RES 2016-0846 - DotComm financial statements and independent auditor's report Douglas Omaha Technology Commission
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR'S REPORT
For the year ended December 31, 2015
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 2—4
MANAGEMENT'S DISCUSSION AND ANALYSIS 5 — 11
FINANCIAL STATEMENTS
Statement of net position 12
Statement of revenues, expenses, and changes in net position 13
Statement of cash flows 14
Notes to financial statements 15 —29
�- SUPPLEMENTAL INFORMATION
Budgetary comparison schedule 31
a
Notes to budgetary comparison schedule 32
INDEPENDENT AUDITOR'S 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 33 —34
SCHEDULE OF FINDINGS AND RESPONSES 35
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 36
a
•
HAYES
&ASSOCIATES,L.L.C.
Certified Public Accountants I Consultants
INDEPENDENT AUDITOR'S REPORT
a
The Oversight Committee
Douglas Omaha Technology Commission
Omaha,Nebraska
We have audited the accompanying financial statements of Douglas Omaha Technology
Commission (DOTComm), which comprise the statement of net position as of and for the year
ended December 31,2015,and related statement of revenues,expenses,and changes in net position,
.�. cash flows for the year then ended, and the related notes to the financial statements.
Management's Responsibility for the Financial Statements
a
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.
a
Auditor's 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.
a
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.
a
a
Westroads Pointe 11015 N.98th St.,Suite 200 I Omaha,NE 68114 I T 402-390-2480
www.hayes-cpa.com
Omni Center 1300 West Broadway,Suite 224 I Council Bluffs,IA 51503 I T 712-322-5503
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.
Opinion
In our opinion,the financial statements referred to above present fairly,in all material respects,the
respective financial position of DOTComm,as of December 31,2015 and the respective changes in
financial position and, where applicable, cash flows thereof for the year then ended in accordance
with accounting principles generally accepted in the United States of America.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis information on pages 5— 1 l be presented to supplement 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
,.� information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise DOTComm's basic financial statements.The budgetary comparison schedule
"' and the related notes to the budgetary comparison schedule are not a required part of the basic
financial statements.
The budgetary comparison schedule and the related notes to the budgetary schedule are the
responsibility of management and were derived from and relate directly to the underlying accounting
and other records used to prepare the basic financial statements. The amounts derived from actual
MIRO revenues and expenses has been subjected to the auditing procedures applied in the audit of the basic
financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves,and other additional procedures
in accordance with auditing standards generally accepted in the United States of America. In our
- 3 -
opinion, the amounts derived from revenues and expenses reflected in the budgetary comparison
schedule and the related notes to the budgetary comparison schedule are fairly stated,in all material
respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 15,
2016,on our consideration of DOTComm'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 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 DOTComm's
internal control over financial reporting and compliance.
Report on Summarized Comparative Information
We have previously audited DOTComm's December 31, 2014, financial statements and, in our
report dated April 8, 2015, we expressed an unmodified opinion on those audited financial
statements. In our opinion,the summarized comparative information presented herein as of and for
the year ended December 31,2014,is consistent, in all material respects,with the audited financial
statements from which it has been derived.
174_5 s . c,zex)14 ,
Hayes & Associates, L.L.C.
"' Omaha,Nebraska
April 15, 2016
a
a
- 4 -
a
Douglas Omaha Technology Commission
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
In this section of the Douglas Omaha Technology Commission (DOTComm) Financial Report,
DOTComm's management provides narrative discussions and analyses of the financial activities
of DOTComm for the twelfth year of operations ended December 31, 2015. Financial results for
the year ended December 31, 2014 are also presented for comparative purposes. DOTComm's
financial performance is discussed and analyzed within the context of the accompanying
financial statements and disclosures following this section.
Financial Highlights
Total net assets at December 31, 2015 and 2014, are comprised of the following:
• Cash and cash equivalents of $1,146,859 includes deposits in transit and various
outstanding checks at December 31, 2015. Cash and cash equivalents for the year ended
December 31, 2014 were $948,198.
• Accounts receivable outstanding at December 31, 2015 amounted to $1,832,571 which
includes amounts receivable from Douglas County and the City of Omaha amounting to
... $1,104,511 and $706,263, respectively. Accounts receivable outstanding at December 31,
2014 amounted to $2,041,387 with amounts receivable from Douglas County of
$1,346,346 and from the City of Omaha of$663,194. The final invoices for the year were
created at the end of December which increased the receivables for the end of the year for
both the City and the County.
.,., • Prepaid contracts amount to $476,174 in 2015 and $340,659 in 2014. The increase to
prepaid contracts was due to the timing of an invoice for mainframe licenses. The invoice
was received in November for licenses set to renew in February 2016. In prior years, the
vendor invoiced the license renewals in January.
• Funds held for the Library are considered to be restricted cash. The balances were
$213,095 and $121,266 for December 31, 2015 and 2014, respectively.
• Total assets, excluding capital assets, amounted to $3,668,699 in 2015 and $3,451,510 in
2014. The key contributing factor to the change in assets is an increase in cash.
oaaa
- 5 -
Douglas Omaha Technology Commission
MANAGEMENT DISCUSSION AND ANALYSIS—CONTINUED
For the year ended December 31, 2015
Financial Highlights—Continued
• Capital assets, net of accumulated depreciation, amounted to $6,667,867 in 2015 and
$5,396,391 in 2014. The majority of DOTComm's assets are comprised of electronic data
processing equipment. Self-developed intangible assets of$555,152 were added in 2015
of which $142,016 were transferred from intangible assets in process. $953,301 in
intangible assets in process were added in 2015. DOTComm also recognized
contributions in assets of$1,204,703 from Douglas County and $375,008 from the City
of Omaha. A fixed asset audit resulted in a write off of approximately $3.4 million in
fully depreciated assets. In addition to the fully depreciated assets, 6 assets with a
combined book value of$18,312 were written off resulting in a loss on the disposal of
those assets.
• Accounts payable due at December 31, 2015 total $610,940. Accounts payable due at
December 31, 2014 total $1,008,848. The change in payables is related to the timing of
multiple invoices.
-» • DOTComm reports $646,433 in accrued liabilities at December 31, 2015, comprised
primarily of accrued vacation and wages payable. On December 31, 2014 accrued
liabilities were $606,197.
• Funds held for the Library were $213,095 at December 31, 2015, and $121,266 at
December 31, 2014.
• Future capital lease obligations related to FileBound are $216,885 as of December 31,
2015.
• Total short-term liabilities amounted to $1,515,060 in 2015 and $1,652,156 in 2014.
Total long-term liabilities amounted to $172,293 in 2015 and $276,124 in 2014. The
change in short-term liabilities is mainly attributable to a decrease in accounts payable
due to timing of invoices payable to various vendors. The changes in long-term liabilities
were due to the FileBound capital lease payments.
• Ending net assets for 2015 and 2014 were $8,649,213 and $6,919,621, respectively.
DOTComm's net assets increased by $1,729,592 for the year ended December 31,
-p 2015. The increase in net assets is primarily due to the capitalization of internally
generated software and donated capital assets.
•— • Unrestricted net assets were $2,198,231 in 2015 and $1,836,465 in 2014.
-6-
.64
Douglas Omaha Technology Commission
MANAGEMENT DISCUSSION AND ANALYSIS—CONTINUED
For the year ended December 31, 2015
Overview of the Financial Statements
For financial statement reporting purposes, DOTComm is treated as a joint venture of the City of
Omaha, Nebraska and Douglas County,Nebraska.
11111.14 Financial Statements
DOTComm's financial statements are prepared using the accrual basis of accounting. Revenues
-l• are recognized when earned and costs and expenses are recognized when incurred. The basic
financial statements are presented on pages 12, 13, and 14 of this report.
Notes to the Financial Statements
The notes to the financial statements, pages 15 through 29 in the accompanying report, provide
information to the reader essential to a full understanding of DOTComm's financial statements.
Overview of the Financial Statements—Continued
Budget Explanations
Total revenues were over by $6,262,453 of which $6,221,316 were due to chargebacks to the
City and County. The chargeback revenue is offset by the reimbursed expenses. Chargebacks are
not budgeted because they are on-demand and at the customer's discretion. The remaining
revenue overage of$41,137 was due to data request services and revenue received from the State
of Nebraska Office of the CIO for cabinets kept in the Tech Center. Wages, benefits and
professional fees show as coming in under budget. The underrun was due to the amount of time
spent on internally generated software projects. DOTComm showed an operating income of
$1,838,028 for 2015 before depreciation and the loss on the disposal of assets.
..
1111.
- 7-
Douglas Omaha Technology Commission
MANAGEMENT DISCUSSION AND ANALYSIS—CONTINUED
For the year ended December 31, 2015
Presentation of Assets, Liabilities, Revenue and Expense after Capitalization of Assets
Assets
■2015 02014
6,667,867
5,396,391
1,832,571 2,041,387
1,359,954
1,069,464
^ +'"mmor 476,174 340,659
Cash A/R Prepaid Expenses Capital Assets
Liabilites and Net Position
■2015 ■2014
.. 8,649,213
6,919,621
824,0351,008,848
589,746 546,958
wawa., 101,279 96,350 172,293 276,124
Accounts Payable Accrued Expenses Current Lease Long-Term Liabilites Net Position
Obligation
-8-
Douglas Omaha Technology Commission
MANAGEMENT DISCUSSION AND ANALYSIS—CONTINUED
For the year ended December 31, 2015
Presentation of Assets, Liabilities, Revenue and Expense after Capitalization of Assets —
Continued
Revenue
■1(11S 4)i)1.:
6,568,434
•,327,942
6,221,316
411
4,937,229
w,. ,797,059
r..
300,071
.• 14,251 172,005192,625 150,571117,543
City Base Services County Base Chargebacks Application Hosting CPAN Other fT Services
Services
v.
-9-
Douglas Omaha Technology Commission
— MANAGEMENT DISCUSSION AND ANALYSIS-CONTINUED
For the year ended December 31, 2015
Presentation of Assets, Liabilities, Revenue and Expense after Capitalization of Assets -
Continued
.S
Comparative Totals of Expenses for the years ending December 31, 2015 & December 31, 2014
Following Capitalization of Assets
2015 2014
Expenses Amount Percentage Amount Percentage
Salaries and wages 4,891,476 27.31% 4,780,350 31.07%
Payroll taxes 352,876 1.97% 348,669 2.27%
... Employee benefits 906,583 5.06% 793,456 5.16%
Pension costs 323,784 1.81% 326,807 2.12%
Professional fees 669,624 3.74% 1,311,894 8.53%
o"" Insurance 98,878 0.55% 75,555 0.49%
Repairs and maintenance 811,317 4.53% 880.616 5.72%
„„ Supplies and equipment 117,749 0.66% 130,346 0.85%
IT expenses 1,164,510 6.50% 1,091,454 7.09%
Rent and lease expenses 71,668 0.40% 68,439 0.44%
"' Voice communications 87,650 0.49% 88,677 0.58%
Reimbursed expenses 6,016,890 33.59% 3,169,259 20.60%
Data communications 521,852 2.91% 530,275 3.45%
Dues and subscriptions 10,247 0.06% 21,074 0.14%
Postage 4,444 0.02% 2,390 0.02%
oft Training 101,393 0.57% 95,523 0.62%
Software and hardware 22,491 0.13% 98,087 0.64%
Advertising 250 0.00% 250 0.00%
too
Bad debt expense 6,161 0.03% 9,086 0.06%
Miscellaneous expense 45,966 0.26% 28,504 0.19%
•- Depreciation expense 1,656,361 9.25% 1,515,697 9.85%
Gain or loss on disposal of assets 18,312 0.10% - 0.00%
Nonoperating expenses 13,474 0.08% 18,163 0.12%
17,913,956 100.00% 15,384,571 100.00%
"- - 10-
0-
NNW
Douglas Omaha Technology Commission
MANAGEMENT DISCUSSION AND ANALYSIS—CONTINUED
For the year ended December 31, 2015
w
Analysis of Financial Position
DOTComm was organized under the Interlocal Agreement, made and entered into by the City of
Omaha, Nebraska and Douglas County, Nebraska on January 15, 2002, which was updated and
renewed on May 1, 2012. DOTComm became fully operational effective January 2, 2003.
.w.
DOTComm provides specialized information technology, voice and data communications, and
professional services primarily to the City of Omaha and Douglas County. The services provided
by DOTComm include:
1. Core services such as the service desk, account administration, facilities management,
„ disaster recovery and information security
OW
2. Core subscription services for employees such as device, email, and telephony
support as well as data storage and network connections
3. Core subscription services for applications such as support and maintenance of
mainframe, web applications, web sites, vendor hosted applications and commercial
off the shelf software
4. On-demand services which include project management, application development
and professional services that are unique to specific user groups
DOTComm operates under an annual budget approved by the DOTComm Oversight Committee
and in conjunction with the City and County budgets. At the request of the City and County,
DOTComm also performs professional services through projects and chargebacks that result in
additional revenue and expense for DOTComm. These items are initially paid for by DOTComm
and are reimbursed at cost by the City and County. With the exception of Oracle services and
related expenses, they are not included in DOTComm's operating budget.
111.` DOTComm does not currently pay occupancy costs for the use of facilities owned by the City or
the County. However, DOTComm does pay for some utilities, and maintenance of the machinery
located in Building 408 and the Technology Center located in the Civic Center.
Analysis of Debt
,r. The balance of the DOTComm's long-term lease obligation for FileBound was $216,885 at
December 31, 2015.
Discussion of Fixed Assets
Property and equipment is recorded at cost and is capitalized under the full accrual basis of
accounting. DOTComm established a capitalization policy during the year ended December 31,
2004 whereby only asset acquisitions of $5,000 or more would be capitalized and depreciated.
For those assets capitalized during 2015. depreciation was calculated under the straight-line
method, using the half year convention, over the estimated service lives of five years.
- 11 -
Douglas-Omaha Technology Commission
STATEMENT OF NET POSITION
December 31,2015
..� (with comparative totals for 2014)
2015 2014
,.. ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,146,859 $ 948,198
Accounts receivable-net of allowance for doubtful accounts
of$5,000 for 2015 and$5,000 for 2014 21,797 31,847
Accounts receivable-City of Omaha 702,156 656,535
Accounts receivable-Douglas County 1,051,931 1,293,766
Prepaid expenses 476,174 340,659
Total current assets 3,398,917 3,271,005
NON CURRENT ASSETS
�.. Accounts receivable-City of Omaha 4,107 6.659
Accounts receivable-Douglas County 52,580 52,580
Restricted cash and equivilents 213,095 121,266
Total non current assets 269,782 180,505
CAPITAL ASSETS,LESS ACCUMULATED DEPRECIATION 6,667,867 5.396,391
Total assets $ 10,336,566 $ 8,847,901
LIABILITIES AND NET POSITION
CURRENT LIABILITIES
Accounts payable $ 562.359 $ 645.890
Accounts payable-City of Omaha 48,581 241,692
Accrued compensated absences 358,654 326,973
Wages payable 147,687 121,230
Accrued expense 83.405 98,755
Funds Held for Library 213.095 121,266
Capital lease obligation,current portion 101,279 96,350
Total current liabilities 1,515,060 1.652.156
LONG-TERM LIABILITIES
Capital lease obligation,less current portion 115,606 216,885
Accrued compensated absences-City of Omaha 4,107 6,659
Accrued compensated absences-Douglas County 52,580 52,580
Total long-term liabilities 172,293 276,124
Total liabilities 1,687,353 1,928,280
NET POSITION
Net investment in capital assets 6,450.982 5,083,156
Unrestricted 2,198,231 1,836,465
Total net position 8.649,213 6,919,621
Total liabilities and net position $ 10.336,566 $ 8.847,901
See accompanying notes and independent auditor's report.
- 12-
Douglas-Omaha Technology Commission
STATEMENT OF REVENUES,EXPENSES.
AND CHANGES IN NET POSITION
For the year ending December 31.2015
(with comparative totals for 2014)
2015 2014
OPERATING REVENUES
Base services $ 11,507,673 $ 11,128,963
Specialized and contract services 6,235.605 3,686,226
IT services 320,559 306,206
Total operating revenues 18.063,837 15,121.395
OPERATING EXPENSES
�.• Salaries and wages 4,891,476 4.780,350
Payroll taxes 352,876 348,669
Employee benefits 906,583 793,456
Pension costs 323.784 326.807
"^ Professional fees 669,624 1,311,894
Insurance 98,878 75,555
Repairs and maintenance 811,317 880,616
Supplies and equipment 117,749 130,346
IT expenses 1,164,510 1,091.454
Rent and lease expenses 71,668 68,439
Voice communications 87.650 88,677
Reimbursed expenses 6,016.890 3.169,259
Data communications 521.852 530,275
Dues and subscriptions 10.247 21,074
Postage 4.444 2,390
Training 101.393 95,523
Software and hardware 22,491 98.087
Advertising 250 250
Bad debt expense 6,161 9,086
Miscellaneous expense 45,966 28,504
Total operating expenses 16,225,809 13,850,711
OPERATING INCOME BEFORE DEPRECIATION 1,838,028 1,270,684
DEPRECIATION EXPENSE 1,656,361 1.515,697
OPERATING INCOME AFTER DEPRECIATION 181.667 (245,013)
.06
NONOPERATING REVENUE(EXPENSES)
Interest expense (13,474) (18,163)
Gain or Loss on Disposal of Assets (18,312) -
Donated capital assets 1,579,711 57,156
1,547,925 38,993
... CHANGE IN NET POSITION 1.729,592 (206,020)
NET POSITION,BEGINNING OF YEAR 6,919,621 7,125,641
NET POSITION,END OF YEAR $ 8.649,213 $ 6,919,621
See accompanying notes and independent auditor's report.
- 13-
W.
Douglas-Omaha Technology Commission
STATEMENT OF CASH FLOWS
For the year ending December 31,2015
(with comparative totals for 2014)
2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 18.079,542 $ 14,302,452
Cash paid to suppliers (9,893,657) (7,385,780)
Cash paid to employees (6,419,134) (6,246,905)
CASH FLOWS FROM OPERATING ACTIVITIES 1,766,751 669,767
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments on capital lease (109,824) (109,831)
Development of internally generated computer software (1.366.437) (981.184)
Purchase of property and equipment - (423.987)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES (1,476,261) (1.515,002)
CHANGE IN CASH AND CASH EQUIVALENTS 290.490 (845,235)
CASH AND CASH EQUIVALENTS,BEGINNING OF YEAR 1,069,464 1.914,699
.a.
CASH AND CASH EQUIVALENTS,END OF YEAR $ 1,359,954 $ 1,069,464
RECONCILIATION OF CHANGE IN NET POSITION TO NET CASH FROM
OPERATING ACTIVITIES
Income from operations $ 181,667 $ (245,013)
Adjustment to reconcile operating income to cash flows
from operating activities
Depreciation 1,656,361 1,515,697
�.. Change in accounts receivable 10.050 6,610
Change in accounts receivable City/County 5,655 (825,553)
Change in prepaid expenses (135,515) 145,759
,M.. Change in accounts payable (83,531) 2,971
Change in accrued compensated absences 29,129 (17,426)
Change in wages payable 26.456 19,803
Change in accrued expense (15,350) 41,294
Change in funds held for the library 91,829 25,625
NET CASH FROM OPERATING ACTIVITIES $ 1.766,751 $ 669,767
NON-CASH ACTIVITY
Donated capital assets $ 1,579.711 $ 57,156
Gain or Loss on Disposal of Assets (18,312)NET NON-CASH ACTIVITY $ 1,543,087 $ 57,156
See accompanying notes and independent auditor's report.
«�, - 14
Douglas Omaha Technology Commission
MAR NOTES TO THE FINANCIAL STATEMENTS
For the year ended December 31, 2015
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of Douglas Omaha
Technology Commission:
OWN 1. Organization
The Douglas-Omaha Technology Commission (DOTComm) is a governmental
ow.. entity,which was organized under an Interlocal Agreement,made and entered into
by and between the City of Omaha,Nebraska,a Municipal Corporation of the State
of Nebraska(the City),and the County of Douglas,Nebraska(the County),a body
,q. corporate and politic,to increase the cooperative efforts of the City and County in
connection with electronic information,voice and data communication services for
governmental operations, and public service. Due to the nature of the agreement,
the City and the County are considered to be related parties.
2. Reporting Entity
DOTComm is governed by the Interlocal Agreement between the City and the
County. The Interlocal Agreement provides for a joint ongoing financial interest in
100. an ongoing financial responsibility for DOTComm. Under those conditions,
DOTComm is a special-purpose government reported as a joint venture for financial
statement purposes.
3. Basis of Accounting
Basis of accounting refers to the timing of the recognition of revenues and
expenditures,or expenses,in the accounts and the financial statements.DOTComm's
accounts are maintained as an enterprise fund type,which is accounted for on a flow
of economic resources measurement focus using the accrual basis of accounting.
Revenues are recognized when earned and costs and expenses are recognized when
incurred.
4. Basis of Presentation
DOTComm is intended to be a self-sufficient enterprise fund and the basic financial
statements include only the accounts and transactions of DOTComm.
- 15 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
MeIP
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
5. Use of Estimates
The preparation of financial statements in conformity with accounting principles
*M„ generally accepted in the United States of America requires management to make
estimates and assumptions that affect 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 reported period.
Actual results could differ from those estimates.
6. Cash Equivalents
For purposes of the statement of cash flows, cash equivalents are defined as short-
,, term investments which are carried at cost and have an original maturity when
purchased of less than 90 days.
7. Accounts Receivable
Accounts receivable consist of amounts receivable from customers. Accounts
A„ receivable as of December 31,2015,are stated at the amount DOTComm expects to
collect. DOTComm provides an allowance for doubtful accounts equal to the
estimated uncollectible amounts. DOTComm's estimate is based on historical
collection experience and a review of the current status of trade accounts receivable.
8. Prepaid Expenses
DOTComm incurs certain costs in connection with its insurance and maintenance
contracts,which are deferred and will be expended in the period benefited. These
costs are reflected as prepaid expenses on the statement of net position and are
expected to be absorbed in the normal course of business within one year.
9. Property and Equipment
Property and equipment are recorded at cost and amounts in excess of$5,000 are
capitalized under the full accrual basis of accounting. Depreciation is calculated
under the straight-line method, using the mid-year convention, over an estimated
service life of five years.
- 16 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
.�. 10. Internally Generated Computer Software
Computer software is considered internally generated if it is developed in-house by
0144 the government's personnel or by a third-party contractor on behalf of the
government. Activities involved in development and installing internally generated
computer software are segregated into the following stages:
a) Preliminary Project Stage—Activities in this stage include the conceptual
formulation and evaluation of alternatives, the determination of the
existence of needed technology,and the final selection of alternatives for the
development of the software. This stage encompasses the originating,
initiating and planning phases of projects.
b) Application Development Stage—Activities in this stage include the design
of the chosen path,including software configuration and software interfaces,
coding, installation to hardware, and testing, including the parallel
processing phase.
c) Post-Implementation/Operation Stage — Activities in this stage include
01.1
application training and software maintenance. Data conversion should be
considered an activity of the application development stage only to the
extent it is determined to be necessary to make the computer software
""' operational,that is, in condition for use.Otherwise,data conversion should
be considered an activity of the post-implementation/operation stage.
Costs incurred during the preliminary project and post-implementation stages are
expensed as incurred. Projects with costs greater than $5,000 incurred during the
application development stage are capitalized. Internally generated computer
software is amortized using the straight-line method,using the mid-year convention,
over an estimated service life of five years.
01." 1 1. Compensated Absences
DOTComm accrues accumulated unpaid vacation pay when earned by the
employee. Unpaid accrued vacation is paid out to employees upon severance of
employment with DOTComm.
- 17 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
.�. 12. Income Tax
DOTComm is a special-purpose government and,accordingly,no provision for state
or federal income tax is required.
13. Operating Revenues and Expenses
DOTComm distinguishes operating revenues and expenses from non-operating
items. Operating revenues and expenses reported in the financial statements include
revenues and expenses that result from providing services in connection with the
principal ongoing operations of DOTComm. Principal operating revenues are
charges to customers for services. Principal operating expenses are the cost of
osft providing services and include the cost of contractual services, supplies, and
depreciation of capital assets. All revenues and expenses not meeting this definition
are reported as non-operating revenues and expenses in the financial statements.
14. Net Position Classification
Net position is required to be classified into three components—net investment in
capital assets; restricted and unrestricted. These classifications are defined as
follows:
Net Investment in Capital Assets—This component of net position consists of capital
assets, net of accumulated depreciation and costs to be recovered from future
revenues, reduced by the outstanding balances of any bonds, mortgages, notes, or
other borrowings that are attributable to the acquisition, construction, or
improvement of those assets. If there are significant unspent related debt proceeds at
year-end,the portion of the debt attributable to the unspent proceeds is not included
in the calculation of net investment in capital assets.
Restricted — This component of net position consists of constraints placed on net
position use through external constraints imposed by creditors(such as through debt
covenants), contributors, or law or regulations of other governments or constraints
imposed by law through constitutional provisions or enabling legislation.
DOTComm had no restricted net position at December 31, 2015.
— 18 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED
ON" 14. Net Position Classification - Continued
Unrestricted — This component of net position consists of net position that do not
meet the definition of"restricted" or "net investment in capital assets." When both
restricted and unrestricted resources are available for use,it is DOTComm's policy to
use restricted resources first,then unrestricted resources as they are needed.
15. Comparative Financial Information and Reclassifications
The financial statements include certain prior-year summarized comparative
information in total. Such information does not include sufficient detail to constitute
a presentation in conformity with generally accepted accounting principles.
Accordingly, such information should be read in conjunction with DOTComm's
financial statements for the year ended December 31, 2014, from which the
summarized information was derived. Certain reclassifications have been made to
WIN the 2014 financial statement presentation to correspond to the current year's format.
Net position and changes in net position are unchanged due to these reclassifications.
NOTE B. CASH AND CASH EQUIVALENTS
Custodial credit risk is the risk that, in the event of a bank failure, DOTComm's deposits
may not be returned to it. FDIC insures each depositor to at least $250,000 per insured
10.41
bank. At December 31, 2015, DOTComm's bank deposit balances were $1,281,863. At
December 31, 2015, DOTComm's deposits were uninsured for $1,031,863.
NOTE C. ACCOUNTS RECEIVABLE
Receivables from the City and County are considered fully collectible. As of December 31,
2015, DOTComm estimates $5,000 of its receivable balance from other customers to be
uncollectible. Net bad debt write-offs for the year ended December 31,2015, was $6,161.
IMPS
- 19 -
Douglas Omaha Technology Commission
'"' NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE D. PROPERTY AND EQUIPMENT
Wt. A summary of the changes in property and equipment for the year ended December 31,
2015, is as follows:
Beginning Additions/ Deletions/ Ending
balance contributions abandonments balance
Capital assets not being depreciated
Internally generated
computer software $ 784.739 $ 811.285 $ (676) $ 1.595.348
Equipment in progress - 745,385 - 745.385
Capital assets being depreciated
Equipment 8.041.536 834.326 (3,306.241) 5.569.621
Internally generated
computer software 3.315.290 480,838 - 3,796.128
Less accumulated
depreciation (6,745,174) (1.656,361) 3.362,920 (5,038,615)
$ 5,396,391 $ 1,215,473 $ 56.003 $ 6,667,867
Depreciation expense amounted to $1,656,361 for the year ended December 31, 2015.
Capital assets not being depreciated includes internally generated computer software in
progress and equipment in progress and not yet deployed at December 31, 2015.
During the year ended December 31, 2015, DOTComm received contributions of IT
equipment from Douglas County in the amount of$459,318 and from the City of Omaha in
the amount of$375,008. The County donated an additional $745,385 of equipment in
progress for the year ended December 31, 2015. These amounts are reported as donated
capital assets in the statement of revenues, expenses, and changes in net position.
- 20 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE E. COMPENSATED ABSENCES
A summary of the changes in compensated absences for the year ended December 31,
2015, is as follows:
Beginning Ending Due Within
®w, balance Increase Decrease balance One Year
Compensated absences
City of Omaha $ 6,659 $ - $ (2,552) $ 4,107 $ -
Douglas County 52,580 - - 52,580 -
DOT.Comm 326,973 406.233 (374,552) 358,654 358.654
$ 386,212 $ 406,233 $ (377,104) $ 415,341 $ 358.654
Compensated absences due to the City of Omaha and Douglas County are classified as long-
term liabilities. Compensated absences due to employees by DOTComm are considered
fully due within one year.
NOTE F. RELATED PARTY TRANSACTIONS
1. Occupancy Costs
•- DOTComm presently occupies 25,180 square feet in a 38,580 square foot building
owned by the County. The County has not, as yet,charged DOTComm rent for the
use of this facility.DOTComm pays the operating costs associated with the facility.
According to County representatives, the market rate for the space occupied by
DOTComm is $10 per square foot. Similarly DOTComm maintains office space on
the C Level of the Civic Center, owned by the Public Building Commission. The
»�• Public Building Commission has not,as yet,charged DOTComm rent for the use of
this office space. No provisions for rental charges have been made in the
accompanying financial statements for these facilities.
S
2. Accounts Receivable - City of Omaha and Douglas County
�.. The City of Omaha and Douglas County include amounts due to DOTComm for
various information technology services provided by DOTComm and services and
items purchased by DOTComm on behalf of the City or County which will be
reimbursed by the City or County.
S
- 21 -
S
14.
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE F. RELATED PARTY TRANSACTIONS—CONTINUED
..» 3. Non Current Accounts Receivable - City of Omaha and Douglas County
The non-current accounts receivables represent amounts due from the City and the
County for employees' accrued vacation balances that were transferred to
DOTComm when the employees changed their employment from the City or County
to DOTComm. Balances that are carried forward are valued at the employee's rate
VIM of pay at the transfer date. Accrued vacation balances due to employees are reflected
in long-term liabilities on the statement of net position.
The related party receivables at December 31, 2015, are as follows:
Accounts Receivable
Trade Compensated
(IT services) absences
.. CityofOmaha $ 702,156 $ 4,107
Douglas County 1,051,931 52,580
Total $ 1,754,087 $ 56,687
4. Due to Library
DOTComm is the contracting party for telecommunication. internet, and related
technology services on behalf of the City of Omaha and Douglas County. The City
of Omaha library system participates in the Universal Services Funds program
administered by the Universal Service Administrative Company.Under this program,
the library system is eligible for reimbursement of previously paid contracted
.�, telecommunication, internet, and related technology services.
As the contracting party,DOTComm coordinates with the Omaha Public Library to
40. request reimbursement of certain technology services. DOTComm receives and
holds these funds until they are requested to be utilized by the library system.
During the year ended December 31,2015,there were no disbursements.DOTComm
received additional funds of $91,829 during the year on behalf of the Library.
Amounts held on behalf of the library system at December 31,2015,were$213,095.
- 22 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE F. RELATED PARTY TRANSACTIONS—CONTINUED
5. Reimbursed Costs
DOTComm periodically purchases items or services on behalf of the City of Omaha
or Douglas County. These costs are reimbursed by the City of Omaha and/or
Douglas County. The reimbursed costs billed for the year ended December 31,
2015,was $6,215,523.
NOTE G. ECONOMIC DEPENDENCY
A significant portion of DOTComm's operations is dependent on the funding provided by
the City and County. A loss of this funding would have a materially adverse effect on
DOTComm. Revenues from the City and County make up approximately 99% of
DOTComm's total revenues for the year ended December 31, 2015.
NOTE H. OPERATING LEASES
DOTComm has entered into several operating leases for equipment used in its own
operations. These leases are for terms between one and four years, some of which include
renewal options. DOTComm's rental expenses for the year ended December 31,2015,were
$71,668.
Future minimum lease payments of leases for DOTComm and those entered into on behalf of
the County and the City as of December 31,2015,that have remaining terms of one year or
more are as follows:
Year ending December 31:
2016 $ 865,483
2017 534,116
2018 269,142
2019 59,021
2020 3,893
$ 1,731,655
NOTE I. CAPITAL LEASE
DOTComm entered into a capital lease agreement to purchase software licensing in March
of 2013. The lease is for a five year term, with a purchase price of$485,000 at 5% interest
for 60 months.
- 23 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE I. CAPITAL LEASE- CONTINUED
The following is a schedule of future minimum payments due under the capital lease as of
December 31, 2015:
�. Year ending December 31: Principal Interest Total
2016 $ 101,279 $ 8,545 $ 109,824
2017 106,461 3,363 109,824
2018 9,145 7 9,152
$ 216,885 $ 11,915 $ 228,800
NOTE J. RETIREMENT PLAN
DOTComm employees may be a participant in one of three pension plans: the Douglas
County Employees' Retirement Plan, the City of Omaha Employees' Retirement System,
and the DOTComm defined contribution plan.
1. Douglas County Employees' Retirement Plan
DOTComm employees who were originally employed by Douglas County may
■- participate in the Douglas County Employees' Retirement Plan(the Plan). The Plan
is a single employer, defined benefit pension plan, which provides retirement,
disability,death,and termination benefits to substantially all employees beginning on
their first day of continuous employment. Benefits are not provided until five years
of participation in the plan and other qualifications have been met.
The general membership and administration of the Plan, as well as carrying out the
provisions of the Plan, are the responsibility of the Retirement Committee of the
County (the Committee), which consists of at least one County Commissioner and
other employees of the County,as appointed by the Board of County Commissioners.
- 24 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE J. RETIREMENT PLAN - CONTINUED
The Committee is responsible for determining the entitlement of members to benefits
and establishing policies regarding obligations of members and the Commission to
contribute to the Plan. Cost-of-living adjustments determined by the Committee are
paid by the County after Board of Commissioner approval. No additional salary is
paid to Committee members. The Plan has no legally required reserves.
The Plan is not subject to either the minimum funding standards of the Employee
Mae
Retirement Income Security Act of 1974 or the maximum funding limitations.
Funding standards are actuarially determined using the projected unit credit cost
method. Actuarial reviews were produced on a biennial basis,the most recent being
as of January 1, 2015.
a. Basis of Accounting
The Plan's financial statements are prepared using the accrual basis of
accounting and are presented as a pension trust fund in basic financial
'e" statements of the County. Plan member and employer contributions are
recognized in the period in which the contributions are due. Benefits are
provided based on a percentage of the member's final average compensation
and are recognized when due and payable.
b. Method Used to Value Investments
Plan assets are invested in readily marketable securities and are carried at fair
value. Investments in securities traded on a national securities exchange are
valued at the latest quoted market prices.
For investments when no readily available market value exists, County
OM% management, in consultation with their investment advisors, values those
investments in good faith based upon audited financial statements or other
information provided by the underlying investment advisor.
Mat
W.
- 25 —
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE J. RETIREMENT PLAN - CONTINUED
1. Douglas County Employees' Retirement Plan—Continued
SON
c. Contributions
Annual contributions to the Plan are composed of employee contributions
equal to 8.5%of reported earnings. DOTComm contributes an amount equal
to the employees' contribution. DOTComm's matching share of
" ' contributions totaled $45,133 for the year ended December 31, 2015.
Additional plan information, including trend information and the net pension
obligation,is available in the County's financial statements and can be obtained from
the Douglas County Clerk's office,located at 1 819 Farnam Street,Omaha,Nebraska
68102.
2. The City of Omaha Employees' Retirement System (Civilian Plan)
AWN DOTComm employees who were originally employed by the City of Omaha may
participate in the City of Omaha Employees' Retirement System.
The Civilian Plan is a single-employer contributory defined benefit pension plan.
The Civilian Plan provides retirement benefits to plan members and beneficiaries.
The Pension Board of the City administers the Civilian Plan. The Pension Board is
111110
responsible for establishing or amending plan provisions. The Civilian Plan does not
issue separate financial statements. The Civilian Plan is not subject to either the
minimum or maximum funding standards of the Employee Retirement Income
Security Act of 1974 or the maximum funding limitations. Funding standards are
actuarially determined using the entry age normal cost method. The most recent
actuarial review was performed as of January 1, 2015.
Cost-of-living adjustments are provided to members and beneficiaries at the
discretion of the City in accordance with plan provisions.
SINN
IPSO
- 26 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE J. RETIREMENT PLAN—CONTINUED
2. The City of Omaha Employees' Retirement System (Civilian Plan) - Continued
a. Basis of Accounting
The Civilian Plan's financial statements are prepared using the accrual basis
of accounting and are presented as a pension trust fund in the City's basic
,�, financial statements. Plan member and employer contributions are
recognized in the period in which the contributions are due. Benefits are
provided based on a percentage of the member's final average compensation
and are recognized when due and payable.
b. Method Used to Value Investments
Raft
Civilian Plan assets are invested in readily marketable securities and are
carried at fair value. Investments in securities traded on a national securities
exchange are valued at the latest quoted market prices. Unlisted investments
are valued at net asset value.
c. Contributions
190.0.
Effective January 1,2011,Civilian Plan members are required to contribute,
by payroll deduction, 10.08%of their annual covered salary. Under the plan,
DOTComm is required to contribute 18.78% of the employees' annual
covered salary. Administrative costs for management of the funds are
financed through investment earnings. Other administrative costs of the
Civilian Plan are paid by the City's general fund. DOTComm's share of
contributions totaled $40,154 for the year ended December 31, 2015.
Additional information, including trend information and the net pension obligation,
is available in the City of Omaha's financial statements and can be obtained from the
City of Omaha's Finance Department, located at 1819 Farnam Street, Suite 1004,
Omaha,Nebraska 68102.
3. Douglas Omaha Technology Commission Employees' Retirement Plan
DOTComm provides pension benefits for the employees not covered under the
Douglas County Employees' Retirement Plan or the City of Omaha Employees'
Retirement System through a defined contribution plan.
- 27 -
Douglas Omaha Technology Commission
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
INAW
NOTE J. RETIREMENT PLAN—CONTINUED
3. Douglas Omaha Technology Commission Employees' Retirement Plan -
Continued
.�. In a defined contribution plan,benefits depend solely on amounts contributed to the
plan plus investment earnings.
,.PA Due to the nature of the 401(a) agreement, DOTComm employees are required to
participate from date of employment and must contribute 5.5%of their salary.
... DOTComm matches this contribution of 5.5%. DOTComm's contribution for each
employee and interest allocated to the employee's account are fully vested
immediately. DOTComm contributed $252,979 on salaries approximating $5
,.P, million for the year ended December 31,2015. Employees contributed $253,071 to
the plan in 2015.
�,. NOTE K. DEFERRED COMPENSATION PLAN
DOTComm offers its employees a deferred compensation plan created in accordance with
Internal Revenue Code Section 457. The plan, available to all DOTComm employees,
permits them to defer a portion of their current salary(up to $16,500 per year) until future
years. During 2015,the employees contributed$231,272.The deferred compensation is not
available to the employees until termination,retirement,death,or unforeseeable emergency.
NOTE L. COMMITMENTS
MKta
DOTComm has entered into a number of contractual agreements for software licenses,
maintenance, and other services. The terms of these contracts range from between one to
five years. Some contracts contain termination clauses if DOTComm provides 30 day
written notice.
However, in some cases, DOTComm is not entitled to a refund on canceled contracts.
DOTComm monitors contract terms and contract payments are included in prepaid expenses
or current year expenses in accordance with generally accepted accounting principles. As of
December 31,2015,DOTComm has committed to up to approximately$2 million related to
such contracts with services provided over the next three years.
- 28 -
Douglas Omaha Technology Commission
•- NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
For the year ended December 31, 2015
NOTE M. ADOPTION OF NEW ACCOUNTING STANDARDS
During 2015, DOTComm adopted the provisions of the following accounting standards:
• GASB Statement No.67,Financial Reporting for Pension Plans,An Amendment of
,.� GASB Statement No. 25 and GASB Statement No. 68, Accounting and Financial
Reporting for Pensions. The requirements of these statements will improve the
financial reporting by state and local government pension plans primarily through
W enhanced disclosures and schedules of supplementary information
The implementation of these standards did not have an impact on the financial statements of
DOTComm. As outlined in Note J, former employees of the County and the City have the
option of participating in the single employer, defined benefit plans of those entities.
Although DOTComm contributes to the plans on behalf of those employees,the net pension
,,A liabilities are included in the financial statements of the City and the County. Therefore,the
net pension liabilities are not required to be reflected on the financial statements of
DOTComm.
..
MON
010.
som
- 29 -
Douglas-Omaha Technology Commission
. BUDGETARY COMPARISON SCHEDULE
For the year ending December 31,2015
""" Over
Budget Actual (Under)
REVENUES
Base services $ 11,505,694 $ 11,507,673 $ 1,979
Specialized and contract services 20,800 6,235,605 6,214,805
IT services 274,890 320,559 45,669
Total revenues 11,801,384 18,063,837 6,262,453
EXPENSES
Salaries and wages 5,597,410 4,891,476 (705,934)
Payroll taxes 428.340 352,876 (75,464)
". Employee benefits 1,065,250 906,583 (158,667)
Pension costs 339,110 323,784 (15,326)
Professional fees 1,398,700 669,624 (729,076)
,,., Insurance 121,030 98,878 (22.152)
Repairs and maintenance 757,150 811,317 54,167
Supplies and equipment 88,900 117,749 28,849
IT expenses 1,189.100 1,164,510 (24,590)
... Rent and lease expenses 54,210 71,668 17.458
Voice communications 75,540 87,650 12,110
Reimbursed expenses - 6,016,890 6,016.890
Data communications 494,880 521,852 26,972
Dues and subscriptions 16,520 10,247 (6,273)
Postage 5,340 4,444 (896)
Training 85,500 101,393 15,893
,. Software and hardware 53,820 22,491 (31,329)
Advertising - 250 250
Depreciation expense - 1,656,361 1.656,361
Bad debt expense 5,004 6,161 1,157
Miscellaneous expense 25,580 45,966 20,386
Total expenses 11,801,384 17,882,170 6,080,786
CHANGE IN NET POSITION FROM OPERATIONS $ - $ 181,667 $ 181.667
See accompanying notes and independent auditor's report.
-31 -
Wm
Douglas Omaha Technology Commission
NOTES TO BUDGETARY COMPARISON SCHEDULE
For the year ended December 31, 2015
NOTE A. BUDGETARY PROCESS
„NO Pursuant to DOTComm's Interlocal Agreement,DOTComm annually adopts a budget on a
basis consistent with accounting principles generally accepted in the United States of
America. Since only one budget is required,the original budget and final budget amounts
are the same.
NOTE B. BASIS OF ACCOUNTING
Both the budgeted and actual amounts are presented using the accrual basis of accounting.
NOTE C. BUDGETARY POLICIES
DOTComm uses a budget to plan revenue and expenses;however,the budget is not held to
the legal level of the budget of a taxing authority whose budget is approved by law. The
budget includes the estimated expenses and revenue sources expected to finance the
operations of DOTComm. The budget is approved by the DOTComm Oversight
Committee.
4.1.16
NOTE D. EXCESS OF EXPENDITURES OVER APPROPRIATIONS
Excess expenditures over appropriations amounted to $6,080,786 for the year ended
December 31, 2015.
- 32 -
PR. UNA
HAES
&ASSOCIATES,L.L.C.
Certified Public Accountants I Consultants
INDEPENDENT AUDITOR'S 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
The Oversight Committee
Douglas-Omaha Technology Commission
Omaha, Nebraska
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
Douglas Omaha Technology Commission(DOTComm)as of and for the year ended December 31,
2015, and the related notes to the financial statements, which collectively comprise DOTComm's
NO* basic financial statements, and have issued our report thereon dated April 15, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered DOTComm's
internal control over financial reporting(internal control)to determine the 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 DOTComm's
internal control. Accordingly, we do not express an opinion on the effectiveness of DOTComm'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 entity'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.
Westroads Pointe 11015 N.98th St.,Suite 200 I Omaha,NE 68114 I T 402-390-2480
www.hayes-cpa.com
Omni Center 1300 West Broadway,Suite 224 I Council Bluffs,IA 51503 I T 712-322-5503
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.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether DOTComm'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 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.
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
entity'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 entity's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Mai
Xiar 5 4 1,----ecioe/46- 1-4.6
..- Hayes & Associates, L.L.C.
Omaha, Nebraska
April 15, 2016
ONO
- 34 -
dR
No.
Douglas Omaha Technology Commission
Financial Statements and Independent Auditor's
Report for the year ended December 31, 2015.
001:slm
RECEIVED
Presented to Co
June 14, 2016 -Motes to receive
and place on file
/ ,rrr 6 O
Buster Brown
City Clerk