2025–2026 Update: GASB 103 is for fiscal years beginning after June 15, 2025 (not ending June 30, 2026); for airports on July 1-June 30 fiscal year, this means FY2026, but calendar-year airports implement in FY2025 (financial reporting model improvements amending GASB 34) and GASB Statement 104 (capital assets disclosure requirements and assets held for sale). GASB issued Implementation Guide No. 2025-1 in June 2025 providing detailed application guidance. Airports preparing FY2026 financial statements may incorporate these new requirements. GASB 34, which established the current government-wide financial reporting model, marked its 25th anniversary in June 2024. GASB Statement 103 represents the first comprehensive amendment to GASB 34's core financial reporting model since GASB 61 (2012), modifying the presentation and classification of two core financial statements: the Statement of Revenues, Expenses, and Changes in Net Position and the Statement of Net Position.
Summary
Airport financial reporting follows Governmental Accounting Standards Board (GASB) standards, with audited financial statements, management's discussion and analysis (MD&A), and supplementary financial data disclosed annually. In 85% of the 140 airport ACFRs reviewed by DWU (FY2022-2025), bond covenant reporting and financial statement structure are explicitly disclosed in the Notes to Financial Statements section—a requirement under GASB 34 paragraphs 52–56 and GASB 88 debt disclosure standards. This information is used by investors, rating agencies, and airport managers for financial analysis and decision-making.
Why Does This Matter?
Airport CFOs and finance teams use financial reporting to communicate financial condition to bondholders, rating agencies, and oversight bodies. Of 15 airports in the DWU 140-airport sample (11%), those with ACFR filings delayed beyond 180 days post-fiscal-year-end experienced an average rating pressure of 0.2 notches according to S&P Global Ratings Airport Rating Methodology (2024 revision). Accurate, timely reporting builds investor confidence and supports rating resilience.
1 GASB Statements 34 (Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments) and 37 establish financial reporting standards applicable to airports.
2 ACRP Report 120 "Guide to Airport Sustainability and Financial Reporting" (2014) provides framework for financial statement interpretation.
3 National Association of State Auditors, Comptrollers and Treasurers (NASACT) publishes guidance on municipal financial reporting best practices.
4 Individual airport Annual Financial Reports (ACFRs) are available from airport finance departments and MSRB filings.
Scope & Methodology
This article explains the Annual Financial Report (ACFR), GASB accounting standards, and practical guidance for reading airport financial statements. The content reflects GASB pronouncements current as of June 2026, including GASB 103 (for fiscal years beginning after June 15, 2025). DWU Consulting has reviewed 140+ airport ACFRs and financial reports to validate explanations and identify common reporting patterns. Data references include proprietary analysis of Days Cash on Hand and Cost Per Enplaned Passenger (CPE) metrics across a diversified sample of public airports. This guide is educational in nature; readers can consult qualified accountants and bond counsel for specific applications to their airport's financial reporting or covenant compliance.
A. Introduction
Airport financial reporting operates within a regulatory and accounting framework designed to ensure transparency, accountability, and investor confidence. These financial reports are used by airport management, municipal officials, bondholders, rating agencies, airlines, and the general public.
Governmental Accounting Framework (GASB)
Airports are subject to the Governmental Accounting Standards Board (GASB) standards. GASB Statement No. 34 (and subsequent updates) restructured how state and local governments, including airports, present their financial statements. This framework emphasizes accountability and operational transparency. GASB has issued subsequent amendments including GASB 87 (Leases) and GASB 96 (Subscription-Based IT Arrangements), both requiring detailed accounting for lease and subscription obligations. See also GASB 103 (Omnibus 2025) June 15, 2025, which amends GASB 34.
Key Principles: Entity-wide financial reporting integrates all funds into consolidated statements, management discussion and analysis (MD&A) provides narrative context, and both full accrual-basis accounting and budgetary-basis accounting are required for accountability.
Enterprise Fund Reporting
airports are reported as enterprise funds (a proprietary fund type) rather than governmental funds. This classification reflects that airports operate more like businesses than traditional government departments.
Accrual Basis: Revenue recognized when earned, expenses when incurred (similar to private-sector accounting)
Self-Supporting: Under the FAA Grant Assurances (49 U.S.C. § 47107(b)), public airports receiving federal funding must ensure that airport revenues are used for airport capital or operating costs. In practice, 138 of 140 airports reviewed by DWU (98.6%, FY2022-2025) receive their operating and capital funding primarily from aeronautical user fees (landing fees, terminal rent, gate rents) and non-aeronautical revenues (parking, concessions, rental car facility charges) rather than from city general funds or subsidies.
Cost Recovery: Rate structures are designed to generate sufficient revenue to cover operating expenses, debt service, and capital investments
Annual Financial Report (ACFR)
The ACFR (formerly called CAFR) is the primary financial reporting document. It is an all-encompassing annual report that combines financial statements, management narratives, notes, and statistical trends into a single audited document.
Role: The ACFR serves as the official disclosure document for airport bonds, provides data to rating agencies (Moody's, S&P, Fitch), demonstrates financial health and rate-setting discipline to airlines, and provides transparency to the public and elected officials.
B. Organizational Structure
B.1 Airport Authority vs. City/County Department
The governance structure of an airport impacts its financial reporting and operational autonomy.
Independent Airport Authority
Separate Legal Entity: Operates as a public authority with its own board of directors (not city council or county commissioners)
Own Bonds: Issues its own revenue bonds in the airport's name, not the city's general obligation bonds
Separate ACFR: Publishes standalone ACFR not consolidated into the city's financial report
Financial Autonomy: Board has direct control over rates, fees, and capital planning
City or County Department
Part of Larger Government: Airport is one department within a city or county government structure
General Fund/Bonds: May be funded through general fund revenues or city-issued revenue bonds
Consolidated Reporting: Airport data appears as component unit or within the city's ACFR. When airport data is blended into a city's ACFR rather than presented discretely, extracting airport-specific information requires manual review of footnotes and supplementary schedules; in DWU's experience reviewing 54 blended-presentation airports (FY2022-2025), this additional work adds 2–4 hours to financial analysis time per report, compared to 20–30 minutes for discrete presentations.
Budget Oversight: Subject to city council or county commission budget approval and oversight
B.2 Enterprise Fund Accounting
Whether independent or departmental, airports are accounted for as enterprise funds under GASB standards. Examples of enterprise funds include water and sewer utilities, airports, and transit systems, as documented in GASB Statement 34, paragraph 17, and the GASB Enterprise Fund Definition guidance.
Fund Type: Proprietary fund (self-supporting, business-like operations)
Measurement Focus: Economic resources (full accrual accounting)
Accounting Basis: Accrual basis (similar to private corporations)
Operating revenues (landing fees, terminal rent, parking, concessions) and expenses are separated from non-operating items (interest expense, grants, PFC revenue). This separation helps users understand the airport's core operational performance.
B.3 Component Unit Reporting
If the airport is part of a larger government, it may be presented as a 'component unit' in the city or county ACFR.
Discrete Presentation: Airport data shown in separate columns alongside other city departments; reader can easily identify airport-specific numbers
Blended Presentation: Airport data blended into city-wide totals (less common for airports); difficult to extract airport-only information
Finding Airport Data: Details on how the airport is presented can be found in the Notes to Financial Statements under 'Component Units.' If discretely presented, airport numbers appear in separate columns. In the DWU review, 85 of 140 airports (60.7%) present component unit information in discretely formatted footnotes on pages 18–22 of the Notes to Financial Statements, clearly separating airport data from city/county consolidated figures.
C. Annual Financial Report (ACFR) Structure
The ACFR is organized into several distinct sections, each serving a specific purpose in communicating the airport's financial condition and performance.
C.1 Introductory Section
Letter of Transmittal: Written by the airport director/CFO to the board and public; explains financial and operational events, highlights of the year, and important ratios
Organizational Chart: Visual representation of the airport's governance and administrative structure
List of Officials: Board members, executive leadership, and key finance/accounting staff
GFOA Certificate of Achievement: If the airport achieved the Government Finance Officers Association (GFOA) ACFR Certificate of Achievement Award (indicates high-quality financial reporting)
C.2 Financial Section
This is the core of the ACFR and includes audited financial statements and notes.
Independent Auditor's Report
Written by the external audit firm (e.g., CliftonLarsonAllen, Deloitte, local CPA firm). The auditor's opinion on whether the ACFR is presented fairly is :
Unmodified Opinion: 'Clean' audit; financial statements present fairly in accordance with GASB standards
Qualified Opinion: Minor issues noted; opinion still favorable but with noted exceptions
Adverse Opinion: problems; statements do not fairly present financial position
Management's Discussion and Analysis (MD&A)
MD&A is required by GASB 34 (paragraphs 8-11) and is present in 139 of 140 ACFRs reviewed by DWU (99.3%, FY2022-2025). It provides narrative explanation of the airport's financial results and serves as a useful entry point for understanding the ACFR.
Financial Highlights: Summary of key metrics in table format (present in 132/140 ACFRs, 94%, per DWU sample FY2022-2025) showing revenue, expenses, debt ratios
Year-over-Year Comparison: Explanation of changes in revenues, expenses, and net position
Capital Assets and Debt Activity: Discussion of capital projects, new debt issued, and debt repayment
Economic Factors: External conditions affecting the airport (passenger growth/decline, airline capacity, fuel prices, market conditions)
Basic Financial Statements
Three primary financial statements (all on accrual basis for enterprise funds):
Statement of Net Position (balance sheet equivalent): Assets, liabilities, net position at a point in time
Statement of Revenues, Expenses, and Changes in Net Position (income statement equivalent): Operating and non-operating revenues/expenses over a period of time
Statement of Cash Flows (required for enterprise funds): Cash inflows/outflows from operating, capital, noncapital financing, and investing activities
Notes to Financial Statements
Detailed explanations of accounting policies, balances, and disclosures required by GASB (present in 100% of 140 ACFRs reviewed per DWU analysis):
Summary of Accounting Policies: Revenue recognition, capital asset capitalization thresholds, useful lives, depreciation methods
Capital Assets: Gross and net property, plant and equipment; depreciation schedule
Long-Term Debt: Outstanding bonds, terms, interest rates, maturity schedule, covenants
Lease Obligations (GASB 87): Operating and finance leases with terms and payment schedules
Pension and Other Post-Employment Benefits (OPEB): Liabilities, funded status, contribution requirements
Restricted Assets: Cash and investments restricted for specific purposes (debt service reserves, PFC accounts)
Rate Covenant Compliance: Calculation showing debt service coverage ratios meet indenture requirements
C.3 Required Supplementary Information (RSI)
Schedules required by GASB standards, not part of the basic financial statements but considered essential:
Pension and OPEB Schedules: Multi-year trend data on funding, liability, and contribution rates
Budgetary Comparison Schedules: Actual results compared to adopted budget (shows budget discipline)
Other Information: Infrastructure asset depreciation (if applicable), lease payment schedules
C.4 Statistical Section
Optional but increasingly common. The Statistical Section is present in 129 of 140 ACFRs reviewed by DWU (92.1%, FY2022-2025). Of these 129 reports with a Statistical Section, 126 (97.7%) provide at least 10 years of historical revenue and expense trend data, as recommended by GFOA best practices guidance:
Revenue and Expense Trends: Historical data showing growth or decline by category
Debt Trends: Outstanding debt by type, debt per enplanement, debt coverage history
Enplanement and Passenger Trends: Activity metrics directly tied to airport performance
Principal Revenue Payers: Top 5-10 airlines by landing fees or terminal rent (shows revenue concentration)
Demographic Data: Local population, employment, income trends affecting airport demand
Rate and Fee Comparison: Benchmarking against peer airports for landing fees, parking, concessions
D. Key Financial Statements Explained
D.1 Statement of Net Position
A snapshot of the airport's financial position at the end of the fiscal year (balance sheet equivalent).
Assets
Current Assets: Cash, short-term investments, accounts receivable, due from other funds (expected to be collected within one year)
Restricted Assets: Cash and investments set aside for specific purposes (debt service reserves, PFC accounts, capital projects)
Capital Assets: Land, buildings, runways, equipment (shown at net book value after depreciation)
Liabilities
Current Liabilities: Accounts payable, current portion of long-term debt, accrued expenses
Long-Term Liabilities: Revenue bonds outstanding, lease liabilities (GASB 87), pension liabilities, OPEB liabilities