2008-12-31 Findings and Recommendations
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GRINNELL LffiRARY ASSOCIATION
FINDINGS AND RECOMMENDATIONS
DECEMBER 31.2008
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SEDORE & COMPANY
Beechwood Office Park
2678 South Road, Suite 101
Poughkeepsie, NY 12601
tel 845.485.5510
fax 845.485.5547
Fishkill 845.897.1040
www.sedoreco.com
Certified Public Accountants, P. C.
James 1. Sedore, Jr., CPA
Mark S. O'Sullivan, CPA
James F Letterio, Jr., CPA
Linda M. Hannigan, CPA
Karen T Hamen, CPA
Jefftey 1. Brown, CPA
Charles R. Rae, Jr., CPA
To the Members of the Board of Trustees
Grinnell Library Association
2642 East Main Street
Wappingers Falls, New York 12590
In planning and performing our audit of the financial statements of Grinnell Library Association
as of and for the year ended December 31, 2008, in accordance with auditing standards generally
accepted in the United States of America, we considered Grinnell Library Association's internal
control over financial reporting (internal control) as a basis for designing our auditing procedures
, for the purpose of expressing our opinion 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.
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 the organization's ability to initiate,
authorize, record, process, or report financial data reliably in accordance with generally accepted
accounting principles such that there 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.
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.
Our consideration of internal control was for the limited purpose described in the first paragraph
and would not necessarily identify all deficiencies in internal control that might be significant
deficiencies or material weaknesses. We did not identify any deficiencies in internal control that
we consider to be material weaknesses, as defined above.
During our audit we became aware of matters that are opportunities for strengthening internal
controls and operating efficiency. The memorandum that accompanies this letter summarizes our
findings and recommendations regarding those matters.
We will review the status of these comments during our next engagement. We have previously
discussed many of these comments and suggestions with the Library personnel, and we will be
pleased to discuss them in further detail, at your convenience, and to perform any additional
study of these matters, or to assist you in implementing the recommendations.
We wish to thank Matthew Pfisterer, Donna Mortensen and the Library staff for their help and
cooperation during the audit.
This report is intended solely for the information and use of the Library Association,
management, and staff, and is not intended to be and should not be used by anyone other than
these specified parties.
~~ V ~, (!..P4 S
Poughkeepsie, New York
May 4, 2009
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GRINNELL LIBRARY ASSOCIATION
MEMORANDUM OF FINDINGS AND RECOMMENDATIONS
DECEMBER 31.2007
Findin21: Cash Disbursements
As part of the audit, we selected a sample of 25 cash disbursements. As a result of our review of
the supporting documentation we noted the following:
· Several invoices were missing approval of the Executive Director, the Treasurer, or
both.
· One check for reimbursement of expenses to the Executive Director was signed by
the Executive Director.
· One check with a dollar amount in excess of $5,000 did not have a dual signature as
required by the Association.
Recommendation:
We recommend that the Association ensures that it adheres to its policy of requiring that
disbursements of $5,000 or more have two check signers and also ensures that invoices have
approval from both the Executive Director and the Treasurer. This will help prevent unauthorized
disbursements from being paid and will provide greater control over the Association's
'expenditures. It is also imperative that checks to the Executive Director are signed by a Board
member. There are increased opportunities for circumventing ofintemal controls when the
person signing the check is also the person to whom the check is made out.
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GRINNELL LmRARY ASSOCIATION
TABLE OF CONTENTS
DECEMBER 31.2008
DESCRIPTION
PAGElS)
Independent Auditor's Report.............. ............... ................ ........ ........................ ........ ...........1
Financial Statements:
Statements of Financial Position..... ..... ... ......... ... ..... .~.... ........... ........ ..... ........ ..... ...... .............2
Statements of Activities ........................................................................................................ 3
Statements of Cash Flows .............. .... ................ ..... ................................. .............................4
Notes to the Financial Statements................................................................. 5-8
SUDDlementarv Information:
Schedule of Functional Expenses ................................................................................ . . ... 9
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SEDORE & COMPANY
Beechwood Office Park
2678 Sourh Road, Suite 101
Poughkeepsie, NY 12601
reI 845.485.5510
fax 845.485.5547
Fishkill 845.897.1040
www.sedoreco.com
Certified Public Accountants, P. C.
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INDEPENDENT AUDITORS' REPORT
James L. Sedore, Jr., CPA
Mark S. O'Sullivan, CPA
James F Letterio, Jr., CPA
Linda M. Hannigan, CPA
Karen T Hansen, CPA
Jeffrey L. Brown, CPA
Charles R. Rae, Jr., CPA
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To the Board of Trustees
Grinnell Library Association
2642 East Main Street
Wappingers Falls, New York 12590
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We have audited the accompanying statement of fInancial position of Grinnell Library Association (a
nonprofIt organization) as of December 31, 2008, and the related statements of activities and cash flows
for the year then ended. These fInancial statements are the responsibility of the Association's
management. Our responsibility is to express an opinion on these fInancial statements based on our audit.
, 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 fmancial 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 Grinnell Library Association as of December 31, 2008 and the changes in its net
assets and its cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic fInancial statements taken as
a whole. The Schedule on page 8 is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic fInancial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic fInancial statements taken as a whole.
~ ., Co"y'"7' e~1f S
Poughkeepsie, New York
May 4, 2009
Large Firm Expertise -- Local Firm Service
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I GRINNELL LmRARY ASSOCIATION
STATEMENTS OF FINANCIAL POSITION
I AS OF DECEMBER 31, 2008
(WITH COMPARATIVE TOTALS FOR 2007)
I ASSETS:
2008 2007
Current Assets:
Cash and Cash Equivalents $ 151,563 $ 343,680
I Marketable Securities 25,000 5,798
Accounts Receivable 12,230
Prepaid Expenses 12,196 12,741
I Total Current Assets 200,988 362,219
I Property and Equipment:
Land 100,000 100,000
Building and Improvements 1,112,808 1,084,563
Books and Equipment 138,056 114,359
I 1,350,864 1,298,922
Accumulated Depreciation (1,081,016) (1,051,371)
Non-depreciable Assets - Artwork 120,000 120,000
I Total Property and Equipment 389,848 367,551
Total Assets $ 590,836 $ 729,770
LIABILITIES AND NET ASSETS
Current Liabilities:
Accounts Payable $ 8,981 $ 13,190
Payroll Liabilities 3,838 1,273
Accrued Expenses 15,911 4,702
Total Current Liabilities 28,731 19,165
Net Assets
Unrestricted 562,105 710,605
Total Net Assets 562,105 710,605
Total Liabilities and Net Assets $ 590,836 $ 729,770
The Independent Auditors' Report and the Notes to the Financial Statements
should be read in conjunction with these financial statements.
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I GRINNELL LmRARY ASSOCIATION
STATEMENTS OF ACTIVITIES
I FOR THE YEAR ENDED DECEMBER 31,2008
(WITH COMPARATIVE TOTALS FORZOO7)
I Temporarily Z008 Z007
Unrestricted Restricted Total Total
Revenue. Gains and Other SUDDort:
I Governmental Support $ 437,928 $ $ 437,928 $ 414,015
Fund Raising - Public and Corporate 21,417 21,417 32,602
In-kind Donations 1,176 1,176 875
I Dividends and Interest 8,039 8,039 12,058
Other Operational Revenues 18,337 18,337 20,863
Realized Gain (Loss) on Marketable Securities (607) (607)
Unrealized Gain (Loss on Marketable Securities (34,667) (34,667) (96)
Total Support 451,623 451,623 480,317
EXDenses:
Program Expenses:
Library Programs 426,355 426,355 414,032
Support Services:
Fundraising 22,961 22,961 397
General & Administrative Expenses 150,806 150,806 129,297
, Total Expenses 600,123 600,123 543,726
Change in Net Assets (148,500) (148.500) (63,409)
Net Assets, as of January 1 710,605 710,605 774,014
Net Assets, as of December 31 $ 562.105 $ $ 562,105 $ 710,605
The Independent Auditors' Report and the Notes to the Financial Statements
should be read in conjunction with these financial statements.
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I GRINNELL LmRARY ASSOCIATION
STATEMENTS OF CASH FLOWS
I FOR THE YEAR ENDED DECEMBER 31,2008
(WITH COMPARATIVE TOTALS FOR 2007)
I 2008 2007
Cash Flows from Ooeratin2 Activities:
Change in Net Assets $ (148,500) $ (63,409)
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Adjustments to Reconcile Change in Net Assets
To Net Cash Provided by Operations:
I Depreciation 29,645 29,922
Donated Stock (2,489) (516)
Realized Gain (Loss) on Marketable Securities 607
I Increase~ecreasein:
Prepaid Expenses 545 1,147
I Accounts Receivable (12,230) 1,117
Accounts Payable (4,209) (1,737)
Accrued Expenses 11,209 80
I Payroll Liabilities 2,565 (9,624)
Net Cash Provided by Operating Activities: (122,856) (43,020)
I Cash Flows from Investing Activities:
Purchase of Investment Securities (75,000)
Sale of Investment Securities 57,681
I Purchase of Property and Equipment (51,942) (19,706)
Net Cash (Used) by Investing Activities: (69,261) (19,706)
I Net Increase in Cash (192,117) (62,726)
Cash and Cash Equivalents, January 1 343,680 406,406
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Cash and Cash Equivalents, December 31 $ 151,563 $ 343,680
I Supplemental Disclosures of Non-Cash Investing Activities
Receipt of donated stock $ 2,489 $ 5,798
I Other Supplemental Disclosures
Interest Paid $ $
I Taxes Paid $ $
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The Independent Auditors' Report and the Notes to the Financial Statements 4
I should be read in conjunction with these financial statements.
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GRINNELL LmRARY ASSOCIATION
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31.2008
1. Summarv of Si2Dificant Accountinsz Policies
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Organization
Grinnell Library Association (the Association) was incorporated on February 3, 1888 under the Not-
For-Profit Corporate Law of the State of New York. The Association is dedicated to meeting general
library informational, educational and recreational needs of all members of the Wappingers Falls area
community. The Association is supported with funding from the three surrounding municipalities as
well as the general public.
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Basis of Accounting
The fmancial statements of the Association have been prepared on the accrual basis of accounting and
accordingly, revenues and gains are recognized when earned, and expenses and losses are recognized
when incurred.
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Fund Accounting
The accounts of the Association are maintained in accordance with the principles of fund accounting.
Under fund accounting, resources for various purposes are classified for accounting and reporting
purposes into funds established according to their nature and purpose. Separate accounts are
maintained for each fund, however, in the accompanying financial statements, funds that have similar
characteristics have been combined into fund groups. In accordance with SF AS No. 117, fund
balances are classified on the statement of financial position as unrestricted, temporarily restricted, or
permanently restricted net assets based on the absence or existence and type of donor-imposed
restrictions
Cash and Cash Equivalents
Grinnell Library Association considers cash in operating bank accounts, highly liquid investments,
such as money markets and certificates of deposit, as well as cash on hand as cash equivalents.
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Investments
In accordance with the provisions of SF AS No. 124, Accountingfor Certain Investments Held by Not-
for-Profit Organizations, the Organization carries investments in marketable securities with readily
determinable fair values and all investments in debt securities at their fair values in the statement of
financial position. Unrealized gains and losses are included in the change in net assets in the
accompanying statement of activities.
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Property and Equipment
Property and equipment are carried at cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the respective assets. When assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in
income for the period. The cost of maintenance and repairs is charged to expense as incurred. Significant
renewals and betterments are capitalized. Additions to fixed assets received by contribution are recorded at fair
market value. Depreciation expense for the year amounted to $29,645.
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GRINNELL LmRARY ASSOCIATION
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31.2008
1. Summarv of Sil!:Dificant Accountinl! Policies (Cont'd.)
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Revenue Recognition
All revenue is considered to be available for unrestricted use in the current year unless specifically
restricted by a grantor. Only grant revenue for which advances have been received is reported as
temporarily restricted. When a grant restriction expires, that is, when a stipulated purpose is
accomplished, temporarily restricted net assets are reclassified to non-restricted net assets and
reported in the statement of activities as net assets released from restrictions. Grant revenue which is
received on a reimbursement basis only (i.e. after expenses are incurred) is reported as unrestricted.
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Donated Materials and Services
The Association records the value of donated goods and services when there is an objective basis
available to measure their value. Donated services that create or enhance non-financial assets or that
require specialized skills, and are provided by individuals possessing those skills, and would typically
be purchased if not provided by donation, are recorded at their fair values in the period received.
Donated materials and equipment are reflected as contributions in the accompanying statements at
their estimated fair value at date of receipt. Also, the Association may benefit from the donated
services of people who volunteer their time to perform various functions that would normally have
warranted the payment of salaries or professional fees. The Association received contributed
professional services for the current year pertaining to financial accounting services. These services
include all bookkeeping for the Association's operations. The amount of contributed professional
services for the current year is $1,176.
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Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
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Functional Allocation of Expenses
Expenses by function have been allocated among program and . management classifications on the
basis of estimates made by the Association's officers.
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Income Taxes
The Association is a not-for-profit corporation that is exempt from federal income taxes under
Section 501 (c) (3) of the Internal Revenue Code. The Association has also been classified as an
entity that is not a private foundation within the meaning of Section 509 (a) and qualifies for
deductible contributions as provided in Section 170 (b) (1) (A) (vi).
Advertising
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The Association follows the policy of charging costs of advertising to expense as incurred.
Advertising expense for the year ended December 31, 2008 was $1,502.
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GRINNELL LffiRARY ASSOCIATION
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31.2008
2. Concentration of Credit Risk for Cash and Cash Eauivalents
Cash in one fmancial institution exceeded or was ineligible for Federal Deposit Insurance Corporation
coverage by $114,518. Management believes credit risk related to these deposits is minimal.
4. Pension Plan
3. Marketable Securities
Marketable securities consist of common stock, which are traded in public markets. Securities are
stated at fair value. The Association had an unrealized loss of $34,667 and realized loss of $607. The
Association had previously recorded a net loss pertaining to the stock of $96, recorded in 2007. The
Association held $25,000 in securities at December 31, 2008.
Grinnell Library Association established a tax deferred annuity plan through TIAA-CREF which is
available to substantially all ofits employees. The benefits are based on years of service and the
. employee's compensation. The Association contributed $5,287 for the current fiscal year.
5. Economic DeDendencv
The Association derives approximately 90% of its revenue from three municipalities. Generally, such
funding is subject to the approval of the two Towns' and one Village's voters. .
6. Commitments
Grinnell Library Association leases a copier under a non-cancelable operating lease which expires
February 2010. The annual base rent is $2,100. Lease expense was $2,100 for the year ended
December 31,2008.
The following is a schedule of future minimum lease payments under this lease:
12/31/2009 $ 2,100
12/31/2010 350
Total $ 2,450
7. Contine:encv
The Association purchased $75,000 worth of auction rate preferred (ARP) securities in
January 2008. ARP securities are bundled long-term corporate bonds, municipal bonds, and
preferred stock on which interest rates are reset periodically based on bids submitted through
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GRINNELL LIBRARY ASSOCIATION
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31.2008
7. Contin2encv. (Cont'd)
securities finns. Generally, rates are reset every seven, fourteen, twenty-eight, or thirty-five
days.
However, in February 2008, the auction market failed and since then most auction rate
securities markets have been frozen. The Association has been successful in collecting
$50,000 worth of the original $75,000 investment, leaving $25,000 outstanding as of
December 31, 2008. Efforts are still ongoing to collect this remaining amount and
management believes they will be able to collect the full amount.
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SUDDlementarv Information
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I GRINNELL LmRARY ASSOCIATION
SCHEDULE OF FUNCTIONAL EXPENSES
I FOR THE YEAR ENDED DECEMBER 31, 2008
(WITH COMPARATIVE TOTALS FOR 2007)
I Program
Services Support Services
Library General & 2008 2007
Programs Fundraising Administrative Total Total
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Salaries and Wages $ 242,059 $ $ 60,515 $ 302,574 $ 288,419
I Payroll Taxes 17,932 4,483 22,415 21,340
Employee Benefits 16,045 4,011 20,056 21,854
Library Materials 66,893 66,893 66,663
General Programs 4,653 4,653 3,911
Volunteer Recognition 1,222 1,222 1,044
Summer Programs 3,892 3,892 3,745
Library Automation System 9,241 9,241 12,163
Fundraising Supplies 308 308 397
Building Maintenance 14,184 3,546 17,730 12,971
Insurance 9,198 2,299 11,497 11,436
Utilities 17,321 4,330 21,651 19,141
Professional Fees 22,654 19,334 41,988 18,689
Telephone 2,465 2,465 2,542
Office Supplies 10,958 10,958 9,682
Newsletter 11,730 11,730 7,660
Postage and Printing 3,182 3,182 731
Marketing Supplies 5,405 5,405
Travel and Conferences 925 925 370
Dues & Workshops 1,364 1,364 540
. 'Copier Expense 2,222 2,222 2,154
Small Equipment 763 763 522
Bank Charges 1,624 1,624 600
In-Kind Expenses 1,176 1,176 875
Licenses and Fees 150 150 203
Advertising 1,502 1,502 2,847
Miscellaneous 2,894 2,894 3,305
Total Expenses Before Depreciation 402,639 22,961 144,877 570,478 513,804
Depreciation 23,716 5,929 29,645 29,922
Total Expenses $ 426,355 $ 22,961 $ 150,806 $ 600,123 $ 543,726
See Independent Auditor's Report
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