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Audit - 2004 (outside agency) SALINA AREA CHAMBER OF COMMERCE, INC. Salina, Kansas STATEMENTS OF REVENUE AND ALLOWABLE EXPENSES UNDER AGREEMENT WITH THE CITY OF SALINA, SALINE COUNTY AND THE SALINA AIRPORT AUTHORITY TO PROVIDE ECONOMIC DEVELOPMENT AND CONVENTION AND TOURISM SERVICES AND INDEPENDENT AUDITORS' REPORT For the Year Ended December 31, 2004 CLUBINE AND RETTELE, CHARTERED CERTIFIED PUBLIC ACCOUNTANTS SALINA, KANSAS SALINA AREA CHAMBER OF COMMERCE, INC. Salina, Kansas INDEX Page INDEPENDENT AUDITORS' REPORT 1 STATEMENTS OF REVENUE AND ALLOWABLE EXPENSES UNDER AGREEMENT WITH THE CITY OF SALINA, SALINE COUNTY AND THE SALINA AIRPORT AUTHORITY TO PROVIDE ECONOMIC DEVELOPMENT SERVICES 2-4 STATEMENTS OF REVENUE AND ALLOWABLE EXPENSES UNDER AGREEMENT WITH THE CITY OF SALINA TO PROVIDE CONVENTION AND TOURISM SERVICES 5-6 NOTES TO FINANCIAL STATEMENTS 7-8 CLUBlNE& RETTELE CHARfERED Certified Public Acrounrants v Robert I. Clubine, C.P.A. David A. Rettele, C.P.A. Jay D. Langley, C.P.A. Jon K Bell, C.PA Leslie M. Corbett, C.P.A Stacy J. Sokol, C.P.A. Marci K Fox, C.PA Delores K Longenecker C.P.A. John T. Millikin, C.P.A. Linda A. Suelter, C.P.A. 218 South Santa Fe P.O. Box 2267 Salina, Kansas 67402-2267 Salina 785/825-5479 785/827-1188 Ellsworth 785 / 472-3915 INDEPENDENT AUDITORS' REPORT To: The Board of Directors Salina Area Chamber of Commerce, Inc. Salina, Kansas We have audited the accompanying statements of revenue and allowable expenses of the Salina Area Chamber of Commerce, Inc. (a nonprofit organization) as of December 31, 2004, pursuant to an agreement relating to Economic Development services between the Chamber and the City of Salina, Saline County and the Salina Airport Authority, and pursuant to an agreement relating to Convention and Tourism services between the Chamber and the City of Salina. These statements are the responsibility of the Chamber's management. Our responsibility is to express an opinion on these statements based on our audit. The prior year financial statements were audited by other auditors. Those auditors expressed an unqualified opinion on the statements of revenue and allowable expenses in their report dated March 25, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statements of revenue and allowable expenses are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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. The accompanying statements were prepared for the purpose of complying with the provisions of agreements described in Note 2 and 3 and are not intended to be a complete presentation of the Chamber's revenues and expenses. In our opinion, the accompanying statements of revenue and allowable expenses present fairly, in all material respects, the revenue and allowable expenses of the Chamber for the year ended December 31, 2004, pursuant to the agreements referred to in Notes 2 and 3 in conformity with accounting principles generally accepted in the United States of America. This report is intended solely for the information and use of the board of trustees and management of the Chamber and the City of Salina, Saline County and the Salina Airport Authority and should not be used for any other purpose. CLUBINE AND R~ARTERED ~ ~~ March 7, 2005 (1) SALINA AREA CHAMBER OF COMMERCE, INC. Salina, Kansas STATEMENTS OF REVENUE AND ALLOWABLE EXPENSES UNDER AGREEMENT WITH THE CITY OF SALINA, SALINE COUNTY AND THE SALINA AIRPORT AUTHORITY TO PROVIDE ECONOMIC DEVELOPMENT SERVICES For the Year Ended December 31. 2004 2003 Revenue City of Salina $ 85,000 $ 85,000 Saline County 15,000 15,000 Salina Airport Authority 20,000 20,000 Total Revenue $ 120,000 $ 120,000 Allowable Expenses Program expenses (Schedule 1A) $ 63,730 $ 67,700 Administrative and general expenses (Schedule 2A) 31,863 29,519 Staff expenses (Schedule 3A) 291,763 302,497 Building operation expenses (Schedule 4A) 33,660 33,473 Total Allowable Expenses 421,016 433,189 Excess of Allowable Expenses Over Revenue $ (301,016) $ (313,189) SEE THE ACCOMPANY NOTES TO THE FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART HEREOF. (2) SALINA AREA CHAMBER OF COMMERCE, INC. Salina, Kansas STATEMENTS OF REVENUE AND ALLOWABLE EXPENSES UNDER AGREEMENT WITH THE CITY OF SALINA, SALINE COUNTY AND THE SALINA AIRPORT AUTHORITY TO PROVIDE ECONOMIC DEVELOPMENT SERVICES For the Year Ended December 31, 2004 2003 Schedule 1 A - Allowable Program Expenses New industry development $ 19,814 $ 27,010 New industry advertising 21,283 20,489 Existing industry development 8,002 2,790 Commercial development 1,675 3,500 Workforce development 1,066 3,352 Assessments 3,537 157 STC 491 1,152 Special events 2,533 1-Stop supplies and travel 5,329 9,200 Jobs Fair 50 Total Allowable Program Expenses $ 63,730 $ 67,700 Schedule 2A - Allowable Administrative and General Expenses Legal and accounting $ 1,528 $ 1,496 Travel expense 6,372 5,891 Office supplies 7,374 5,988 Postage 3,198 1,830 Communications 3,103 3,039 Computer services 3,716 2,428 Equipment services 3,975 3,891 Dues and subscriptions 1,399 3,076 Insurance 1,028 947 Contingency fund 170 932 Total Allowable Administrative and General Expenses $ 31,863 $ 29,518 Schedule 3A - Allowable Staff Expenses Salaries $ 220,837 $ 228,023 Payroll taxes 15,695 15,517 Group medical insurance 35,428 43,654 Retirement 12,227 10,492 Group life insurance 633 803 Cafeteria plan 362 367 Unemployment tax 2,924 857 Workers compensation insurance 1,061 637 Professional development 2,596 2,147 Total Allowable Staff Expenses $ 291,763 $ 302,497 SEE THE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART HEREOF. (3) SALINA AREA CHAMBER OF COMMERCE, INC. Salina, Kansas STATEMENTS OF REVENUE AND ALLOWABLE EXPENSES UNDER AGREEMENT WITH THE CITY OF SALINA, SALINE COUNTY AND THE SALINA AIRPORT AUTHORITY TO PROVIDE ECONOMIC DEVELOPMENT SERVICES (Continued) For the Year Ended December 31, 2004 2003 Schedule 4A -Allowable Building Operation Expenses Property insurance Utilities Taxes Equipment maintenance Maintenance and janitorial Depreciation Total Allowable Building Operation Expenses $ 2,605 $ 4,122 6,448 $ 6,488 13,997 33,660 $ SEE THE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART HEREOF. (4) 2,828 4,245 5,535 6,868 13,997 33,473 SALINA AREA CHAMBER OF COMMERCE, INC. Salina, Kansas STATEMENTS OF REVENUE AND ALLOWABLE EXPENSES UNDER CONTRACT WITH THE CITY OF SALINA TO PROVIDE CONVENTION AND TOURISM SERVICES For the Year Ended December 31, 2004 2003 Revenue City of Salina $ 490,637 $ 460,000 Allowable Expenses Program expenses (Schedule 1 B) Administrative and general expenses (Schedule 2B) Staff expenses (Schedule 3B) Building operation expenses (Schedule 4B) Total Allowable Expenses 229,973 26,657 225,283 25,245 507,158 225,065 24,991 205,942 25,104 481,102 Excess of Allowable Expenses Over Revenue $ (16,521) $ (21,102) SEE THE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART HEREOF. (5) SALINA AREA CHAMBER OF COMMERCE, INC. Salina, Kansas STATEMENTS OF REVENUE AND ALLOWABLE EXPENSES UNDER CONTRACT WITH THE CITY OF SALINA TO PROVIDE CONVENTION AND TOURISM SERVICES For the Year Ended December 31, 2004 2003 Schedule 1 B - Allowable Program Expenses Signage $ 14,657 $ 16,600 Advertising 25,726 19,915 Convention marketing 10,471 1 0,231 Convention services 13,203 14,680 Tourism marketing 31,036 39,031 Sports 125,097 117,408 Special projects 9,783 7,200 Total Allowable Program Expenses $ 229,973 $ 225,065 Schedule 2B - Allowable Administration and General Expenses Legal and accounting $ 1,145 $ 1,122 Travel expense 7,776 6,452 Office supplies 5,598 4,490 Postage 2,399 1,373 Communications 2,236 2,048 Computer services 2,624 1,821 Equipment services 2,981 2,919 Dues and subscriptions 999 3,342 Insurance 771 710 Miscellaneous 128 714 Total Allowable Administration and General Expenses $ 26,657 $ 24,991 Schedule 3B - Allowable Staff Expenses Salaries $ 166,626 $ 152,832 Contract labor Payroll tax 11,807 11,036 Group medical insurance 29,524 26,746 Retirement 10,242 9,946 Group life insurance 796 760 Cafeteria plan 345 290 Unemployment tax 2,345 662 Workers compensation insurance 735 477 Professional development 2,863 3,192 Total Allowable Staff Expenses $ 225,283 $ 205,941 Schedule 4B - Allowable Building Operation Expenses Property insurance $ 1,954 $ 2,121 Utilities 3,091 3,184 Taxes 4,836 4,151 Equipment maintenance Maintenance and janitorial 4,866 5,151 Depreciation 10,498 10,497 Total Allowable Building Operation Expenses $ 25,245 $ 25,104 SEE THE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART HEREOF. (6) SALINA AREA CHAMBER OF COMMERCE, INC. Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 2004 and 2003 1. Nature of Organization and Significant Accounting Policies A. Nature of Organization Salina Area Chamber of Commerce, Inc. (the "Chamber") is a nonprofit organization located in Salina, Kansas. Its purpose is to administer various activities advancing the general welfare and prosperity of the Salina area especially in the areas of economic development and tourism. B. Income Tax Exemption The Chamber is exempt from income tax under Internal Revenue Code Section 501 (c)(6). C. Accounting Method The books of the Chamber are maintained and these financial statements were prepared on the accrual method of accounting. Under this method revenues are recognized when earned and expenses are recognized when incurred. D. Land, Building and Equipment Land, building and equipment are carried at cost. Depreciation of the building and equipment is computed on a straight-line basis over the estimated useful lives of the respective assets. The building, parking lot and landscaping are depreciated over their estimated useful lives which range from 8 to 35 years and the estimated useful lives of the furniture, fixtures and equipment range from 3 to 10 years. E. Allocation of expenses The basis for allocation of expenses to specific programs is determined by management. Expenses that can be directly identified with specific programs are charged to that program. Other expenses are allocated using predetermined percentages. F. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the use of management's estimates. 2. Contributions Relating to Economic Development The Chamber receives contributions from the City of Salina, Saline County and the Salina Airport Authority (Grantors) to help fund a program, the purpose of which is to encourage economic development in the Salina/Saline County area. The agreement provides that the Chamber will expend funds received on programs and services that the parties to this agreement believe will enhance the economic development of the area. 3. Contract Relating to Convention and Tourism The Chamber has entered into an agreement with the City of Salina to provide convention and tourism programs to encourage, promote and solicit conventions and tourism for the City of Salina, and the City has appointed a Convention and Tourism Advisory Committee to provide recommendations to the Chamber programs in connection with this agreement. Under this agreement the City makes quarterly contributions to the Chamber of a portion of the proceeds of the local transient guest tax levied on hotel and motel guests. [7) 4. Subsequent Events Management of the Chamber and City of Salina met on March 29, 2005 in regard to transient guest tax collected in 2004 that was in excess of the budgeted amount. As a result of that meeting, the Chamber will amend it's 2005 budget to include the excess transient guest tax, resulting in an amended budget item of $510,000 versus the original $483,465. (8)