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Audit Report

From: Leaven, Vol. 45 No. 1, 2009, pp. 22-23

Each year the La Leche League International Board of Directors commissions an independent audit of the financial operations of the LLLI office in Schaumburg, Illinois, USA. The audit provides the Board with a financial snapshot of the organization that can be compared with previous audits to gauge whether we are progressing toward the goal of being a financially healthy organization.

The annual audit for the fiscal year April 1, 2007, to March 31, 2008, was conducted by Desmond and Ahern, Ltd., Certified Public Accountants and Consultants, based in Chicago, Illinois, USA. The audit was presented to and accepted by the LLLI Board of Directors at the October 2008 Board meeting.

Prior to presenting the audit at the Board meeting, a draft went to the Audit Committee. This committee is traditionally made up of LLL members and outside individuals, with the majority being Board members. This year it was comprised of co-Chairmen Lavinia Belli and Cindy Garrison; Board members Val Meyers, Ed Savage, and Viola Lennon; Leaders Annette Beening of Germany and Jill Allan of New Zealand; and Bill Heritage, also from New Zealand and a member of the LLLI Management Advisory Council. The Audit Committee reviewed the audit and had the chance to ask questions of auditor Pat Melvin, Executive Director Barbara Emanuel, and Financial Manager Jackie Philp. The final audit included consideration of comments from the committee.

In the statement from the auditor, they extended "a note of appreciation and congratulation for the tremendous job the staff and management of La Leche League did in preparing for the fiscal year 2008 audit." They also extended "kudos to the entire management team" for their increased awareness of LLL resources and costs of utilizing those resources.

What did the audit tell us? It tells us that La Leche League is not immune to the worldwide trends in economies. With unstable financial markets and employment concerns, families and donors are looking very closely at where they put their money. In this atmosphere, giving and discretionary buying have a lower priority than essential purchases. Due to these and other influences, LLLI -- along with numerous other nonprofits -- has finished the fiscal year with a deficit. While the organization’s overall assets have increased in the past year, and expenses have come in under budget, costs still exceed revenues leading to a deficit of $144,053.

La Leche League continues to be an important voice for breastfeeding as a normal standard for mothers to nourish their babies. The LLLI Board will continue to make decisions that will improve the financial state and security of the organization so that this voice will continue to be available for all women around the world now and in the future.

There are several clear areas of concern. There has been a significant drop in revenues from membership and periodicals. The organization cannot be healthy if it is not supported from within. The online store revenues are less than had been projected. IT (Information Technology) concerns -- among them the Web site redesign and Kintera not being able to provide what had been hoped -- have resulted in more time and money expended on this area than had been expected.

To balance those concerns, the audit pointed out many areas of good fiscal stewardship. The audit was unqualified, which means that there were no questions left hanging in how the financial affairs are conducted. Accounts conform to generally accepted accounting principles and practices. This improves our standing on Charity Navigator (http://charitynavigator.org) and makes LLLI eligible for the Combined Federal Campaign once again.

La Leche League continues to be an important voice for breastfeeding as a normal standard for mothers to nourish their babies. The LLLI Board will continue to make decisions that will improve the financial state and security of the organization so that this voice will continue to be available for all women around the world now and in the future.

How the money is being handled, tracked, and accounted for was a highlight of the audit. As part of the audit, the auditors "test" the system, making random selections of controls to make sure they work as they follow money and how it is accounted for as it comes in and goes out, how inventory is controlled and accounted for, and how transactions are documented.

There are some changes anticipated to how the IRS looks at nonprofits and suggestions were offered to help LLLI be proactive and anticipate these changes now. Included in these suggestions were to have a whistleblower policy, which the Board was already preparing, and to update conflict-of-interest statements annually or even every Board meeting to keep things transparent.

If you have questions about the auditor's report or the work of the Audit Committee, please feel free to write to Lavinia Belli (LBelli at llli dot org) or Cindy Garrison (CGarrison at llli dot org).

Leaders with financial experience are especially encouraged and invited to consider Audit Committee work.

Statement of Financial Position

Fiscal Year April 1 2007 - March 31 2008

Assets
Current Assets
Cash and equivalents 1,118,546
Accounts receivable, net allowance
of doubtful accounts of $81,846
99,781
Royalties receivable 131,112
Inventory, net allowance of $30,710 198,425
Prepaid expenses 18,469
Net Property and Equipment 1,485,408
Total Current Assets 1,566,333
Property, Office Equipment, and Software
Development
Office and land 665,000
Office equipment, furniture, and vehicle 286,640
Software development 962,176
1,913,816
Less accumulated
depreciation and amortization
(428,408)
Net Property and Equipment 1,485,408
Total Assets $3,051,741
Liabilities and Net Assets
Current Liabilities
Accounts payable $187,756
Accrued liabilities 61,767
Deferred revenue 176,613
Total Current Liabilities 426,136
Net Assets
Unrestricted
General 2,191,586
Board designated 289,396
Total Unrestricted Net Assets 2,480,982
Temporarily restricted 134,623
Permanently restricted 10,000
Total Net Assets 2,625,605
Total Liabilities
and Net Assets
3,051,741

 

La Leche League International, Inc. Financial Information

Complete information about the audit for the year ending March 31, 2008
can be downloaded from the shared library on the CN.

Statement of Activities
Fiscal Year April 1 2007 - March 31 2008

  Unrestricted Temporarily Restricted Permanently Restricted Total
Revenues
Publications, net of discounts
and returns of $10,153
$882,104 ------ ------ $882,104
Periodicals 114,059 ------ ------ 114,059
Membership dues 319,180 ------ ------ 319,180
International Conference 15,000 ------ ------ 15,000
Royalty income 319,003 ------ ------ 319,003
Workshop and seminar fees 938,106 ------ ------ 938,106
Enduring materials income 70 ------ ------ 70
Miscellaneous 5,583 ------ ------ 5,583
Contributions 342,422 140,107 ------ 482,529
In-Kind Contributions ------ 213,618 ------ 213,618
Net assets released
from restrictions
408,419 (408,419) ------ ------
  3,343,946 (54,694) ------ 3,289,252
Expenses
Supporting Services
Management and operations 534,573 ------ ------ 534,573
Fundraising 187,042 ------ ------ 187,042
  Total Supporting Services 721,615 ------ ------ 721,615
Program Services 2,771,634 ------ ------ 2,771,634
  Total Expenses 3,493,249 ------ ------ 3,493,249
(Decrease) in
Net Assets from Operation
(149,303) (54,694) ------ (203,997)
Other Income
Interest Income 55,334 4,610 ------ 59,944
  Total Other Income 55,334 4,610 ------ 59,944
Net (Decrease) in Net Assets (93,969) (50,084) ------ 144,053
Net Assets
Beginning of the Year 2,574,951 184,707 10,000 2,769,658
End of Year $2,480,982 $134,623 $10,000 $2,625,605
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