Loading...
HomeMy WebLinkAbout12/18/2024 - Meeting Materials Salt Lake Arts Council Foundation Profit & Loss Budget vs. Actual July through November 2024 Jul-Nov 24 Budget $Over Budget Ordinary Income/Expense Income REVENUE CITY In-Kind SLC Dept DED Exp. 0.00 53,805.00 -53,805.00 In-Kind SLC Dept Salaries&Ben 0.00 1,349,037.00 -1,349,037.00 SLC Nondepartmental 1,000,000.00 1,000,000.00 0.00 Total CITY 1,000,000.00 2,402,842.00 -1,402,842.00 CONTRIBUTIONS Corporate 0.00 60,000.00 -60,000.00 Foundations 720,000.00 518,322.31 201,677.69 In-Kind 0.00 220,000.00 -220,000.00 Individuals 4,305.00 6,500.00 -2,195.00 Total CONTRIBUTIONS 724,305.00 804,822.31 -80,517.31 EARNED INCOME Beverage Sales Alcohol 0.00 29,000.00 -29,000.00 Total Beverage Sales 0.00 29,000.00 -29,000.00 Commissions 1,500.00 6,000.00 -4,500.00 Other Fees 7,064.50 6,000.00 1,064.50 Rental Fees 1,970.00 3,000.00 -1,030.00 Ticket Sales 20,000.00 30,000.00 -10,000.00 Vendor Fees 0.00 13,200.00 -13,200.00 Total EARNED INCOME 30,534.50 87,200.00 -56,665.50 GOVERNMENT GRANTS County 29,520.00 200,000.00 -170,480.00 Federal 0.00 40,000.00 -40,000.00 State 0.00 56,000.00 -56,000.00 Total GOVERNMENT GRANTS 29,520.00 296,000.00 -266,480.00 OTHER REVENUE Interest 12,137.39 30,000.00 -17,862.61 Total OTHER REVENUE 12,137.39 30,000.00 -17,862.61 Total REVENUE 1,796,496.89 3,620,864.31 -1,824,367.42 Total Income 1,796,496.89 3,620,864.31 -1,824,367.42 Gross Profit 1,796,496.89 3,620,864.31 -1,824,367.42 Expense EXPENSES General&Adminstrative Page 1 of 6 Jul-Nov 24 Budget $Over Budget Bank Fees 202.88 700.00 -497.12 Benefits 344.00 1,760.00 -1,416.00 Conference Fees 160.00 800.00 -640.00 Contracted Services 103,130.00 647,100.00 -543,970.00 Credit Card Fees 659.74 1,400.00 -740.26 Dues/Subscriptions/Publications 1,982.70 13,400.00 -11,417.30 Employee Screenings 0.00 200.00 -200.00 General Insurance 5,184.49 13,050.00 -7,865.51 In-Kind SLC Dept DED Expenses 0.00 53,805.00 -53,805.00 In-Kind SLC Dept Salaries&Ben 0.00 1,349,037.01 -1,349,037.01 Parking/Mileage 122.04 1,600.00 -1,477.96 Travel 30.00 36,000.00 -35,970.00 Utilities 3,109.07 12,000.00 -8,890.93 Total General&Adminstrative 114,924.92 2,130,852.01 -2,015,927.09 Program Expenses Advertising&Publicity 3,706.77 59,650.00 -55,943.23 Artist Commissions 1,050.00 4,200.00 -3,150.00 Beverages Purchased Alcohol 0.00 8,000.00 -8,000.00 Non Alcohol 0.00 6,000.00 -6,000.00 Total Beverages Purchased 0.00 14,000.00 -14,000.00 Equipment Rental 14,397.68 170,850.00 -156,452.32 Equipment Repairs&Maintenance 0.00 0.00 0.00 Food&Beverage 1,550.77 8,150.00 -6,599.23 Grant Expense Artist in the Classroom 15,000.00 21,000.00 -6,000.00 Bloomberg 200,000.00 200,000.00 0.00 General Support 316,650.00 333,000.00 -16,350.00 Project Support 90,050.00 146,000.00 -55,950.00 Total Grant Expense 621,700.00 700,000.00 -78,300.00 Graphics/Design Work 0.00 9,400.00 -9,400.00 Honoraria&Artist Fees 19,262.50 117,350.00 -98,087.50 In-Kind Goods&Services 0.00 220,000.00 -220,000.00 Mailing 311.16 600.00 -288.84 Meals 0.00 Merchandise 0.00 3,500.00 -3,500.00 Miscellaneous Charge 1,339.12 6,000.00 -4,660.88 Payroll Taxes Federal Unemployment Tax 17.27 FICA 1,390.77 Payroll Taxes-Other 0.00 11,528.00 -11,528.00 Total Payroll Taxes 1,408.04 11,528.00 -10,119.96 Page 2 of 6 Jul-Nov 24 Budget $Over Budget Permits&Licenses 0.00 3 -34,530.00 Postage 1.87 2,400.00 -2,398.13 Printing 2,965.13 22,900.00 -19,934.87 Salaries&Wages 18,180.07 145,550.00 -127,369.93 Security 525.16 56,000.00 -55,474.84 Supplies 7,748.72 12,522.31 -4,773.59 Unemployment 0.00 5,000.00 -5,000.00 Total Program Expenses 694,146.99 1,604,130.31 -909,983.32 Total EXPENSES 809,071.91 3,734,982.32 -2,925,910.41 Payroll Expenses 0.00 Total Expense 809,071.91 3,734,982.32 -2,925,910.41 Net Ordinary Income 987,424.98 -114,118.01 1,101,542.99 Net Income 987,424.98 -114,118.01 1,101,542.99 Page 3 of 6 Salt Lake Arts Council Foundation 1:21 PM Profit & Loss Budget vs. Actual 12/06/2024 July through November 2024 Accrual Basis %of Budget Ordinary Income/Expense Income REVENUE CITY In-Kind SLC Dept DED Exp. 0.0% In-Kind SLC Dept Salaries&Ben 0.0% SLC Nondepartmental 100.0% Total CITY 41.62% CONTRIBUTIONS Corporate 0.0% Foundations 138.91% In-Kind 0.0% Individuals 66.23% Total CONTRIBUTIONS 90.0% EARNED INCOME Beverage Sales Alcohol 0.0% Total Beverage Sales 0.0% Commissions 25.0% Other Fees 117.74% Rental Fees 65.67% Ticket Sales 66.67% Vendor Fees 0.0% Total EARNED INCOME 35.02% GOVERNMENT GRANTS County 14.76% Federal 0.0% State 0.0% Total GOVERNMENT GRANTS 9.97% OTHER REVENUE Interest 40.46% Total OTHER REVENUE 40.46% Total REVENUE 49.62% Total Income 49.62% Gross Profit 49.62% Expense EXPENSES General&Adminstrative Page 4 of 6 %of Budget Bank Fees 28.98% Benefits 19.55% Conference Fees 20.0% Contracted Services 15.94% Credit Card Fees 47.12% Dues/Subscriptions/Publications 14.8% Employee Screenings 0.0% General Insurance 39.73% In-Kind SLC Dept DED Expenses 0.0% In-Kind SLC Dept Salaries&Ben 0.0% Parking/Mileage 7.63% Travel 0.08% Utilities 25.91% Total General&Adminstrative 5.39% Program Expenses Advertising&Publicity 6.21% Artist Commissions 25.0% Beverages Purchased Alcohol 0.0% Non Alcohol 0.0% Total Beverages Purchased 0.0% Equipment Rental 8.43% Equipment Repairs&Maintenance 0.0% Food&Beverage 19.03% Grant Expense Artist in the Classroom 71.43% Bloomberg 100.0% General Support 95.09% Project Support 61.68% Total Grant Expense 88.81% Graphics/Design Work 0.0% Honoraria&Artist Fees 16.42% In-Kind Goods&Services 0.0% Mailing 51.86% Meals Merchandise 0.0% Miscellaneous Charge 22.32% Payroll Taxes Federal Unemployment Tax FICA Payroll Taxes-Other 0.0% Total Payroll Taxes 12.21% Page 5 of 6 %of Budget Permits&Licenses 0.0% Postage 0.08% Printing 12.95% Salaries&Wages 12.49% Security 0.94% Supplies 61.88% Unemployment 0.0% Total Program Expenses 4327% Total EXPENSES 21.66% Payroll Expenses Total Expense 21.66% Net Ordinary Income -86527% Net Income -865.27% Page 6 of 6 OSBORNE, ROBBINS & BUHLER, P.L.L.C. Certified Public Accountants 4527 South 2300 East, Suite 201 • Salt Lake City, Utah 84117-4480 • Phone: (801)308-0220 • Fax: (801)274-8589 INDEPENDENT AUDITOR'S 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 AUDITING STANDARDS Board of Trustees Salt Lake Arts Council Foundation We have audited, in accordance with the auditing standards generally accepted in the United State of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and the general fund of Salt Lake Arts Council Foundation (the Foundation), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Foundation's basic financial statements and have issued our report thereon dated November 1, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Foundation's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Foundation's internal control. Accordingly, we do not express an opinion on the effectiveness of the Foundation's internal 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 a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the 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 internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal 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 internal control that we consider to be material weaknesses. We identified certain deficiencies in internal control, described in the accompanying schedule of findings and responses that we consider to be significant deficiencies. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Foundation's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. 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. Salt Lake Arts Council Foundation's Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on the Foundation's response to the findings 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 of the 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 of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose November 1, 2024 SCHEDULE OF FINDINGS AND RESPONSES Internal Control over Financial Reporting Management is responsible for establishing and maintaining internal controls, including monitoring, and for the fair presentation in the financial statements of financial position and results of operations, including the notes to the financial statements, in conformity with U.S. generally accepted accounting principles (GAAP). At times management may choose to outsource certain accounting functions due to cost or training considerations. Such accounting functions and service providers must be governed by the control policies and procedures of the Foundation. Management is as responsible for outsourced functions performed by a service provider as it would be if its personnel performed such function. Specifically, management is responsible for management decisions and functions; for designating an individual with suitable skill, knowledge, or experience to oversee any outsourced services; and for evaluating the adequacy and results of those services and accepting responsibility for them. As part of the audit, management requested us to prepare a draft of the Foundation's financial statements, including the related notes to the financial statements. Management reviewed, approved, and accepted responsibility for those financial statements prior to their issuance; however, management does not currently have the ability to 1) evaluate the completeness of the financial statement disclosures, 2) recognize instances when reclassification of financial statement items may be required by GAAP, or 3) evaluate the appropriateness of information with regard to GASB Statement No. 68 as provided by service organizations. The absence of the ability to perform these control procedures is considered a significant deficiency because the potential exists that a more than inconsequential but less than material misstatement of the financial statements could occur and not be prevented or detected by the Foundation's internal control. The existence of this significant deficiency is already known to management and represents a conscious decision by management or those charged with governance to accept that degree of risk because of cost or other considerations. Management is responsible for making decisions concerning costs and the related benefits. We are responsible to communicate significant deficiencies and material weaknesses in accordance with professional standards regardless of management's decisions. Recommendation We recommend that Management and those charged with governance evaluate the ongoing risks associated with the above finding and compare it to the costs of additional training and or staff required to mitigate or eliminate those risks. Management Response We have considered the costs and benefits associated with addressing the risks noted in the above finding and have determined the costs to be prohibitive. We are comfortable with the risk levels associated with this finding. Salt Lake Arts Council Foundation (A Non-profit organization and a component unit of Salt Lake City Corporation) Basic Financial Statements and Report of Independent Certified Public Accountants June 30, 2024 Osborne, Robbins, & Buhler, PLLC Page Independent Auditor's Report 1 Required supplementary information Management's discussion and analysis 4 Basic financial statements Government-wide financial statements: Statement of net position 12 Statement of activities 13 Fund financial statements Balance sheet- governmental fund 14 Statement of revenues, expenditures and changes in fund balance - governmental fund 15 Notes to the basic financial statements 17 Required supplementary information Schedule of revenues, expenditures and changes in fund balance - budget and actual - general fund 32 Schedule of the Proportionate Share of the Net Pension Liability - Utah Retirement Systems 33 Schedule of Contributions - Utah Retirement Systems 34 Notes to Required Supplementary Information 35 OSBORNE, ROBBINS & BUHLER, P.L.L.C. Certified Public Accountants 4527 South 2300 East, Suite 201 • Salt Lake City, Utah 84117-4480 • Phone: (801)308-0220 • Fax: (801)274-8589 INDEPENDENT AUDITOR'S REPORT Board of Trustees Salt Lake Arts Council Foundation Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities and the general fund of Salt Lake Arts Council Foundation (the Foundation) as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Foundation's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the general fund of Salt Lake Arts Council Foundation June 30, 2024, and the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions 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 of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Foundation and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Foundation's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always 1 detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Foundation's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Foundation's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on page 4 through 10, the budgetary comparison information on page 32 and the pension information on pages 33-35 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 1, 2024, on our consideration of the Foundation's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of 2 that testing, and not to provide an opinion on the effectiveness of the Foundation's internal 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 internal control over financial reporting and compliance. November 1, 2024 3 Salt Lake Arts Council Foundation Management's Discussion and Analysis (Unaudited) June 30, 2024 Our discussion and analysis of the Foundation's financial performance provides an overview of the Foundation's financial activities for the fiscal year ended June 30, 2024. Please read it in conjunction with the Foundation's financial statements which begin on page 11. FINANCIAL HIGHLIGHTS • The Foundation's net position at June 30, 2024 is $963,045 consisting of$3,191 net investment in capital assets and unrestricted net position of $959,854. As of June 30, 2023, the Foundation's net position was $853,839, consisting of $3,424 net investment in capital assets and unrestricted net position of$850,415. • The Foundation's net position increased by $109,206 during 2024 and $167,689 during 2023. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements. Foundation-wide Financial Statements The Statement of Net Position presents information on all the Foundation's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Foundation is improving or deteriorating. The Statement of Activities presents information showing how the Foundation's net position changed during the year presented. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future periods (such as earned but unused vacation leave). Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Foundation maintains only one fund — the General Fund which is a governmental fund. The Governmental fund financial statements differ from the Foundation-wide financial statements in that they focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the Foundation's near-term financing requirements. 4 Salt Lake Arts Council Foundation Management's Discussion and Analysis (Unaudited) June 30, 2024 FINANCIAL ANALYSIS OF THE FOUNDATION To begin our analysis, a summary of the Foundation's Net Position is presented in Table A-1 below. As noted earlier, net position may serve, over time, as a useful indicator of the Foundation's financial position. The Foundation shows a total net position of$963,045 as of June 30, 2024 and $853,839 as of June 30, 2023. The increase in fiscal year 2024 was primarily the result of an increase in transfers in from Salt Lake City Corporation and also an overall decrease in expenses as compared to fiscal year 2023. As of June 30, 2024, the Foundation's net position consisted of $3,191 ($3,424 in 2023) that represents its investment in capital assets (e.g. buildings and improvements, event equipment, and office furniture and equipment). As of June 30, 2024 and 2023, there is no debt associated with the acquisition of these assets. These assets are used by the Foundation to conduct its programs and consequently, are not available for future spending. The Foundation has no net position subject to external restrictions. At the end of 2024, the Foundation reports unrestricted net position of $959,854, compared to unrestricted net position of$850,415 in 2023. TABLE A-1 Statement of Net Position June 30, 2024 2023 Current and other assets $ 1,127,937 $ 1,302,524 Capital assets 3,191 3,424 Total assets $ 1,131,128 $ 1,305,948 Deferred outflows of resources $ 135,464 $ 106,798 Noncurrent liabilities $ 152,686 $ 122,999 Other liabilities 149,049 434,209 Total liabilities $ 301,735 $ 557,208 Deferred inflows of resources $ 1,812 $ 1,699 Net investment in capital assets $ 3,191 $ 3,424 Unrestricted 959,854 850,415 $ 963,045 $ 853,839 5 Salt Lake Arts Council Foundation Management's Discussion and Analysis (Unaudited) June 30, 2024 A summary of the Foundation's changes in net position is presented in Table A-2. Table A-2 Revenues, Expenses and Changes in Net Position Years ending June 30, 2024 2023 Change Revenues Program revenues Vendorfees $ 13,200 $ 13,550 $ (350) Ticket sales and fees 40,602 59,416 (18,814) Merchandise sales 51,308 59,879 (8,571) Gallery commission 18,269 9,100 9,169 Operating grants and contributions 304,326 509,266 (204,940) General revenues Grants and contributions not retricted to specific programs 175,869 256,521 (80,652) Rental income 2,370 2,620 (250) Interest and miscellaneous income 30,538 28,049 2,489 Transfers from Salt Lake City Corporation 1,967,641 1,845,553 122,088 Total revenues 2,604,123 2,783,954 (179,831) Expenses Administration 356,714 337,836 18,878 City Arts Grants 490,350 779,802 (289,452) Brown Bag/Busker Fest 73,383 113,000 (39,617) Twilight Concert Series 176,930 257,634 (80,704) Living Traditions Festival 670,229 632,223 38,006 Living Traditions Events 45,999 49,152 (3,153) Visual Arts Exhibitions 145,331 97,711 47,620 Wake the Great Salt Lake 104,160 - 104,160 Public Art Program 215,642 194,197 21,445 Other Program Services 215,946 153,926 62,020 Depreciation Expense 233 784 (551) Total expenses 2,494,917 2,616,265 (121,348) Change in net position 109,206 167,689 (58,483) Net position at beginning of year 853,839 686,150 167,689 $ 963,045 $ 853,839 $ 109,206 6 Salt Lake Arts Council Foundation Management's Discussion and Analysis (Unaudited) June 30, 2024 The Foundation's total revenues decreased by approximately $180,000 between 2024 and 2023. A primary reason for the decrease is related to covid related grants that had been received in prior years. The large grants were finalized in 2023 and because they were not a recurring item, the grant revenues declined by over $200,000 in 2024. The decrease in grants and contributions was offset by an increase in transfers from Salt Lake City Corporation of approximately$122,000. Overall expenses decreased during fiscal year 2024 by approximately $121,000 which was the result of several factors. During 2024, the Foundation launched a new program called Wake the Great Salt Lake and incurred expenses of $104,160. There were also increases in expenses in the Visual Arts program, the Public Art program, the Living Traditions Festival as well as Other Programs. These increases were offset by a decrease in expenses associated with the City Arts Grants program of approximately $289,000. This decrease was primarily due to the successful completion of a one-time, two-year grant from the National Endowment for the Arts that was used to fund the Foundation's grants program. All grants were issued in fiscal years 2022 and 2023. The Foundation held two fewer concerts in 2024 as part of its Twilight Concert Series. Two additional concerts were held in June of 2023, so the comparison between the two years gave the appearance of diminished ticket sales and fees in 2024, but over the course of the two years, the number of events was consistent with previous years. Additionally, the Foundation collects a ticket fee from the contractor who manages the Twilight Concert Series and during 2024 the fee was decreased from $0.50 to $0.25 per ticket. This decrease was implemented to offset an increase in the costs of the venue that was born by the contractor. The Foundation received more grants and contributions for its Living Traditions Festival than in fiscal year 2023. During 2024, the Foundation recognized program revenues including vendor and ticket fees, merchandise sales and gallery commissions totaling $123,379. This represents a decrease from 2023 of approximately$18,000, primarily the result of the aforementioned decrease in ticket sales and fees. BUDGETARY HIGHLIGHTS The Foundation is required by law to adopt an annual budget. At the June board meeting, a projected budget for the upcoming year is reviewed and presented to the board for discussion and adoption. During the year, the Foundation amended the budget to reflect an increase transfers in from Salt Lake City Corporation, grants and contributions, gallery commissions and miscellaneous income and to budget for the new Wake the Great Salt Lake program. During 2023, the Foundation adopted a fund balance reserve policy to establish guidelines for future budgeting and ensure preservation of the Foundation's fund balance. 7 Salt Lake Arts Council Foundation Management's Discussion and Analysis (Unaudited) June 30, 2024 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At the end of fiscal year 2024, there was $370,407 invested in capital assets, as shown in Table A-3. The Foundation did not acquire any new capital assets during 2024. TABLE A-3 Capital Assets at Cost June 30, June 30, 2024 2023 Buildings and improvements $347,774 $348,379 Event equipment 6,529 $ 19,356 Office furniture and equipment 16,104 24,503 $370,407 $392,238 Additional information on the Foundation's capital assets can be found in Note D on page 23 of this report. Long-Term Debt As of June 30, 2024 Foundation had long-term obligations outstanding related to compensated absences due to employees totaling $96,662. As of June 30, 2024 the Foundation had a net pension liability of$69,668. The following summarizes the long-term obligations of the Foundation as of June 30, 2024 and 2023. TABLE A-4 Long-Term Obligations June 30, June 30, 2024 2023 Compensated absences $ 96,662 $ 87,701 Net pension liability 69,668 49,724 $ 166,330 $137,425 The Foundation has never issued bonds and has no bond rating. Additional information on the Foundation's long-term debt can be found in Note E on page 23 of this report. 8 Salt Lake Arts Council Foundation Management's Discussion and Analysis (Unaudited) June 30, 2024 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET The Foundation's 2025 budget was prepared reflecting an increase in non-departmental funding from Salt Lake City Corporation, from approximately $800,000 in 2024 to $1 million in 2025. These funds are for use in funding the Foundation's City Arts Grants Program, public programs and operations and facility management. Salt Lake County ZAP funds available to the Foundation will likely be more stable as the Foundation's qualifying expenditures have stabilized following a change in the operational model for Twilight Concert Series that the Foundation adopted in 2018. Beginning with that year, the Foundation's qualifying expenditures associated with the Twilight Concert Series declined, resulting in an accumulated decrease in ZAP revenues of approximately $215,000 over the past several years. ZAP revenues will remain lower than before the change, but the fluctuations will diminish. Looking forward, the Foundation will be subsidizing an increase in the costs charged by the venue for Twilight Concert Series, the Gallivan Center. The Gallivan Center has implemented a policy change reducing capacity and increasing rental fees. Since 2019, the facility rental fees have increased by approximately 200 percent and between 2019 and 2025, there has been a reduction in the capacity allowed for events by approximately 34 percent. For 2026, the Foundation is anticipating another 14 percent reduction in capacity. This will require examining the overall costs to produce the concert series, including examining alternative venue options. The Foundation's fund balance remains healthy and allows for excess cash to be invested with the Public Treasurer's Investment Fund, providing the Foundation with additional revenues in the form of interest income. Most notably, Salt Lake City Corporation was awarded a Bloomberg Public Art Challenge Grant for$1 million. The City has contracted with the Foundation to manage the grant and will transfer the funds to the Foundation as project milestones are met. The funds will be used in fiscal 2025 and 2026 to support a new project called Wake the Great Salt Lake. During 2024, the Foundation's board committed to use $160,000 of the Foundation's fund balance as additional funding for the project. Some expenditures were incurred during 2024 as the project was launched, resulting in a committed fund balance of$138,483 as of June 30, 2024. A capital construction project is planned for improvements to the Art Barn and could begin in 2025 and if not, will begin in 2026. The project is expected to take three years and could impact both revenues and expenses associated with the Finch Lane Gallery and the Art Barn as a result of temporary closures during construction. Otherwise, the Foundation's normal operations will continue including: • Maintaining year-round public hours of operation at the Finch Lane Gallery, bringing back exhibition opening events, and producing Finch Lane Flash projects. • Presenting a five-concert series, Mondays in the Park. • Running a three-day Living Traditions Festival. • Funding the 2024 Busker Fest through a contracted services agreement with Primrose Productions. • Presenting a five or six show Twilight Concert Series with partners S & S Presents. • Funding regular grant cycles with City Arts Grants. • Performing outreach engagement efforts. 9 Salt Lake Arts Council Foundation Management's Discussion and Analysis (Unaudited) June 30, 2024 Post-pandemic inflation has appeared to stabilize in the industry locally, but the effects have continued to impact the local arts community. A major long-term festival in Salt Lake City last year saw unusual revenue shortfalls due to a sharp decline in attendance and high relative production costs. The Sundance Film Festival has been subject to rising costs of venue, equipment, and labor costs post pandemic as well as other economic factors. The routine contract renewal for the Sundance Film Festival RFP Process in 2024 has resulted in the consideration of other Cities in the United States and could impact the labor pool in Salt Lake City of qualified gig and production workers who rely on multiple festivals and events year-round. Additionally, this year we learned that the Foundation's Living Traditions Festival will overlap with a rapidly growing music festival in Salt Lake City during 2025 which could impact labor, equipment rental availability, security, and attendance. CONTACTING THE FOUNDATION'S FINANCIAL MANGEMENT This report is designed to provide a general overview of the Foundation's finances and to demonstrate the Foundation's accountability for the money it receives. If you have questions about this report or need additional information, contact the Foundation's Director, Felicia Baca, at 54 Finch Lane, Salt Lake City, Utah 84102, by phone at (801) 596-5000, or e-mail at felicia.baca@slc.gov. 10 BASIC FINANCIAL STATEMENTS Salt Lake Arts Council Foundation Statement of Net Position June 30, 2024 Governmental Activities ASSETS Current assets Cash and cash equivalents $ 997,742 Grants and sponsorships receivable 121,290 Miscellaneous receivables 3,174 Prepaid expenses 5,731 Total current assets 1,127,937 Noncurrent assets Net capital assets 3,191 Total noncurrent assets 3,191 Total assets $ 1,131,128 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions $ 135,464 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 50,580 Grants payable 84,825 Current portion, compensated absences 13,644 Total current liabilities 149,049 Noncurrent liabilities Net pension liability 69,668 Compensated absences, net of current portion 83,018 Total noncurrent liabilities 152,686 Total liabilities $ 301,735 DEFERRED INFLOWS OF RESOURCES Revenues received in advance of permitted use $ 650 Deferred inflows of resources related to pensions 1,162 $ 1,812 NET POSITION Net investment in capital assets $ 3,191 Unrestricted 959,854 Total net position $ 963,045 See accompanying notes to basic financial statements. 12 Salt Lake Arts Council Foundation Statement of Activities For the year ended June 30, 2024 Program Revenues Vendor Fees, Ticket Sales Net(Expense) and Fees Revenue and Merchandise Changes in Sales, Gallery Net Position Commissions Operating Governmental Contracted Grants and Activities Functions/Programs Expenses Services Contributions Total Primary Government Governmental activities Administration $ 356,714 $ - $ 17,160 $ (339,554) City Arts Grants 490,350 - 3,000 (487,350) Brown Bag/Busker Fest 73,383 - 2,000 (71,383) Twilight Concert Series 176,930 40,602 19,152 (117,176) Living Traditions Festival 670,229 64,508 257,982 (347,739) Living Traditions Events 45,999 - 504 (45,495) Visual Arts Exhibitions 145,331 18,269 2,016 (125,046) Wake the Great Salt Lake 104,160 - - (104,160) Public Art Program 215,642 - - (215,642) Other Program Services 215,946 - 2,512 (213,434) Depreciation Expense 233 - - (233) Total primary government $2,494,917 $ 123,379 $ 304,326 (2,067,212) General revenues: Grants and contributions not restricted to specific programs 175,869 Rental income 2,370 Interest and miscellaneous income 30,538 Transfers from Salt Lake City Corporation 1,967,641 2,176,418 Change in net position 109,206 Net position at beginning of year 853,839 Net position at end of year $ 963,045 See accompanying notes to basic financial statements. 13 Salt Lake Arts Council Foundation Balance Sheet — Governmental Fund June 30, 2024 General Fund ASSETS Cash and cash equivalents $ 997,742 Grants and sponsorships receivable 121,290 Miscellaneous receivables 3,174 Prepaid items 5,731 Total assets $ 1,127,937 LIABILITIES Accounts payable and accrued liabilities $ 50,580 Grants payable 84,825 Total liabilities 135,405 DEFERRED INFLOWS OF RESOURCES Revenues received in advance of allowable use 650 FUND BALANCE Nonspendable 5,731 Committed 138,483 Unassigned 847,668 Total fund balance 991,882 Total liabilities, deferred inflows of resources and fund balance $ 1,127,937 Reconciliation of total governmental fund balance to net position of governmental activities: Total governmental fund balance $ 991,882 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the general fund 3,191 Deferred outflows of resources are not available to pay for current period expenditures and therefore are deferred in the general fund 135,464 Actuarially calculated changes in the net pension asset or liability are deferred for recognition in later periods (1,162) Long-term liabilities- compensated absences and the net pension liability not due and payable in the current period are not recorded as an expenditure or a liability in the general fund (166,330) Net position of governmental activities $ 963,045 See accompanying notes to basic financial statements. 14 Salt Lake Arts Council Foundation Statement of Revenues, Expenditures and Changes in Fund Balance — Governmental Fund For the year ended June 30, 2024 General Fund Revenues Grants and contributions $ 480,195 Vendor fees 13,200 Ticket sales and fees 40,602 Merchandise sales 51,308 Gallery commissions 18,269 Rental Income 2,370 Miscellaneous 30,538 Total revenues 636,482 Expenditures Current Administration 356,644 City Arts Grants 490,315 Brown Bag/Busker Fest 73,378 Twilight Concert Series 176,915 Living Traditions Festival 670,192 Living Traditions Events 45,993 Visual Arts Exhibitions 145,298 Wake the Great Salt Lake 104,135 Public Art Program 215,576 Other Program Services 215,886 Total expenditures 2,494,332 Deficiency of revenues over expenditures (1,857,850) Other financing sources Operating transfers from Salt Lake City Corporation 1,967,641 Total other financing sources and uses 1,967,641 Net change in fund balance 109,791 Fund balance at beginning of year 882,091 Fund balance at end of year $ 991,882 Continued 15 Salt Lake Arts Council Foundation Statement of Revenues, Expenditures and Changes in Fund Balance — Governmental Fund - continued For the year ended June 30, 2024 Reconciliation of the change in fund balance - governmental fund to the change in net position of governmental activities Net change in fund balance- governmental fund $ 109,791 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets: Capital assets purchases capitalized - Depreciation expense (233) Some expenses reported in the statement of activities, such as compensated absences and pension expenses do not require the use of current financial resources and therefore are not reported as expenditures in the governmental fund (352) Change in net position of governmental activities $ 109,206 See accompanying notes to the basic financial statements. 16 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE A- SUMMARY OF ACCOUNTING POLICIES History, organization activity and reporting entity The Foundation was established as a Utah Nonprofit Corporation in 1979 to promote the arts within Salt Lake City. The Foundation operates in conjunction with, and its trustees are identical to, the Salt Lake City Arts Council, which is an advisory board to the Mayor under Salt Lake City Ordinances. The Foundation is a component unit of Salt Lake City. The Foundation conducts several programs promoting the arts including Living Traditions Festival, the Brown Bag/Busker Fest, Public Art Program and the Twilight Concert Series. The Foundation also makes grants to local organizations promoting the arts, and operates the Art Barn, a local art center that provides Visual Arts Exhibitions. Basis of presentation The Foundation's financial statements are prepared in accordance with generally accepted accounting principles (GAAP). Because the mayor of Salt Lake City appoints the members of the Salt Lake City Arts Council which also makes up the trustees for the Foundation, the Foundation is subject to the requirements of the Governmental Accounting Standards Board. Accordingly, the accompanying financial statements do not reflect the provisions of the Financial Accounting Standards Board. The Governmental Accounting Standards Board is responsible for establishing GAAP for state and local governments. The more significant accounting policies established in GAAP and used by the Foundation are discussed below. Basic Financial Statements and Basis of Accounting The Foundation is a governmental nonprofit entity, solely accounted for in a general fund and categorized as a governmental-type activity. The Foundation's basic financial statements include both government-wide and fund financial statements. Government-wide financial statements The government-wide financial statements are presented on the full accrual, economic resource basis of accounting which recognizes all long-term assets and receivables as well as long-term debt and obligations. Revenues are recognized when earned and expenses are recognized when incurred. The Foundation's net position is reported in three parts, as applicable — net investment in capital assets, restricted, and unrestricted. The government-wide Statement of Activities reports both the gross and net cost of each of the Foundation's functions. The functions are also supported by general government revenues and transfers from Salt Lake City. The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Direct expenses are those that are clearly identifiable with a specific program or function. Indirect expenses for centralized services and administrative overhead are allocated among the programs or functions. Program revenues include 1) vendor fees charged to allow outside vendors to set up a sales booth at certain events, 2) ticket sales and fees earned from the Twilight Concert Series, 3) merchandise sold by the Foundation at certain events, 4) gallery commissions, 5) contracted services and 6) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Unrestricted grants and contributions and other revenues not properly included among program revenues are reported instead as general revenues. 17 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE A—SUMMARY OF ACCOUNTING POLICIES - CONTINUED This government-wide focus is more on the sustainability of the Foundation as an entity and the change in the Foundation's net position resulting from the current year's activities. Fund financial statements The General Fund is the only fund used by the Foundation. The financial statements of this fund are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Foundation considers revenues to be available if they are collected within 60 days of the end of the current fiscal period or if the revenues have not been received at the normal time. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. However, principal and interest on long-term debt, which is not material, are recognized when paid. Allocations of costs, such as depreciation and amortization are not recognized in governmental funds. Receivables Receivables consist of amounts due from grantors and miscellaneous other items. An allowance for doubtful accounts is not considered necessary as of June 30, 2024. Deposits and investments The Foundation's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Capital assets and depreciation Capital assets are defined by the Foundation as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of 5 years. The Foundation records its capital assets at cost. Contributed capital assets are valued at their estimated fair market value on the date of contribution. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Maintenance and repairs are charged to current period operating expenses, whereas additions and improvements are capitalized. Depreciation of property and equipment has been provided using the straight-line method over the following estimated useful lives: Years Building and improvements 5-30 Event equipment 5— 10 Office furniture and equipment 5— 10 18 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE A—SUMMARY OF ACCOUNTING POLICIES - CONTINUED Prepaid items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded in the general fund as prepaid items. Compensated absences Vacation leave, compensatory leave, and the portion of sick leave that will eventually be paid are recognized as liabilities as they are earned. In the event of termination or retirement, an employee is reimbursed for unused accumulated vacation. It is the policy of the Foundation to compensate employees who retire early for their years of service. This compensation consists of a payment of 50%, 75%, or 100% of unused accumulated sick leave depending on the employee's age and years of service. Fund Balance Governmental fund balance is further classified as follows: Nonspendable fund balance. This classification includes amounts that cannot be spent because they are either (a) not in spendable form — prepaid items or inventories; or (b) legally or contractually required to be maintained intact. Restricted fund balance. This classification reflects the constraints imposed on resources either (a) externally by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional or enabling legislation. Committed fund balance. These amounts can only be used for specific purposes pursuant to constraints imposed by formal resolutions of the board of trustees — the Foundation's highest level of decision making authority. Those committed amounts cannot be used for any other purpose unless the board removes the specified use by taking the same type of action imposing the commitment. This classification also includes contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. Assigned fund balance. This classification reflects the amounts constrained by the Foundation's "intent" to be used for specific purposes but are neither restricted nor committed. The board of trustees has the authority to assign amounts to be used for specific purposes. Unassigned fund balance. This fund balance is the residual classification for the General Fund. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Utah Retirement Systems Pension Plan (URS) and additions to/deductions from URS's fiduciary net position have been determined on the same basis as they are reported by URS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 19 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE A—SUMMARY OF ACCOUNTING POLICIES - CONTINUED Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE B— DEPOSITS AND INVESTMENTS The Foundation's deposits and investments are governed by the Utah Money Management Act Annotated in Title 51, Chapter 7 — State Money Management Act (Act) and by the rules of the State of Utah Money Management Council. Following are discussions of risks related to is cash management activities. Custodial Credit Risk— Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the Foundation's deposits may not be recovered. The Money Management Act requires deposits be in a qualified depository. The Act defines a qualified depository as any financial institution whose deposits are insured by an agency of federal government and which has been certified by the State Commissioner of Financial Institutions as meeting the requirements of the Act and adhering to the rules of the Utah Money Management Council. The deposits in the bank in excess of the insured amount are uninsured and uncollateralized. Deposits are not collateralized nor are they required to be by state statute. The deposits for the Foundation at June 30, 2024 were $447,330, approximately $62,000 of which was exposed to custodial credit risk as uninsured and uncollateralized. Investments The Act defines the types of securities authorized as appropriate investments and the conditions for making investment transactions. Investment transactions may be conducted only through qualified depositories, certified dealers, or directly with issuers of investment securities. The Act authorizes investments in both negotiable and nonnegotiable deposits of qualified depositories and permitted negotiable depositories; repurchase and reverse repurchase agreements; commercial paper that is classified as "first tier" by two nationally recognized statistical rating organizations, one of which must be Moody's Investors Services or Standard & Poor's; bankers' acceptances; obligations of the United States Treasury including bills, notes, and bonds; obligations, other than mortgage derivative products, issued by U.S. government sponsored enterprises (U.S. Agencies) such as the Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae), and Student Loan Marketing Association (Sallie Mae); bonds, notes, and other evidence of indebtedness of political subdivisions of the State; fixed rate corporate obligations and variable rate securities rate "A" or higher, or the equivalent of "A" or higher, by two nationally recognized statistical rating organizations; and shares or certificates in a money market mutual fund as defined in the Act. 20 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE B— DEPOSITS AND INVESTMENTS—CONTINUED The Foundation's investments at December 31, 2024 are presented below: Investment Maturity in Years Fair Less More Investment Type Value Than 1 1 - 5 6- 10 Than 10 Utah Public Treasurer's Investment Fund $ 550,412 $ 550,412 $ - $ - $ - Interest Rate Risk- Investments Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Foundation manages its exposure to declines in fair value by investing mainly in the PTIF and by adhering to the Act. The Act requires that the remaining term to maturity of the investment may not exceed the period of availability of the funds to be invested. Credit Risk of Debt Securities Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Foundation follows the Act as previously discussed as its policy for reducing exposure to investment credit risk. The Foundation's investments are unrated. Quality Ratings Fair Investment Type Value AAA AA A Unrated Utah Public Treasurer's Investment Fund $ 550,412 $ - $ - $ - $ 550,412 Custodial Credit Risk— Investments Custodial credit risk for investments is the risk that, in the event of a failure of the counter party, the Foundation will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. All of the Foundation's investments at December 31, 2024 were with the Utah Public Treasurer's Investment Fund and therefore are not categorized as to custodial credit risk. Additional information regarding the Utah Public Treasurer's Investment Fund is available at Note C. Concentration of Credit Risk—Investments Concentration of credit risk is the risk of a loss attributed to the magnitude of a government's investment in a single issuer. The Foundation's policy for reducing this risk of loss is to comply with the Rules of the Council. Rule 17 of the Council limits investments in a single issuer of commercial paper and corporate obligations to between 5 and 10 percent depending upon the total dollar amount held in the portfolio. The Council limitations do not apply to securities issued by the U.S. government and its agencies. 21 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE B— DEPOSITS AND INVESTMENTS—CONTINUED All of the Foundation's investments at December 31, 2024 were with the Utah Public Treasurer's Investment Fund and therefore are not categorized as to concentration of credit risk. Additional information regarding the Utah Public Treasurer's Investment Fund is available at Note C. NOTE C— EXTERNAL INVESTMENT POOL The PTIF is not registered with the SEC as an investment company. The PTIF is authorized and regulated by the Money Management Act, Chapter 51-7, Utah Code Annotated, 1953, as amended. The Act establishes the Money Management Council which oversees the activities of the State Treasurer and the PTIF. The Act details the investments that are authorized which are high-grade securities and, therefore, there is very little credit risk except in the most unusual and unforeseen circumstances. Deposits in the PTIF are not insured or otherwise guaranteed by the State of Utah and participants share proportionally in any realized gains or losses on investments. The PTIF allocates income and issues statements on a monthly basis. The PTIF operates and reports to participants on an amortized cost basis. The participants' balance is their investment deposited in the PTIF plus their share of income, gains and losses, net of administration fees, which are allocated to each participant on the ratio of each participant's share to the total funds in the PTIF. Twice a year, at June 30 and December 31, the investments are valued at fair value to enable participants to adjust their investments in this pool at fair value. The Bank of New York and the State of Utah separately determine each security's fair value in accordance with GASB 31 (i.e. for almost all pool investments the quoted market price) and then compare those values to arrive at an agreed upon fair value of the securities. As of June 30, 2024, the Foundation had $550,412 invested in the PTIF which approximates the fair value of the investment . The table below shows statistical information about the investment pool: I nvestment Investment Type Percentage Corporate bonds and notes 7.30% U.S. Treasury bills 23.84% U.S. Government agencies 62.76% Money market agreements 0.77% Commercial paper 5.33% 100.00% 22 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE D-CAPITAL ASSETS Capital asset activity for the year ended June 30, 2024 was as follows: Balance Balance July 1, 2023 Increases Decreases June 30, 2024 Capital assets: Buildings and improvements $ 348,379 $ - $ (605) $ 347,774 Event equipment 19,356 - (12,827) 6,529 Office furniture and equipment 24,503 - (8,399) 16,104 Capital assets at historical cost 392,238 - (21,831) 370,407 Less accumulated depreciation for: Buildings and improvements 346,517 - (605) 345,912 Event equipment 19,224 - (12,827) 6,397 Office furniture 23,073 233 (8,399) 14,907 Total accumulated depreciation 388,814 233 (21,831) 367,216 Total capital assets, net $ 3,424 $ (233) $ - $ 3,191 NOTE E-LONG-TERM OBLIGATIONS The following is a summary of changes in long-term obligations for the year ended June 30, 2024: Balance Balance Amounts July 1, June 30, Due Within 2023 Additions Deletions 2024 One Year Compensated absences $ 87,701 $ 83,507 $ 74,546 $ 96,662 $ 13,644 Net pension liability 49,724 47,292 27,348 69,668 - $ 137,425 $130,799 $ 101,894 $ 166,330 $ 13,644 23 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE F— FUND BALANCE Fund balance is presented in compliance with the requirements of GAAP. The detail of the fund balance categories is presented below: Nonspendable: Prepaid items $ 5,731 Committed: Bloomberg Challenge Grant Fund 138,483 Unassigned 847,668 Total Fund Balance $ 991,882 NOTE G—OPERATING TRANSFERS During the year, the Foundation received operating transfers from Salt Lake City Corporation as follows: Program grants for the following: City Arts Grants Program $ 382,500 Public Programs and Operations 407,500 Facility Management 10,000 Foundation expenditures paid by the City Salaries and employee benefits 1,120,739 Miscellaneous expenditures 46,902 $ 1,967,641 NOTE H - RETIREMENT PLANS The Foundation personnel are employees of Salt Lake City Corporation and as such, participate in the retirement plans offered to all City employees. The following summarizes information regarding the retirement plans applicable only to the City employees that make up the Foundation's personnel. Funding of the retirement plans is provided by Salt Lake City and, along with other personnel-related expenditures, is included in the transfers in from Salt Lake City Corporation. General Information about the Pension Plan Plan description: Eligible plan participants are provided with pensions through the Utah Retirement Systems. The Utah Retirement Systems are comprised of the following pension trust funds: • Public Employees Noncontributory Retirement System (Noncontributory System) is a multiple employer, cost sharing, public employees, retirement system. • Tier 2 Public Employees Contributory Retirement System (Tier 2 Public Employees System) is a multiple employer, cost sharing, public employees, retirement system. 24 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE H - RETIREMENT PLANS—CONTINUED The Tier 2 Public Employees System became effective July 1, 2011. All eligible employees beginning on or after July 1, 2011, who have no previous service credit with any of the Utah Retirement Systems, are members of the Tier 2 Retirement System. The Utah Retirement Systems (Systems) are established and governed by the respective sections of Title 49 of the Utah Code Annotated 1953, as amended. The Systems' defined benefit plans are amended statutorily by the State Legislature. The Utah State Retirement Office Act in Title 49 provides for the administration of the Systems under the direction of the Board, whose members are appointed by the Governor. The Systems are fiduciary funds defined as pension (and other employee benefit) trust funds. URS is a component unit of the State of Utah. Title 49 of the Utah Code grants the authority to establish and amend the benefit terms. URS issues a publicly available financial report that can be obtained by writing Utah Retirement Systems, 560 E. 200 S, Salt Lake City, Utah 84102 or visiting the website: www.urs.org. Benefits provided: URS provides retirement, disability, and death benefits. Retirement benefits are as follows: Summary of Benefits by System Final Years of service required Average and/or age eligible Benefit percent per System Salary for benefit year of service COLA** Noncontributory system Highest 3 years 30 years any age 2.0% per year all years Up to 4% 25 years any age* 20 years age 60* 10 years age 62* 4 years age 65 Tier 2 Public Employees Highest 5 years 35 years any age 1.5% per year all years Up to 2.5% System 20 years any age 60* 10 years age 62* 4 years age 65 *with actuarial reductions **All post-retirement cost-of-living adjustments are non-compounding and are based on the original benefit except which is a compounding benefit. The cost-of-living adjustments are also limited to the actual Consumer Price lnde: increase for the year, although unused CPI increases not met may be carried forward to subsequent years. Contributions: As a condition of participation in the Systems, employers and/or employees are required to contribute certain percentages of salary and wages as authorized by statute and specified by the URS Board. Contributions are actuarially determined as an amount that, when combined with employee contributions (where applicable) is expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded actuarial accrued liability. 25 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE H - RETIREMENT PLANS—CONTINUED Contribution rates are as follows: Paid by Employer Employer Employee Employer Contribution Rate for Paid for Employee Rates 401(k) Plan Contributory System 111 - Local Governmental Division Tier 2 N/A N/A 17.77% 0.18% Noncontributory System 15-Local Governmental Division Tier 1 N/A N/A 16.01% 0.18% For the year ended June 30, 2024, the employer and employee contributions to the Systems were as follows: Employer Employee System Contributions Contributions Noncontributory System $ 23,945 N/A Tier 2 Public Employees System 47,376 N/A $ 71,321 $ - Contributions reported are the URS Board approved required contributions by the System. Contributions in the Tier 2 Systems are used to finance the unfunded liabilities in the Tier 1 Systems. Pension Assets, Liabilities, Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2024, the Foundation reported a net pension liability of $69,668 and no net pension asset. Net Net Proportionate Pension Pension Share Asset Liability Noncontributory system 0.16900% $ - $ 44,873 Tier 2 Public Employees System 0.01480% - 24,795 Total Net Pension Asset/Liability $ - $ 69,668 The net pension liability was measured as of December 31, 2023, and the total pension liability used to calculate the net pension asset and liability was determined by an actuarial valuation as of January 1, 2023 and rolled-forward using generally accepted actuarial procedures. The proportion of the net pension asset and liability is equal to the ratio of the employer's actual historical contributions to the Systems during the plan year over the total of all employer contributions to the System during the plan year. For the year ended June 30, 2024, the Foundation recognized pension expense of$35,791. 26 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE H - RETIREMENT PLANS—CONTINUED At June 30, 2024, the Foundation reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences between expected and actual experience $ 39,362 $ 406 Changes in assumptions 27,658 20 Net difference between projected and actual earnings on pension plan investments 17,392 - Changes in proportion and differences between contributions and proportionate share of contributions 3,154 736 Contributions subsequent to the measurement date 47,898 - Total $ 135,464 $ 1,162 $47,898 was reported as deferred outflows of resources related to pensions results from contributions made by the Foundation prior to its fiscal year end, but subsequent to the measurement date of December 31, 2023. These contributions will be recognized as a reduction of the net pension liability in the upcoming fiscal year. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Deferred Outflows (Inflows) of Resources Year Ended June 30, 2025 $ 21,807 2026 19,310 2027 46,499 2028 (8,809) 2029 1,181 Thereafter 6,416 27 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE H - RETIREMENT PLANS—CONTINUED Actuarial assumptions: The total pension liability in the December 31, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.50 percent Salary increases 3.50- 9.25 percent, average, including inflation Investment rate of return 6.85 percent, net of pension plan investment expense, including inflation Mortality rates were developed from actual experience study dated January 1, 2023. The retired mortality tables are developed using URS retiree experience and are based upon gender, occupation, and age as appropriate with projected improvement using 80% of the ultimate rates from the MP-2020 improvement assumption using a base year of 2020. The mortality assumption for active members is the PUB-2010 Employees Mortality Table for public employees, teachers, and public safety members respectively. The actuarial assumptions used in the January 1, 2023 valuation were based on the results of an actuarial experience study for the period ending December 31, 2022. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Expected Return Arithmetic Basis Long-term Expected Real Portfolio Target Return Real Asset Arithmetic Rate of Allocation Basis Return Asset class Equity securities 35% 6.87% 2.40% Debt securities 20% 1.54% 0.31% Real assets 18% 5.43% 0.98% Private equity 12% 9.80% 1.18% Absolute return 15% 3.86% 0.58% Cash and cash equivalents - 0.24% 0.01% Totals 100% 5.45% Inflation 2.50% Expected arithmetic nominal return 7.95% 28 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE H — RETIREMENT PLANS—CONTINUED The 6.85% assumed investment rate of return is comprised of an inflation rate of 2.50%, a real return of 4.35%that is net of investment expense. Discount rate: The discount rate used to measure the total pension liability was 6.85%. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that contributions from all participating employers will be made at contractually required rates that are actuarially determined and certified by the URS Board. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The discount rate does not use the Municipal Bond Index Rate. Sensitivity of the proportionate share of the net pension asset and liability to changes in the discount rate: The following presents the proportionate share of the net pension liability calculated using the discount rate of 6.85%, as well as what the proportionate share of the net pension liability(asset)would be if it were calculated using a discount rate that is 1-percentage-point lower (5.85%)or 1-percentage-point higher(7.85%)than the current rate: 1% Discount 1% Decrease Rate Increase (5.85%) (6.85%) (7.85%) Proportionate share of net pension (asset)/liability Noncontributory system $ 232,886 $ 44,873 $ (112,576) Tier 2 Public Employees System 85,194 24,795 (22,043) $ 318,080 $ 69,668 $ (134,619) Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued URS financial report. 29 Salt Lake Arts Council Foundation Notes to Financial Statements June 30, 2024 NOTE I - DEFERRED COMPENSATION PLANS The Foundation also offers participation in Defined Contribution Savings Plans which are administered by the Utah Retirement Systems and are generally supplemental plans to the basic retirement benefits of the Utah Retirement Systems, but may also be used as a primary retirement plan. These plans are voluntary tax-advantaged retirement savings programs authorized under sections 401(k), 457(b) and 408 of the Internal Revenue Code. Detailed information regarding plan provisions is available in the separately issued URS financial report. The Foundation participates in the following Defined Contribution Savings Plans: • 401(k) Plan • 457(b) Plan • Roth IRA Plan • Traditional IRA Plan Employee and employer contributions to the Utah Retirement Defined Contribution Savings Plans for the year ended June 30, 2024 were as follows: 401(k)Plan Employer Contributions $ 25,714 Employee Contributions 27,474 457 Plan Employer Contributions - Employee Contributions 1,040 Roth IRA Plan Employer Contributions - Employee Contributions 1,706 NOTE J - RISK MANAGEMENT The Foundation is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Foundation carries commercial liability insurance for general liability claims as well as for other risks of loss. There were no decreases in coverage during 2024. Settlement amounts have not exceeded insurance coverage for the current year or the three prior years. Expenses and claims not covered by insurance are recognized when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. In determining claims, events that might create claims, but for which none have been reported, are considered. There has been no claims liability incurred or paid for the past two years. 30 REQUIRED SUPPLEMENTARY INFORMATION Salt Lake Arts Council Foundation Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund For the Fiscal Year Ended June 30, 2024 Variance with Final Budget Original Final Actual Positive Budget Budget Amounts (Negative) Revenues Grants and contributions $ 430,265 $ 468,559 $ 480,195 $ 11,636 Merchandise sales 28,000 28,000 51,308 23,308 Ticket sales and fees 38,450 38,450 40,602 2,152 Vendorfees 13,200 13,200 13,200 - Rental income 3,000 3,000 2,370 (630) Gallery commissions 3,200 18,500 18,269 (231) Miscellaneous - 28,900 30,538 1,638 Total revenues 516,115 598,609 636,482 37,873 Expenditures Current operations Administration 395,648 378,485 356,644 21,841 City Arts Grants 508,475 502,588 490,315 12,273 Busker Fest 74,101 75,176 73,378 1,798 Twilight Concert Series 178,039 178,117 176,915 1,202 Living Traditions Festival 661,771 665,408 670,192 (4,784) Living Traditions Events 47,950 46,922 45,993 929 Visual Arts Exhibitions 145,705 151,294 145,298 5,996 Wake the Great Salt Lake - 127,600 104,135 23,465 Public Art 232,391 220,700 215,576 5,124 Other program services 242,844 223,912 215,886 8,026 Total expenditures 2,486,924 2,570,202 2,494,332 75,870 Deficiency of revenues over expenditures (1,970,809) (1,971,593) (1,857,850) 113,743 Other financing sources Operating transfers from Salt Lake City Corporation 1,970,809 2,000,093 1,967,641 (32,452) Total other financing sources 1,970,809 2,000,093 1,967,641 (32,452) Net change in fund balance - 28,500 109,791 81,291 Fund balance at beginning of year 882,091 882,091 882,091 - Fund balance at end of year $ 882,091 $ 910,591 $ 991,882 $ 81,291 32 Salt Lake Arts Council Foundation Schedule of the Proportionate Share of the Net Pension Liability - Utah Retirement Systems For the Fiscal Year Ended June 30, 2024 With a Measurement Date of December 31, 2023 Last 10 Fiscal Years* Noncontributory System for the Fiscal Years Ended June 30, 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Proportion of the net pension liability(asset) 0.0016900% 0.0016710% 0.0017070% 0.0025890% 0.0026090% 0.0026005% 0.0020285% 0.0205614% 0.0262664% 0.0251462% Proportionate share of the net pension liability (asset) $ 44,873 $ 33,942 $ (97,761) $ 13,278 $ 98,328 $ 90,095 $ 90,095 $ 134,585 $ 148,022 $ 108,601 Covered employee payroll $ 134,300 $ 131,135 $ 132,389 $ 201,771 $ 215,926 $ 209,312 $ 164,919 $ 171,751 $ 214,764 $ 211,317 Proportionate share of the net pension liability (asset)as a percentage of its covered employee payroll 33.4% 25.9% -73.8% 6.6% 45.5% 43.0% 54.6% 78.4% 68.9% 51.4% Plan fiduciary net position as a percentage of the total pension liability 96.9% 97.5% 108.7% 99.2% 87.0% 87.0% 91.9% 87.3% 87.8% 90.2% Tier 2 Public Employees System for the Fiscal Years ended June 30, 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Proportion of the net pension liability(asset) 0.0104800% 0.0100700% 0.0093900% 0.0079700% 0.0079700% 0.0000000% 0.0000000% 0.0000000% 0.0000000% 0.0188903% Proportionate share of the net pension liability (asset) $ 24,795 $ 15,782 $ (3,976) $ 1,138 $ 1,805 $ - $ - $ - $ - $ 590 Covered employee payroll $ 270,896 $ 219,520 $ 174,369 $ 132,348 $ 67,303 $ 107,254 $ 135,112 $ 131,927 $ 134,413 $ 92,861 Proportionate share of the net pension liability (asset)as a percentage of its covered employee payroll 9.15% 7.19% -2.28% 0.86% 2.68% 0.00% 0.00% 0.00% 0.00% 0.64 Plan fiduciary net position as a percentage of the total pension liability 89.6% 92.3% 90.8% 98.3% 90.8% 90.8% 97.4% 95.1% 100.2% 103.5% w w Salt Lake Arts Council Foundation Schedule of Contributions - Utah Retirement Systems For the Fiscal Year Ended June 30, 2024 With a Measurement Date of December 31, 2023 Last 10 Fiscal Years Contribution Contributions in as a relation to the percentage As of fiscal Actuarial contractually Contribution Covered of covered year ended Determined required deficiency employee employee June 30, Contributions contribution (excess) payroll payroll* Noncontributory System 2015 $ 39,753 $ 39,753 $ - $ 211,317 18.81% 2016 39,408 39,408 - 214,764 18.35% 2017 30,849 30,849 - 171,751 17.96% 2018 31,120 31,120 - 164,919 18.87% 2019 38,088 38,088 - 209,312 18.20% 2020 37,706 37,706 - 215,926 17.46% 2021 37,030 37,030 - 201,771 18.35% 2022 24,087 24,087 - 132,389 18.19% 2023 23,538 23,538 - 131,135 17.95% 2024 23,945 23,945 - 134,300 17.83% Tier 2 Public Employees System" 2015 7,808 7,808 - 92,861 8.41% 2016 20,038 20,038 - 134,413 14.91% 2017 20,868 20,868 - 131,927 15.82% 2018 23,269 23,269 - 135,112 17.22% 2019 18,566 18,566 - 107,254 17.31% 2020 19,232 19,232 - 67,303 28.58% 2021 20,911 20,911 - 132,348 15.80% 2022 31,276 31,276 - 174,369 17.94% 2023 39,342 39,342 - 219,520 17.92% 2024 47,376 47,376 - 270,896 17.49% Contributions as a percentage of covered-employee payroll may be different than the URS Board certified rate due to rounding or other administrative issues. Contributions in Tier 2 include an amortization rate to help fund the unfunded liabilities in Tier 1 systems. Tier 2 systems were created effective July 1, 2011. Salt Lake Arts Council Foundation Notes to Required Supplementary Information For the Fiscal Year Ended June 30, 2024 With a Measurement Date of December 31, 2023 Changes of Assumptions Changes include updates to the mortality improvement assumption, salary increase assumption, disability incidence assumption, assumed retirement rates, and assumed termination rates, as recommended with the January 1, 2023 actuarial experience study. 35 OSBORNE, ROBBINS & BUHLER, P.L.L.C. Certified Public Accountants 4527 South 2300 East, Suite 201 • Salt Lake City, Utah 84117-4480 • Phone: (801)308-0220 • Fax: (801)274-8589 November 1, 2024 To the Board of Trustees Salt Lake Arts Council Foundation We have audited the financial statements of the governmental activities and the general fund of Salt Lake Arts Council Foundation (the Foundation), a component unit of Salt Lake City Corporation for the year ended June 30, 2024. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated August 9, 2024. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Foundation are described in Note A to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during 2024. We noted no transactions entered into by the Foundation during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements was: Management's estimate of the net pension liability is based on information provided to Salt Lake City Corporation by Utah Retirement Systems (URS). Salt Lake City Corporation (the City) disseminates that information to provide the Foundation with its appropriate share of the City's total pension information. The City's net pension liability was calculated by actuaries hired by URS, and details about it and the related deferred inflows and outflows of resources were included in the URS annual report as of December 31, 2023. We traced the information to the URS annual report, as well as to specific other data provided by URS to the Center. We also reviewed the City's allocation of the information provided by the URS to the Foundation. We also noted that URS engaged its auditor to issue a Service Organization Controls (SOC 1) Type 2 report on the design and operating effectiveness regarding census data maintained by URS. This report was intended to meet the needs of the participating employers and their auditors in evaluating the effectiveness of the controls at URS on the URS financial statement assertions. We noted that the opinion of the URS auditors in the SOC 1 Type 2 report was unqualified. The sensitivity of this estimate is described in Note H to the financial statements and the 6.85% assumed investment rate of return is comprised of an inflation rate of 2.5% and a real return of 4.35%. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated November 1, 2024. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Foundation's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Foundation's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters Required Supplementary Information We applied certain limited procedures to the Management's Discussion and Analysis, Budgetary Comparison, and Pension Information, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. Restriction on Use This information is intended solely for the use of the board of trustees and management of the Foundation and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, OSBORNE ROBBINS & BUHLER PLLC Ian J Robbins Managing Member OSBORNE, ROBBINS & BUHLER, P.L.L.C. Certified Public Accountants 4527 South 2300 East, Suite 201 • Salt Lake City, Utah 84117-4480 • Phone: (801)308-0220 • Fax: (801)274-8589 Board of Trustees Salt Lake Arts Council Foundation In planning and performing our audit of the financial statements of Salt Lake Arts Council Foundation (the Foundation)for the year ended June 30, 2024, we noted certain other matters for your consideration. This letter summarizes our comments and suggestions regarding those other matters. This letter does not affect our report dated November 1, 2024, on the financial statements of the Foundation. Also, reportable conditions and material internal control weaknesses, if any, are included in our report dated November 1, 2024, in accordance with Government Auditing Standards. Item 2024-A Controls Over Electronic Disbursements The Foundation uses electronic banking for many of its cash disbursements and has established mitigating controls over the electronic disbursement processes. At the time the audit fieldwork was being performed, the Office Facilitator's online banking permissions were structured such that she is able to both initiate and approve and release disbursements. Recommendation The Foundation should change the online banking permissions of the Office Facilitator to ensure that she can initiate electronic disbursements but that she would not be able to approve or release the disbursements. The Office Facilitator does all the accounting and prepares the Foundation's bank reconciliations, so she should not be able to sign on the bank accounts or release electronic payments. Management Response and Action Plan The Foundation's policies require written approval from either Executive Director or the Deputy before any electronic disbursements can be issued. The Foundation will continue to follow that policy and has already made the necessary changes to the online banking profile for the Office Facilitator. Additionally, the Foundation will continue to have the Executive Director and Board Treasurer review bank statements. Item 2024-B Outstanding Checks The Foundation's bank reconciliation for its primary checking account has a large number of outstanding checks. As of June 30, 2024, total outstanding checks that were more than one year old was$20,656. Recommendation The Foundation should implement a procedure wherein all outstanding checks are reviewed for propriety on a regular basis. The payee name and address along with the amount should be verified. For any checks that are outstanding for more than one month, management should determine why it has not cleared and take appropriate steps to ensure the payment is made as required. If the outstanding item is deemed to be an error, it should be resolved immediately and any necessary adjustments should be made at that time. Old outstanding checks for which the payee cannot be located, management should remit the funds to the State's unclaimed property system. Old outstanding checks that are considered to be an error, such as a situation in which a duplicate check had been issued, the original check should be voided and removed from the outstanding check list. Management Response and Action Plan Beginning in May of 2024, management started a process to review all outstanding checks to confirm their status. Management is also reviewing each vendor's account to ensure that none of the outstanding checks should have been cancelled. Additionally, management is actively working to make contact with the relevant vendors to obtain contact information for any checks that should be re-issued. Once the status of all old outstanding checks is verified, management will submit a report of unclaimed property to the State and remit the associated funds. The State's unclaimed property guidelines indicate that outstanding checks must be at least three years old before they qualify for submission. Approximately $12,000 of the Foundation's outstanding checks meet this requirement. Item 2024-C Reconciliation of Balance Sheet Accounts At the time of the audit certain balance sheet accounts did not agree to underlying supporting documentation or otherwise contained errors that had not been noted by the Foundation prior to the audit. These items included: • Bank reconciliations that had been prepared but did not agree to the Quickbooks balances. There were discrepancies between the bank reconciliations and Quickbooks balances for the regular checking account, the grants checking account and one of the savings accounts. Approximately $3,800 of the discrepancies between bank reconciliations and the Quickbooks balances resulted from entries made in Quickbooks (subsequent to when the bank reconciliations were prepared) to move funds between two checking accounts within Quickbooks. This affected the bank reconciliations for both checking accounts and the savings account and once identified, it was apparent that they offset one another. Another $1,200 discrepancy resulted when a check had been recorded in one bank account within Quickbooks but was actually written on the check stock of another bank account. This discrepancy also affected two accounts in Quickbooks, but once it was identified, netted out to zero. After factoring in the discrepancies that were identified, there was an unidentified discrepancy of$164 of the primary checking account. • The accrued liability account Direct Deposit Liabilities that is used in processing payroll had a negative balance of over $7,000 that was the result of an error from voiding and re-processing a payroll. • The balance in the Sales Tax Receivable account had been increasing for several years but refunds of sales tax for which the Foundation would have been eligible had not been applied for. The time period to apply for refunds from the state had expired for approximately$1,900 which was written off during the audit. If all asset and liability accounts are not reconciled on a regular basis or changes to those reconciled balances are subsequently made, errors that might otherwise have been noted and corrected in a timely basis can go undetected and could accumulate over time, diminishing the accuracy of interim financial statements. If errors accumulate over time larger adjustments would be required to prepare for the annual audit. Recommendation We recommend creating a checklist of all asset and liability accounts that could be used as a guide for closing out each month. These accounts should be reconciled to supporting information and schedules and the reconciliations should be reviewed by appropriate levels of management to ensure that they match the balance sheet accounts as recorded in Quickbooks at month end. The accounts receivable aging report and accounts payable aging report should each be compared to the corresponding balance sheet accounts and also reviewed for unusual items. Changes to month end balance sheet accounts should be included in reconciliations so that underlying supporting documentation is accurate. This will ensure that the monthly financial statements are accurate and provide a more meaningful management tool. Management Response and Action Plan Management has been regularly reviewing the bank reconciliations but that review did not include ensuring that the reconciled balance agreed to the corresponding account on the Quickbooks balance sheet. Management will implement processes to ensure that all balance sheet accounts are reviewed regularly and matched to corresponding reconciliations and other supporting documentation. November 1, 2024 November 1, 2024 OSBORNE, ROBBINS & BUHLER, PLLC 4527 S 2300 E, SUITE 201 SALT LAKE CITY, UTAH 84117 This representation letter is provided to you in connection with your audit of the financial statements of Salt Lake Arts Council Foundation (the Foundation) which comprise the financial position as of June 30, 2024, and the changes in financial position for the year then ended, and the disclosures (collectively, the "financial statements"), for the purpose of expressing opinions as to whether the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. An omission or misstatement that is monetarily small in amount could be considered material as a result of qualitative factors. We confirm, to the best of our knowledge and belief as of November 1, 2024, the following representations made to you during your audit. Financial Statements 1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated August 9, 2024, including our responsibility for the preparation and fair presentation of the financial statements in accordance with U.S. GAAP and for preparation of the supplementary information in accordance with the applicable criteria. 2. The financial statements referred to above are fairly presented in conformity with U.S. GAAP and include all assets and liabilities under the organization's control. In addition, there are no component units required by generally accepted accounting principles to be included in the financial reporting entity. 3. We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error. 4. We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud. 5. The methods, significant assumptions, and data used in making accounting estimates and their related disclosures are appropriate to achieve recognition, measurement, or disclosure that is reasonable in accordance with U.S. GAAP. Osborne, Robbins & Buhler, PLLC November 1, 2024 Page 2 6. Related party relationships and transactions, including revenues, expenditures/expenses, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties have been appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP. 7. Adjustments or disclosures have been made for all events, including instances of noncompliance, subsequent to the date of the financial statements that would require adjustment to or disclosure in the financial statements. 8. There are no uncorrected misstatements to the financial statements. In addition, we are in agreement with the adjusting journal entries you have proposed and they have been posted to the accounts. 9. We are not aware of any pending or threatened litigation, claims or assessment or unasserted claims or assessments that are required to be accrued or disclosed in the financial statements and we have not consulted a lawyer concerning litigation, claims or assessments. 10. Guarantees, whether written or oral, under with the Foundation is contingently liable, if any, have been properly recorded or disclosed. Information Provided 11. We have provided you with: • Access to all information, of which we are aware, that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation and other matters. • Additional information that you have requested from us for the purpose of the audit. • Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence. • Minutes of the meetings of the Board of Trustees or summaries of actions of recent meetings for which minutes have not yet been prepared. 12. All material transactions have been recorded in the accounting records and are reflected in the financial statements. 13. We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. 14. We have no knowledge of any fraud or suspected fraud that affects the entity and involves: • Management, • Employees who have significant roles in internal control, or • Others where the fraud could have a material effect on the financial statements. 15. We have no knowledge of any allegations of fraud or suspected fraud affecting the entity's financial statements communicated by employees, former employees, regulators, or others. 16. We have no knowledge of instances of noncompliance or suspected noncompliance with provisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects should be considered when preparing financial statements. Osborne, Robbins & Buhler, PLLC November 1, 2024 Page 3 17. We have disclosed to you all known actual or possible litigation, claims and assessments whose effects should be considered when preparing the financial statements. 18. We have disclosed to you the names of the entity's related parties and all the related party relationships and transactions of which we are aware. Government-specific 19. There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices. 20. We have identified to you any previous audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented. 21. We have identified to you investigations or legal proceedings that have been initiated with respect the period under audit, if any. 22. The Foundation has no plans or intentions that may materially affect the carrying value or classification of assets, deferred outlows of resources, liabilities, deferred inflows of resources, or equity. 23. We are responsible for compliance with the laws, regulations, and provisions of contracts and grant agreements applicable to us; including debt limits and debt contracts and legal and contractual provisions for reporting specific activities in separate funds. 24. We have identified and disclosed to you instances of fraud and suspected fraud and noncompliance with provisions of laws, regulations, and grant agreements that we believe have a material effect on the financial statement amounts. 25. There are no leases that should be recorded or disclosed in the financial statements in accordance with GASBS No. 87. 26. We have identified and disclosed to you all instances of identified and suspected fraud, and noncompliance with provisions of laws, regulations,contracts and grant agreements that we believe have a material effect on the financial statement amounts. 27. There are no violations or possible violations of budget ordinances, laws and regulations (including those pertaining to adopting, approving, and amending budgets), provisions of contracts and grant agreements, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the financial statements, or as a basis for recording a loss contingency, or for reporting on noncompliance. 28. As part of your audit, you assisted with preparation of the financial statements and related notes. We acknowledge our responsibility as it relates to those nonaudit services, including that we assume all management responsibilities; oversee the services by designating an individual, preferably within senior management, who possesses suitable skill, knowledge, or experience; evaluate the adequacy and results of the services performed; and accept responsibility for the results of the services. We have reviewed, approved, and accepted responsibility for those financial statements and disclosures. Osborne, Robbins & Buhler, PLLC November 1, 2024 Page 4 29. The Foundation has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral. 30. The Foundation has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance. 31. There are no component units or joint ventures with an equity interest that should be included in the financial statements. 32. The financial statements properly classify the Foundation's one fund and related activities. 33. Components of net position (net investment in capital assets; restricted; and unrestricted) are properly classified and, if applicable, approved. 34. Investments are properly valued. 35. Provisions for uncollectible receivables have been properly identified and recorded. 36. Expenses have been appropriately classified in or allocated to functions and programs in the statement of revenues, expenses and changes in net position, and allocations have been made on a reasonable basis. 37. Revenues are appropriately classified in the statement of activities within program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal. 38. Deposits and investment securities are properly classified as to risk and are properly disclosed. 39. Capital assets, including infrastructure assets, are properly capitalized, reported, and, if applicable, depreciated. 40. We acknowledge our responsibility for the required supplementary information (RSI). The RSI is measured and presented within prescribed guidelines and the methods of measurement and presentation have not changed from those used in the prior period. We have disclosed to you any significant assumptions and interpretations underlying the measurement and presentation of the RSI. Executive Director Signature Title C,q1f41n 7-(� sk Treasurer Caitlin Tursic(Nov 8,202410:38 MST) Signature Title