks and other reconciling items. Balances in the bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Included in the bank balance, the Corporation had a funds in a credit union totaling $75,312. This amount is insured by the National Credit Union Administration (NCUA) up to $250,000.
Restricted Deposits
Restricted deposits, as further described in Notes 6C and 7, are to be utilized for eligible PEG capital expenditures. The total amount of restricted deposits at June 30, 2021 was $331,654.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure the Corporation’s deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2021, the Corporation had uncollateralized deposits in excess of FDIC coverage of $338,977.
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Investments Authorized by the California Government Code The table below identifies the investment types that are authorized for the Corporation by the California Government Code. Other than what is in the Government Code, the Corporation has no other investment policy.
Investment Types Authorized by Maximum Maximum
Authorized by the Investment Maximum Percentage Investment in California Government Code Policy Maturity of Portfolio One Issuer Local Agency Bonds Yes 5 Years None None
U.S. Treasury Obligations Yes 5 Years None None
U.S. Agency Securities Yes 5 Years None None
Bankers’ Acceptances Yes 180 Days 40% 30%
Commercial Paper Yes 270 Days 25% 10%
Negotiable Certificates of Deposit Yes 5 Years 30% None Repurchase Agreements Yes 1 Year None None
Reverse Repurchase Agreements Yes 92 Days 20% None
Medium-Term Notes Yes 5 Years 30% None
Mutual Funds Yes N/A 20% 10%
Money Market Mutual Funds Yes N/A 20% 10%
Mortgage Pass-Through Securities Yes 5 Years 20% None
County Pooled Investment Funds Yes N/A None None
Local Agency Investment Fund Yes N/A None None
Joint Power Agency Pools
(Other Investment Pools) Yes N/A None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Corporation manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. The Corporation held no investments as of the year ended June 30, 2021.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The Corporation held no investments as of the year ended June 30, 2021.
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 2 CASH AND INVESTMENTS (CONTINUED)
Concentration of Credit Risk
In accordance with GASB Statement No. 40 requirements, the Corporation is considered to be exposed to concentration of credit risk whenever they have invested more than 5% of their total investments in any one issuer. Investments guaranteed by the U.S. Government and investments in mutual funds and external investment pools are excluded from this requirement. The Corporation held no investments as of the year ended June 30, 2021.
NOTE 3 CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2021 is as follows:
July 1, 2020 Additions Dispositions June 30, 2021
Capital Assets Being Depreciated:
Production Equipment 437,420 $ - $ - $ 437,420$ Leasehold Improvements 93,897 - - 93,897 Less Accumulated Depreciation for:
Production Equipment (312,078) (33,051) - (345,129) Leasehold Improvements (39,125) (15,650) - (54,775) Total Capital Assets 180,114 $ (48,701) $ - $ 131,413$
Depreciation expense for the year ended June 30, 2021 was $48,701.
NOTE 4 DEFINED CONTRIBUTION RETIREMENT PLAN
Effective April 4, 2017, the Corporation adopted a Savings Incentive Match Plan for Employees Individual Retirement Account plan (the Plan) for which all employees who have completed 90 days of service are eligible to participate. The employees of the Corporation may elect to contribute to the Plan (subject to overall limits) in any one plan year. Each year the Corporation will make a matching contribution to the Plan on a dollar-for-dollar basis up to 3% of the employee's compensation, for the employees who are contributing to the Plan.
The Corporation contributed $12,874 to the Plan for the year ended June 30, 2021.
NOTE 5 OPERATING LEASE
The Corporation leases office and production facilities in Pasadena, California, under an operating lease agreement. The lease term expires August 31, 2023. The Corporation is obligated to pay utilities, property taxes, insurance, and normal repairs and maintenance for the space that the Corporation occupies. The current monthly rent, including common area maintenance charge is $13,388. The monthly rent is scheduled to increase to $13,789 effective September 1, 2021.
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 5 OPERATING LEASE (CONTINUED)
The minimum annual lease payments due during the term of the lease are as follows:
Year Ending June 30, Amount
2022 164,666 $
2023 169,606
2024 28,406
Total 362,678 $
Total rent expense, including common area maintenance charges, for the year ended June 30, 2021 was $176,977 and is included in the occupancy expenses reported in the statement of revenues, expenses and changes in net position.
NOTE 6 OTHER PROVISIONS OF REVENUE AND CONTRACTS
A. Franchise Fees
On December 2, 1983, a 15-year cable franchise agreement (the Agreement) was entered into by and between the City and a cable communications operator (Cable Operator). According to the terms of the Agreement, the Corporation is entitled to receive 2% of the Cable Operator's gross revenues (as defined in the Agreement) in return for providing the public access and public service programming function of the Cable Operator's communications system. This agreement expired during the year ended June 30, 1999. The City committed to continue to fund the agreement, after expiration, until a new agreement could be reached.
Effective October 1, 2000, the City and the Cable Operator entered into a new nonexclusive franchise agreement to operate a cable television system in the City. The agreement expired on October 17, 2005, and was extended on a month-to-month basis under mutual agreement with the Cable Operator while negotiating a franchise renewal.
This agreement ended prior to statewide franchising that took effect in 2008.
The City now receives 5% of the state franchise holders' gross revenues derived from the provision of video service pursuant to California Public Utilities Code Section 5840.
The franchise fee is considered General Fund revenue for the City and, although the City continues to fund the Corporation at approximately 75% of the franchise fee revenue, the funding amount is at the discretion of the Pasadena City Council.
B. Management and Operating Agreement
On February 10, 2015, the Corporation entered into an agreement with the City to provide operation and day-to-day management of the local PEG access system, for a period of 25 years, commencing as of the date of the Agreement, and ending July 1, 2040.
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 6 OTHER PROVISIONS OF REVENUE AND CONTRACTS (CONTINUED) C. 1% Public, Education, and Government (PEG) Allocation Pursuant to Pasadena Municipal Code 18.04.060, it was established that a fee would be paid to the City for the support of public, educational, and governmental access facilities and activities within the City. The Pasadena Municipal Code states that this fee shall be 1% of a cable provider's gross revenues, as defined in California Public Utilities Code Section 5860.
The Corporation serves as a receiving, holding, and disbursing entity for monies intended to promote noncommercial uses of the cable telecommunication medium.
These funds are allocated as grants solely for PEG related purposes.
During the 2020-2021 fiscal year, the Corporation received $196,513 in PEG funding from the City, while awarding $41,066 in PEG funding to PCC and PUSD for eligible PEG capital expenses.
As shown in Note 7, cumulative unspent PEG funding of $331,654 has been classified as unearned revenue within these financial statements.
D. Other Contracts
The Corporation earns additional service contract revenue by providing various production services to Los Angeles County for Altadena Town Council Meetings.
NOTE 7 PEG FUNDING FROM CITY OF PASADENA
As described in Note 6, the Corporation received $196,513 of PEG funding from the City of Pasadena during the year ended June 30, 2021. Unspent PEG funding is classified as unearned revenue within these financial statements until the Corporation has incurred costs on approved capital expenditures.
The changes in unspent PEG funding for the year ended June 30, 2021 were as follows:
Beginning Unearned Revenue 176,207 $
PEG Grant:
PEG Revenue Received 196,513
PEG Capital Equipment Expense (41,066)
Capitalized Production Equipment -
PEG Subtotal 155,447
Ending Unearned Revenue 331,654 $
PASADENA COMMUNITY ACCESS CORPORATION
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 8 CONCENTRATIONS OF REVENUE
For the year ended June 30, 2021, revenues derived from the City of Pasadena from the management and operating agreement described in Note 6B and the 1% PEG Allocation described in Note 6C accounted for 95% of the Corporation’s total revenue.
NOTE 9 COMPENSATED ABSENCES
Changes in compensated absences as of June 30, 2021 were as follows:
Amount Amount Due
Balance Balance Due Within in More than
July 1, 2020 Incurred Satisfied June 30, 2021 One Year One Year 32,291$ 15,019 $ (13,491) $ 33,819 $ 33,819 $ - $
NOTE 10 RISK MANAGEMENT
The Corporation is covered under Special Liability, Property and Participant Accident policies through Nonprofits Insurance Alliance of California (NIAC). Liability and Participant Accident claims are insured for up to $1,000,000 per occurrence for any amount over the Corporation’s deductible amount of $1,000. Property claims are insured for up to $25,000,000 per occurrence for any amount over the Corporation’s deductible amount of $1,000.
Workers’ compensation claims are covered under a purchased policy through Hartford Accident and Indemnity Company for claims up to $1,000,000 for each occurrence for any amount over the Corporation’s deductible amount of $1,000.
Settled claims have not exceeded any of the Corporation’s coverage amounts in any of the last three fiscal years.
NOTE 11 INCOME TAXES
The Corporation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and applicable state law. The Corporation files Form 990 in the U.S. federal jurisdiction and Form 199 in the state of California.
NOTE 12 RELATED PARTY TRANSACTIONS
As part of the management and operating agreement discussed in Note 6B, the City bills the Corporation for services rendered on the Corporation’s behalf. Services provided to the Corporation for the year ended June 30, 2021 was $20,000. The Corporation did not have an amount payable to the City as of June 30, 2021.
CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member‐firm‐disclaimer for details. (19)
CliftonLarsonAllen LLP
CLAconnect.com
INDEPENDENT AUDITORS’ 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
Board of Directors
Pasadena Community Access Corporation
Pasadena, California
We have audited, in accordance with the 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, the financial statements of the Pasadena Community Access Corporation (the Corporation), a component unit of the City of Pasadena, California, as of and for the year ended June 30, 2021 and the related notes to the basic financial statements, which collectively comprise the Ci ty’s basic financial statements, and have issued our report thereon dated November 2, 2021
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Corporation’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Corporation’s internal control.
A deficiency in internal control 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 and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Corporation’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Board of Directors
Pasadena Community Access Corporation
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Corporation’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. 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.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Corporation’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Corporation’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
CliftonLarsonAllen LLP
Irvine, California
November 2, 2021