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Annual Audit: 2006-2007

Shera Lyn Parpia and Shirley Phillips
LLLI Board of Directors
From: LEAVEN, Vol. 44, No. 3, 2008, p. 17

Abstract: 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 towards the goal of being a financially healthy organization.

The annual audit for the fiscal year April 1, 2006 to March 31, 2007 was conducted by Desmond & Ahern, Certified Public Accountants, based in Chicago, Illinois, USA. The audited financial statements were presented to and accepted by the LLLI Board of Directors at the February-March 2008 Board meeting.

LLLI retained a new auditing firm this year because Mann Weitz & Associates, the previous auditors, were providing financial (accounting) services to LLLI. Desmond & Ahern was retained after considering and interviewing three firms recommended to us. The accounts this time do not include comparatives from the audit of 2005-06 because the new auditors opted not to present with their audited accounts information from an audit for which they had not been responsible.

The audit for this financial year was a qualified audit rather than an unqualified one. This was only because $87,000 in the clearing account could not be identified to a specific line item, in spite of heroic efforts on the part of the accounting staff. The auditors agreed that the bottom line was correct, but specific details relating to that $87,000 could not be verified without further work out of proportion to the amount in question.

The audit presented many challenges to the staff at the LLLI office. At the end of this period, in a special letter, the auditors commended the controller and the staff at LLLI for their "efforts at cleaning up the books and providing a financial reporting foundation in which to move forward" and concluding that "their efforts cannot be overstated." This type of commendation is most unusual and therefore very special.

The last article about the audit (Leaven, Vol. 43 No. 1, January-February-March 2007, pp. 18-19) concluded by stating that although we no longer had any debts thanks to the sale of the office building and were considering other ways of reducing expenses, our financial future was still uncertain. The article also said:

...it has been clear to the Board of Directors that dramatic changes need to be made to the LLLI business operations to enable the organization to survive. Our limited resources need to be focused where they can best promote and support the mission of LLLI.

The year that followed this audit was a year of change for LLLI in many ways. One significant change has been to reduce expenses quite dramatically from $3,875,404 to $2,618,506. This has been made possible by reduced expenses in a smaller and more appropriate building, staff reduction, and discontinuing or changing the nature of some programs. As explained after the last audit, in order to reduce expenses and work more effectively, some services have been outsourced (such as shipping), some programs have been changed, some programs are no longer funded by LLLI, and some have been discontinued; for example, the helpline, which was providing a service principally to mothers in the USA, has been taken over by the two USA Divisions and the services of the Breastfeeding Information Network (formerly the Center for Breastfeeding Information) will now be fulfilled by voluntary staff.

The financial statements of the audit indicate that during 2006-2007 our total assets were $3,379,644. The sale of the building gained us $1,279,520 and this was responsible in large measure for the fact that we ended the fiscal year with more money than when it started.

The increase in deferred revenue was due to receiving income for the 2007 LLLI Conference, financial details of which will form part of the 2007-08 audited accounts. A large proportion of the temporarily restricted funds was also released, mainly for the Information System Project, so that temporarily restricted assets are now only $184,707 compared with $835,116 last year. Our computer systems were very out of date and have now been largely updated, creating a unified platform. Another pleasing facet is that Accounts Receivable (at $101,732) are now comparable with Accounts Payable ($150,558), rather than the large imbalance of last year.

However, while expenses were down, so was income from items such as publications, periodicals, and membership dues, while unrestricted contributions remained steady. The delicate balance between income and expenditure remains a big issue for LLLI.

Questions about the audited financial statements or the work of the Audit Committee may be directed to Shera Lyn Parpia and Shirley Phillips, Co-Chairs of the Audit Committee for 2006-07.

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