Report from the Board: Annual Audit
Sharon Matuszek and Donna Cookson Martin
LLLI Board of Directors
From: LEAVEN, Vol. 38 No. 6, December 2002 - January 2003, p. 122.
At the end of each fiscal
year, the LLLI Board of Directors orders an independent audit of the
financial operations directed from the LLLI office in Schaumburg, Illinois,
USA. Thomas Havey, LLP Certified Public Accountants, completed the audit
for the fiscal year ending March 31, 2002. Their report was presented
to the LLLI Board of Directors at the October 2002 meeting.
Because of the publicity
regarding audits in 2002 or perhaps because of LLLI’s current financial
situation, you may be wondering about and trying to understand the audit
process. What is the role of the Audit Committee? How is the auditing
firm selected? What did the 2001-2002 audit tell us?
The Audit Committee is a
standing committee, mandated by the LLLI Bylaws to report to the LLLI
Board of Directors. The majority of the committee members must be members
of the LLLI Board of Directors. This year the committee, co-chaired
by Sharon Matuszek and Donna Cookson Martin, also includes Board member
Sharon Vines, LLLI Founder, Mary Ann Kerwin, and former EUS Division
Finance Administrator, Linda Parry.
According to the LLLI Policies
and Standing Rules, the Audit Committee of the Board of Directors has
two main functions:
To present the auditor’s
report to the Board and respond to questions regarding its contents
and the auditing procedures used so that all the functions of the organization
may be effectively and efficiently carried out in conformity with established
policies and procedures of LLLI; and
To present to the Board of Directors at the session prior to the Annual
Board session the Committee’s recommendations of independent public
accountants to be employed to prepare the audit the following year.
Put simply, the audit Committee recommends a competent and trustworthy
auditor, reviews the auditor’s findings and shares these findings
with the Board.
The Board, on the recommendation
of the Audit Committee, has used the services of Thomas Havey, LLP,
for several years. The firm, which has offices in several major US cities,
was chosen because it has a solid reputation and is respected for its
work with nonprofit organizations. The accountants have an understanding
and appreciation of our history as an organization and a wide experience
of the issues facing not-for-profit organizations. Thomas Havey, LLP,
offers reasonable and competitive rates and their employees work well
with our office staff. Barry Omahen, Senior Partner at Thomas Havey,
has worked on the LLLI audit for many years. He helped LLLI obtain an
exemption from paying property taxes of approximately $45,000 a year
and helped us receive a refund of the taxes that had been previously
paid by LLLI.
To determine the financial
status of LLLI, two auditors from Thomas Havey, LLP, conducted an on-site
inspection at the LLLI office in Schaumburg. They checked the accuracy
of the physical inventory and examined the financial records and the
procedures and policies used by the office staff. After this three-week
process, reports and management letters were prepared and distributed
to the Finance Director and the Audit Committee.
The report stated in part:
In our opinion, the financial
statements present fairly, in all material respects, the financial position
of La Leche League International, Inc. as of March 31, 2002 and 2001;
and the results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted in
the United States of America.
LLLI experienced a deficit
of $426,418 in 2001-2002. Our total revenue in 2001-2002 was $4,355,916
and our expenses $4,782,334. The costs we incurred in operating the
LLLI office and providing the services exceeded the amount of money
received from memberships, donations, and sales, etc. This is not the
first time we have incurred a deficit. We avoided a deficit in 2000-2001
only because of a refund of $265,257 in real estate taxes that had been
paid in previous years.
Several factors have contributed
to the deficit. One is the weakening United States economy. The largest
proportion of LLLI income is derived from US sources. LLLI has seen
a decrease in the number of memberships, the volume of sales, and the
amount of philanthropic giving. La Leche League depends on donations
as a way of meeting our operating expenses. Sales of materials from
the LLLI Catalogue were down in 2001-2002. The value of merchandise
held for resale at the time of the audit in 2002 was $440,609 compared
to $317,669 in 2001. Although inventory is an asset, the amount shows
us that we did not meet anticipated sales during the 2001-2002 fiscal
year. At the close of the fiscal year, LLLI owed vendors $380,000. Those
who make purchases from LLLI owed $361,000. About half of the money
owed to LLLI comes from within LLL (Groups, Areas, Affiliates), and
the remaining from book distributors, hospitals, and other larger customers
outside of LLL.
Executive Director Anne Gaskell,
Finance Director Mike Giuntoli, Operations Director Tamara Harris, and
the Board of Directors Finance Committee are working to develop ways
to improve this situation. They are examining the work done in the office
and continue to implement ideas for generating revenue and for improving
efficiency. Input and suggestions from Leaders are always welcome.
Sharon Bell-Wilson, Funding
Director, is working toward developing new funding sources for our mission.
She is striving to improve relations with our current donors and develop
relationships with new ones.
Areas, Groups, and Leaders
can help to ensure that LLLI has the financial resources needed to carry
out our mission all over the world. We can sell more memberships and
seek support from those who contact us for mother-to-mother support.
We can purchase publications and other materials from LLLI and work
to make sure that we pay our account balances quickly. We can remember
La Leche League when making charitable donations and ask others to do
the same. We can look for fundraising opportunities, we can participate
in the World Walk for Breastfeeding, and we can attend the LLLI Conference.
We encourage all to become
engaged in promoting the financial health of La Leche League. If you
have questions about the Auditor’s Report or the work of the Audit
Committee, please write to: Sharon Matuszek, 241 Scannell Road, Chatham,
New York 12037 USA, matuszek at taconic.net (email); or Donna Cookson Martin,
Box 236 Sedgewick, Alberta, Canada T0B 4C0, cookson at telus planet.net
(email).
Page last edited Sun Oct 14 09:31:31 UTC 2007.
