Audit - 2007
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C H ART ERE 0 accountants
November 15, 2007
Salina Arts and Humanities Foundation
Salina, Kansas 67401
ladies and Gentlemen:
In planning and performing our audit,of the financial statements of the Sl)1oky Hill River Festival
for the year ended September 30, 2007, we considered the Organization's internal control in
order to determine our auditing procedures for the purpose of expressing an opinion on the
financial statements and not to provide assurance on internal control.
'. However, during our audit, we became aware of matters that are opportunities for strengthening'
internal controls and operating efficienc'y, .
. We will review the status of these comments during our next audit engagement. We have
already. discussed many of these comments and suggestions with various Organization
personnel, and' we will be pleased to discuss these comments in further detail. at Your
convenience, to perform any additional' study of these matters, or to assist you in implementing
the recommendations, Our comments are summarized as follows:
Cash at the Festival
Through inquiry, the auditor noted that cash collected at the Festival is not always counted by
two people and appropriately documented as such,
We would suggest that at all times two people should count the money and document their
work. . One of those people should be someone independent of the accounting/recording
functions. We believe this would be a good procedure to protect the person counting the money
as well as the Festival.
In addition, through our analytical review, we found that gate receipts increased considerably
from prior years. .
We inquired of staff and management and they represented that the Festival had hired security
to, stand by the gates. We' also realize through our own attendance at the Festival that the great
weather could also have been a factor for the increase., ' .
We suggest that you continue to hire security at the gates for the Festival, which may help
prevent opportunities for theft due to the amount of cash that is being handled, and may
decrease the opportunity for people to "sneak in" .
We look at this idea as an opportunity to gain additional control over an area that is difficult to
substantiate. '.
We wiSh to thank the Executive Director and his department for their support and assistance
during our audit. . ' .
1619 E. Iron Avenue. P.O. Box 1516 . Salina, Kansas 67402-1516 . Phone 785-825-5494'
Fax 785-825-4450'. www.woodsanddurham.com .
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This report is intended solely for the information and use of the Board of Directors,
. management, and others within the organization .isnot intended to be and should not be used
by anyone other than these specified parties.
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Sincerely yours,
WOODS & DU~HA~ ...
a~0'~~
Bonhie S. Sanderson
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THE SMOKY HILL RIVER FESTIVAL
Salina, Kansas
AUDITED FINANCIAL STATEMENTS
September 30, 2007
WOODS & DURHAM, CHARTERED
Certified Public Accountants
Salina, Kansas
THE SMOKY HILL RIVER FESTIVAL
Salina, Kansas
TABLE OF CONTENTS
Page
Number
Independent Auditor's Report .................................................. 1
Statement of Assets, Liabilities, and Net Assets - 2
Modified Cash Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .
Statement of Support, Revenue and Expenses,
and Changes in Net Assets - Modified Cash Basis
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Notes to Financial Statements
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. , : INDEPENDENT AUDITOR'S REPORT
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",' ,we~aye auditedihe accor,;pa~~if1gst~tem~~t ~i ass~ts,li~bi;itiei,'imd'.netasiet~:modified~a~hb~SiS
,of The Smoky Hill River Festival (a 'nonprofit organiza~on)as of:Septeri;1ber ,30, 209,7, and the rel~ted
. statement of support,: revenue a'ridexpensescmcidified cash basis, for the year then ended, ,These'
'financial statements are the responsibilitY of Salina Art~ and,Huma'niiies Foundation"Our responsiblliiy is" "
to expre,ss anopinionon these fincHlcial statements b~s~ci oflouraudit"" , " '
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,We'conducted our audit in accordanc:ewith auditing standards generally acceptediin iheUnitedStates of '
, America:"T>hO,sestandard;'reqUiie that we plan'ai)d ~erform the audit tCl obt!3in' reasonable assurance,
. about whetherthe'fihancial'statements are free ,of material misstatement 'An audit,includ.es examining,' .
.or a test basis: evidt)nce supporting ttie amounts 'and disclosure~ in the,financi,\l ,statem,ents, An audit:
, also includes as~essingthe,' accOunting principles used and significanfestimates made by management,
. aswell as evaluating the' overall, financia/:statement presentation, 'We believe that our audit provides a
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As described in Note 1, these financial ,statements were' prepared'on the ,modified 'cash basis of, "
,', accounting, 'which 'is a compcehensive 'basi's"ot' accountingcither than generally accepteel-acc6unting .
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',In our opinion, 'the financial statemehtsreferred to above, p'cesenf fairly; in all material respects, the,
assets, liabilities, :and'net assets of The 'Smoky, Hill RiveiFe,stival,'i3s'of Septerriber3q,2007,:and'its'
support, revenue'arid 'expenses for the year then ended,:on:the'basis'of accounting described in Note 1 :
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THE SMOKY HILL RIVER FESTIVAL
Salina, Kansas
STATEMENT OF ASSETS, LIABILITIES, AND NET ASSETS
MODIFIED CASH BASIS
September 30, 2007
ASSETS
Current Assets
Cash $ 7,342
Investments 141,502
Total Current Assets 148,844
Equipment 12,774
TOTAL ASSETS $ 161,618
LIABILITIES AND NET ASSETS
Net Assets
Unrestricted
$ 161,618
TOTAL LIABILITIES AND NET ASSETS
$ 161,618
See Independent Auditor's Report and Notes to Financial Statements.
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THE SMOKY HILL RIVER FESTIVAL
Salina,Kansas
STATEMENT OF SUPPORT, REVENUE AND EXPENSES,
AND CHANGES IN NET ASSETS - MODIFIED CASH BASIS
September 30, 2007
SUPPORT AND REVENUE
Public Support
Private Charitable Contributions
Individual donations
Business donations
Sponsorships
Professional fund campaign
Foundation support
Total Public Support
$ 28,631
4,676
71,195
12,250
10,000
Revenue
Program Revenue
Admissions
Fees
Merchandise income
Investment income
Miscellaneous income
Total Revenue
168,311
97,009
8,565
5,767
2,460
TOTAL SUPPORT AND REVENUE
EXPENSES
Program Services
Special Projects
Arts programs
Marketing
Technical
Merchandise expense
Total Program Services
221,031
74,670
74,204
8,325
Supporting Services
General administration
Sales tax
Miscellaneous
Total Supporting Services
27,619
457
2,207
TOTAL EXPENSES
INCREASE IN UNRESTRICTED NET ASSETS
NET ASSETS BEGINNING OF YEAR - October 1, 2006
NET ASSETS END OF YEAR - September 30, 2007
See Independent Auditor's Report and Notes to Financial Statements.
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$ 126,752
282,112
408,864
378,230
30,283
408,513
351
161,267
$ 161,618
THE SMOKY HILL RIVER FESTIVAL
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
September 30, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The organization prepares its financial statements on the modified cash
basis of accounting, which is a comprehensive basis of accounting other than generally accepted
accounting principles. Under this basis, revenue is recognized when received and expenses are
recorded as disbursed. Transactions considered as modifications could include the recording of
non-cash expenses such as depreciation, and amounts reflecting certain timing issues related to
payments made to the Festival for periods after the period under audit.
The Smoky Hill River Festival is a program of the Salina Arts and Humanities Foundation. Separate
accounting records are maintained by the two entities, and separate audit reports have been issued.
Property and Equipment- The amount recorded as equipment represents equipment purchased
at cost by the Smoky Hill River Festival. Depreciation has not been provided on this equipment.
Tax Exempt Status - The Smoky Hill River Festival, as a program of the Salina Arts and
Humanities Foundation, is exempt from federal income tax under Section 501 (c)(3) of the Internal
Revenue Code, and is not identified as a private foundation within the Code.
Cash and Cash Equivalents - Cash and cash equivalents include all monies in banks and highly
liquid investments with maturity dates of three months or less. Fair market value equals carrying
amounts.
Revenue Recognition - The Foundation has adopted SFAS No. 116, "Accounting for Contributions
Received and Contributions Made." In accordance with SFAS No. 116, contributions received are
recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the
existence or nature of any donor restrictions. They are then reclassified to unrestricted net assets
upon expiration of time restrictions or upon meeting program requirements. As of September 30,
2007, there were no donor-imposed restrictions on contributions received.
Basis of Presentation - Financial statement presentation follows the recommendations of the
Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS)
No. 117, Financial Statements of 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
permanentiy restricted net assets. As of September 30, 2007, there were no donor-imposed
restrictions on net assets.
Estimates - The preparation of financial statements requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Advertising - For the year ended September 30,2007, advertising expense amounted to $19,070.
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THE SMOKY HILL RIVER FESTIVAL
Salina,Kansas
NOTES TO FINANCIAL STATEMENTS
September 30, 2007
NOTE 2 - CONTRIBUTED SERVICES
The Festival utilizes the donated services of literally hundreds of volunteers to produce the Festival.
Although these volunteer services are an integral part of the organization, there is no clearly
measurable basis for determining the value of such services. Accordingly, these financial
statements do not reflect financial data pertaining to these services.
NOTE 3 - DEPOSITS AND INVESTMENTS
Deposits
As of September 30, 2007, and for the year then ended, the cash balances of the Festival were
adequateiy secured by FDIC insurance of the respective banking institutions.
Investments
As of September 30,2007, the balance of investments of the Festival was $151,542. All but one
investment has been made In institutions insured by the FDIC, and all but one investment balance
during the year was fully insured. Of the $151,542 balance, $10,738 is not covered by insurance
provided by the federal government, but are Insured with SIPC.
The following is a listing of investments as of September 30, 2007:
Total
Fair
Market
Basis Value
$ 38,892 $ 38,892
28,427 28,427
10,738 10,738
1,031 1,031
22,240 22,240
40,175 40,175
$ 141,503 $ 141,503
Certificate of Deposit - UMB
Certificate of Deposit - Capitol Federal
Money Market Account - A.G. Edwards
Money Market Account - First Bank
Certificate of Deposit - Security Savings
Money Market Account - Security Savings
Investment return is summarized as follows:
Interest Income
$
5,767
NOTE 4 - OPERATING LEASE
The Commission entered into a three-year operating lease for office equipment November 27, 2006,
requiring monthly payments of $391 plus expenses. This lease allows the Commission to renew
monthly after the three-year term is met. Payments for the equipment are made from various
programs of the Foundation. Under this agreement, rent expense for 2007 was $808.
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