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Home My WebLink AboutItem 06.fDate November 21, 201 1 Item No. Lakeville Convention and Visitors Bureau Financial Statements for the vears ending December 31 2010 and 2009 Proposed Action Staff recommends adoption of the following motion: Move to acknowledge receipt of the Lakeville Convention and Visitors Bureau Annual Financial Statements and Inde ep ndent Auditors Report for the years ended of December 31, 2010 and 2009. Overview The Lakeville Convention and Visitors Bureau Agreement requires the Lakeville Chamber of Commerce to provide an annual financial audit of the Bureau performed by an independent certified public accounting firm. The auditing firm of Kern, Dewenter, Viere, Ltd. has prepared and submitted the attached audit for fiscal years ended December 31, 2010 and 2009 Primary Issues to Consider • Financial performance (budget compared actual) • Status of most significant revenue source — lodging tax — compared to prior years. • Financial position— net assets —as of December 31, 2010 Supporting Information • Lakeville Convention and Visitors Bureau Annual Financial Statements and Independent Auditors Report for the years ended of December 31, 2010 and 2009 Dennis Feller, Finance Director Financial Impact: $ N/A budgeted: N/A Source: N/A _ Related Documents (CIF. ERP, etc.): N otes: Page 2 Primary ssues to Consider • Financial performance (budget compared actual) Support and Revenues Lodging tax Grant income Other income Total Support and Revenue Expenses Advertising Personnel Manaeement fee Rent Operations Total expenses Change in net assets 2010 Budget Actual Variance $ 126,900 $ 132,052 $ 5,152 Year 5,000 (decrease) 3,131 132,052 $ (1,869) 2009 200 (29,622) 778 150,256 578 $ 132,100 $ 135, $ 3, 861 2005 46,940 (267) 43,332 95,012 3,608 2003 57,423 (14,628) 53,729 109,959 3,694 2001 6,345 (7,357) 6,603 122,658 (258) 1999 9,000 5,764 9,000 124,584 - 1997 17,010 1 7,41 6 (406) $ 136,718 $ 1 30,080 $ 6,63 (4, $ 5,881 S 10,499 • Status of most significant revenue source - lodging tax - compared to prior years. Lodging increase/ Year Tax (decrease) 2010 $ 132,052 $ 1.1,418 2009 120,634 (29,622) 2008 150,256 19,255 2007 131,001 45,549 2006 85,453 (9,293) 2005 94,745 (267) 2004 95,012 (319) 2003 95,331 (14,628) 2002 109,959 (5,342) 2001 115,301 (7,357) 2000 122,658 (7,690) 1999 130,348 5,764 1998 124,584 8,295 1997 116.289 • Financial position - net assets - as of December 31, 2010 As of December 31, 2010, the Lakeville Convention and Visitors Bureau had $124,557 of net assets. The net assets are approximately 94% of the Lodging tax revenues. TABLE tV ., INDEPENDENT AUDITOR'S REPORT ..... AUDITED FINANCIAL STATEMENTS Statements of Financial Position .................. Statements of Activities ............................... Statements of Cash Flows ............................ Notes to the Financial Statements ................ SUPPLEMENTARY SCHEDULES Statements of Functional Expenses ............. Actual to Budget Comparison ...................... .............................................. ............................... 10 .............................................. ............................... 11 am Expert advice. When you need it." INDEPENDENT AUDITOR'S REPORT Board of Directors Lakeville Convention and Visitors Bureau Lakeville, Minnesota We have audited the accompanying Statements of Financial Position of the Lakeville Convention and Visitors Bureau as of December 31, 2010 and 2009, and the related Statements of Activities and Cash Flows for the years then ended. These financial statements are the responsibility of the Lakeville Convention and Visi_tnrs Bureau management. Our responsibility is to express an opinion on these financial statements based on our audits. W e conducted our audits in accordance with U.S generally accepted auditing standards. Those standards require that we plan, and perform the audit 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 audits provide 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 the Lakeville Convention and Visitors Bureau as of December 31, 2010 and 2009, and the changes in its net assets and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The supplementary schedules listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. KERTv, DEWENTER, VIERS, LTD. Bloomington, Minnesota September 6, 2011 r � u . 2 STATEMENTS OF FINANCIAL POSITION ASSETS Current Assets Cash and Cash Equivalents Certificates of Deposit Lodging Tax Receivable Deposits Prepaid Expenses Total Current Assets Equipment, Net Total Assets LIABILITIES AND NET ASSETS Current Liabilities Accounts Payable Net Assets Unrestricted Total Liabilities and Net Assets December 31 2010 2009 $ 69,705 $ 66,468 22,651 28,661 18,573 16,767 6,288 - 6,851 4,295 124,068 116,191 1,418 3,323 $ 125 $ 119,514 $ 929 $ 838 124,557 118,676 $ 125,486 $ 119,514 The Notes to the Financial Statements are an integral part of these statements. 3 STATEMENTS OF ACTIVITIES REVENUES Lodging Tax Revenue Grant Revenue Other Revenue Total Revenues EXPENSES Program Services General and Administrative Total Expenses Change .r. Net Assets NET ASSE'T'S BeW, nning of Year ,., Y ears Ended December 31 2010 2009 $ 132,052 $ 120,634 3,131 3,522 778 1,607 135,961 125,763 60,804 61435 69,276 67,990 130,080 129,425 5,881 (3,662) 118,676 122,338 $ 124,557 $ 118,676 The Notes to the Financial Statements are an integral part of these statements. 4 STATEMENTS OF CASH FLOWS CASH FLOWS - OPERATING ACTIVITIES Change in Net Assets Adjustments to Reconcile Change in Net Assets to Net Cash Flows - Operating Activities: Depreciation Change in Assets and Liabilities: Lodging Tax Receivable Deposits Prepaid Expenses Accounts Payable Total Adjustments Net Cash Flows - Operating Activities CASH FLOWS - INVESTING ACTIVITIES Net Change in Certificates of Deposit Net Cash Flow - Investing Activities Net Change in Cash and Cash Equivalents Beginning ion MI, slain Years Ended December 31, 2010 2009 $ 5,881 1,905 (1,806) (6,288) (2,556) 91 (8,654) (2,773) $ (3,662) 2,030 2,261 1,560 (113) 5,738 2,076 6,010 (771) 6,010 (771) 3,237 1,305 66,468 65,163 $ 69,705 $ 66,468 The Notes to the Financial Statements are an integral part of this statement. LAKEVILLE CONVENTION AND VISITORS BUREAU NOTES TO THE FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Organization The Lakeville Convention and Visitors Bureau (the "CVB ") is organized as a division of the Lakeville Chamber of Commerce (the "Chamber ") to advance the economic impact of tourism in the Lakeville, Minnesota area by attracting visitors, conventions, meetings, events and trade shows. Basis of Accounting The financial statements of the CVB have been prepared on the accrual 'basis of accounting. The accounting policies of the CVB conform to U.S. generally accepted accounting principles applicable to nonprofit organizations. Financial Statement Presentation The assets, liabilities, net assets, revenues and expenses of the CVB are reported based upon net asset restrictions (if any) and the purposes for which resources are to be spent and the means by which spending activities are controlled. Net asset restrictions are categorized as unrestricted, temporarily restricted or permanently restricted by donor - imposed stipulations. The CVB's funds are all unrestricted and may be used at the discretion of the Board of Directors. Expenditures are limited to the purpose outlined in the Minnesota Lodging Tax Statute. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles - requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Support and Revenues The CVB receives its support primarily from a 3% tax on Iodging in the City of Lakeville, Minnesota (the "City "). The lodging tax is based on at.. established City ordinance. The City and the Chamber have entered into an agreement in which the Chamber is responsible for oversight and management of the CVB. The City collects the tax receipts and then remits the proceeds (less an administrative charge of 5% of the gross tax collections) to the CVB. This agreement may be cancelled by either the City or the Chamber with six months notice. The CVB recognizes revenue in the period it is earned. Cash and Cash Equivalents The CVB considers all financial instruments with a maturity of three months or less to be cash equivalents. Certificates of Deposit Certificates of deposit are recorded at cost plus accrued interest. Certificates of deposit are with banks that are insured by the Federal Deposit Insurance Corporation (FDIC). Lodging Tax Receivable This represents lodging tax revenue received by the City but not yet remitted to the CVB. Equipment Equipment is stated on the accompanying financial statements at cost, Iess the associated accumulated depreciation. Depreciation of equipment is provided on a straight -line or accelerated basis, over the estimated useful lives of the assets. Estimated useful lives range from three to five years. LAKEVILLE CONVENTION AND VISITORS BUREAU NOTES TO THE FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Advertising Costs The CVB's policy is to expense advertising costs when first utilized. Advertising costs incurred totaled $ 33,939 and $ 32,399 for the years ended December 31, 2010 and 2009, respectively. Income Taxes The Chamber, of which the CVB is a division, is a not- for -profit organization that is exempt from income taxes under Section 501(c)(6) of the Internal Revenue Code. Therefore, no provision or liability for federal income taxes is included in the financial statements. Subsequent Events The CVB has evaluated subsequent events through September 6, 2011, the date which the financial statements were available to be issued. NOTE 2 — EVUIPMEPdT December 31, 2010 2009 Equipment Less Accumulated Depreciation $ 7,758 $ 7,758 (6,340) (4,435) Total Equipment $ 1,418 $ 3,323 Depreciation expense for the years ended December 31, 2010 and 2009 totaled $ 1,905 and $ 2,030, respectively. 1 i The CVB was established as a division of the Chamber for the purpose of marketing and promoting the City as a tourist or convention center (see Note I.E. for terns of agreement). The CVB and the Chamber share a common work area and, therefore, share expenses. The Chamber charges back certain expenses to the CVB based on estimated usage. The Chamber also charges a 5% management fee (based on the CVB's Iodging tax income) to cover costs of direct services used. The management fee for 2010 and 2009 was $ 6,603 and $ 6,032, respectively. Accounts payable to the Chamber for management fees at December 31, 2010 and 2009 was $ 929 and $ 838, respectively. The CVB also reimburses the Chamber $ 750 a month for office overhead expenses. Reimbursement expense for the years ended December 31, 2010 and 2009 was $ 9,000 each year. 1 1 The CVB maintains a SIMPLE IRA plan. The CVB matches employee deferrals dollar -for- dollar, up to 3% of employee compensation. The CVB's contributions to the plan for the years ended December 31, 2010 and 2009 was $ 1,190 each year. LAKEVILLE CONVENTION AND VISITORS BUREAU NOTES TO THE FINANCIAL STATEMENTS December 31, 2010 and 2009 NOTE 5 — DEPOSITS The CVB has a CD from a bank that matured in September of 2010. The bank inadvertently sent the funds to Minnesota Department of Commerce's unclaimed funds department. The funds are in the process of being returned to the CVB. �. + •� STATEMENTS OF FUNCTIONAL EXPENSES (Unaudited) See the accompanying Independent Auditor's Report on supplementary information. 10 Years Ended December 31, Program General and 2010 2009 Services Administrative Total Total Salary $ 22,912 $ 22,911 $ 45,823 $ 45,823 Payroll Taxes and Benefits 3,358 3,358 6,716 6,962 Pension 595 595 1,190 1,190 Chamber Management Fees - 6,603 6,603 6,032 Audit - 4,000 4,000 4,240 Accounting Fees - 975 975 1,113 Reimbursement Expense - 9,000 9,000 9,000 Insurance _ 930 930 930 Adver 33 33,939 32,399 Production - 375 Printing - - 1,674 Office Supplies - 3,056 3,056 2,224 Education and Seminars - 2,690 2,690 1,455 Computer Technology - 929 929 350 Business Meetings - 2,573 2,573 2,169 Postage - 198 198 161 Memberships - 980 980 1,210 Advisory Board Meetings - 857 857 713 Telephone - 873 3 873 z Sic 1, 615 Travel - 3,150 3,150 4,507 Miscellaneous - 693 693 1,303 Total Expenses before Depreciation 60,804 67,371 128,175 127,395 Depreciation - 1,905 1,905 2,030 Total Expenses $ 60,804 $ 69,276 $ 130,080 $ 129,425 See the accompanying Independent Auditor's Report on supplementary information. 10 �• ACTUAL TO BUDGET COMPARISON For the Year Ended December 31, 2010 (Unaudited) See the accompanying Independent Auditor's Report on supplementary information. 11 Actual Budget REVENUE Grant Revenue $ 3,131 $ 5,000 Programs Revenue 132,052 126,900 Other Revenue 778 200 Total Revenue 135,961 132,100 EXPENSES Salary 45,823 49,194 Payroll Taxes and Benefits 6,716 7,039 Pension 1,190 1,190 Charnber Management Fees 6,603 6,345 Audit 4,000 4,000 Accounting Fees 975 1,250 Reimbursement Expense 9,000 9,000 Insurance 930 950 Advertising 33,939 30,750 Production - 1,000 Printing - 2,950 Office Supplies 3,056 2,460 Education and Seminars 2,690 4,490 Computer Tecl .olo 929 Business Meetings 2,573 1,800 Depreciation 1,905 600 Postage 198 2,400 Memberships 980 1,300 Advisory Board Meetings 857 1,600 Telephone 3,873 3,120 Travel 3,150 4,650 Miscellaneous 693 630 Total Expenses 130,080 136,718 Change in Net Assets $ 5,881 $ (4,618} See the accompanying Independent Auditor's Report on supplementary information. 11