HomeMy WebLinkAboutItem 06.fDate November 5, 2010
Proposed Action
Lakeville Convention and Visitors Bureau
Financial Statements for the years ending December 31. 2009 and 2008
Staff recommends adoption of the following motion: Move to acknowledge receipt of the
Lakeville Convention and Visitors Bureau Annual Financial Statements and Independent
Auditors Report for the years ended of December 31, 2009 and 2008.
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, 2009 and 2008.
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 2009
Supporting Information
• Lakeville Convention and Visitors Bureau Annual Financial Statements and
Independent Auditors Report for the years ended of December 31, 2009 and 2008
Dennis Feller, Finance Director
Financial Impact: S NA budgeted: _ N/A Source:
Related Documents (CIP, ERP, etc.):
Notes:
Item No.
Page 2
Primary Issues to Consider
• Financ
1 performance (budget compared actual)
2009
Budget
Support and Revenues
Lodging tax $ 147,800 $ 120,634 $ (27,166)
Grant income 2,000 3,522 1.522
Other income 200 1,607 1.407
Total Support and Revenue $ 150,000 $ 125,763 $ (24,237)
Expenses
Advertising 60.460 43,789 16,671
Personnel 58,563 53,975 4,588
Management fee 7 ,290 6.032 1.358
Rent 9,000 9,000
Operations 13,330 16,629 (3,299)
Total expenses $ 148,743 $ 129,425 $ 19,318
Change in net assets $ 1,257 $ (3,662) $ (4,919)
• Status of most significant revenue source - lodging tax - compared to prior years.
Lodging Increase/
Year Tax (decrease)
2009 3 147,800 $ (2,456)
2 008 150,256 19.255
2007 131,001 45,549
2006 85,453 (9,293)
2005 94,745 (267)
2004 95,012 (319)
2003 95,331 (14,629)
2002 109,960 (5,341)
2001 115.301 (7,357)
2000 122,658 (7,690)
1999 130,348 5,764
1998 124.584 8,295
1997 116,289
Dosition net assets as of December 31, 2008
Actual
Variance
As of December 31, 2009, the Lakeville Convention and Visitors Bureau had
$1 18,676 of net assets. The net assets are approximately 98% of the Lodging tax
revenues.
"
LAKEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT I
AUDITED FINANCIAL STATEMENTS:
Statements of Financial Position 3
Statements of Activities 4
Statements of Cash Flows ...................... ...............................
Notes to the Financial Statements 6
SUPPLEMENTARY SCHEDULES:
Statements of Functional Expenses 10
Actual to Budget Comparison 11
June 18, 2010
Board of Directors
Lakeville Convention and Visitors Bureau
Lakeville, Minnesota
KERN. DI WENTER. VIERI . 1;ID
Bloomington, Minnesota
K DV
Expert advice. When you need it.` '
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying Statements of Financial Position of the Lakeville Convention
and Visitors Bureau, as of December 31, 2009 and 2008, 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 Visitors Bureau's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 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 the Lakeville Convention and Visitors Bureau, at December 31, 2009
and 2008, 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 of the Lakeville
Convention and Visitors Bureau. 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
AUDITED FINANCIAL STATEMENTS
2
ASSETS:
Current Assets:
Cash and Cash Equivalents
Certificates of Deposit
Lodging Tax Receivable
Prepaid Expenses
Total Current Assets
Equipment, Net
Total Assets
LAKEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
STATEMENTS OF FINANCIAL POSITION
December 31,
2009 2008
$ 66,468 $ 65.163
28,661 27,890
16,767 19,028
4,295 5.855
116,191 117,936
3,323 5,353
119,514 $ 123,289
LIABILITIES AND NET ASSETS:
Current Liabilities:
Accounts Payable $ 838 $ 951
Total Current Liabilities 838 951
Net Assets:
Unrestricted 118.676 122.338
Total Net Assets 118.676 122,338
Liabilities and Net Assets $ 119,514 $ 123,289
The Notes to the Financial Statements are an integral part of this statement. 3
Change in Net Assets
NET ASSETS:
beginning of Year
LAICEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
STATEMENTS OF ACTIVITIES
Year Ended December 31,
2009 2008
REVENUES:
Lodging Tax Revenue $ 120,634 $ 148,172
Grant Revenue 3,522 -
Other Revenue 1.607 910
Total Revenues 125.763 149.082
EXPENSES:
Program Services 61,436 61,563
General and Administrative 67,990 67,976
Total Expenses 129,425 129.539
(3,662) 19,543
1
102,795
End of Year $ 118.676 $ 122,338
The Notes to the Financial Statements are an integral part of this statement. 4
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASII FLOWS - FINA.NCING ACTIVITIES
Net Change in Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS:
Beginning of Year
End of Year
LAKEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
Year Ended December 31,
2009 2008
CASH FLOWS - OPERATING ACTIVITIES:
Change in Net Assets $ (3,662) $ 19,543
Adjustments to Reconcile Change in Net Assets
to Net Cash Flows - Operating Activities:
Depreciation 2,030 1.162
Change in Assets and Liabilities:
Lodging Tax Receivable 2,261 4,005
Prepaid Expenses 1,560 (I,325)
Accounts Payable (113) (1,352)
Total Adjustments 5,738 2.490
Net Cash Flows - Operating Activities 2,076 22,033
CASH FLOWS - INVESTING ACTIVITIES:
Purchase of Equipment - (5,000)
Net Increase in Certificates of Deposit (771) (15,438)
Net Cash Flow - Investing Activities (771) (20,438)
1,305 1,595
65,163 63.568
$ 66.468 $ 65.163
The Notes to the Financial Statements are an integral part of this statement. 5
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. 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 econornic impact of tourism in
the Lakeville, Minnesota area by attracting visitors, conventions, meetings, events and trade
shows.
B. Basis of Accounting
The financial statements of the CVB have been prepared on the accrual basis of accounting. The
accounting policies of the CV 13 conform to U.S. generally accepted accounting principles
applicable to nonprofit organizations.
C. 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 CVt3's
funds are all unrestricted and may he used at the discretion of the Board of Directors.
Expenditures are limited to the purpose outlined in the Minnesota Lodging Ta.x Statute.
D. 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.
E. Support and Revenues
LAKEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009 and 2008
The CVB receives its support primarily from a 3% tax on lodging in the City of Lakeville,
Minnesota (the "City "). The lodging tax is based on an 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.
6
LAKEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
F. Cash and Cash Equivalents
The CVB considers all financial instruments with a maturity of three months or less to be cash
equivalents.
G. Certificates of Deposit
Certificates of deposit are recorded at fair value based on cost plus accrued interest income,
which is estimated to approximate current market value. Certificates of deposit are with banks
that are insured by the Federal Deposit Insurance Corporation (FDIC).
H. Lodging Tax Receivable
This represents lodging tax revenue received by the City but not yet remitted to the CVB.
L Equipment
Equipment is stated on the accompanying financial statements at cost, less the associated
accumulated depreciation. Depreciation of equipment is provided on a straight -tine or
accelerated basis, over the estimated useful lives of the assets. Estimated useful lives range fr
3 to 5 years.
J. Advertising Costs
The CVB's policy is to expense advertising costs when first utilized. Advertising costs incurred
totaled $ 32,399 and $ 31,355 for the years ended December 31 2009 and 2008, respectively.
K. 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.
L. Subsequent Events
The CVB has evaluated subsequent events through June 18, 2010. the date which the financial
statements were available to be issued.
7
NOTE 2 — EQUIPMENT
Equipment
Less Accumulated Depreciation
Total Equipment
NOTE 3 — RELATED PARTIES
NOTE 4 — PENSION PLAN
LAKEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
NOTE 5 — RECLASSIFICATIONS
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2009 and 2008
December 31,
2009 2008
$ 7,758 $ 7,758
(4,435) (2,405)
$ 3,323 $ 5,353
Depreciation expense for the years ended December 31, 2009 and 2008 totaled $ 2,030 and
$ 1,162, respectively.
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 1.E. for terms 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 lodging tax income) to cover costs of direct services
used. The management fee for 2009 and 2008 was $ 6,032 and $ 7,409, respectively. Accounts
payable to the. Chamber for management fees at December 31, 2009 and 2008 was $ 838 and
$ 951, respectively.
The CVB also reimburses the Chamber $ 750 a month for office overhead expenses.
Reimbursement expense for the years ended December 31, 2009 and 2008 was $ 9.000 each
year.
The CVI3 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. 2009 and 2008 were $ 1,190 and $ 1,167, respectively.
Certain amounts in the December 31, 2008 financial statements have been reclassified to
conform to the presentation used in the December 31, 2009 financial statements.
8
SUPPLEMENTARY SCHEDULES
9
Salary $ 22,912 $ 22,912 $ 45,823 $ 44,245
Payroll Taxes and Benefits 3,481 3,481 6,962 7,581
Pension 595 595 1,190 1,167
Chamber Management Fees 6,032 6,032 7,409
Audit - 4,240 4,240 4,190
Accounting Fees 1,113 1,113 975
Reimbursement Expense - 9,000 9,000 9,000
insurance 930 930 875
Advertising 32,399 32,399 31.355
Production 375 - 375 1,003
Printing 1,674 1,674 2,708
Office Supplies 2,224 2,224 1,847
Education and Seminars - 1,455 1.455 1.725
Computer Technology - 350 350 -
Business Meetings - 2,169 7_169
;30
Postaee - 161 161 1,191
'Memberships - L210 1,210 805
Advisory Board Meetings - 713 713 1.114
Telephone - 3,565 3,565 2,976
Travel - 4,507 4,507 4,557
Miscellaneous 1,303 1,303 324
"Total Expenses before
Depreciation
Depreciation
Total Expenses
LAKEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
STATEMENTS OF FUNCTIONAL EXPENSES
(Unaudited)
Year Ended December 31,
Program General and 2009 2008
Services Administrative Total Total
61,436 65,960 127,395 128,377
2 ,030 2,030 1.162
$ 61,436 8 67,990 $ 129.425 $ 129.539
See the accompanying Independent Auditor's Report on supplementary information. 10
LAKEVILLE CONVENTION AND VISITORS BUREAU
Lakeville, Minnesota
ACTUAL TO BUDGET COMPARISON
For the Year Ended December 31, 2009
(Unaudited)
Actual Budget
REVENUE:
Grant Revenue $ 3,522 $ 2,000
Programs Revenue 120,634 147,800
-- Other Revenue 1,607 200
Total Revenue 125,763 150,000
EXPENSES:
Salary 45,823 50,177
Payroll Taxes and Benefits 6,962 7,162
Pension 1.190 1.225
Chamber Management Fees 6,032 7,390
Audit 4,240 4,000
Accounting Fees 1.113 1,025
Reimbursement Expense 9,000 9,000
Insurance 930 975
Advertising 32,399 36.620
Production 375 1.000
Printing 1,674 4,150
Office Supplies 2224 2 .400
Education and Seminars 1,455 4.490
Computer Technology 350
Business Meetings 2,169 1.800
Depreciation and Amortization 2,030 300
Postage 161 2.400
Memberships 1 210 1,500
Advisory Board Meetings 713 1,600
Telephone 3.565 3.000
Travel 4,507 5.050
Miscellaneous 1,303 1,829
Total Expenses 129.425 147.093
Change in Net Assets $ (3.662) $ 2.907
See the accompanying Independent Auditor's Report on supplementary information. 1 I