Audit - 2008
...:-.~~...
/
/
November 5, 2008
To the Commissioners and Management
Smoky Hill River Festival '
Salina, Kansas 67401
. In planning and performing our audit of the financial statements of the Smoky Hill River
Festival as of and for the year ended September 30, 2008, in accordance with auditing
standards generally acce'pted in the United States of America, we considered the Smoky Hill
River Festival's internal control over financial reporting (internal control) as a basis for
designing our aud iting proced ures forthe purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the
Organization's internal control. Accordingly, we do not express an opinion on the
effectiveness of the Organization's internal control.
Our consideration of internal control was for the limited purpose described in the preceding
. paragraph and would not necessarily identify all deficiencies in internal control that might be
significant deficiencies or material weaknesses. However, as discussed below, we identified
certain deficiencies in internal control that we consider to be a significant deficiency and to be
a material weakness. . ,
A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control
deficiency, or a combination of control deficiencies, that adversely affects theOrganization's
ability to initiate, authorize, record, process, or report financial data reliably in accordance with
a comprehensive basis of accounting other than generally accepted accounting principles
such thatthere is more than a remote likelihood that a misstatement of the Organization's
financial statements that is more than inconsequential will not be prevented or detected by the
Organization's internal control. We consider the following deficiencies to be a significant
deficiency in internal control as well as a material weakness.
We noted that deposits in the amount of $18,219 were received before September 30,2008,
but were not deposited until October 7, 2008. We inquired of John Highkin, Executive
Director, to determine if he was aware of this under-reported revenue. Through our
discussion, he represented that these monies were not deposited as they were related to the
next fiscal year, and they did not want this revenue to impact the profit and loss for the current
year Festival.
To assure that receipts are recorded in the correct period and that cash is being protected
from being lost or misplaced; deposits should be timely made and not held. There are
Balance Sheet accounting entries that are available to properly account for such situations.
> We discussed these options with him during our interview. Accordingly, to properly account
for these receipts, we proposed a journal entry to record the money as cash on hand and
1619 E. Iron Avenue · P.O. Box 1516 · Salina, Kansas 67402-1516 · Phone 785-825-5494
Fax 785-825-~50. www.woodsanddurham.com
.. ..
have recorded deferred revenue for these funds, both are Balance Sheet accounts.
Therefore, the entries will have no effect on the Festival's profit as of September 30, 2008.
A material weakness is a significant deficiency, or a combination of significant deficiencies,
that results in more than a remote likelihood that a material misstatement of the financial
statements will not be prevented or detected by the Organization's internal control.
This communication is intended solely for the information and use of management, the
Commissioners and others within the Organization, and is not intended to be and should not
be used by anyone other than these specified parties.
Sincerely,
WOODS & DURHAM, CHTD.
(J~~S 5:~411.
Bonnie S. Sanderson
!
ii~'1-. ;,~"!"-...
certified
public
C H ART ERE.O accountants
November 5, 2008
To the Commissic;mers
Smoky Hill River Festival
Salina, Kansas 67401
We have audited the financial statements of the Smoky Hill River. Festival for the year ended
September 30, 2008, and have issued our report thereon dated November 5, 2008. Professional
standards require that we provide you with the following information related to our audit.
Our Responsibilitv under U.S. Generallv Accepted Auditina Standards
As stated in our engagement letter dated September 21,2007, our responsibility, as described by
. professional.standards, is to express an opinion about whether the financial statements prepared by
management with your oversight are fairly presented, in all material respects, on the cash basis,
which is a comprehensive basis of accounting other than generally accepted accounting principles.
Our audit of the financial statements does not relieve you or management of your responsibilities.
Planned Scope and Timina of the Audit
We performed the audit according to the planned scope and timing previously communicated to you
in our meeting about planning matters on September 3, 2008.
Sianificant Audit Findinas
Qualitative Aspects of Account Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the Smoky Hill River Festival are described in Note 1 to the
financial statements. No new accounting policies were adopted and the application of existing
policies was not changed during the year ended September 30,2008. We noted no transactions
entered into by the Organization during the year for which there is a lack of authoritative guidance or
consensus. In the aggregate, there were significant transactions that would have been recognized
in the financial statements in a different period than when the transaction occurred.
The disclosures in the financial statements are neutral, consistent, and clear. Certain financial
statements disclosures are particularly sensitive because of their significance to financial statement
users. The most sensitive disclosure affecting the financial statements was:
The disclosure of Deferred Revenue in Note 6 to the financial statements where
deposits were received before year-end, but not timely deposited.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
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
Iii C,,.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. In addition, one of the
misstatements detected as- a result of audit procedures and corrected by management were
material, either individually or in the aggregate, to the financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolvedto our satisfaction, that
could be significant to the financial statements or the auditor's report. We are pleased to report that
no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter November 5, 2008.
Management Representations
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principles to the Organization's financial statements or a
determination of the, type of auditor's opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the
consultant has all the relevant facts. To our knowledge, there were no such consultations with other
accountants. '
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the Organization's auditors.
However, these discussions occurred in the normal course of our professional relationship and our
responses were not a condition to our retention.
This information is intended solely for the use of the Commissioners and management of the Smoky
Hill River Festival and is not intended to be and should not be used by anyone other than these
specified parties.
Sincerely,
WOODS & DURHAM, CHTD.
/J"1n~S~~
Bonnie S. Sanderson
THE SMOKY HILL RIVER FESTIVAL
Salina, Kansas
AUDITED FINANCIAL STATEMENTS
. September 30, 2008
WOODS & DURHAM, CHARTERED
Certified Public Accountants
Salina,Kansas
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Independent Auditor's Report
THE SMOKY HILL RIVER FESTIVAL
Salina,Kansas
TABLE OF CONTENTS
Statement of Assets, Liabilities, and Net Assets -
Modified Cash Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .
Statement of Support, Revenue and Expenses,
and Changes in Net Assets - Modified Cash Basis
Notes to Financial Statements
Page
Number
1
2
3
4-6
0'1
" -'-
. ,-' , "r
I'.'"
.' -,; ~
~I',
'1'.:""
" .I, -
.Ii
. 'l.
I';'
\' ". ',-'
:1'. ...... .'
~ ,."
.." .,:,:,-
I:"
,', . ,'1
-.1.
, ' ' ,,' .' '/ ;
'.. I
r ":
,'i '/" J
, .,.,'
-., .~ I, " ; , f '
( ,:,;:;,'."', ""',_ ':!_\~' :,':' ";~,._\,,' "'._"I'~::' ",,:',1,\, -, '_~;' ,/ v," i',..... ";:"'\ . .,J~(, ,0'.; /''-.;''"r ..: -: '.-, ' ".;
,We'h'ilv~ al.ldit~((thes~companying ~taternent' of;assetsjtabiliti~si~6q~et assets L'rilodified; ca~hlbasis
'. '. 'of The Smoky HiII:Rlvt}r ;Fes~ivaF(anonprofjtorgaJlizationra~of,Septerrib~r. '~Q,2008, and, tlle;,related' ,:',:;.
. statement" ofsu'pport, reyeflUe ,~hd . exp~nse's';rflodifje(i 'cash':ba~js, forth~ ~y~ar" ~~enended.i. These
. ofinanCial.~tatemE!.n~~'ill"ethe resppnsi~l\ity, of Sali?8 ~rts ~f1dHurnariiti~s:,Fo.;~!1datj()n:';.04rreSP<)~~ibillty is'." .
to express 'iln opln!onon these ~nanqal'staternentsbased'or:Jouraudlt: . I . ., :'" ,
""",,:,:-.,.~- \" ", "'v,,),:_",~, "1',;:, ': .,~,," ~\,:".,-,\~ "",J......".." ;.' ;j'.~':,-"" ,. -,':,.:.,':r."". " .\.., r '; ;\.\ ~'\. ~_
. . "We conducted our audit in accordance with auditing standards generally ,accepted In the United, States of, ,
'. '..:,' ':America;Those. stcfngards require'tt'l~tweplari' and .perform~'the audit,to' ootainrea$onabie 'cissuranc~' ;
.' .. :abput~hethE!rthe:~na~cjalsfa~ementsarefr~e .of'mat~ri~1 ;rl1i~sta,t~rn~p't~:l\r{au,ditiil?i~~e~ ~xamin'ing;" ",,'
. , , on' a test oasis;. eV,idenc~ supporting ,t/:le.amoLlritsan,d disc:lo~~r~s i,n thEl,~'1a'1cial;5tatements,:. An' audit
. ""'" alsoinclude~' .as~essing, t/:le accouritingprin,Ciples used ahd signifjc~rit.estimates made, by-mani3gement, .'
:, i . ,I, ,as' well'as evalucltil}gtt1e ov~rallfinanCial st~~errierit;pre~~n}atiqn:',. .VVe b~H~ve ~thatourauditprcivides a.
'. :reas9~able'b.~~is'forQtJr opiriipr(: "q:i, "':;:": ,:" . o' ." . "'';''., 'v..' .' ',., :.. .'" '
" t~
, .',
. ',~ "
"'.
'-:-J
. , '. I
, ,
. ';:.
~ .' . . r ; ,r., /: ," ,~,' , ~.. ' , .. . _
,As described"in Note,. 1;, these ,~rianda(statements; were~iprepare~" 'on' th~)i:1iodifjed' 'Cash ,basis .1 of
" . .accountirig,' which 'is ~k compreh~r~ive basis: of~?ccount!ng other': tl)angeiier~l\y '~ccepted"acGoyntirig
\#ri~ci.ples~ ' " . . "'. ",' "," ',', '~ .,:; ,
'(
',\. -
. ,')...,
.. ~.).
. . ~ .J . .
';: '. '-. "JI.'" ,,~ .(.','.v'" ,"'{ i,_ ,:"~', '." .".,"V . ", ,", "." ". ~,,_:.,...I/'.' ,'~ . _ '.:>_:: ,'_ <l'~)~"'~.I" .
" :hi<o~r' :opi;'i9n.th~ 'financial'. st~t~m~nts'; ,referf~d .', tc?' 'a'boye ,'prese.~t fairly;" in,,' ~,II'~a'terial.'r~~pect~,:. th~ '
, .:; 'assets,liabHities, .and ,,'net' as~ets 'of. The Smoky' Hill . ~iv~r Festival as 'of September 30,2008;.and ,its.:
. "',~suPPQi( revenu~and ~?<pensesfodh'e'year,t~~nend~d; on'the basisof~ccoun~ing, describ~d:in Not~ 1., . ..,~:
r:.,...:~:" ;'::"r ~'~,':;':('~" : ',':',.-, .. ,,:..' (J """,'::.,'" .~r,..\~_, L~, ..' "':'.~''-''<l.: .:\~~I,."':': 1.,,1..:';
" j
" .
\ " ...,-<.
C",
, '.
'-,' ' ~
". ;', ,': " .
" "
~ :', ,
"..',
--: '-
, '.'..' ,~',' ".:, ~_' ..'_ ". : ,'., ::' .:' ",,:,\<~~ L., "_'{ I"':"'<"'~'~";''- _ ~- ,.,.. ",,'
'.16~9,:E.-It:Qn~\i-enue',:.' ~RO;B()xj516:!"Sali,i1.a, K~risas 67402;}QiF -:Phone 785~825::5494
.' .," -':, ..,' ;. i .' "Fax 78s.,825-4450:. .,www:woddsanddurham:com
~__"', -.\ :;.' "!,\____,~.,.____.___:,..:.-~'.! I-',J', '~""'" :~. ' :':',"."- -
: ,~."
.'\ .
I
I
I
I
I
I
I
I
I
I
I
, I
I
I
I
I
I
I
I
THE SMOKY HILL RIVER FESTIVAL
Salina,Kansas
STATEMENT OF ASSETS, LIABILITIES, AND NET ASSETS
MODIFIED CASH BASIS _
September 30, 2008
Current Assets
Cash
Investments
Total Current Assets
Equipment
TOTAL ASSETS
Current Liabilities
Deferred Revenue
Net Assets
Unrestricted
ASSETS
LIABILITIES AND NET ASSETS
TOTAL LIABILITIES AND NET ASSETS
See Independent Auditor's Report and Notes to Financial Statements.
2
$ 108,223
71,620
179,843
12,774
$ 192,617
$ 18,219
174,398-
, $ 192,617
I
I
I
I
I
I
I
I
I
I
I
I'
I
I
I
I
I
I
I
THE SMOKY HILL RIVER FESTIVAL
Salina, Kansas
STATEMENT OF SUPPORT, REVENUE AND EXPENSES
MODIFIED CASH BASIS
Year Ended September 30, 2008
SUPPORT AND REVENUE
Public Support:
Private Charitable Contributions
Individual donations
Business donations
Sponsorships
Professional fund campaign
Foundation support
Total Public Support
$ 29,876
4,975
79,994
14,050
-11,500
$ 140,395
Revenue
Program Revenue
Admissions
Fees
Merchandise income
Investment income
Miscellaneous income
Total Revenue
167,258
112,03'8
14,694
4,654
2,910
301,614
TOTAL SUPPORT AND REVENUE
442,009
EXPENSES
Program Services
Special Projects
Arts programs
Marketing
Technical
Merchandise expense
Total Program Services
TOTAL EXPENSES
228,094
72,117
75,976
21,209
397,396
27,389
947
3,497
31,833
429,229
(13,000)
13,000
12,780
161,618
$ 174,398
Supporting Services
General administration
Sales tax
Miscellaneous
Total Supporting Services
TRANSFERS
Transfer to Salina Arts and Humanities Commission
Transfer from Salina Arts and Humanities Commission
Net Transfers
CHANGE IN NET ASSETS
NET ASSETS - October 1, 2007
NET ASSETS - September 30, 2008
See Independent Auditor's Report and Notes to Financial Statements.
3
I -
'I
I
I
I
I
I
I
I
I
I
I
I
I
I
I-
I
I
I
I
THE SMOKY HILL RIVER FESTIVAL
Salina,Kansas
NOTES TO FINANCIAL STATEMENTS
September 30,2008
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. It is the.'
Foundation's policy to capitalize equipment in excess of $500.
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 ant! 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 amount~.
Revenue Recognition ,. The F9undation 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, 2008, 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 permanently restricted net assets. As of
September 30, 2008, 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, 2008, advertising expense amounted to $20,171,
4
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
THE SMOKY HILL RIVER FESTIVAL
Salina,Kansas
NOTES TO FINANCIAL STATEMENTS
September 30, 2008
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
DeDosits
As of September 30, 2008, and for the year then ended, the cash balances of the Festival were adequately
secured by FDIC insurance of the respective banking institutions.
Investments
As of September 30, 2008, the bank balance of investments of the Festival was $71,620. 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 $71,620 balance, $396 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, 2008:
Certificate of Deposit - UMB
Certificate of Deposit - Capitol Federal
Money Mar~et Account - A.G. Edwards
Money Market Account - First Bank
Fair
Market
Basis Value
$ 40,377 $ 40,377
29,805 29,805
396 396
1,042 1,042
$ 71,620 $ 71 :620
Total
Investment return is summarized as follows:
Interest Income
$ 4,654
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 2008 was $780.
NOTE 5 - FUNCTIONAL ALLOCATION OF EXPENSES
The costs of providing the various programs and activities have been summarized on a functional basis in
the Statement of Support, Revenue and Expenses. Accordingly, certain costs have been allocated among
the programs and supporting services benefited, including fund raising expense.
5
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
THE SMOKY HILL RIVER FESTIVAL
Salina,Kansas
NOTES TO FINANCIAL STATEMENTS
September 30, 2008
NOTE 6 - DEFERRED REVENUE
Deferred revenue consists of amounts received as of September 30, 2008. These funds are designated
for the 2008-2009 Smoky Hill River Festival.
6