2014 Audit

JACKSON MUNICIPAL AIRPORT AUTHORITY

Audited Financial Statements and Independent Auditors' Reports on Internal

Accounting Controls and Compliance September 30, 2014 and 2013

JACKSON MUNICIPAL AIRPORT AUTHORITY September 30, 2014 and 2013

TABLE OF CONTENTS

Independent Auditors' Report.. ...... ......... ... ....... ...... ... .. ... ...... ... .. .... .... ... ....... ... .. .... .... .. .. .. .. 1 - 3

Management's Discussion and Analysis ........ ..... ........... ................. .... ..... .... ..... .. ............. 4i - 4viii

Financial Statements:

Statements ofNet Position........ .......... .. .. .. .... .. .......... ... ............ ... .. ... ....... ... .... ..... ..... ........ 5

Statements of Revenues, Expenses and Changes in Net Position ... .... .. ... ................... .... 6

Statements of Cash Flows... ........ ..... ... ... ......... ... .................. .... ........ ... .... ... .... ............... ... 7

Notes to Financial Statements ............................... ... ... ..... ......... .. . ..... ...... .. ... . .... .... .... .... .. 8 - 19

Supplementary Information:

Schedule ofExpenditures ofFederal Awards... .... ...... ........ .. ...... ..................................... 20

Notes to Schedule of Expenditures of Federal Awards.................................. ........ .. ....... 21

Schedule of Passenger Facility Charges- Cash Basis.. ......... .. .. ............ ............ .. ............ 22

Historical Schedule of Selected Financial Data.... ... ... ..... ..... .... ................................. .. .. .. 23

Schedule of Budgeted vs. Actual Revenues and Expenses.......................... ....... ............. 24

Summary Schedule of Prior Audit Findings... ..... ......... .. ... ..... ...... .. ..................... .... .... ... 25

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 ............ ...... .. .... .. ........ ..... .... .... 26- 27

JACKSON MUNICIPAL AIRPORT AUTHORITY September 30, 2014 and 2013

TABLE OF CONTENTS (Continued)

Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and the Passenger Facility Charge Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and the Passenger Facility Charge Audit Guide for Public Agencies .................................................. ........ .. ...... 28 - 30

Schedule of Findings and Questioned Costs............... ... ............ ..... ..... ............................ 31 - 32

Corrective Action Plan............................. ................ ..................... ... ................................. 33

BREAZEALE, SAUNDERS & O'NEIL LTD. CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors' Report

The Board of Commissioners Jackson Municipal Airport Authority

Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities of Jackson Municipal Airport Authority, as of and for the years ended September 30, 2014 and 2013, and the related notes to the financial statements, which collectively comprise Jackson Municipal Airport Authority'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 opinions on these financial statements based on our audits. We conducted our audits 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 audits 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 auditors' 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

120 NORTH CONGRESS STREET I SUITE 300 I P. 0. BOX 80 I JACKSON, MISSISSIPPI, 39205-0080 TELEPHONE: 601-969-7440 I TELECOPIER: 601-355-9003 I www.bsoltd.com

Jackson Municipal Airport Authority Page two

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 opinions.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activities of Jackson Municipal Airport Authority, as of September 30, 2014 and 2013, and the respective changes in financial position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 1(k) to the financial statements, in 2014, the Authority adopted Governmental Accounting Standards Board Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis pages 4i through 4viii 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 comprise Jackson Municipal Airport Authority's basic financial statements. The Schedule of

Jackson Municipal Airport Authority Page three

Expenditures of Federal Awards, as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; Schedule of Passenger Facility Charges- Cash Basis, required by the Passenger Facility Charge Audit Guide for Public Agencies; Historical Schedule of Selected Financial Data; and Schedule of Budgeted vs. Actual Revenues and Expenses are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The Schedule of Expenditures of Federal Awards, Schedule of Passenger Facility Charges -Cash Basis, Historical Schedule of Selected Financial Data, and Schedule of Budgeted vs. Actual Revenues and Expenses 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. Such information 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 opinion, this information is 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 January 26, 2015, on our consideration of Jackson Municipal Airport Authority'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 Jackson Municipal Airport Authority's internal control over financial reporting and compliance.

Jackson, Mississippi January 26,2015


Management's Discussion and Analysis September 30, 2014

JACKSON MUNICIPAL AIRPORT AUTHORITY Management's Discussion and Analysis

Year Ended September 30, 2014

The following discussion and analysis of the financial performance and activity of the JacksonMedgar Wiley Evers International Airport and Hawkins Field is to provide an introduction and understanding of the basic financial statements of the Jackson Municipal Airport Authority ("the Authority") for the year ended September 30, 2014. This discussion has been prepared by management and should be read in conjunction with the audited financial statements and the notes thereto, which follow this section.

HIGHLIGHTS OF THE FISCAL YEAR 2014 BUDGET

On September 26, 2013, the Authority Board approved the fiscal year 2014 Budget. The actual operating results compared to budgeted amounts are as follows:

Fiscal Year 2014 Budget Actual

Operating revenues $ 18,485,608 17,755,027

Operating expenses 14,636,521 14,113,158

Operating income before depreciation 3,849,087 3,641,869

Depreciation expense 8,481,481 8,866,469

Operating loss (4,632,394) (5,224,600)

Non-operating income (expense) 3,094,614 3,175,972

Loss before capital grant contributions $ (1!531!780) (2!048!628)

Operating revenues are $731 thousand lower than budget primarily due to reduced parking and concession revenue primarily as a result of Southwest Airlines discontinuing service to the Jackson market in June of 2014. This loss of service was the primary factor in enplanements being 8% under budget for fiscal year 2014.

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Operating expenses are $523 thousand less than budget as a result of lower spending for employee salaries and benefits reflecting vacant positions as a result of turnover as well as reduced spending for consulting and business promotion.

Non-operating income is $81 thousand greater than budget and is due primarily to an insurance settlement for a hail damaged roof.

OVERVIEW OF THE FINANCIAL STATEMENTS

The financial reporting package consists of four parts - the independent auditors' report, management's discussion and analysis (this section), the basic financial statements and supplementary information. The report is guided by accounting and reporting principles established by the Governmental Accounting Standards Board (GASB). The basic financial statements are prepared on an accrual basis, whereby revenues are recognized when earned and expenses are recognized when incurred, regardless of when cash is received or paid. The basic financial statements consist of: statements of net position that include the Airport's assets, deferred outflows of resources, liabilities, and net position; statements of revenues, expenses, and changes in net position; and statements of cash flows. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. Following the financial statements is a section of supplementary information, which further explains and supports the information in the financial statements. Of special significance to readers of the financial statements is that, with certain limited exceptions, Authority monies are restricted by bond ordinances and Federal Aviation Administration regulations for use at the Airport. Airport net revenues (essentially operating revenues less operating expenses other than depreciation) are largely determined by permits with airlines and agreements with concessionaires and other tenants.

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Operating Revenues

Revenue Classification

Aviation Non-Aviation Concessions

Year Ended September 30,2014

FINANCIAL HIGHLIGHTS

FY 2014

$ 6,754,780 8,242,632 2,757.615

FY2013

6,568,866 8,147,834 2,918,192

Total operating revenues $ 17.755.027 17.634.892

FY2012

6 408,066 7,826,724 2,836,512

17.071.302

The table above presents the major operating revenue classifications for fiscal year 2014 compared to fiscal year 2013 and fiscal year 2012.

The $186 thousand increase in aviation income in fiscal year 2014 is due primarily to the landing fee rate being higher by approximately 25% than in fiscal year 2013. The $161 thousand increase in aviation revenue in fiscal year 2013 is due primarily to the increase in terminal rents offset somewhat by a drop in commercial landing fee revenue.

The $95 thousand increase in non-aviation income from fiscal year 2013 is due primarily to an increase in parking rates for the fiscal year 2014. The $321 thousand increase in non-aviation income in fiscal year 2013 from fiscal year 2012 is due primarily to the full year impact of an additional non-aviation tenant as well as additional space taken by that tenant and the impact of additional terminal rent rate.

The $161 thousand decrease in concession income in fiscal year 2014 is due to reduced rental car income as a result of reduced enplanements and reduced food and beverage income related to a lower concession fee rate as well as reduced enplanements. The fiscal year 2013 increase in concession revenue of $82 thousand is due primarily to an increase in rental car activity due in large part to a hail storm in the Jackson metro area in March of 2013

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Operating Expenses

Expense Classification FY 2014 FY2013 FY 2012

Board expenses $ 99,416 114,873 113,607 Building expenses 2,105,713 1,525,267 1,480,529 Employee expenses 7,652,005 7,336,490 6,764,954 Equipment expenses 341,071 365,021 398,357 Miscellaneous expenses 9,600 76,692 38,121 Services 3,336,496 3,279,176 4,003,220 Supplies 568,857 509.460 515,038

Total operating expenses $ 14!113)58 13!206!972 13!313!826

The table above presents the major expense classifications for fiscal year 2014 compared to fiscal year 2013 and fiscal year 2012. The total operating expenses for fiscal year 2014 increased $906 thousand from fiscal year 2013 while the total operating expenses for fiscal year 2013 decreased $1 07 thousand from the prior fiscal year.

Building expenses increased $580 thousand in fiscal year 2014 primarily due to the foundation work on the building leased to the FAA that began in fiscal year 2013 as well as an increase in electric utility rates. Building expenses increased $45 thousand in fiscal year 2013 over fiscal year 2012 due primarily to foundation work on the building leased to the FAA.

Employee expenses increased $316 thousand in fiscal year 2014 for salary and benefit economics as well as the full year impact of the July 1, 2013 pension contribution increase. Employee expenses increased $572 thousand in fiscal 2013 primarily due to wage and payroll tax economics as well as increases in the employer pension contribution and medical insurance premiums.

Equipment expenses decreased $24 thousand in fiscal year 2014 primarily due to reduced computer purchases. Equipment expenses decreased $33 thousand in fiscal year 2013 due to reduced equipment maintenance.

Miscellaneous expenses decreased $67 thousand in fiscal 2014 primarily as a result of reduced sponsorships. Miscellaneous expenses increased $39 thousand in fiscal 2013 primarily as a result of increased sponsorships.

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Services expense increased $57 thousand in fiscal year 2014 as increased legal fees associated with an arbitration case was partially offset with reduced spending for consulting and business promotion. Services expense decreased $724 thousand in 2013 due primarily to certain fiscal year 2012 consulting expenses that were reimbursed by operating grants (reflected in nonoperating income) or restricted funds and the full year fiscal year 2013 savings impact of parking lot expenses managed by a new firm.

Supplies expense increased $59 thousand in fiscal year 2014 primarily due to increased computer software related expenses. Supplies expense was relatively unchanged in fiscal year 2013.

NON-OPERATING INCOME (EXPENSE)

Non-operating income decreased $193 thousand as a result of reduced Passenger Facility Charges relating to a year-to-year enplanement drop of 8% and reduced other miscellaneous income items. Non-operating income increased $1.3 million in fiscal year 2013 primarily due to the one-time fiscal year 2012 loss on a contract dispute and asset write-offs associated with the intermodal and access control projects.

NET POSITION

The statement of net position presents the financial position of the Authority at the end of the fiscal year and includes all of its assets and liabilities. Net position represents the difference between total assets and deferred outflows of resources, and total liabilities. A summarized comparison of the Authority's assets, deferred outflows of resources, liabilities and net position follows:

FY2014 FY 2013 FY 2012

Assets: Current assets $ 17,992,559 17,382,353 20,177,098 Noncurrent assets:

Facilities, net 118,015,617 118,700,392 108,092,854 Other noncurrent 28,916,455 26,621,122 30,704,545

Total assets 164,924,631 162,703,867 15 8,97 4,497

Deferred Outflows of Resources -Deferred charge- debt refunding 190,900 218,043 246,569

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Liabilities: Current liabilities Noncurrent liabilities

Long-term debt, net Total liabilities

Net Position: Invested in capital assets,

Net of related debt Restricted Unrestricted

Total net position


FY 2014

4,600,993

37,904,829 42,505,822

78 209 355 32,359,710 12,040,644

$ 122.609.709

FY 2013

4,675,523

39,302,349 43,977,872

77,609 407 30 047,872 11,286,759

118.944.038

FY 2012

5,108,510

40,655,506 45,764,016

66,782,656 34,168,609 12,505,785

113.457.050

Net position increased $3.7 million in fiscal year 2014 as a result of cash generated through operations and restricted cash collections. As a result the debt equity ratio improved to .35. Net position increased $5.4 million in fiscal year 2013 as a result of investments in property, plant and equipment that were financed with capital grants, restricted funds and internally generated unrestricted funds As a result, the debt equity ratio improved to .37.

Total liabilities decreased $1.5 million in fiscal year 2014 primarily due to repayment of long term debt. Total liabilities decreased $1.8 million from fiscal year 2012 to 2013 as the result of the Authority being able to finance its capital programs through grants, restricted cash and internally generated unrestricted funds as well as keeping net operating expenses relatively level.

CAPITAL ASSETS

The Authority's capital assets as of September 30, 2014 and September 30, 2013 amounted to $118,015,617 and $118,700,392 (net of accumulated depreciation) respectively. This investment in capital assets includes land, facilities, facility improvements, equipment, furniture and fixtures and construction in progress. The total decrease in the Authority's investment in capital assets after accumulated depreciation for fiscal year 2014 is $684,775 and the increase in 2013 1s $10,607,538.

Capital asset acquisitions are capitalized at cost and depreciated using the straight-line method. The Authority funds capital assets with passenger facility charges, customer facility charges, federal and state grants, net revenues and various bond issues. Additional information on the Authority's capital assets can be found in the accompanying notes to the financial statements.

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DEBT ADMINISTRATION

As of September 30, 2014, the Authority had outstanding revenue bonds of $39,335,000, which are listed below:

Description Amount

Series 2005A $17,200,000 Series 2005B 7,775,000 Series 2005C 3,390,000 Series 2007 A 5,110,000 Series 2007B 5,860,000

Long-term debt in the financial statements is reported net of unamortized bond discounts of $230,015 and increased for unamortized bond premiums of $169,844. As discussed in footnote 1 (k) the financial statements, in 2014, the Authority implemented Governmental Accounting Standards Board Statement No. 65, which changed the accounting for debt issue costs and deferred charges relating to these bond issues.

OTHER ITEMS

Airline Rates and Charges

Terminal rents for fiscal year 2014 were increased to $77.89 per square foot from the fiscal year 2013 rate of $75.75 per square foot. The landing fee for fiscal year 2014 was increased to $2.35 from the fiscal year 2013 rate of $1.99 per 1,000 lbs. On May 1, 2014 the landing fee was increased to $2.71/1,000 lbs. to mitigate the effect of the loss of Southwest Airlines. Rates and charges are calculated annually, but are subject to change during the year. Included in the rates and charges calculations are specific rebates of debt service coverage.

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Operating and Capital Grants and Reimbursements

In fiscal year 2014, the Authority recognized grant revenue of $4,986,379 from the Federal Aviation Administration (FAA), $742,920 from the Mississippi Department of Transportation (MDOT) and $219,000 from the Transportation Security Administration (TSA). Funds from the FAA were to partially offset costs of capital projects. Funds from MDOT were to partially offset costs of capital projects ($727,920) and air service consulting costs ($15,000). Funds from the TSA were to reimburse the Authority for providing law enforcement services on behalf of TSA at the passenger security checkpoints.

REQUEST FOR INFORMATION

This financial report is designed to provide a general overview of the Authority's finances and to demonstrate the Authority's accountability for the funds it receives and expends. Questions concerning this report or requests for additional information should be addressed to Gary Cohen, Chief Financial Officer, Jackson Municipal Airport Authority, Post Office Box 98109, Jackson, MS 39298-8109. Information of interest may also be obtained on the Authority's website at www.Jmaa.com.

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Financial Statements September 30, 2014 and 2013

JACKSON MUNICIPAL AIRPORT AUTHORITY Statements ofNet Position

September 30, 2014 and 2013

2014 2013

Assets Current assets:

Cash and cash equivalents $ 12,602,366 11,692,061 Restricted cash and cash equivalents 3,718,897 3,730,498 Accounts receivable 555,901 453,734 Governmental grants receivable 812,188 1,167,115 Other 303,207 338,945

Total current assets 17,992,559 17,382,353

Restricted cash and cash equivalents 28,143,395 25,893,999 Restricted passenger facility charges receivable 303,650 292,480 Restricted customer facility charges receivable 193,780 130,895 Prepaid bond insurance 275,630 303,748 Property, plant and equipment, net 118,015,617 118,700,392

Total assets 164,924,631 162,703,867

Deferred Outflows of Resources Deferred charge - debt refunding 190,900 218,043

Liabilities Current liabilities:

Current maturities of long-term debt 1,370,000 1,345,000 Accounts payable 1,173,716 1,243,012 Contract retainage payable 151,281 185,137 Accrued expenses 1,698,250 1,700,516 Unearned revenue 207,746 201,858

Total current liabilities 4,600,993 4,675,523 Long-term debt, net of current maturities 37,904,829 39,302,349

Total liabilities 42,505,822 43,977,872

Net Position Invested in capital assets, net of related debt 78,209,355 77,609,407 Restricted 32,359,710 30,047,872 Unrestricted 12,040,644 11,286,759

Total net position $ 122,609,709 118,944,038

The accompanying notes are an integral part ofthesejinancial statements.

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JACKSON MUNICIPAL AIRPORT AUTHORITY Statements of Revenues, Expenses and Changes in Net Position

Years Ended September 30, 2014 and 2013

2014 2013

Operating revenues: Aviation $ 6,754,780 6,568,866 Non-aviation 8,242,632 8,147,834 Concessions 2,757,615 2,918,192

Total operating revenues 17,755,027 17,634,892

Operating expenses: Board expenses 99,416 114,873 Building expenses 2,105,713 1,525,267 Employee expenses 7,652,005 7,336,490 Equipment expenses 341,071 365,021 Miscellaneous expenses 9,600 76,692 Services 3,336,496 3,279,176 Supplies 568,857 509,460

Total operating expenses 14,113,158 13 206,979 Operating income before depreciation 3,641,869 4,427,913

Depreciation expense 8,866,469 8,456,421

Operating loss (5,224,600) ( 4,028,508)

Non-operating income (expense): Passenger facility charges, restricted 2,264,218 2,432,918 Customer facility charges, restricted 2,310,517 2,184,219 Interest expense (1 ,825,426) (1,890,502) Operating governmental grant revenue 234,000 221,690 Gain on disposal of assets 43,189 Interest income 34,406 91,333 Other 158,257 286,037

Net non-operating income (expense) 3,175,972 3,368,884

Loss before capital grant contributions (2,048,628) (659,624)

Capital governmental grant contributions 5,714,299 6,146,612

Change in net position 3,665,671 5,486,988

Net position- beginning ofyear, as restated 118,944,038 113,457,050

Net position- end of year $ 122,609,709 118,944,038

The accompanying notes are an integral part of these financial statements.

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JACKSON MUNICIPAL AIRPORT AUTHORITY Statements of Cash Flows

Years Ended September 30, 2014 and 2013

2014 2013

Cash flows from operating activities: Cash received from customers $ 17,658,748 17,671,722 Cash paid for payroll expenses (7,227,579) (6,888,145) Cash paid for other operating expenses {6,964,112) (6,442,922)

Net cash flows from operating activities 3,467,057 4,340,655

Cash flows from non-capital financing activities: Operating grants received 292,200 138,554 Other 158,257 286,037

Net cash flows from non-capital financing activities 450,457 424,591

Cash flows from capital and related financing activities: Capital grants received 6,011,026 5,406,445 Passenger facility charges collected 2,253,048 2,549,242 Customer facility charges collected 2,247,632 2,228,248 Payment of debt (1 ,365,000) (1,405,000) Payment of interest (1,807,423) (1,869,518) Capital asset expenditures (8,143,103) (18,664,975) Proceeds from sale of capital assets 76,673

Net cash flows from capital and related financing activities (803,820) {11 678,885)

Cash flows from investing activities -Receipt of interest 34,406 91,333

Change in cash and cash equivalents 3,148,100 (6,822,306) Cash and cash equivalents - beginning of year 41,316,558 48,138,864

Cash and cash equivalents - end of year $ 44,464,658 41,316,558

Reconciliation of operating loss to net cash flows from operating activities:

Operating loss $ (5,224,600) ( 4,028,508) Depreciation expense 8,866,469 8,456,421 Net effect of changes in operating assets and liabilities:

Accounts receivable (102,167) 33,004 Other current assets 35,738 34,812 Accounts payable (141,743) (181 ,401) Accrued expenses 27,472 22,497 Unearned revenue 5,888 3,830

Net cash flows from operating activities $ 3,467,057 4,340,655

The accompanying notes are an integral part ofthesefinancial statements.

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JACKSON MUNICIPAL AIRPORT AUTHORITY Notes to Financial Statements September 30, 2014 and 2013

(1) Summary of Significant Accounting Policies

A summary of significant accounting policies for the Jackson Municipal Airport Authority ("the Authority") follows:

(a) Organization and Nature of Operations

The Authority operates two airports in the Jackson, Mississippi, metropolitan area, the Jackson-Medger Wiley Evers International Airport ("JMWEIA") and the Hawkins Field Airport. The Authority, created in 1960 as a component unit ofthe City of Jackson, Mississippi, is governed by five (5) commissioners appointed by the Mayor of Jackson and confirmed by the Jackson City Council to serve staggered terms of five (5) years each. The Commissioners are responsible for planning, development, and operation of the Hawkins Field Airport and JMWEIA. Most of the Authority's business activity is with customers in the transportation industry. A substantial portion of its customers' ability to honor their contracts with the Authority is dependent upon the transportation economic sector.

(b) Basis of Accounting and Measurement Focus

The Authority is accounted for as an enterprise fund and presents its financial statements in accordance with the Government Accounting Standards Board ("GASB") Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments; GASB Statement No. 37, Basic Financial Statements- and Management's Discussion and Analysis for State and Local Governments: Omnibus; and GASB Statement No. 38, Certain Financial Statement Disclosures.

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(1) Summary of Significant Accounting Policies (Continued)

(c) Cash and Cash Equivalents

Mississippi law allows governmental entities to invest in collateralized bank deposits, Federal securities, or securities issued by other Mississippi governmental entities. For purposes of the statements of cash flows, the Authority considers restricted cash and all short-term debt securities purchased with maturities of three months or less to be cash equivalents.

(d) Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from balances outstanding at year-end. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for trade accounts receivable. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. At September 30, 2014 and 2013, the valuation allowance was $86,296 and $0, respectively.

(e) Property, Plant and Equipment

Property, plant and equipment are recorded at acquisition cost. Interest expense, net of income earned on construction bond proceeds, is capitalized during construction on those capital projects paid for from the bond proceeds and is amortized over the depreciable life of the related assets on a straight-line basis. No interest was capitalized in 2014 or 2013.

Depreciation has been provided using the straight-line method over the estimated useful lives of the assets. Depreciation is not provided for construction-inprogress until such time as the assets are placed into service.

(f) Income Taxes

The Authority is exempt from federal and state income taxes.

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(g) Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates.

(h) Presentation of Sales Tax

The State of Mississippi imposes a sales tax of 7% on the Authority's parking revenues. The Authority collects the sales tax from customers and remits the entire amount to the State. The Authority's accounting policy is to exclude the tax collected and remitted to the State from both revenues and expenses.

(i) Date of Management's Review

Management has evaluated subsequent events through January 26, 2015, the date on which the financial statements were available to be issued.

(j) Restricted Assets

Assets required to be held and/or used as specified in bond indentures, bond resolutions, and grantor specifications have been reported as restricted assets. When both restricted and unrestricted assets are available for use, the policy is to use restricted assets first.

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(k) Impact of New Accounting Standards

In 2014, the Authority adopted GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, which establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The effect of this change was to increase 2014 change in net position by $76,356. The financial statements for 2013 have been retroactively restated for the change, which resulted in an increase in change in net position of $81,101. Net position as of October 1, 2012, has decreased by $832,525 as a result of the writeoff of debt issue costs and deferred loss on debt refunding called for by this GASB statement.

In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions. This statement will require the Authority to record a liability for its proportionate share of the net pension liability of Public Employees' Retirement System of Mississippi. This statement will be effective for the Authority's 2015 fiscal year. The Authority is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows. However, management does believe the effect will be material to the financial statements.

(2) Cash and Cash Equivalents

Cash - Bank Deposits

The carrying amount of the Authority's total cash deposits with financial institutions (including restricted cash) at September 30, 2014 and 2013 was $41,441,578 and $38,288,763, respectively, and the bank balance was $41,454,010 and $40,772,635, respectively. Collateral for public entities' deposits in financial institutions is held in the name of the Mississippi State Treasurer under a program established by the Mississippi State Legislature and is governed by Section 27-105-5, Miss. Code Ann. (1972). Under this program, the State Treasurer monitors collateralization of the entity's funds. Financial institutions holding deposits of public funds must pledge securities as collateral against those deposits. In the event of failure of a financial institution, securities pledged by that institution would be liquidated by the State Treasurer to replace the public deposits not covered by the Federal Depositary Insurance Corporation ("FDIC").

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(2) Cash and Cash Equivalents (Continued)

Cash Equivalents

The carrying amount of the Authority's total cash equivalents, which are restricted for repayment of debt or use of debt proceeds, at September 30, 2014 and 2013, was $3,023,080 and $3,027,795, respectively. The Authority's cash equivalents, which are invested in mutual funds which invest in U.S. Treasury securities, are not covered by FDIC insurance.

(3) Restricted Cash and Cash Equivalents

A summary of restricted cash and cash equivalents follows:

Description 2014 2013

Short-term: Debt interest and principal payments $ 2,314,853 2 319,580 Passenger facility charges ("PFC") 219,012 219,012 Customer facility charges ("CFC") 1,185,032 ] ,191,906

Total short-term 3.718,897 3,730,498

Long-term: Passenger facility charges ("PFC") 17,103,265 15,784,893 Customer facility charges ("CFC") 5,787,246 4,789,167 Unused proceeds of bond issues 708,227 708,215 Restricted for capital projects 1,404,964 1,501,699 Cash reserve restricted by bond indenture 3,139,693 3,110,025

Total long-term 28,143,395 25,893,999

Total restricted cash and cash equivalents $ 3128622292 292624A97

12

(4)


Property, Plant and Equipment, Net

A summary of property, plant and equipment, net follows:

Balance Description Sept. 30, 2013 Additions Deletions Adjustments

Land $ 4,622,050 Land improvements 91,205,2I9 17,470,077 Buildings II2,846,224 32,500 463,505 Utility systems 3,139,6I2 Furniture, fixtures & equip. II,808,535 I89,262 (20,698) Construction in progress 29,088,997 7,959,932 {17,933,582)

Total 252, 7I 0,63 7 8.I81.694 (20.698) -

Accumulated depreciation (134,0 I 0,245)

Net property, plant and equipment $I18.700.392

Balance Description Sept. 30, 2012 Additions Deletions Adjustments

Land $ 4,622,050 Land improvements 87,85I,262 3,353,957 Buildings II0,385,262 9,045 2,45I,9I7 Utility systems 3,139,6I2 Furniture, fixtures & equip. II,58I,805 507,358 (2 80,628) Construction in progress I6,342,095 I8,581.040 ( 28,264) (5,805,874)

Total 233 ,922,086 I9.097.443 (308.892) -

Accumulated depreciation (125,829,232)

Net property, plant and equipment $I 08.092.854

Balance Sept. 30, 2014

4,622,050 I 08,675,296 I13,342,229

3, 139,6I2 I I,977,099 19,II5,347

252,710,637

(142,856,0 I6)

1I8.0I5.617

Balance Sept. 30, 2013

4,622,050 9I,205,2I9

II2,846,224 3,I39,6I2

II ,808,535 29,088,997

252,7I0,637

(1 34,0 I 0,245)

II8.700.392

Substantially all buildings and improvements are leased to third parties through operating leases. Depreciation expense for the years ended September 30, 2014 and 2013, was $8,866,469 and $8,456,421, respectively.

13


(4) Property, Plant and Equipment, Net (Continued)

The Authority has committed approximately $9,800,000 to future construction projects as of September 30, 2014. These projects are expected to be substantially completed within two (2) years from September 30, 2014, and will primarily be financed with grant and PFC funds.

The Authority is dependent on continued Federal and State grants and PFC funds to fund a majority of its capital projects.

(5) Pension Plan

Plan Description - The Authority contributes to the Public Employees' Retirement System of Mississippi ("PERS"), a cost-sharing multiple-employer defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries·. Benefit provisions are established by State law and may be amended only by the State of Mississippi Legislature. PERS issues a publicly available financial report that includes financial statements and required supplementary information. That information may be obtained by writing to Public Employee Retirement System, PERS Building, 429 Mississippi Street, Jackson, Mississippi 39201-1005 or by calling 1-601-359-3589 or 1-800-444-PERS.

Funding Policy - PERS members are required to contribute 9% of their annual covered salary and the Authority is required to contribute at an actuarially determined rate. The current rate is 15.75% of annual covered payroll (14.26% prior to July 2013). The contribution requirements of PERS members are established and may be amended only by the State of Mississippi Legislature. The Authority's contributions to PERS for the years ended September 30, 2014 and 2013, were $823,210 and $749,635, respectively.

Employees of the Authority may also elect to contribute to a Section 457 tax-deferred defined contribution retirement plan administered by PERS. The Authority's matching contributions to this plan for the years ended September 30, 2014 and 2013, were $131,541 and $112,652, respectively.

14


(6) Operating Lease Revenues

(7)

Primarily all buildings and improvements, except for the parking facility, of the Authority are leased to third parties through operating leases. Many of these leases provide for the payment of contingent amounts based on revenues. A summary of future minimum rental revenue to be received based on operating leases in effect at September 30, 2014, follows:

Year Ending Future Minimum September 30, Rental Revenues

2015 $ 3,827,912 2016 3,332,805 2017 3,268,774 2018 3,240,317 2019 3,237,562 2020-2024 11,827,206 2025-2029 2,128,467 2030-2034 1,826,754 2035-2039 1,226,512 2040-2044 350,814 2045-2049 189,424

Total $ 3424562547

Long-term Debt

A summary of long-term debt follows:

Description 2014 2013

2007 Series A Authority Revenue Bonds maturing in October 2026; interest rates from 4.00% to 5.00% $ 5,110,000 5,390,000

2007 Series B Authority Revenue Bonds maturing in October 2028; interest rates from 3.75% to 4.25% 5,860,000 6,170,000

15


(7) Long-term Debt (Continued)

Description

2005 Series A Authority Revenue Bonds maturing in October 2031; interest rates from 3.75% to 5.00%

2005 Series B Authority Revenue Bonds maturing in October 2035; interest rate of4.5%

2005 Series C Authority Revenue Bonds maturing in October 2027; interest rates from 4.25% to 5.15%

Total long-term debt

Unamortized bond premiums

Unamortized bond discounts

Long-term debt

Less current maturities

Long-term debt, net of current maturities

2014

17,200,000

7,775,000

3,390,000

39,335,000

169,844

(230,015)

39,274,829

(1,370,000)

$ 37!904!829

2013

17,200,000

7,775,000

4,165,000

40,700,000

193,239

(245,890)

40,647,349

(1,345,000)

39!302!349

The 2007 Revenue Bonds are collateralized by and will be payable solely from the net revenues of the Authority. The indentures do not constitute a mortgage on any of the physical properties of the Authority. The bonds do not constitute a debt of the Authority within the meaning of the Mississippi Constitution. Payment of principal and interest on these bonds is insured by a municipal bond insurance policy.

16


(7) Long-term Debt (Continued)

The 2005 Revenue Bonds are collateralized by and will be payable from the net revenues of the Authority. The 2005A and 2005B Bonds are also partially collateralized by and payable from PFC revenues of the Authority and the 2005A and 2005C Bonds are also partially collateralized by and payable from CFC revenues of the Authority. The indentures do not constitute a mortgage on any of the physical properties of the Authority. The bonds do not constitute a debt of the Authority within the meaning of the Mississippi Constitution. Payment of principal and interest on these bonds is insured by a municipal bond insurance policy.

No new debt was issued in 2014 or 2013. Principal repayments of debt were $1,365,000 and $1,405,000 in 2014 and 2013, respectively.

A schedule of future maturities of long-term debt follows:

Year Ending September 30, Principal Interest

2015 $ 1,370,000 1,746,807 2016 1,545,000 1,684,313 2017 1,610,000 1,619,331 2018 1,680,000 1,551,000 2019 1,745,000 1,478,295 2020-2024 9,930,000 6,157,703 2025-2029 10,425,000 3,709,232 2030-2034 7,520,000 1,687,364 2035-2039 3,510,000 159,751

Total $ 39!335!000 19)93)96

17

JACKSON MUNICIPAL AIRPORT AUTHORITY Notes to Financial Statements September 30,2014 and 2013

(8) Net Position

A summary of restricted net position follows:

Description

Debt interest and principal payments Passenger facility charges ("PFC") Customer facility charges ("CFC") Unused proceeds of bond issues Restricted for capital projects Cash reserve restricted by bond indenture

Total restricted net position

(9) Passenger Facility Charges

2014

$ 2,314,853 17,625,927 7,166,058

708,215 1,404,964 3,139,693

$ 32.359.710

2,319,580 16,296,385 6,111,968

708,215 1,501,699 3,110,025

30.047.872

Under Part 158 of the Code of Federal Regulations, the Federal Aviation Administration ("FAA") granted public agencies controlling commercial service airports the authority to impose passenger facility charges ("PFC"), ranging from $1.00 to $4.50 per enplaned passenger, to be used towards the cost of predetermined capital and operating projects and debt service. These projects and debt service have been approved by the FAA and the participating airlines. The Authority is currently authorized to impose PFC charges of $4.50 per enplaned passenger and is authorized to collect $88,407,168 in connection with specific PFC projects, of which $47,135,799 had been collected as of September 30, 2014.

(10) Customer Facility Charges

The Authority has reached agreements with its automobile rental concessionaires whereby the Authority collects a customer facility charge ("CFC") of $5.00 for each vehicle rental day ($4.00 per vehicle rental day prior to December 2012). Use of the CFC revenues is restricted to expansion of the parking garage at JMWEIA and other construction projects (including related debt service) for the benefit of the Authority's automobile rental concessionaires and to offset increases in rental rates charged by the Authority to the concessionaires.

18


(11) Commitments and Contingencies

The Authority is exposed to risks of loss of property and general liability claims incidental to its operations. The Authority manages these risks by purchasing commercial msurance.

The Authority arbitrated a claim against a third party relating to the East Runway Project Phase II. In June 2014, the arbitrator ruled in the third party's favor.

In June 2014, Southwest Airlines ("Southwest") discontinued all service to and from JMWEIA. Southwest accounted for approximately 23% of passenger air traffic at the JMWEIA. Some of the Southwest passenger air traffic has been absorbed by the remaining carriers. Management is continuing its efforts to recruit a replacement carrier.

In November 2014, mold was discovered on the fifth floor of the JMWEIA terminal building. The cause of the mold is under investigation. Remediation costs and insurance coverage amounts have yet to be determined.

19


Supplementary Information September 30, 2014

JACKSON MUNICIPAL AIRPORT AUTHORITY Schedule of Expenditures ofFederal Awards


Federal Federal Grantor I Pass-through CFDA

Grantor I Program or Cluster Title Number

U.S. Department of Transportation: Direct programs -

Federal Aviation Administration -Airport Improvement Program:

3-28-0037-045-2011 20.106 3-28-0037-046-2012 20.106 3-28-0037-047-2012 20.106 3-28-003 7-048-2013 20.106 3-28-0038-014-2013 20.106 3-28-003 7-049-2014 20.106

Total U.S. Department of Transportation

U.S. Department of Homeland Security-Direct program -

Transportation Security Administration -Law Enforcement Officer Reimbursement Program -

HSTS0213HSLR327 97.090

$

Total expenditures of Federal awards $

Federal Expenditures

125,979 47,521

149,922 3,693,170

131,234 838,553

4,986,379

219,000

5,205,379

The accompanying notes to schedule of expenditures of Federal awards are an integral part of this schedule.

20

JACKSON MUNICIPAL AIRPORT AUTHORITY Notes to Schedule of Expenditures ofFederal Awards


(1) Basis of Presentation

The accompanying schedule of expenditures of federal awards includes the federal grant activity of Jackson Municipal Airport Authority and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and NonProfit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.

(2) Sub-recipients

The Authority provided no federal awards to sub-recipients.

(3) Reconciliation of Schedule of Expenditures of Federal Awards to Financial Statements

A reconciliation of the total Federal awards per the Schedule of Expenditures of Federal A wards to the statement of revenues, expenses and changes in net position is presented below:

Description Amount

Per Schedule of Expenditures of Federal Awards:

Total expenditures ofFederal awards $ 5,205,379 State of Mississippi grants 742,920

Total governmental grants $ 5.948.299

Per Statement of Revenues, Expenses and Changes In Net Position:

Operating governmental grant revenue $ 234,000 Capital grant contributions 5,714,299

Total governmental grants $ \948!299

21

JACKSON MUNICIPAL AIRPORT AUTHORITY Schedule of Passenger Facility Charges - Cash Basis


PFC PFC PFC Application Application Application

99-03-C- 03-04-C- 07-05-C-00-JAN 00-JAN 00-JAN

Balance at September 30,2013

Receipts: Passenger facility charges collected Interest income

Total receipts- cash basis

Expenditures: Terminal renovations- debt service $ 159,464 Rehabilitate International Drive

- debt service 59,548 Access Control Security Project 652,628 Rehabilitate Storm Water Infrastructure 62,945

Total expenditures 159,464 59,548 715,573

Prior expenditures 5,464,493 2,211,322 11,374,372

Cumulative expenditures $ 5,623,957 2,270,870 12,089,945

Balance at September 30, 2014

22

Total

$ 16,003,905

2,228,029 24,928

2,252,957

159,464

59,548 652,628 62,945

934,585

$ 17,322,277

JACKSON MUNICIPAL AIRPORT AUffiORITY Historical Schedule of Selected Financial Data As of and For the Years Ended September 3 0,

{in thousands)

2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 --- --- -- --- --Assets and Deferred Outflows of Resources Current assets, unrestricted $ 14,274 13,653 16,270 16,611 16,333 12,935 11,432 8,637 8,385 8,154 Restricted assets 32,360 30,047 34,344 32,567 32,454 26,948 24,692 23,569 22,229 32,038 Property, plant & equipment 118,016 118,700 108,093 112,145 105,401 112,086 117,454 123,631 126,193 109,851 Other 466 522 946 1,048 1,144 1,235~~~~

Total assets and deferred outflows of resources 165,116 162,922 159,653 162,371 155,332 153,204 154,919 157,289 158,343 151,694

Liabilities Current liabilities 4,601 4,676 5,174 4,917 4,764 4,165 4,119 4,262 4,748 5,043 Long-term debt, net of current maturities 37,905 39,302 40,189 41,556 42,862 44,096 45,277 46,398 47,672 48,400

Total liabilities 42,506 43,978 45,363 46,473 47,626 48,261 49,396 50,660 52,420 53,443

Net Position $ 122,610 118,944 114,290 115,898 107,706 104,943 105,523 106,629 ~ 98,251

Revenues and Expenses Operating revenues $ 17,755 17,635 17,071 16,288 16,096 15,994 16,524 15,908 14,660 13,531 Operating expenses 14,113 13,207 13,314 12,463 13,103 11,971 13,248 11,777 10,701 8,822

Operating income before depreciation 3,642 4,428 3,757 3,825 2,993 4,023 3,276 4,131 3,959 4,709 Depreciation 8,86l 8,456 8,407 8,730 8,398 8,560 8,491 ~ 6,756 6,504

Operating income (loss) (5,225) (4,028) (4,650) (4,905) (5,405) (4,537) (5,215) (4,187) (2,797) (1,795) Passenger facility charges (restricted) 2,264 2,433 2,801 2,702 2,681 2,645 3,102 3,348 3,343 2,931 Customer facility charges (restricted) 2,311 2,184 1,717 1,733 1,558 1,528 1,781 1,961 3,212 1,807 Interest expense (1,825) (1,893) (2,042) (2,107) (2,171) (2,232) (2,243) (2, 197) (1,729) (1,252) Other 426 566 (449) 363 2,635 334 1,298 957 613 418

Income (loss) before capital grant contributions $ (2,049) (7]_8) (2,623) (2,214) (702) (2,262) (1,277) ~ 2,642 2,109

OTHER Property, plant & equipment additions $ 8,182 19,097 5,412 15,474 5,023 1,782 2,314 5,757 24,047 19,203 Federal and state capital grants (5,714) (6,144) (1,014) (10,407) (3,464) (1,683) (171) (824) (5,703) (10,092) Passenger facility charge reimbursements (716) (5,715) (1,602) (2,501) (601) ~ ~ __ - __ - ~

Net construction costs $ 1,752 7,238 2,796 2,566 958 49 624 ~ 18,344 ~

Note: Years prior to 2013 have not been restated to reflect the adoption of GASB Statement No. 65.

23

JACKSON MUNICIPAL AIRPORT AUTHORITY Schedule of Budgeted vs. Actual Revenues and Expenses


Budget Actual Variance

Operating revenues: Aviation $ 6,833,529 6,754,780 (78,749) Non-aviation 8,742,913 8,242,632 (500,281) Concessions 2,909,166 2,757,615 {151,551)

Total operating revenues 18,485,608 17,755,027 {730,581)

Operating expenses: Board expenses 122,213 99,416 (22,797) Building expenses 2,113,955 2,105,713 (8,242) Employee expenses 8,026,352 7,652,005 (374,347) Equipment expenses 361,838 341 ,071 (20,767) Miscellaneous expenses 40,429 9,600 (30,829) Services 3,452,913 3,336,496 (116,417) Supplies 518,821 568,857 50,036

Total operating expenses 14,636,521 14,113,158 (523,363)

Operating income before depreciation 3,849,087 3,641,869 (207,218)

Depreciation expense 8 481,481 8,866,469 384,988

Operating loss {4,632,394) (5,224,600) (592,206)

Non-operating income (expense):

Passenger facility charges, restricted 2,602,831 2,264,218 (338,613) Customer facility charges, restricted 2,014,318 2,310,517 296,199 Interest expense (1,777,535) (1,825,426) (47,891) Operating governmental grant revenue 219,000 234,000 15,000 Interest income 36,000 34,406 (1 ,594) Other 158,257 158,257

Net non-operating income (expense) 3,094,614 3,175,972 81,358

Loss before capital grant contributions $ (1,537,780) (2,048,628) (510,848)

24


Summary Schedule of Prior Audit Findings September 30, 2014

JACKSON MUNICIPAL AIRPORT AUTHORITY Summary Schedule of Prior Audit Findings

September 30, 2014

There were no prior audit findings reported.

25


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 September 30, 2014

BRMZEALE, SAUNDERS & O'NEIL. LTD. CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors' Report ou Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Per(ormed in Accordance with Government Auditing Standards


We have audited, 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, the financial statements of the business-type activities of Jackson Municipal Airport Authority as of and for the year ended September 30, 2014, and the related notes to the financial statements, which collectively comprise Jackson Municipal Airport Authority's basic financial statements, and have issued our report thereon dated January 26, 2015.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered Jackson Municipal Airport Authority'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 Jackson Municipal Airport Authority's internal control. Accordingly, we do not express an opinion on the effectiveness of Jackson Municipal Airport Authority'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.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant

26

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deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting 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 Jackson Municipal Airport Authority'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.

We noted certain matters that we have reported to management of Jackson Municipal Airport Authority in a separate letter dated January 26, 2015.

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. ~-""""" - /1. ,; ofv£J, ~ . ,~~ ~.,J.. .. Jackson, Mississippi January 26, 2015

27


REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND THE PASSENGER

FACILITY CHARGE PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND THE PASSENGER FACILITY

CHARGE AUDIT GUIDE FOR PUBLIC AGENCIES September 30, 2014

BREAZEALE, SAUNDERS & O'NEIL. LTD. CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors' Report on Compliance Requirements That Could Have a Direct and Material Effect on Each Major Program and the Passenger Facility

Charge Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133 and the Passenger Facility Charge Audit Guide for

Public Agencies


Report on Compliance for Each Major Federal Program

We have audited Jackson Municipal Airport Authority's compliance with the types of compliance requirements described in the U.S. Office of Management and Budget ("OMB") Circular A-133 Compliance Supplement that could have a direct and material effect on each of Jackson Municipal Airport Authority's major federal programs and the compliance requirements described in the Passenger Facility Charge Audit Guide for Public Agencies ("the Guide"), issued by the Federal Aviation Administration, for its passenger facility charge program for the year ended September 30, 2014. Jackson Municipal Airport Authority's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditors' Responsibility

Our responsibility is to express an opinion on compliance for each of Jackson Municipal Airport Authority's major federal programs and the passenger facility charge program based on our audit of the types of compliance requirements refened to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and the Guide. Those standards, OMB Circular A-133, and the Guide require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements

28

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referred to above that could have a direct and material effect on a major federal program or the passenger facility charge program occurred. An audit includes examining, on a test basis, evidence about Jackson Municipal Airport Authority's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program and the passenger facility charge program. However, our audit does not provide a legal determination of Jackson Municipal Airport Authority's compliance.

Opinion on Each Major Federal Program and the Passenger Facility Charge Program

In our opinion, Jackson Municipal Airport Authority complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs and its passenger facility charge program for the year ended September 30, 2014.

Report on Internal Control over Compliance

Management of Jackson Municipal Airport Authority is responsible for establishing and maintaining effective. internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Jackson Municipal Airport Authority's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program and its passenger facility charge program as a basis for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and its passenger facility charge program and to test and report on internal control over compliance in accordance with OMB Circular A-133 and the Guide, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Jackson Municipal Airport Authority's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program or the passenger facility charge program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program or the passenger facility charge program that is less severe than a material weakness in internal

29

Jackson Municipal Airport Authority Page three

control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements ofOMB Circular A-133 and the Guide. Accordingly, this report is not suitable for any other purpose.

Jackson, Mississippi January 26,2015

30


Schedule of Findings and Questioned Costs September 30, 2014

JACKSON MUNICIPAL AIRPORT AUTHORITY Schedule of Findings and Questioned Costs

September 30, 2014

Section I- Summary of Auditors' Results

Financial Statements

• Type of auditor's report issued: Unqualified.

Internal control over financial reporting:

• Are any material weaknesses identified? No.

• Are any significant deficiencies identified not considered to be material weaknesses? None reported.

• Is any noncompliance material to financial statements noted? No.

Federal Awards

• Type of auditor's report issued on compliance for major programs: Unqualified.

Internal control over major programs:

• Are any material weaknesses identified? No.

• Are any significant deficiencies identified not considered to be material weaknesses? None reported.

• Are any audit findings disclosed that are required to be reported in accordance with U.S. Office of Management and Budget Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations, Section .510(a)? No.

Identification o[major programs:

• The programs tested as major programs were: CFDA # 20.106 - Airport Improvement Program.

• The threshold for distinguishing Types A and B programs was $300,000.

• Jackson Municipal Airport Authority was determined to be a low-risk auditee.

31

JACKSON MUNICIPAL AIRPORT AUTHORITY Schedule of Findings and Questioned Costs

September 30, 2014

Section II- Financial Statement Findings

No significant deficiencies, material weaknesses, or instances of material noncompliance related to the financial statements were reported.

Section III- Federal Award Findings and Questioned Costs

No audit findings required to be reported by Section 510(a) of Circular A-133 were reported.

32


Corrective Action Plan

September 30, 2014

JACKSON MUNICIPAL AIRPORT AUTHORITY Corrective Action Plan

September 30, 2014

No audit findings have been reported. Therefore, no corrective action plan is necessary.

33

2014 Audit

Documents

Transcript of 2014 Audit