Last update: 2008 Sep 13. Click History for a list of changes and updates.
___The audit reports for 2007 are finally available. They should have been available and summarized in the notice of the annual meeting.
___The continuation of this post is a summary of the results reported. Roughly, the results for 2007 are about $100,000 worse than for 2006, which were unfavorable as have been prior years. The cash flow for 2007 was negative (meaning unsustainable).
___If my review of the the 2007 audit report is incorrect, or if you have concerns about the findings from the review, please post a comment.
Don Nordeen
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Click Continue for Post Continuation plus Comments.
- Key Words: Financial Information, 2007 General; MOA Operations, General/Total; accounting; financial statements; preservation fund; reserve fund
2007 Audit Financial Statements (continued)
___The audit reports are now available at the MOA website, members only section.
___The change in net assets for MOA (operating loss for MOA) was (negative) $163,416, worse from (negative) $53,544 for 2006. With the accounting used, the net loss for Pines Club Corporation (golf course and bar & restaurant) is included as an expense to MOA. However, the net loss for PCC is the net of the loss for actual operations and an income tax credit. The operating loss is more negative for 2007 and 2006 by (negative) $31,050 and (negative) $22,350, respectively, since redemption of the income tax credit is unlikely in the future.
___The operating losses for the Pines Club Corporation for 2007 and 2006 are $206,753 and $149,292, respectively. Non-operations amounts of $31,050 and $22,350 fare reported for Federal Income Tax Benefit. The lesser "bottom line" amounts of negative $175,743 and negative $126,942 might be reported, but such numbers ignore the null value of the tax benefit. The tax benefit will likely never be realized because PCC has no prospect of ever making a profit to use the tax benefit.
___These are huge losses but they also don't include approximately $200,000 in costs billed directly to MOA. The $200,000 is an estimate in the 2005 audit report made by the CPA firm. They include depreciation, property taxes, some maintenance and repairs, part of the insurance, etc. related to the golf course and bar & restaurant. In addition, some fees for professional services for the CG and B&R may be included in the MOA expenses. In Note 4 (which is referenced from Loss on Investment in PCC and from Wages, the 2007 audit report states that MOA recovers $1 for the $200,000 costs. This reflects that the accounting for Pines Club Corporation is not a full-cost accounting for those operations. In addition, the personnel costs for staff that provide services to PCC are not recovered from PCC as indicated by the citation to Note 1 from wages.
___Hence, an estimate of the total cost to MOA for operating the golf course and the bar and restaurant in 2007 is more than $375,000.
___The cash flow is horrendous. MOA's cash flow was negative $125,429 and PCC's positive $25,358 for a net of negative $100,171. Cash was expended for capital assets in the amount of $104,329. It appears that $80,000 of negative cash flow was covered by taking cash from the reserve account, which was short of cash by that amount at the end of 2007. The $80,000 is in addition to the money from the reserve account for the pool repair. Apparently some of the funding for the total pool repair involved some new equipment that was paid from unrestricted MOA funds, and may be part of the $104,329. The board has certainly had opportunity to explain these uses of the reserve fund in business review, but has not done so.
___An estimate of future major repairs was included as an unaudited schedule on pages 12 and 13. This appears to be the same schedule included in the post, Preservation of MOA's Assets, which also included an estimate of expenditures for the 2006-2010 time period. It shows that $385,541 will be needed. The current cash and certificates of deposit is only $214,419
___The above are examples of why MOA needs an independent audit committee elected by the members. But, alas, the members repealed Article IX of the Bylaws which provided such a committee. Did MOA provide any information on these needs and benefits? Should the board required in the bylaws to provide full and accurate information to the members?
- History _
- 2008 Sep 13 — discussion added concerning the income tax credit not being operating income
- 2008 Sep 08 — revised the discussion in the second paragraph re the income tax credit
- 2008 Sep 04 — link to Preservation of MOA's Assets added
- 2008 Sep 01 — discussion concerning the citation to Note 4 in the Audit Report added
- 2008 Aug 29 — Initial Post
- Links:_2007 Audit Financial Statements at [http://swagmanmwpoa.blogspot.com/2008/08/2007-audit-financial-statements.html]
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