Audit - 2006/2007u
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BENSON ACCOUNTING, CPA, PA
JOEL BENSON, CPA MARY BENSON, CPA
120 E. IRON AVE.
SALINA, KS 67401
PH: 785 - 827 -3157 FAX: 785 - 827 -3159
To the Board of Directors of
SALINA DOWNTOWN, INC.
In accordance with professional standards we are required to communicate to
management any suggestions we may have pertaining to the maintenance of the books
and records of an organization upon completion of our audit.
During the audit, the following item was noted as an area for potential improvement,
which if implemented will improve the internal controls related to the accuracy and
completeness of the books and records of the Company:
1) During our audit, we noted that there was an employment contract with the
executive director position; however, there is no documentation available for the
employment of the executive assistant position, which is a part-time position. In
the absence of an employment contract or an employee handbook as it relates to
part-time employees, there may be ambiguity in the interpretation of how
compensation is to be calculated as well as what, if any, benefits the part time
employee may be eligible for. We strongly encourage the management and or
the Board to develop such documents to outline specific tasks and duties of all
employees of the Organization.
We are confident that with the implementation of this suggestion, the internal controls
and efficiency of the accounting function will be improved.
Very truly yours,
G PA-
Joel Benson, C.P.A.
May 11, 2007
o s
BENSON ACCOUNTING, CPA, PA
JOEL BENSON, CPA MARY BENSON, CPA
120 E. IRON AVE.
SALINA, KS 67401
PH: 785-827-3157 FAX: 785-827-3159
To the Board of Directors of
SALINA DOWNTOWN, INC.
In planning and performing our audit of the financial statements of Salina Downtown, Inc. for
the year ended December 31, 2006 & 2005, we considered its internal control in order to
determine our auditing procedures for the purpose of expressing our opinion on the financial
statements and not to provide assurance on internal control.
Our consideration of the internal control and its operation would not necessarily disclose all
matters in the internal control that might be reportable conditions under standards established
by the American Institute of Certified Public Accountants. Reportable conditions involve matters
coming to our attention relating to significant deficiencies in the design or operation of internal
control that, in our judgment, could adversely affect the organization's ability to initiate, record,
process, and report financial data consistent with the assertions of management in the financial
statements. However, we noted no matters involving the internal control and its operation that
we consider to be reportable conditions as defined above. In addition, because of inherent
limitations in any internal control structure, errors or irregularities may occur and not be detected
by such control structure.
Due to the small size of the Organization, there is inherently a lack of segregation of duties for
safeguarding its assets. This condition did not cause us any problems during our audit, but was
considered in determining, timing and extent of tests applied for the audit of the December 31,
2006 & 2005 financial statements, and this report does not affect our report on those financial
statements dated May 11, 2007. We have not considered the internal control structure since
the date of our report. The best control available in a small firm is the diligence of the Board in
reviewing and approving transactions and records on a regular basis.
During our audit procedures, we discussed the risks of fraud with management. The Board has
established controls such as requiring dual signatures on checks and reviewing financial reports
on a monthly basis. The Board should continue to develop strategies and controls to help
prevent, deter and detect fraud.
We would like to thank the management and the Board of Salina Downtown, Inc. for their
assistance and cooperation during the audit. If there are any questions, please do not hesitate
to contact us any time. We appreciate this opportunity to work with you, and look forward to
working with you in the future.
This report is intended solely for the information and use of the Board of Directors, management
and others within the organization and is not intended to be and should not be used by anyone
other t n these specified parties.
Benf on Accounting, CPA, PA
Salina, KS
May 11, 2007
SALINA DOWNTOWN, INC.
Financial Statements
And
Independent Auditors' Report
December 31, 2006 & 2005
Independent Auditors' Report
Statements of Financial Position
Statements of Activities
Statements of Cash Flows
Notes to the Financial Statements
Table of Contents
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BENSON ACCOUNTING, CPA, PA
JOEL BENSON, CPA MARY BENSON, CPA
120 E. IRON AVE.
SALINA, KS 67401
PH: 785-827-3157 FAX: 785-827-3159
Independent Auditors' Report
To the Board of Directors
SALINA DOWNTOWN, INC.
We have audited the accompanying statements of financial position of Salina
Downtown, Inc. as of December 31, 2006 & 2005, and the related statements of
activities and cash flows for the years then ended. These financial statements are the
responsibility of the Organization's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
' assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
' In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Salina Downtown, Inc. as of December 31, 2006 &
' 2005, and the changes in its net assets and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of America.
BENSON ACCOUNTING, CPA, PA
By. G VA
Joel Benson, CPA
May 11, 2007
Salina, KS
SALINA DOWNTOWN, INC.
STATEMENTS OF FINANCIAL POSITION
For the Years Ended December 31, 2006 & 2005
ASSETS
Current Assets
Cash on hand
Cash in banks
Accounts receivable
Prepaid expenses
Property and equipment, net
Total Assets
2006
$ 60
92,200
4,107
500
$ 96,867
$ 4,185
$ 101.052
LIABILITIES & NET ASSETS
Current Liabilities
Accounts payable
Facade grant payable
Payroll taxes payable
Net Assets
Unrestricted
Permanently restricted
Total Liabilities and Net Assets
$ 1,564
11,557
2,163
$ 15,284
$ 85,737
$ 31
$ 85,768
$ 101,052
See auditors' report and accompanying notes.
E
aim
$ 60
55,041
6,321
452
$ 61,874
$ 4,671
$ 66,545
$ 532
3,265
2,815
$ 6,612
$ 58,056
$ 1,877
$ 59,933
$ 66,545
SALINA DOWNTOWN, INC.
STATEMENTS OF ACTIVITIES
For the Years Ended December 31, 2006 & 2005
UNRESTRICTED NET ASSETS
2006
2005
Revenues
Service fees
$ 86,624
$
86;976
Organization contribution
55,000
55,000
Partnership income
3,600
3,745
Destination marketing
552
1,391
Interest
3,375
1,558
Annual meeting income
0
880
Contributions in -kind
987
9,593
Miscellaneous
3,996
4,423
Total Revenue
$ 154,134
$
163,566
Program Expenses
Organizational Expenses
Salaries
$ 52,001
$
66,435
Payroll taxes
4,228
5,506
Health insurance
1,581
4,749
Travel
635
441
Outside professional services
1,288
539
Office rent
6,000
6,000
Telephone
1,141
1,329
Utilities
1,339
1,522
Postage & printing
2,631
3,241
Office supplies
1,559
2,424
Contributions
0
500
Advertising
993
1,078
Copies
578
870
Equipment & building repairs
1,618
1,087
Accounting & legal
4,750
5,350
Insurance
2,507
2,546
Taxes
44
61
Dues & subscriptions
1,808
1,204
Conferences
1,437
703
Depreciation
971
878
Loss on Equipment Disposal
2,901
0
Other organization expenses
2,072
176
Special events - Trash Cans
0
10,000
Special events expenses
3,894
13,134
Total Organizational Expenses
$ 95,976
$
129,773
See auditors' report and accompanying notes.
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SALINA DOWNTOWN, INC.
STATEMENTS OF ACTIVITIES (CONTINUED)
For the Years Ended December 31, 2006 & 2005
Program Expenses (Continued)
2006
2005
Committee Expenses
Business Support Expenses
Christmas decorations
$ 814
$ 1,262
Clock fund
240
240
Staff and volunteer training
0
162
Seminars
1,431
3,820
Miscellaneous
1,007
330
Total Business Support Expenses
$ 3,492
$ 5,814
Destination Marketing Expenses
Business directory
$ 4,683
$ 5,045
Marketing campaign
9,422
9,484
Quarterly mixer
46
407
Big Boorama
503
164
Santa Fe day
2,242
2,000
Parade of lights
4,190
2,241
Miscellaneous
283
95
Total Destn. Marketing Expenses
$ 21,369
$ 19,436
Communications & Advocacy Expenses
Newsletter
$ 2,078
$ 2,785
Internet
1,255
800
Annual meeting /other
2,283
1,155
Total Comm. & Advocacy Exp.
$ 5,616
$ 4,740
Total Committee Expenses
$ 30,477
29,990
Total Program Expenses
$ 126,453
$ 159,763
Change in Unrestricted Net Assets
$ 27,681
$ 3,803
Unrestricted Net Assets - Beginning of Year
$ 58,056
$ 54,253
Unrestricted Net Assets - End of Year
$ 85,737
$ 58,056
See auditors' report and accompanying notes.
SALINA DOW. NTOWN, INC.
STATEMENTS OF ACTIVITIES (CONTINUED)
For the Years Ended December 31, 2006 & 2005
PERMANENTLY RESTRICED NET ASSETS
Fagade Grant Revenues
Fagade Grant Expenses
Change in Permanently Restricted Net Assets
Permanently Rest. Net Assets — Beginning of Year
Permanently Rest. Net Assets — End of Year
See auditors' report and accompanying notes.
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2006
$ 12,000
$ (13,846)
$ (1,846)
$ 1,877
$ 31
2005
$ 10,000
$ (8,123)
$ 1,877
$ 0
$ 1,877
SALINA DOWNTOWN, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2006 & 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
2006
2005
Service Fees & Organization Contributions
$ 148,377
$ 156,151
Facade Grant Received
12,000
10,000
Interest Received
3,375
1,558
Other Revenue
4,548
6,694
Facade Grant Paid
(5,554)
(8,123)
Cash Paid to Suppliers & Others
(122,200)
(158,863)
Net Cash Provided / (Used) by Operations
$ 40,546
$ 7,417
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Furniture & Equipment
$ (3,387)
$ NONE
CASH FLOWS FROM FINANCING ACTIVITIES:
$ NONE
$ NONE
NET INCREASE/ (DECREASE) IN CASH
$ 37,159
$ 7,417
CASH AT BEGINNING OF YEAR
$ 55,101
47,684
CASH AT END OF YEAR
$ 92,260
$ 55,101
RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Increase in Net Assets $ 25,835 $ 5,680
Add Non -cash Expense, Depreciation /Loss 3,873 878
Net (Increase) /Decrease in Receivables 2,214 (2,419)
Net (Increase) in Prepaid Expenses. - (49) (9)
Net Increase in Payables 8,673 3,287
Net Cash Provided / (Used) by Operations $ 40,546 $ 7,417
See auditors' report and accompanying notes.
SALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS
LFor the Years Ended December 31, 2006 & 2005
NOTE A —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies of Salina Downtown, Inc. is as follows:
Business Activity — The function of Salina Downtown, Inc. is to improve the image of
downtown Salina, Kansas through cooperation, promotion, business retention,
recruitment and enhancement of physical appearance. The Organization receives funds
' in the form of assessments to businesses located in the Business Improvement District.
These assessments are invoiced and collected by the City of Salina and paid to the
Organization.
Taxes — Salina Downtown, Inc. is exempt from federal and state income taxes under
Internal Revenue Code Section 501(c)(6) and similar state provisions. The Organization
r prepares its financial statements on the accrual method of accounting.
Method of Accounting — The Organization prepares its financial statements according to
Statement of Financial Accounting Standards (SFAS) No. 117, "Financial Statements for
Not - For - Profit Organizations ". Under SFAS No. 117, the Organization is required to
' report information regarding its financial position and activities according to three classes
of net assets: Unrestricted net assets, temporarily restricted net assets, and permanently
restricted net assets. In addition, the Organization is required to present a statement of
' cash flows.
The Organization also follows SFAS No. 116, "Accounting for Contributions Received and
' Contributions Made ", whereby contributions received are recorded as unrestricted,
temporarily restricted, or permanently restricted support depending on the existence
and /or nature of any donor restrictions. Restricted net assets are reclassified to
unrestricted net assets upon satisfaction of the time or purpose restrictions.
Accounts Receivable — Salina Downtown, Inc. considers accounts receivable to be fully
' collectible- accordingly, no allowance for doubtful accounts is required. If amounts
become uncollectible, they will be charged to operations when that determination is
made. Through City of Salina ordinance, all accounts are to be billed and collected by
the City of Salina for distribution to Salina Downtown, Inc. Therefore, all accounts
uncollected by the City will remain on the receivables list of the City, and not the books of
Salina Downtown, Inc. Accounts receivable included on the books of Salina Downtown,
' Inc. include only those payments actually received from Business Improvement District
patrons through the end of the year which have not been paid to Salina Downtown, Inc.
' Depreciation — Furniture, fixtures and equipment are recorded at cost. Depreciation is
determined using the straight -line method over the estimated useful life of each asset.
Leasehold improvements are recorded at cost and are being depreciated using both
accelerated and straight -line methods over the estimated useful life.
tSee auditors' report.
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SALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Years Ended December 31, 2006 & 2005
Use of estimates — 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 certain reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
tstatements and certain reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE B — CONCENTRATIONS OF CREDIT RISK
The Organization maintains cash balances in banks. The money market fund account
held at UMB Bank is not insured by the Federalbeposit Insurance Corporation.
The Organization derives the vast majority of its revenues from the City of Salina, Kansas
either through special budgeted funds or through sales tax revenues allotted to Salina
Downtown, Inc.
NOTE C — ORGANIZATION CONTRIBUTION
' The Organization has entered into an agreement with the City of Salina to merge private
efforts with city government efforts toward the development of plans and programs to
assure the vitality and prosperity of Salina's Central Business District. The agreement
provides the City Wand Salina 'Downtown, _ Inc." will jointly fund these programs.
Contributions from the City of Salina for 2006 & 2005 were $40,000 each. In addition,
Salina Regional Health Center participates in this program and contributed $15,000
during each of the years ended December 31, 2006 & 2005.
NOTE D — LEASES
The Organization had entered into a 2 -year lease with the current landlord spanning the
period January 1, 2005 through December 31, 2006 payable on a monthly basis at $500
per month. Lease expense for the year ended December 31, 2006 & 2005 was $6,000
each. Future minimum lease payments are $6,000 for the year ending December 31,
2005. There were no future minimum lease payments for December 31, 2006 as the
lease was allowed to lapse and revert to a month to month lease at the end of the original
lease term as the Organization is looking for alternative office space. Subsequent to year
end., and prior to the date of this report, the Organization had entered into a new lease
agreement at a new location through February 29, 2008 at $570 per month.
NOTE E — FUNCTIONAL CLASSIFICATION OF EXPENSES
Salina Downtown Inc.'s expenses are primarily program related with an insignificant
amount of expenses related to administration and fund raising. Thus, the statement of
functional expenses is not presented.
See auditor's report.
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tSALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Years Ended December 31, 2006 & 2005
NOTE F – CASH ON HAND AND IN BANKS
Cash on the Statement of Cash Flows includes the following:
2006 2005
Cash on hand $ 60 $ 60
Cash in bank – Money Market Fund 87,608 51,093
Cash in Bank – Operating 4,592 3,948
92 260 55 101
For purposes of the Statement of Cash Flows, the Organization considers all highly liquid
investments with a maturity of three months or less to be cash equivalents.
NOTE G – PROPERTY AND EQUIPMENT
A detail of property and equipment is as follows:
2006 2005
Furniture and Fixtures $ 9,221 $ 9,268
' Leasehold Improvements 0 3,813
9,221 13,081
Less Accumulated Depreciation (5,036) (8,410)
' Net Property and Equipment 4 185 1-46-71
NOTE H – CONTRIBUTIONS IN -KIND
Contributions in -kind at December 31, 2006 & 2005 consist of professional services,
radio, print and other advertising in the amounts of $987 & $9,593, respectively. The
' contributions are based on the value of services rendered and air time and costs. The
related expenses are included as special event expenses on the statement of activities.
NOTE I – FAQADE GRANT
The City of Salina has joined resources with Salina Downtown, Inc. in an effort to improve
the aesthetics of the Business Improvement District through the repair and maintenance
of exterior building facades. This grant is for business and property owners within the
district who show need and expense toward improving the appearance of their properties.
During the year ended December 31, 2006 & 2005, City contributions to Salina
Downtown, Inc. amounted to $12,000 & $10,000, respectively. Payments to Downtown
Patrons from Salina Downtown, Inc. for 2006 & 2005 amounted to $13,846 & $8,123,
' respectively. Amounts not expended to Downtown shop and property owners are subject
to return to the City of Salina upon request, but may be rolled into the following year's
grant allocation total. As of December 31, 2006 & 2005, $31 & $1,877, respectively has
' not been earmarked for distribution, which the City has agreed to add to the following
years' grant allotments. The grant activity is. listed in the accompanying financial
statements as Permanently Restricted activities due to the specificity of use of these
funds.
ISee auditor's report.
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