Louisiana Museum Foundationapp1.lla.la.gov/PublicReports.nsf/E44DB8238CE74DD686257C...Louisiana Museum Foundation (the Foundation) is a nonprofit corporation which was formed to support

LOUISLVNA MUSEUM FOUNDATION

FINANCIAL STATEMENTS

JUNE 30,2013 AND 2012

i i S A i Postlethwaite MSSja & Netterville

A Professional Accounting Corporation

www.pncpa.com

http://www.pncpa.com

LOUISIANA MUSEUM FOUNDATION

FINANCIAL STATEMENTS

JUNE 30,2013 AND 2012

TABLE OF CONTENTS

Page

Independent Auditors' Report 1-2

Financial Statements

Statements of Financial Position 3

Statement of Activities and Changes in Net Assets for the Year Ended June 30,2013 4

Statement of Activities and Changes in Net Assets for the Year Ended June 30,2012 5

Statements of Cash Flows 6

Notes to Financial Statements 7-15

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditins Standards 16 - 17

Schedule of Findings and Responses 18

H Postlethwaite & Netterville A Professional Accounting Corporation

Associated Offices in Principal Cities of the United States

www.pncpa.com

INDEPENDENT AUDITORS' REPORT

To the Board of Directors Louisiana Museum Foundation New Orleans, Louisiana

Report on the Financial Statements

We have audited the accompanying financial statements of Louisiana Museum Foundation (the Foundation), which comprise the statement of financial position as of June 30, 2013, and the related statements of activities and changes in net assets and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of intemal control relevant to the preparation and fair presentation of financial statements that are firee from material misstatement, whether due to fraud or error.

Auditors'Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are firee from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment ofthe risks of material misstatement ofthe financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers intemal control relevant to the entity's preparation and fair presentation ofthe fibnancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity's intemal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

1

30th Floor - Energy Centre • 1100 Poydras Street • New Orleans, LA 70163-3000 • Tel: 504.569.2978

One Galleria Blvd., Suite 2100 • Metairie, LA 70001 • Tel: 504,837.5990 • Fax: 504.834.3609

http://www.pncpa.com

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Louisiana Museum Foundation as of June 30, 2013, and the changes in its net assets and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Other Matter

The financial statements ofthe Foundation as of June 30, 2012, were audited by other auditors whose report dated December 14, 2012, expressed an unmodified opinion on those statements.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 27, 2013, on our consideration ofthe Foundation's intemal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the intemal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Foundation's intemal control over financial reporting and compliance.

% t r / ^ P o ^ A H ^ ^ i ^ ^

New Orleans, Louisiana November 27, 2013

P&N

LOUISUySlA MUSEUM FOUNDATION NEW ORLEANS, LOUISIANA

STATEMENTS OF FINANCIAL POSITION JUNE 30,2013 AND 2012

ASSETS

Cash and cash equivalents Investments Unconditional promises to give Prepaid expenses Fumimre and office equipment, net

TOTAL ASSETS

$

$

2013 496,094

1,917,651 33,125 6,076

30,411

2,483,357

LIABILITIES AND NET ASSETS

Accounts payable

TOTAL LIABILITIES

NET ASSETS

Unrestricted Undesignated Designated for endowment purposes Designated for reserve purposes

TOTAL UNRES TRICTED NET ASSETS

Temporarily restricted

TOTAL NET ASSETS

TOTAL LIABILITIES AJVD NET ASSETS

$

$

8,686

8,686

347,420 416,363 153,729

917,512

1,557,159

2,474,671

2,483,357

$

$

$

$

2012 601,802

1,803,371 27,344

6,567 14,701

2,453,785

9,929

9,929

380,157 390,148 153,729

924,034

1,519,822

2,443,856

2,453,785

The accompanyhig notes are an integral part ofthese financial statements.

LOUISL^A MUSEUM FOUNDATION NEW ORLEANS, LOUISIANA

STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30,2013

REVENUES Memberships and contributions Grants Gala Facility use contributions Net unrealized gain on investments Net realized gain on investments hiterest and dividends Miscellaneous

Total revenues

Net assets released from restrictions

Total revenues and support

EXPENSES Program expenses Fundraising General and administrative expenses

Total expenses

Unrestricted

$ 153,584 14,600

168,025 -

29,891 1,997

22,568 295

390,960

543,346

934,306

808,681 17,790

114,357

940,828

Temporarily Restricted

$ 202,918 J 119,128

-174,025 44,720

5,075 34,817

-

580,683

(543,346)

37,337

.

--

Total

B 356,502 133,728 168,025 174,025 74,611 7,072

57,385 295

971,643

_

971,643

808,681 17,790

114,357

940,828

Change in net assets (6,522) 37,337 30,815

Net assets, beginning of year 924,034 1,519,822 2,443,856

Net assets, end of year $ 917,512 $ 1,557,159 $ 2,474,671

The accompanying notes are an integral part ofthese financial statements.

LOUISIANA MUSEUM FOUNDATION NEW ORLEANS, LOUTSIANA

STATEMENT OF ACTTS^TIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30,2012

REVENUES Memberships and contributions Grants Gala Facility use contributions Net unrealized loss on investments Interest and dividends Miscellaneous

Total revenues

Net assets released from restrictions

Total revenues and support

EXPENSES

Program expenses Fundraising General and administrative expenses

Total expenses

Unrestricted

$ 133,314 14,925

244,611 -

(883) 20,462

536

412,965

366,772

779,737

668,805 17,473

122,660

808,938


$ 122,661 S 141,929

-211,735

(2,093) 27,671

-

501,903

(366,772)

135,131

.

--

Total

5 255,975 156,854 244,611 211,735

(2,976) 48,133

536

914,868

_

914,868

668,805 17,473

122,660

808,938

Change in net assets (29,201) 135,131 105,930

Net assets, beginning of year 953,235 1,384,691 2,337,926

Net assets, end of year $ 924,034 $ 1,519,822 $ 2,443,856


LOUISIANA MUSEUM FOUNDATION NEW ORLEANS, LOUISIANA

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

2013 2012 CASH FLOWS FROM OPERATING ACTTVITIES

Change in net assets

Adjustments to reconcile change in net assets

to net cash provided by (used in) operatmg activities

Depreciation

Net unrealized loss (gain) on investments

Decrease (increase) in unconditional promises to give

Decrease (increase) in prepaid expenses

Increase (decrease) in accounts payable

30,815 $ 105,930

(13,926) 11,873

(74,611) 2,976

(5,781) 21,189

491 (2,752)

(1,243) 5,905

Net cash provided by (used in) operating activities (64,255) 145,121

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of office equipment Purchase of investments Proceeds from sale and mamrities of investments

(1,784) (6,295) (1,731,851) (41,850) 1,692,182

Net cash used in investing activities (41,453) (48,145)

Net increase (decrease) in cash and cash equivalents (105,708) 96,976

Cash and cash equivalents, begimiing of year 601,802 504,826

Cash and cash equivalents, end of year $ 496,094 $ 601,802


LOUISUNA MUSEUM FOUNDATION NEW ORLEANS, LOUISIANA

NOTES TO FINANCIAL STATEMENTS

1. Nature of Organization and Summary of Significant Accounting Policies

Louisiana Museum Foundation (the Foundation) is a nonprofit corporation which was formed to support the Louisiana State Museum (the Museum), through fund administration, promotional activities, fund raising programs and events, and management assistance.

Organization and Income Tax

The Foundation is a nonprofit corporation organized under the laws of the State of Louisiana to provide support to the Louisiana State Museum. It is exempt from Federal income tax under Section 501(c)(3) ofthe Intemal Revenue Code (IRC), and qualifies as an organization that is not a private foundation as defined in Section 509(a) of the IRC. It is also exempt from Louisiana income tax under the authority of R.S. 47:121(5).

Financial Statement Presentation

Financial statement presentation follows the recommendations of the Not-for-Profit Entities Topic of the Accounting Standards Codification of the Financial Accounting Standards Board (ASC). Under the Not-for-Profit Entities Topic of the ASC, the Foundation classifies its net assets, revenues, and expenses based on the existence or absence of donor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows:

Unrestricted Net Assets Receives contributions and other revenues and expends fimds for the general operation of the Foundation and for program support for the Louisiana State Museum.

Temporarily Restricted Net Assets Grants and other revenues specifically authorized by the grantor or donor to be used for a certain purpose or to benefit a specific accounting period.

Permanently Restricted Net Assets Contributions subject to donor-imposed restrictions and that are to be held in perpetuity by the Foundation. The Foundation does not have any permanently restricted net assets.

Basis of Accounting

The accompanying financial statements have been prepared on the accmal basis of accounting, and accordingly, reflect all significant receivables, payables, and liabilities.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

LOUISLVNA MUSEUM FOUNDATION NEW ORLEANS, LOUISIANA


1. Nature of Organization and Summary of Significant Accounting Policies (Continued)

Cash and Cash Equivalents

For the purposes of the statement of cash flows, the Foundation considers all highly liquid investments (including restricted assets) with an original maturity of three months or less to be cash equivalents.

Promises to Give

Contributions are recognized as assets and revenues when the donor makes a promise to give that is, in substance, unconditional. Conditional promises to give are recognized when the conditions on which they depend are substantially met. All promises to give at June 30, 2013 and 2012 were unconditional and receivable in less than one year. All promises to give are deemed by management to be collectible.

Investments

Investments of certificates of deposit are presented in the financial statements at cost which approximates fair market value. Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statements of financial position. Umealized gains and losses are included in the change in net assets in the accompanying statements ofactivities. Gains, losses, and investment income are accounted for as unrestricted, temporarily restricted, or permanently restricted based on restrictions, if any, imposed by donors.

The Foundation records donated securities at their fair market value at the date of donation. Investments are shown in the financial statements at approximate current market value. Realized and unrealized gains and losses are included in the statement of activities.

Furniture and Office Equipment

Fumimre and office equipment of the Foundation are recorded at cost and depreciated over the estimated useful life using the straight-line method. Estimated usefiil life of fumimre and office equipment is five to seven years, except computer equipment which is three years.

Contribution and Revenue Recognition

Contributions are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence or natore of any donor restrictions. Support that is restricted by a donor is reported as an increase in temporarily restricted or permanently restricted net assets, depending on the namre of the restrictions. When the restriction expires (that is, when a stipulated time restriction ends or a purpose restriction is accomplished), temporarily restricted net assets are reclassified to umestricted net assets and reported in the statement of activities as net assets released from restrictions.



2. Furniture and Office Equipment

Fumimre and office equipment at June 30, 2013 and 2012 are as follows:

2013 2012 Fumiture and office equipment, cost $ 102,728 $ 100,944 Less: accumulated depreciation (72,317) (86,243)

Fumimre and office equipment, net _$ 30,411 $ 14,701

Depreciation expense totaled $9,658 and $11,873 for the years ended June 30, 2013 and 2012, respectively. An adjustment was made to correct prior year recognition of depreciation at an accelerated rate in order to recognize the depreciation of assets in accordance with generally accepted accounting principles.

3. Investments

Investments consist ofthe following at June 30*:

June 30, 2013 Certificates of deposit Mutual fimds

Total

June 30, 2012 Certificates of deposit Mutual funds

Total

Net unrealized gain for the

Fair Marke t Value

$

$

$

$

150,208 1,767,443

1,917,651

116,814 1,686,557

1,803,371

year ended June 30, 2013

$

$

$

$

Cost or Assigned Amount

150,208 1,625,274

1,775,482

116,814 1,754,115

1,870,929

Excess of Marke t Over (Under) Cost

Value

$

$

$

142,169

(67,558)

74,611



4. Temporarily Restricted Net Assets

Changes in temporarily restricted net assets during the year ended June 30, 2013 were as follows:

Fund

Collections, Acquisitions and Conservation LSM Collections Fund Jazz Collection New Orleans Branch Mint Coin Collection Map Collection Louisiana Historical Center Fats Domino Piano Conservation Socola Painting Photography Collection Colonial Documents War of 1812 Coat Textiles and Costumes Collection

Exhibits Hurricane Exhibit Community Contributions Music Exhibit Community Contributions Traveling Exhibits Washington Mardi Gras Small Permanent Exhibits LMF Revolving Grant Account National Science Foundation LA Statehood Bicentennial

Educational Programming Louisiana State Museum Miscellaneous

Educational and Special Project Fund Musical Programming K-12 Education Fund Visual Arts Publications Performing Arts Venue

Other Museum Endowment Fund Louisiana State Museum Joint Budget 2011 Joint Budget 2012 Joint Budget 2013 LPB Film Premier Fund Festival Fund Peg Bolton Fund Berger Fund Baton Rouge Museum MC Wurzlow Estate Gen LSM Fund Krewe of Hermes Norma Eyrich Gross Cabfldo Welch Cartoon Bequest LSM AU Purpose LSM Marketing LSM Director Search

Tota ls

B a l a n c e

J u n e 3 0 , 2 0 1 2

$ 4,100

15,720

875

250 369

20,133

5,715

2,487

23,473

-350

533

-129

10,000

2,603

32

R e v e n u e s

$ 4,900

---

4,415

--

69,940

3,265

100

1,777

1,000

----

E x p e n s e s

$ 448

1,423

--369

24,548

--

51,946

8

-

1,000

171

----

T r a n s f e r s

$ ----------_ -----

B a l a n c e

J u n e 3 0 , 2 0 1 3

$ 3,652 19,197

875

250

--

5,715

2,487

41,467

3,257

450

1,310

829

129

10,000

2,603

32

17,752 44,930

(17,752)

431

7,206

1,949

-9,034

1,458

1,183,718

76,661

5,015

74,246

--

9,350

1,790

5,000

4,180

3,940

-7,352

9.800

-4,171

10,000

$ 1,519,822

---

1,200

-15,914

88,094

174,025

---

31,645

5,000

--500

-16,400

--

79,664

11,960

25,954

$ 580,683

-5,756

--

1,084

10,820

8,558

1,010

2,517

74,246

168,241

31,645

750

-----

1,080

-65,680

9.649

34,605

$ 540,484

-------

(200,000)

--

217,500

-(13,600)

-(5,000)

-----

17,339

-( U 4 9 )

$ (2,862) ** $

431

1,450

1,949

1,200

7,950

6.552

1.263;254

49,676

2,498

-49,259

--

1,790

-4,680

3,940

16,400

6,272

9,800

31,323

6,482

-

1,557,159

The balance in transfers relates to the net of transfers in to (out of) unrestricted funds.

10



4. Temporarily Restricted Net Assets (Continued)

Changes in temporarily restricted net assets during the year ended June 30, 2012 were as follows:

Fund

Collections, Acquisitions and Conservation Conservation & Acquisitions Fund Jazz Collection New Orleans Branch Mint Coin Collection Map Collection Louisiana Historical Center Fats Domino Piano Conservation Socola Painting Photography Collection Colonial Documents Textiles and Costtmies Collection

Exhibits Hurricane Exliibit Community Contributions Changing Exhibits Traveling Exhibits Washington Mardi Gras Small Permanent Exhibits National Science Foundation - Huiricane Exhibit LA Statehood Bicentennial

Educational Programming Louisiana State Museum Miscellaneous

Educational and Special Project Fund Musical Programming K-12 Education Fund Performing Arts Venue

Other Museum Endowment Fimd Louisiana State Museum Joint Budget 2009 Joint Budget 2011 Joint Budget 2012 Festival Fimd Peg Bolton Fund Publications MC Wurzlow Estate Gen LSM Fund

* Berger Fund Baton Rouge Museum Norma Eyrich Gross Cabildo Welch Cartoon Bequest LMF Revolving Grant Account LSM Marketing LSM Director Search

Totals

Balance June 30, 2011

$ 20,630 4,614

875 250

5 2,000 6,396 2,487

--

7,264

-129

10,000 2,766

--

431 4,498 1,949

-

1,158,139 34,418

1,808 69,025

--

1,790 13,709 9,000

10,000 2,451 9,920 9,800

37 300

-

$ 1,384,691

Revenues

$ 322 19,510

--

1,000 18,155

--

30,150 350

411 6,270

---

91,619 20,000

-5,000

-5,409

25,578 211,735

---

11,000

----

36,915 9,189

--

9,290

-

$ 501,903

Expenses

$ 16,852 15,904

--636 22

681

-6,677

-

142 29,804

--163

91,619 24,248

-2,292

-3,951

-1,491 1,808

74,884 74,525

1,650

-4,675 5,060

-24,312 11,757

-5

5,419

-

$ 398,577

Transfers

$ 7,500

--------

(7,000) 23,534

----

22,000

----

-(168,000)

-10,874

148,771

----

(5,000) (10,874)

----

10,000

$ 31,805 **

Balance June 30, 2012

$ 4,100 15,720

875 250 369

20,133 5,715 2,487

23,473 350

-533

-129

10,000 2,603

-17,752

431 7,206 1,949 1,458

1,183,717 76,662

-5,015

74,246 9,350 1,790 9,034 3,940 5,000 4,180 7,352 9,800

32 4,171

10,000

$ 1,519,822

The balance includes a receivable in the amount of $5,000. The receivable is current and has not been discounted. The balance in transfers relates to the net of transfers in to (out of) unrestricted funds.

11



5. Fair Value Measurements

The Foundation follows the provisions of the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification. Accordingly, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification establishes a fair value hierarchy for inputs used in measuring fair market value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on the best information available in the circumstances.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities as of the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly, as ofthe reporting date.

Level 3 - Valuations based on inputs that are unobservable and include simations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation.

In some instances, the inputs used to measure fair value may fall into different levels ofthe fair value hierarchy. In such instances, an investment's level witiiin the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Foundation's measurements of fair value are made on a recurring basis, and their valuation techniques for assets recorded at fair value are as follows:

Mumal Funds - The fair value of mumal fimds is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers. If listed prices or quotes are not available, fair value is based upon externally developed models that use unobservable inputs due to the limited market activity ofthe investment.

Certificates of Deposit - Fair value approximates cost basis.

12



5. Fair Value Measurements (Continued)

The following table sets forth by level, within the fair value hierarchy, the Foundation's assets at fair value as of June 30, 2013:

Level 1 Level 2 Level 3 Total Certificates of deposit Mumal fiinds

Bonds Bank Loans Emerging Markets Nontraditional Bond Intermediate Term Bond

Equities Small Value Mid Value Large Value SmaU Core Mid Core Large Core Small Growth Mid Growth Large Growth

Other Small Value Mid Value Small Core Mid Core Large Core Small Growth Mid Growth Large Growth Large Blend

Totals

$ 150,208

109,356 82,819

274,159 82,923

63,600 24,115

229,849 68,024 31,288

115,605 28,571 89,439

225,495

13,029 31,368

5,610 9,114

27,728 1,257

11,541 19,671

222,882 $ 1,917,651

$ 150,208

109,356 82,819

274,159 82,923

63,600 24,115

229,849 68,024 31,288

115,605 28,571 89,439

225,495

13,029 31,368

5,610 9,114

27,728 1,257

11,541 19,671

222,882 $ 1,917,651

The following table sets forth by level, within the fair value hierarchy, the Foundation's assets at fair value as of June 30,2012:

Certificates of deposit Mutual fimds

Totals

Level 1

$ 1,803,371

Level 2 Level 3 $ 116,814 $

1,686,557 $

Total $ 116,814

1,686,557 $ 1,803,371

At June 30, 2013 and 2012 there were no assets measured at fair value on a non-recurring basis.

13



6. Louisiana State Museum Fund and Joint Budget Funds

Donations are made to the Foundation by groups or individuals who use the Museum's facilities for special functions. The Foundation must designate these funds for use by the Louisiana State Museum for endowment, educational, acquisitions, publications, conservation, and building function support purposes. Expendimres of net monies from the funds are subject to the approval ofthe Joint Legislative Committee on the Budget, State of Louisiana.

7. Museum Endowment Fund

The Museum Endowment Fund was created by the Board to accumulate $3,000,000 for Museum support. Revenue and other support for the fund consist of contributions, investment income, and transfer of excess funds from other temporarily restricted or umestricted funds as the Board authorizes.

During the year ended June 30, 2012, the Foimdation Board voted unanimously to allow $13,137 from the Unrestricted, Board Designated portion of the endowment, which was held in a money market account, to be transferred out of the endowment. Of this total, $10,000 was to be transferred into a temporarily restricted fund for the search of a new Louisiana State Museum director and $3,137 was to be transferred to an unrestricted fund for general operations.

1. Expendimres of investment income eamed from the temporarily restricted portion of the corpus are limited to acquisitions, conservation, exhibitions, public programs, and publications.

2. No expendimres are to be made until the temporarily restricted portion of the fiind reaches a corpus balance of $3,000,000. Annually, thereafter, 50% of investments income may be spent; the other 50% is to be added to corpus.

3. The temporarily restricted portion of the corpus is never to be touched except for emergencies.

4. Emergency expendimres ofthe temporarily restricted portion ofthe corpus will require 100% approval of a quorum by the Louisiana Museum Foundation Board of Directors at a full board meeting.

Investment revenues related to the endowment are reported net of related expenses, fees, and charges related to investment activities were $11,359 for the year ended June 30, 2013.

14


NOTES TO FEVANCIAL STATEMENTS

7. Museum Endowment Fund (Continued)

Activity in the Museum Endowment Fund was as follows:

Balance, June 30, 2011

Interest and dividends Net umealized gain on investments Transfer


Interest and dividends Net unrealized gain on investments


Concentration of Credit Risk


$ 1,158,139

27,671 (2,093)

-

1,183,717

34,817 44,720

$ 1,263,254

Unrestricted $ 395,124

$

8,828 (667)

(13,137)

390,148

11,475 14,740

416,363

$

$

Total 1,553,263

36,499 (2,760)

(13,137)

1,573,865

46,292 59,460

1,679,617

The Foundation maintains its cash balance at several financial instimtions located in New Orleans, Louisiana. Accounts at each instimtion are insured by the Federal Deposit Insurance Corporation. At June 30, 2013, all cash was insured by the Federal Deposit Insurance Corporation.

9. Accounting for Uncertain Tax Positions

The Foundation follows the provisions of the Accounting for Uncertainty in Income Taxes Topic of the FASB Accounting Standards Codification. All tax remms have been appropriately filed by the Foundation. The Foundation recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The Foundation's tax filings are subject to audit by various taxing authorities. The Foundation's open audit periods are 2010 through 2012. Management evaluated the Foundation's tax position and concluded that the Foimdation has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. The Foundation's 2013 tax retum has not been filed as ofthe report date.

10. Subsequent Events

Management has evaluated subsequent events through the date that the financial statements were available to be issued, November 27, 2013, noting no events requiring disclosure.

No subsequent events occurring after this date have been evaluated for inclusion in these financial statements.

15

l U t f l ^ l Postlethwaite E a S i l J & Netterville

A Professional Accounling Corporation Associated Offices in Principal Cities of the United States

wwv/.pncpa.com

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTIIER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Directors Louisiana Museum Foundation New Orleans, Louisiana

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Auditing Standards issued by the Comptroller General of the United States, the financial statements of Louisiana Museum Foundation (the Foundation) (a nonprofit organization), which comprise the statement of financial position as of June 30, 2013, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated November 27, 2013.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the Foundation's intemal control over fmancial reporting (intemal control) to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Foundation's intemal control. Accordingly, we do not express an opinion on the effectiveness ofthe Foundation's intemal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in intemal control, such that there is a reasonable possibility that a material misstatement ofthe entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in intemal control that is less severe than a material weakness, yet important enough to merit attention by those charged with govemance.

Our consideration of intemal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in intemal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in intemal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify a certain deficiency in internal control, described in the accompanying schedule of fmdings and responses as item 2013-1 that we consider to be a significant deficiency.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Foundation's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Louisiana Museum Foundation's Response to Findings

The Foundation's response to the finding identified in our audit is described in the accompanying schedule of findings and responses. The Foundation's response was not subjected to the auditing procedures applied in the audit ofthe financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope ofour testing of intemal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness ofthe organization's intemal control or on compliance. This report is an integral part of an audit performed in accordance with Govemment Auditing Standards in considering the organization's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

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New Orleans, Louisiana November 27, 2013

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P&N


SCHEDULE OF FINDINGS AND RESPONSES

2013-1 Preparation of Financial Statements and Disclosures

Criteria:

Condition:

Effect:

Cause:

Recommendation

Management's Response:

If the auditors prepare the financial statements, auditing standards require that an entity's management function is to review, approve, and accept responsibility for their financial statements accompanying the audit report prior to their issuance. This would require the Foundation to have someone with the technical expertise and knowledge to either prepare financial statements and all disclosures in accordance with generally accepted accounting principles or review, approve, and accept responsibility for the financial statements.

Financial statements and required disclosures were prepared by the auditors.

The independent auditor cannot be a part of the Foundation's intemal control over financial reporting.

Statement of Auditing Standards (SAS) 115 requires that the above condition be reported as a control deficiency. The SAS does not provide exceptions to reporting deficiencies that are mitigated with non-audit services rendered by the auditor or deficiencies for which the remedy would be cost prohibitive or otherwise impractical.

Whether or not it would be cost effective to cure a control deficiency is not a factor in applying SAS 115's reporting requirements. Because pmdent management requires that the potential benefit from an intemal control must exceed its cost, it may not be practical to correct all the deficiencies noted under SAS 115. However, the Foundation should consider the need for having someone with the technical expertise and knowledge to prepare financial statements and all disclosures in accordance with generally accepted accounting principles.

As has been noted, because pmdent management requires that the potential benefit from an intemal control must exceed its cost, it is not practical to correct all the deficiencies noted under SAS 115. The Louisiana Museum Foundation staff is familiar with the day-to-day accounting requirements; however, in this case, due to limited staffing and funding, we do not consider that it would be cost effective or practical to provide sufficient training for our staff to cure the significant deficiency described in this finding in order to eliminate this condition. As is common practice in organizations of our size, we will thus continue to rely on the auditor to prepare the financial statements at this time.

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