THE COMISSION ON PRESERVATION AND ACCESS FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1993 Contents Independent Auditors' Report Balance Sheet Statement of Revenue, Expenses and Changes in Fund Balance Statement of Cash Flows Statement of Functional Expenses Notes to the Financial Statements BEERS & CUTLER Certified Public Accountants 1250 Connecticut Avenue NW Fourth Floor Washington DC 20036 Facsimile 202-778-0239 Virginia Office 8230 Leesburg Pike Suite 700 Tysons Corner Vienna Virginia 22182 Independent Auditors' Report To the Board of Directors The Commission on Preservation and Access Washington, D.C. We have audited the accompanying balance sheet of The Commission on Preservation and Access (the Commission) as of June 30, 1993, and the related statements of revenue, expenses and changes in fund balance, cash flows, and functional expenses for the year then ended. These financial statements are the responsibiliq of the Commission's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Commission on Preservation and Access as of June 30, 1993, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. [Beers & Cutler] August 12, 1993 Member Summit International Associates Inc with offices in principal US and International Cities Member AICPA Division for Firms- SEC Practice Section THE COMMISSION ON PRESERVATION AND ACCESS BALANCE SHEET JUNE 30, 1993 (with comparative totals for 1992) Assets 1993 1992 ---- ---- Cash $ 203,438 $ 339,468 Investments, including restricted amounts of $1,801,478 and $788,758 2,486,287 1,679,992 Grants receivable 237,500 300,000 Prepaid expenses and other receivables 24,780 18,557 Furniture, fixtures and equipment, net of accumulated depreciation of $12,521 and $4,057 16.598 22.962 --------- --------- Total assets $2,968,603 $2,360,979 Liabilities and Fund Balance Accounts payable and accrued expenses $ 45,133 $ 35,902 Contracts payable Unrestricted 28,556 10,179 Restricted 102,978 361,640 Deferred revenue Unrestricted 238,994 439,612 Restricted 1.801,478 788,758 --------- --------- Total liabilities 2,217,139 1,636,091 Fund Balance 751,464 724,888 --------- --------- Total liabilities and fund balance $2,968,603 $2,360,979 The accompanying notes are an integral part of these financial statements. THE COMMISSION ON PRESERVATION AND ACCESS STATEMENT OF REVENUE, EXPENSES AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 1993 (with comparative totals for 1992) 1993 1992 Total Total Unrestricted Restricted All Funds All Funds Revenue Grant $200,619 $758,021 $ 958,640 $ 923,344 Contributions 170,400 -- 170,400 281,000 Publication sales -- 7,323 7,323 5,070 Interest 32,148 -- 32,148 40,749 ------- ------ --------- --------- Total revenue 403,167 765,344 1,168,511 1,250,163 Expenses Program National Preservation Program 143,637 -- 143,637 267,549 Demonstration Projects 125,618 -- 125,618 10,387 International Projects - 305,584 305,584 233,980 Advisory Committees -- 70,651 70,651 57,202 Technology Assessment -- 153,312 153,312 351,140 Text and Image Project - -- -- 51,085 Communications - 168,178 168,178 123,301 Nonprint Materials -- 67,619 67,619 34,583 ------- ------- --------- --------- Total program expenses 269,255 765,344 1,034,599 1,129,227 Administration 107,336 -- 107,336 57,304 Total expenses 376,591 765,344 1,141,935 1,186,531 Excess of Revenue over Expenses 26,576 -- 26,576 63,632 Fund Balance, beginning of year 724,888 -- 724,888 661,256 ------- ------- -------- --------- Fund Balance, end of year $751,464 $ -- $ 751,464 $ 724,888 The accompanying notes are an integral part of these financial statements. THE COMMISSION ON PRESERVATION AND ACCESS STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 1993 (with comparative totals for 1992) 1993 1992 Total Total Unrestricted Restricted All Funds All Funds Cash Flows from Operating Activities Excess of revenue over expenses $ 26,576 $ -- $ 26,576 $ 63,632 Adjustments to reconcile excess of revenue over expenses to net cash (used in) provided by operating activities Depreciation 8,464 -- 8,464 4,057 Changes in: Grants receivable 150,000 (87,500) 62,500 (233,333) Prepaid expenses and other receivables (6,223) -- (6,223) (14,100) Account payable and accrued ecpenses 9,231 -- 9,231 (3,730) Contracts payable 18,377 (258,662) (240,285) 18,444 Deferred revenue (200,618) 1,012,720 812,102 (402,104) --------- --------- --------- --------- Total adjustments (20,769) 666,558 645,789 (630,766) Net cash provided by (used in) operating activities 5,807 666,558 672,365 (567,134) --------- --------- --------- --------- Cash Flows from Investing Activities Purchases of investments (3,944,737 (666,558) (4,611,295) (3,279,992) Sales of investments 3,805,000 -- 3,805,000 1,600,000 Purchase of furniture, fixtures and equipment (2,100) -- (2,100) (27,019) --------- --------- --------- --------- Net cash used in investing activities (141,837 (666,558) (808,395) (1,707,011) --------- --------- --------- --------- Net Decrease in Cash (136,030) -- (136,030) (2,274,145) Cash beginning of year 339,468 -- 339,468 2,613 ,613 --------- --------- --------- --------- Cash end of year $ 203,438 $ -- $ 203,438 $ 339,468 --------- --------- --------- --------- The accompanying notes are an integral part of these financial statements. THE COMMISSION ON PRESERVATION AND ACCESS STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 1993 (with comparative totals for 1992) National Demonstration International Advisory Technology Nonprint Preservation Projects Projects Committeer Assessment Communications Materials Total Totals Totals Program (Hewlett) (Mellon) (Mellon) (Mellon) (Mellon) (Mellon) Program Administration 1993 1992 Unrestricted Contracts $ - $ 87,501 $ - $ - $ - $ - $ - $ 87,501 $ - $ 87,501 $ 10,000 Refunds and overappropriations (4,318) - - - - - - (4,318) - (4,318) (6,811) Staff and travel 57,486 - 9 - - - - - 57,495 83,542 141,037 192,792 Meetings and consultants 285 37,812 - - - - - 38,097 - 38,097 6,722 Board expenses - - - - - - - - 13,247 13,247 10,838 Support services including office expenses 90,188 296 - - - - - 90,480 10,547 101,027 121,699 --------- ------ ---------- --------- -------- ------------ --------- ------- -------- -------- ------- $ 146,637 $125,618 $ $ $ $ $ $ 269,255 $ 107,336 $ 376,591 $ 335,240 --------- ------ ---------- --------- -------- ------------ --------- ------- -------- -------- ------- Restricted Contracts $ - $ - $ 78,857 $ - $ 75,000 $ - $ 50,000 $ 203,857 $ - $ 203,857 $ 360,937 Refunds and overappropriations - - (805) - (1,436) - - (2,241) - (2,241) - Staff and travel - - 45,609 29,714 37,905 123,403 - 236,641 - 236,641 160,490 Meetings and consultants - - 33,564 16,482 13,391 - - 63,437 - 63,437 42,691 Board expenses - - 141,106 23,898 27,523 1,301 17,423 211,251 - 211,251 204,306 Support services including office expenses - - 7,523 558 929 43,464 196 52,399 - 52,399 82,867 --------- ------ ---------- --------- -------- ------------ --------- ------- -------- -------- ------- 305,584 70,651 153,312 168,178 67,619 765,344 765,344 851,291 --------- ------ ---------- --------- -------- ------------ --------- ------- -------- -------- ------- $ 143,637 $125,618 $ 305,584 $ 70,651 $153,312 168,178 67,619 $1,034,599 $ 107,336 $1,141,935 $1,186,531 --------- ------ ---------- --------- -------- ------------ --------- ------- -------- -------- ------- THE COMMISSION ON PRESERVATION AND ACCESS NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1993 1. Organization The Commission on Preservation and Access (the Commission) is a non-profit organization incorporated under the laws of the District of Columbia in 1988 for the purpose of fostering, developing and supporting systematic and purposeful collaboration in order to ensure the preservation of the published and documentary record in all formats and provide equitable access to that information. The Commission's operations are financed through contributions from colleges, universities and other organizations and through general support grants and restricted grants from private foundations and other sources. The Commission conducts its work directly through committees and working groups as well as through contracts with other organizations and individuals. 2. Summary of Significant Accounting Policies The significant accounting policies followed in the preparation of the financial staternents are described below: Basis of Accounting - The financial statements of the Commission have been prepared on the accrual basis. Grant Revenue - Grants to the Commission are recorded in the balance sheet as grants receivable and as deferred grant revenue when awarded. Interest earned on grant funds received is deferred and included in deferred grant revenue. Revenue earned on restricted grant funds, including interest, is recognized only to the extent of expenditures that satisfy the restricted purpose of these grants. Unrestricted grant revenue is recognized as income in accordance with the budgeted annual payments specified by the grantor. Contributions - Contributions for general support of the Commission are recognized as revenue when received. Contracts Payable - Contracts made by the Commission are recorded in the balance sheet as contracts payable and as an ecpense at the time the contracts are signed. This normally occurs after the Board of Directors has approved the contracts, which are generally payable within one year. Cash - Cash consists of demand deposits with a bank, investments with original maturities of 90 days or less and deposits in a money market fund which are recorded at cost. Investments - The Commission invests its excess cash in U.S. treasury bills, notes, and federal agency securities. These securities typically mature within 180 days and bear minimal risk. During 1993, The Commission invested $400,000 in U.S. treasury notes which mature in October 1994. Furniture, Fixtures and Equipment - Furniture, fixtures and equipment are carried at cost. Depreciation is computed using the straight-line nethod over the estimated useful lives of the assets ranging from three to five years. Functional Allocation of Expenses - Costs of providing the various programs of the Commission have been summarized on a functional basis in the accompanying financial statements. Certain indirect costs identified as support services costs have been allocated directly to programs and administration on a systematic basis. These costs primarily include salary, benefits, rent and other expenses. Reclassifications - Where appropriate, the 1992 financial statements have been reclassified to conform with the 1993 presentation. THE COMMISSION ON PRESERVATION AND ACCESS NOTES TO THE FINANCIAL STATEMENTS JUNE 30, I993 3. Changes in Restricted Deferred Revenue Balance, beginning of year $ 788,758 Additions 1,716,000 Interest earned on unepended grant funds received 54,741 2,559,499 Reductions Grant revenue 758.021 Balance, end of year $1,801,478 4. Income Taxes The Commission is exempt from federal income tax under Internal Revenue Code 501(c)(3) and under applicable regulations of the District of Columbia. 5. Retirement Plan All employee are eligible for participation in the Commission's defined contribution retirement annuity program (the Plan) administered through the TIAA/CREF insurance companies. Individual contracts issued under the Plan provide for full and immediate vesting of the Commision's contributions. The Commission's contributions were approimately $41,000 in fiscal year 1993. 6. Commitments The Commission has entered into a noncancelable lease agreement for office space which expires in April, 1998. As part of the lease agreement, the Commission is assessed an annual charge based on its proportionate share of the increase in the operating costs of the building. The future minimum based lease payment required under the lease as of June 30, 1993 is as follows: 1994 $ 62,500 1995 62,500 1996 62,500 1997 62,500 Thereafter 52,083 $302,083 For the year ended June 30, I993, rent ecpense on this lease totaled $62,132