2013 financial audit
Money Matters — Keith Sessions, Chief Financial Officer
This month, I am pleased to announce the results of the 2013 financial audit for the Academy of Model Aeronautics. The accounting firm of Brady, Ware & Schoenfeld, Inc. performed the audit in March. The results were reviewed with the Executive Council at our April 6, 2014, meeting.
We received an unqualified opinion from the audit. Although “unqualified” does not sound great, it is actually the best rating we could receive from an audit. In layman's terms, it means that there were no major accounting issues uncovered.
Our auditors did bring to light a couple of items for us to consider going forward:
- A recommendation to increase dues. Because it is an accounting firm, I would be surprised if they did not recommend increasing dues. As mentioned in my May article, we have not increased dues in several years. Inflation and increased expenses related to lobbying efforts would certainly justify the increase.
- Improved unrelated-business income, which helps us delay a dues increase. Because we are a nonprofit organization, the IRS does not require us to pay taxes on much of our income, but certain parts are considered taxable.
The AMA is subject to unrelated-business income tax on magazine advertising, merchandising sales, Internet advertising, and rental income on debt-financed property. We still have net operating loss carryforwards, which help us avoid paying taxes at this point. In 2012, the expectation was that it would take four to five years to use these up. In the 2013 audit, the expectation was changed to one to two years.
Although this is a good problem to have, it is still a problem. For 2014, the staff at AMA Headquarters is going back through the records and ensuring that we capture any and all expenses related to the unrelated-business income.
An audit of the books for an organization the size of the AMA is a requirement. For local clubs, I think it becomes almost the exception instead of the rule. I highly recommend that the books be reviewed by a second party at least once a year. When a review is done, it is often performed right before or right after office elections. I think it would make more sense to perform one off-cycle every few years.
I would also like to welcome Vicki Barkdull back as the AMA’s comptroller. Vicki was with the AMA for 14 years, from 1993 until 2007. In 2007 she left to manage the finances for a family business. We are excited to have her back.
As a side note, I have been able to attend several events since taking over as CFO. I always get a kick out of the people who mention that they have read my column. By my calculations, I estimate that my readership has almost reached double digits!
Transcribed from original scans by AI. Minor OCR errors may remain.
