HomeMy WebLinkAbout09 - NB-1 - Attachment 2 - 5/6/2014Attachment 2
COSTA MESA CONFERENCE
AND VISITOR BUREAU
FINANCIAL STATEMENTS
For the fiscal years ended June 30, 2013
and June 30, 2012
CONTENTS
Page No,
Independent Auditors' report
Financial Statements
Statements of assets, liabilities and net assets — cash basis
Statements of support, revenues and expenses -- cash basis
Notes to financial statements -- cash basis
Geller
Eperthener
McConnell LLP
��n� Certified pllblic&wglants and Cor�siiitariis
To the Board of Directors of
Costa Mesa Conference and
Visitor Bureau
Independent Auditors' Re ort
Mitchell R Geller, C.P.A.
Steven. D. Eperthener, c,P.A
William L, McConnell, cP.A
We have audited the accompanying financial statements of Costa Mesa Conference and Visitor
Bureau (a nonprofit organization), which comprise the statement of financial position as of June 30,
2013 and 2012, and assets, liabilities and net assets —cash basis, and the related statements of
support, revenues, and expenses — cash basis for the years then ended.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with cash basis of accounting, which is a comprehensive basis of accounting other than
generally accepted accounting principles; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with the cash basis of accounting, which is a comprehensive
basis of accounting other than generally accepted accounting principles. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation: and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control. Accordingly, we express no such
opinion. An audit also included evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
(562) 594-5866 • (977) 310-1440 0 fx: (562) 594-7944 •3626 Last Pacific Coast Highway a 2nd Floor • Long Beach, C!4dornia 908043
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Costa Mesa Conference and Visitor Bureau (a nonprofit organization), as of
June 30, 2013 and 2012, and assets, liabilities and net assets -- cash basis, and the related
statements of support, revenues, and expenses — cash basis for the year ended in accordance with
the cash basis of accounting, which is a comprehensive basis of accounting other than generally
accepted accounting principles.
Certified Public Accountants
Long Beach, CA
November 30, 2013
COSTA MESA CONFERENCE AND VISITOR BUREAU
STATEMENTS OF ASSETS, LIABILITIES AND NET ASSETS - CASH BASIS
June 30, 2013 and June 30, 2012
ASSETS
Cash
Total assets
LIABILITIES
Current Liabilities
Total Liabilities
NET ASSETS
Unrestricted
Net Assets
See accompanying notes to financial statements
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2013
$1,317,294
$1,317,294
2012
$1,288,743
$1,288,743
$ 462 $ -
462 -
$1,316,832 $1,288,743
$1,316,832 $1,288,743
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COSTA MESA CONFERENCE AND VISITOR BUREAU
STATEMENTS OF SUPPORT, REVENUES AND EXPENSES - CASH BASIS
June 30, 2013 and 2012
2013 2012
UNRESTRICTED NET ASSETS
Unrestricted revenues
Business improvement area assessment $2,197,149 $1,939,658
Interest income 3,666 3,821
Other income - 113
Total unrestricted revenues
Expenses
Hotel and special promotions
Marketing
Salaries and benefits
General and administrative
Total expenses
Increase in unrestricted net assets
NET ASSETS AT BEGINNING OF THE YEAR
NET ASSETS AT END OF YEAR
See accompanying notes to financial statements
2,200,815 1,943,592
321,237
323,973
1,254,165
839,813
343,153
315,536
254,171
160,841
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2,172,726 1,640,163
28,089 303,429
1,288,743 985,314
$1,316,832 $1,288,743
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COSTA MESA CONFERENCE AND VISITOR BUREAU
NOTES TO FINANCIAL STATEMENTS - CASH BASIS
June 30, 2013 and June 30, 2012
1 . Nature of activities and Significant Accounting Policies
Nature of activities
The Costa Mesa Conference and Visitor Bureau (The Bureau) is a California non-profit
corporation formed in 1995 to market the city of Costa Mesa as a leisure and group meeting
travel destination.
The vision of the Bureau is to be the engaged destination -marketing leader by supporting and
selling the city of Costa Mesa's distinct visitor brand experiences and advocating community
tourism benefits. The Bureau's mission is to enhance and promote the city of Costa Mesa's
brand, experience, further increasing visitor spending for industry and community economic
viability, sustainability and quality of life.
The Bureau is comprised of the ten member hotels within the Business Improvement Area
(BIA) of Costa Mesa. The member hotels are Costa Mesa Marriott, Hilton Costa Mesa, Holiday
Inn Express Hotel & Suites, Residence Inn by Marriott, Avenue of the Arts Wyndham Hotel,
Ayres Hotel & Suites, The Westin South Coast Plaza, Ramada Inn and Suites Costa Mesa, Best
Western Plus Newport Mesa Inn, and Crowne Plaza.
Basis of accountin
The Bureau's policy is to prepare its financial statements on the basis of cash receipts and
disbursements which is a comprehensive basis of accounting other than generally accepted
accounting principles. Consequently, revenues are recognized when received rather than when
earned, and expenses are recognized when disbursed rather than when the obligation is
incurred.
Tax status
The Bureau is exempt from taxation under Internal Revenue Code Section 501(c)(6) on
income related to its tax exempt purpose. The Bureau had no unrelated business income, as
defined by the Internal Revenue Code, for the fiscal years ended June 30, 2013 and June 30,
2012. Accordingly, no tax provision has been provided for in the accompanying financial
statements.
Use of Estimates
The preparation of financial statements in conformity with the cash basis of accounting
requires management to make estimates and assumptions that affect certain reported amounts
and disclosures. Actual results could differ from those estimates.
COSTA MESA CONFERENCE AND VISITOR BUREAU
NOTES TO FINANCIAL STATEMENTS - CASH BASIS (continued)
June 30, 2013 and June 30, 2012
1. Nature of activities and Significant Accounting Policies (continued)
Financial Statement Presentation
The Bureau reports information regarding its financial position and activities according to
unrestricted net assets.
Designation of Unrestricted Net Assets
The Bureau designates the majority of its unrestricted net assets into the following major
categories:
Hotel and special promotions - (See Note 3)
Marketing - (See Note 4)
Salaries and benefits — Funds to compensate for the employees of the Bureau, expenses such
as salary, and employee benefit plan (See Note 8).
General and administrative - Funds to pay for expenses of operations of the Bureau.
Revenue
On behalf of the City of Costa Mesa the Bureau's ten member hotels collect a Business
Improvement Area (BIA) levy on the sale of overnight guest room stays. For the fiscal year
ended June 30, 2013 and June 30, 2012 the levy was three percent (3%) The levy is transmitted
by the hotels to the City and is remitted to the Bureau, net of a one percent handling fee,
pursuant to a Professional Services Agreement (PSA) entered into by and between the City and
the Bureau.
The above mentioned levy is 99.8% of the total revenue of the Bureau for fiscal years ended
June 30, 2013 and June 30, 2012, respectively. The professional services agreement (PSA)
with the City of Costa Mesa is renewed annually. The Bureau and the City of Costa Mesa have
a good working relationship; consequently there is no concern that the PSA will not be renewed
each year, indefinitely.
Use of BIA Revenue
California state law provides that BIA assessments are to be used for the purposes specified
in the authorizing resolution that established the assessment. The City's resolution that
established the assessment references the uses specified in the Bureau's annual report.
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COSTA MESA CONFERENCE AND VISITOR BUREAU
NOTES TO FINANCIAL STATEMENTS - CASH BASIS (continued)
June 30, 2013 and June 30, 2012
2. Cash
Cash consists of demand deposits as of June 30, 2013 and June 30, 2012 at the following
institutions:
American Securities Bank
Pacific Premier Bank
Beach Business Bank
National Bank
Total
6130113
$731,325
368,476
217,493
0
$1,317,294
6130112
$476,495
585,369
216,747
10,132
$1,288,743
The Bureau maintains its cash in bank deposit accounts, which at various times during the
fiscal years ended June 30, 2013 and June 30, 2012 exceeded federally insured limits.
3. Hotel promotions expense
During 2012-2013 fiscal years, the Bureau allocated $150 per room to each member hotel for
hotel specific marketing purposes, The allocation subsidizes hotel specific advertising and
marketing efforts that also include the Bureau logo. Vendor invoices are either paid by the hotel
or paid directly by the Bureau.
Samples of the advertising 1 marketing material must be submitted showing the
Bureau logo for reimbursement. Hotel promotions expense amounted to $321,237 and
$323,973 for fiscal years ended June 30, 2013 and June 30, 2012, respectively. If the hotels do
not use all of their allocated funds the funds revert back to the Bureau.
It is the opinion of the Bureau that reimbursing the hotels for advertising costs provides a
public benefit to the City of Costa Mesa by promoting tourism, increasing retail sales, etc.
4. Marketing expenses
The Bureau incurs marketing expenses related to its mission of promoting the City of Costa
Mesa as a tourist destination. For the fiscal years ended June 30, 2013 and June 30, 2012,
marketing expenses totaled $1,254,165 and $839,813, respectively.
Marketing expenses include a new website for the Bureau which went live in January 2012,
community sponsorships, brochures, print advertising and various promotions. All of these
endeavors promote tourism in the City of Costa Mesa.
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COSTA MESA CONFERENCE AND VISITOR BUREAU
NOTES TO FINANCIAL STATEMENTS - CASH BASIS (continued)
June 30, 2013 and June 30, 2012
5. Commitments and Contingencies
The Bureau entered into a lease for office space effective July 15, 2010. The lease is for five
(5) years ending July 31, 2015. There is an option to renew the lease for an additional five (5)
years at the end of the lease period. Total rent expense for fiscal years ending June 30, 2013
and June 30, 2012 amounted to $34,389 and $32,076, respectively.
Future minimum lease obligations as of June 30, 2013 consist of the following:
Fiscal year ended June 30, 2014 $34,047
June 30, 2015 $35,068
June 30, 2016 thereafter $2,969
The Bureau also entered into non -cancelable lease for a color copier on
September 30, 2010. The lease is for five (5) years ending September 29, 2015.
Monthly payment for the copier is $166.60 per month until the end of the lease.
6. Employee Benefit Plan
The Bureau sponsors a defined contribution salary deferral plan (401(k) plan) covering all
employees. Beginning in April 2012 the board of directors has agreed to match 401(k)
contributions dollar for dollar up to 3% of the eligible employee's salary. During the fiscal year
ended June 30, 2013 matching contributions amounted to $9,522. There were no matching
contributions during fiscal year June 30, 2012.
7. Credit Risk
The Bureau maintains cash deposits at institutions which are insured by the Federal
Deposit Insurance Corporation (FDIC) up to $250,000. At various times during 2013 and
2012, the Bureau maintained balances in excess of the federally insured limit.
8. Risk and Uncertainties
Due to the nature of the Bureau's business, the Bureau's revenue is entirely dependent on the
City of Costa Mesa, which collects the Business Improvement Area (BIA) levy from the ten hotels
in Costa Mesa (see Revenue). A cancellation of the Professional Service Agreement (PSA)
between the City of Costa Mesa and the Bureau will adversely and severely impact the Bureau's
financial position. The possibility of the PSA agreement not being renewed annually is remote.
10
COSTA MESA CONFERENCE AND VISITOR BUREAU
NOTES TO FINANCIAL STATEMENTS - CASH BASIS (continued)
June 30, 2013 and ,lune 30, 2012
9. Subsequent Events
Management has evaluated subsequent events through November 30, 2013, the date that the
financial statements were available to be issued. The following subsequent event has been
identified for disclosure in these financial statements.
The Bureau had initiated a lawsuit against a former vendor, during 2012, The Bureau
believed the vendor had breached a contract with the Bureau by not performing services
as requested. During 2013, the case resulted in The Bureau losing the lawsuit against
the vendor.
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