HomeMy WebLinkAboutMiami Children's Museum-Independent Auditor's ReportAd.
00.2 1-19
SUB
PUB
TEM
VERDEJA I DE ARMAS
CERTIFIED PUBLIC ACCOUNTANTS
TTEDiNOTHE
C RECORD FOR
ON
S- brni ftati -
rJ
0
0
0
o
0
THE MIAMI CHILDREN'S MUSEUM, INC.
MIAMI, FLORIDA
FINANCIAL STATEMENTS,
INDEPENDENT AUDITORS' REPORT,
AND SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2011
(WITH COMPARATIVE TOTALS FOR
THE YEAR ENDED JUNE 30, 2010)
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT 1-2
FINANCIAL STATEMENTS
Statements of Financial Position . ..... . ........ . . . . . 3
Statements of Activities. .. . . . . . . ..... . . . . . . . . . ....... 4
Statements of Cash Flows ........... . ..... . . ..... . 5
Notes to Financial Statements. . . ....... . ..... • . 6-14
SUPPLEMENTARY INFORMATION
Independent Auditors' Report on Schedule of Functional
Expenses
Schedule of Functional Expenses
Independent Auditors' Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards ...... . . ..... . . . . . ,
15
16
17-18
Submitted Into the public
record in connection with
item FR• .3 on oq 12r(2.
Priscilla A. Thompson
City Clerk
.,..•••••••T
El
0
0
[.]
VERDEJA 1 DE ARMAS
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
The Miami Children's Museum, Inc.
PEDRO M. DE ARMAS, C.P.A.
ALEJANDRO M. TRUJILLO, C.P.A.
OCTAVIO A. VERDEJA, C.P.A.
ANDRES ALFONSO, C.P.A.
YESLIE CASTRO, C.P.A.
MARIA C. PEREZ-ABREU, C.P.A.
RICHARD F. PUERTO, C.P.A.
OCTAVIO F. VERDEJA, C.P.A.
TAB VERDEJA, C.P.A.
We have audited the accompanying statement of financial position of The Miami
Children's Museum, Inc. (the "Museum") (a nonprofit organization) as of June 30, 2011,
and the related statements of activities and cash flows for the year then ended. These
financial statements are the responsibility of the Museum's management. Our
responsibility is to express an opinion on these financial statements based on our audit.
The prior year summarized comparative information has been derived from the
Museum's June 30, 2010 financial statements and in our report dated August 31, 2010 we
expressed an unqualified opinion on those financial statements.
We conducted our audit in accordance with generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of The Miami Children's Museum, Inc. as of June 30,
2011, and the changes in its net assets and cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.
In accordance with Government Auditing Standards, we have also issued our report dated
September 20, 2011 on our consideration of the Museum'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 to
describe the scope of our testing of intemal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on the internal
control over financial reporting or on compliance. That report is an integral part of an
audit performed in accordance with Government Auditing Standards and should be
considered in assessing the results of our audit.
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
A LIMITED LIABILITY PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
255 ALPINviBRA CIRCLE, SUITE 560, CORAL GABLES, FL 33134 OFFICE: 305.446.3177 • FAx: 305.446.6370
WWW.V-DCPA.COM
Our audit was made for the purpose of forming an opinion on the financial statements of
The Miami Children's Museum Inc. taken as a whole. The accompanying schedule of
functional expenses for the year ended June 30, 2011, which is also the responsibility of
the Museum's management, is presented for purposes of additional analysis and is not a
required part of the financial statements. Such schedule has been subjected to the
auditing procedures applied in our audit of the financial statements and, in our opinion, is
fairly stated in all material respects when considered in relation to the financial
statements taken as a whole.
Coral Gables, Florida
September 20, 2011
CERTIFIED PUBLIC ACCOUNTANTS
Submitted Into the public
record in connectionwi
item FR. '3 on cpiliz
Priscilla A. Thompson
City Clerk
r
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
STATEMENTS OF FINANCIAL POSITION
NNE 30, 2011 (With comparative totals as of June 30, 2010)
0
0
C
C
0
4.4
r
C
June 30, 2011 June 30, 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,124,389 $ 816,484
Promises to give, net 460,394 477,715
Grants receivable 279,507 841,506
Other receivables 258,675 95,446
Inventory 79,444 46,993
Prepaid expenses and other current assets 93,859 135,330
TOTAL CURRENT ASSETS 2,296,268 2,413,474
Promises to give, net 41,678 190,459
Endowments:
Investments, permanently restricted 660,633 563,708
Promises to give, permanently restricted 316,667 316,667
Building, exhibits, collections and
property and equipment, net 13,439,747 14,123,371
Other assets 103,518 118,872
TOTAL ASSETS $ 16,858,511 $ 17,726,551
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 245,934 $ 509,144
Accounts payable for WOZ building and design 59,244
Deferred revenues 192,976 110,785
Line of credit 205,195 500,000
Loan payable - 132,687
Current portion of bonds payable 187,500 172,500
TOTAL CURRENT LIABILITIES 831,605 1,484,360
Bond payable - long-term portion 2,125,000 2,312,500
TOTAL LIABILITIES
NET ASSETS
Unrestricted
Temporarily restricted
Permanently restricted
TOTAL NET ASSETS
TOTAL LIABILITIES AND
NET ASSETS
The accompanying notes are an integral part
of these financial statements.
2,956,605 3,796,860
8,819,697
4,104,443
977,766
8,591,314
4,381,110
957,267
13,901,906 13,929,691
16,858,511 $ 17,726,551
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
1 HI. MIA IVI 1 ufilLuitElsi'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
STATEMENTS OF ACTIVITIES
FOR THE YEAR ENDED .TUNE 30, 2011 (With comparative totals for the year ended June 30, 2010)
0
0
rj
Temporarily Permanently
Unrestricted Restricted Restricted Total 2010
SUPPORT AND REVENUE
SUPPORT:
Government grants $ 1,066,796 $ $ 1,066,796 $ 1,363,329
Donations 513,160 513,160 1,820,706
Special events 798,654 - 798,654 842,755
In -kind contributions 286,285 286,285 255,280
TOTAL SUPPORT 2,664,895 2,664,895 4,282,070
REVENUE:
Admissions and dues 1,780,355 1,780,355 1,483,150
Education 1,701,390 1,701,390 1,394,912
Interest and investment income, net of fees 77,626 20,499 98,125 45,903
Other 27,104 27,104 29,987
TOTAL REVENUE 3,586,475 20,499 3,606,974 2,953,952
TOTAL SUPPORT AND REVENUE 6,251,370 20,499 6,271,869 7,236,022
PROGRAM AND SUPPORTING EXPENSES
SCHEDULE OF FUNCTIONAL
EXPENSES) SERVICES EXPENSES:
Program services
Supporting activities
TOTAL PROGRAM AND
SUPPORTING EXPENSES
(Deficit) excess of support and revenues over
expenses from operations
5,104,570
1,195,084
5,104,570 4,724,484
1,195,084 1,106,098
6,299,654
6,299,654 5,830,582
(48,284) 20,499 (27,785) 1,405,440
Net assets released from restrictions
due to time restrictions 276,667 (276,667) -
CHANGES IN NET ASSETS 228,383 (276,667) 20,499 (27,785) 1,405,440
NET ASSETS - BEGINNING OF YEAR 8,591,314 4,381,110 957.267 13,929,691 12,524,251
NET ASSETS - END OF YEAR 8,819,697 4 104 443 S 977.766 $ 13,901_,906 $ 13 929.691
The accompanying notes are an integral part
of these financial statements.
4
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2011 (With comparative totals for the year ended June 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Change in net assets
Adjustments to reconcile change in net assets
to net cash provided by operating activities
(Decrease) increase in pledge discount
Depreciation and amortization
Provision for bad debt
Net unrealized (gains) losses
Decrease (increase) in promise to give
Decrease (increase) in grants and other receivable
Decrease (increase) in prepaid expenses and other assets
(Increase) in inventory
(Decrease) increase in accounts payable and accrued expenses
Increase in deffered revenue
TOTAL ADJUSTMENTS
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, exhibits and equipment
Design and building of WOZ exhibit
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loan and bond Payable
Net payments from line of credit
NET CASH USED IN FINANCING ACTIVITIES
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS - END OF PERIOD
Cash & cash equivalents
Cash held in reserve - restricted
The accompanying notes are an integral part
of these financial statements.
f..
5
June 30, June 30,
2011 2010
$ (27,785) $ 1,405,440
(3,906) 3,225
934,843 922,113
42,708
(96,925) (32,685)
170,008 (529, 166)
398,770 (774,447)
41,465 (79,166)
(32,451) (17,510)
(322,454) 58,153
82,191 78,829
1,171,541 (327,946)
1,143,756 1,077,494
(235,859) (42,573)
(456,298)
(235,859) (498,871)
(305,187) (1,000,000)
(294,805) 16,274
(599,992) (983,726)
307,905 (405,103)
816,484 1,221,587
$ 1,124,389 $ 816.484
$ 1,124,389 $ 816,484
$ 1,124,389 $ 816,484
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Miami Children's Museum, Inc. ("the Museum") is a nonprofit corporation established in 1983 for the
purpose of operating a children's educational museum.
Financial Statement Presentation
The accompanying financial statements are presented in accordance with FASB ASC. Under this interpretation,
the Museum is required to report information regarding its financial position and activities according to three
classes of net assets as follows:
Unrestricted net assets are the part of net assets that are neither permanently nor temporarily restricted by
donor -imposed stipulations. Generally, operating revenues and expenses have been recorded in the Unrestricted
Fund.
Temporarily restricted net assets result from contributions and other inflows of assets whose use is limited by
donor -imposed stipulations that either expire by passage of time or can be removed by actions of the
organization pursuant to those stipulations. (See Note 8)
Permanently restricted net assets result from contributions and other inflows of assets whose use is limited by
donor -imposed stipulations that neither expire by the passage of time nor can be fulfilled or otherwise rem6ved
by actions of the organizations. As of June 30, 2011, the Museum has an endowment fund of $660,633 in
which the principal cannot be spent, except as stipulated by the Donor. (See Note 9)
Revenue Recognition
The accompanying financial statements are prepared in accordance with FASB ASC. In accordance with FASB
ASC contributions received are recorded as unrestricted, temporarily restricted or permanently restricted
support depending on the existence and/or nature of any donor restrictions. FASB ASC requires that
contributed services be recognized if the services received either creates or enhances nonfinancial assets or
requires specialized skills and are provided by individuals possessing those skills, and would typically need to
be purchased if not provided by donation.
It is the policy of the Museum to record the total grant amount at the time of award and defer the unexpended
portion until earned. Government funds restricted by grantor for plant acquisitions or operating purposes are
deemed to be earned and reported as revenue when the Museum has incurred expenditures in compliance with
the specific restrictions.
Property and Equipment
Property and equipment is recorded at cost. Donated property and equipment is recorded at fair market value, at
the date of the gift, as unrestricted net assets unless its use is restricted by the donor. Proceeds from the sale of
these assets, if unrestricted, are accounted for in the operating funds or, if restricted, accounted for as either
temporarily or permanently restricted net assets, dependent upon donor stipulation. Depreciation of equipment
is provided over the estimated useful lives of 5 to 50 years on both straight-line and accelerated methods.
Maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred in the
operating fund.
6
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
LI
El
NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Promises to Give
Unconditional promises to give are recorded as receivables in the period the promise is made. Promises for
support of the Museum's ongoing operations are recorded as operating fund support, generally in the
Unrestricted Fund. Promises that are restricted for support of the capital campaign are recorded as Capital
Campaign Fund support, generally in the Temporarily Restricted Fund. Promises are carried at their net
realizable value. Multi -year promises are discounted using a fair market rate and reported at their net present
value.
Cash and Cash Equivalents
For the purpose of reporting cash flows, the Museum considers all highly liquid debt instruments purchased
with maturity of three months or less to be cash equivalents.
Contributed Assets, Materials, Service and Donated Facilities
During the year ended June 30, 2011, the Museum received donated assets, materials and services meeting the
recognition criteria under FASB ASC. Donated assets, materials and service revenues valued at $286,285 have
been reported as support in the accompanying financial statements for operating and capital campaign purposes.
Functional Allocation of Expenses
The costs of providing the various programs and other activities have been summarized on a functional basis in
the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting
services benefited.
Income Taxes
The Museum is exempt from federal income taxes under section 501(c) (3) of the Internal Revenue Code.
Accordingly, no provision for income tax is reported in these financial statements.
Reclassifications
Certain accounts in the June 30, 2010 financial statements have been reclassified to conform to the June 30,
2011 presentation.
Management Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the
reported amounts. The actual outcome of these estimates could differ from the estimates made in the
preparation of the financial statements.
Subsequent Events
Under FASB ASC, subsequent events are events or transactions that occur after the balance sheet date but
before financial statements are issued or ready to be issued. The Museum recognizes in the financial statements
the effects of all subsequent events that provide additional evidence about conditions that existed at the date of
the balance sheet, including the estimates inherent in the process of preparing the financial statements. The
Museum's financial statements do not recognize subsequent events that provide evidence about conditions that
did not exist at the date of the balance sheet but arose after the balance sheet date and before financial
statements are issued. The Museum has evaluated subsequent events through September 20, 2011, which is the
date the financial statements were available to be issued.
7
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
0.1
0
ti
El
NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Uncertainty in Income Taxes
The FASB ASC interpretation prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This
interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition.
This interpretation must be applied to all existing tax positions. The cumulative effect, if any, is to be reported
as an adjustment to opening net assets. This interpretation will require management of the Museum to analyze
all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and
certain states. Open tax years are those that are open for examination by taxing authorities (i.e., generally the
last four tax year ends and the interim tax period since then). The Museum has no examinations in progress.
Management believes that this does not have a material effect on its financial statements.
NOTE 2 — BUILDING, EXHIBITS, COLLECTIONS AND PROPERTY AND EQUIPMENT
Building, including capitalized interest $ 11,608,145
Exhibits and collections 8,334,648
Property and equipment 721,895
Less accumulated depreciation
Depreciation expense was $919,483 for the year ended June 30, 2011.
20,664,688
(7,224,941)
13,439,747
NOTE 3 — STATE AND COUNTY FUNDS
Uncollected State and Miami -Dade County funds, totaling $104,507 are included in the financial statements
under the caption of grants receivable. These grants are to be used to fund exhibits and educational programs of
the Museum.
The Museum earned and spent $891,796 in grants from the State, County and City for current year educational
programs and exhibits.
8
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 4 — PROMISES TO GIVE
Unconditional promises to give represent commitments from various individuals and corporations to fund the
operations and maintenance of the Museum's new facilities and for payment of the bond payable. Promises,
which are due within one year, are reported as current assets at their net realizable value. Promises, which are
due after one year, have been discounted.
Payments due on promises to give which are recorded are as follows:
June 30,
2012 $ 460,394
2013 408,646
2014 5,750
2015 5,000
2016 20,000
Less Discount & Allowance
899,790
(81,051)
818,739
Current Portion 460,394
Long Term Portion
Unrestricted 41,678
Permanently Restricted 316,667
818,739
The Museum has recorded an allowance for doubtful accounts and discount on pledges of $28,331 and $52,720
respectively, and it has been recorded in these financial statements.
NOTE 5 — OTHER ASSETS
Approximately $143,000 of loan costs relating to the construction loan has been capitalized and as of June 30,
2011 has been fully amortized. An additional $111,000 in loan costs were incurred in 2003 relating to the new
loan payable and were being amortized over fifteen years. In order to obtain significant interest savings, the
loan payable was converted into a bond payable during the 2004 year, and the Museum incurred closing costs of
approximately $119,000, which are being amortized over fifteen years. (See Note 8)
Amortization expense for the year ended June 30, 2011 was $15,360.
NOTE 6 — PETER MAX ART COLLECTION
During the year 2000, a private donor gifted the Museum a 39-piece art collection by the renowned painter
Peter Max. The Museum intends to keep the collection for display. As a result, the artwork has been recorded
in these financial statements at the net selling price of the entire collection equivalent to $980,595. During
2002, additional artwork was donated and recorded at its fair market value of $71,500. The total amount
recorded for the Peter Max Collection is $1,052,095 as of June 30, 2011, which is included in Building,
Exhibits, Collections and Property and Equipment. In addition, the Peter Max Collection is held as collateral on
the bond payable. (See Note 8)
9
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
ri
110
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 7 — BOND PAYABLE AND LINE OF CREDIT
The Museum has a line of credit which bears interest equal to an annual percentage rate of 4.10%, which can
increase or decrease as the Institution's Index increases or decreases from time to time. The agreement
establishes "regular payments", which are equal to the amount of the accrued finance charges. The new
maturity date is June 14, 2012. At June 30, 2011, the outstanding balance on this line of credit was $205,195.
During 2003, the Museum entered into a $5 million loan agreement with a financial institution for the purpose
of exhibit fabrication and acquiring new exhibits and equipment. In November 2003, the loan was converted
into a bond payable with an interest rate of 5.20% and it is due in semi-annual payments of interest only and
annual payments of principal ending April 30, 2018. In May 2011 the bond payable was modified and required
a payment of $1,000,000 to be applied to principal balance by May 1, 2011. The Museum paid the $1,000,000
with cash held in a certificate of deposit. The bond is secured by a second leasehold mortgage, pledges
receivable, the Peter Max Art Collection, and all revenue from the Miami Children's Museum Charter School.
The outstanding balance as of June 30, 2011 was $2,312,500 which is recorded as a current and long-term bond
payable.
Principal maturities on the modified loan for the next five
June 30
2012
2013
2014
2015
2016
Thereafter
Total
years are as follows:
$ 187,500
365,000
385,000
405,000
425,000
545,000
2,312,500
NOTE 8 — TEMPORARILY RESTRICTED NET ASSETS
In prior years, Miami -Dade County contributed $5,000,000 towards the construction of the Museum with the
condition that the facility be used as a children's museum for 30 years. Accordingly each year, I/30 of the
$5,000,000 will be released from restriction. In addition, the Museum received other contributions that are
considered to be temporarily restricted. The balance in the temporarily restricted net assets at June 30, 2011
was $4,104,443 and the assets are held in cash, pledges receivable and buildings.
NOTE 9 — PERMANENTLY RESTRICTED NET ASSETS
Permanently restricted net assets result from contributions and other inflows of assets whose use is limited by
donor -imposed stipulations that neither expire by the passage of time nor can be fulfilled or otherwise removed
by actions of the Museum. Permanently restricted net assets endowments are held in investments of cash and
securities at the Dade Community Foundation as well as a pledge receivable from a donor. The agreements
with the donors stipulate that only a specific portion of the balance in permanently restricted may be used for
operations. The balance in permanently restricted net assets at June 30, 2011 was $977,766.
10
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 9 — PERMANENTLY RESTRICTED NET ASSETS (Continued)
Permanently restricted net assets are held in:
Endowment funds 660,633
Adjusted for:
Contributions to the endowment recorded as promises to 316,667
give
Unfunded portion 466
Ending Balance
977,766
The initial amount of the permanently restricted grant that was awarded to the Museum was $500,000 in the
year 2000. According to Section C of the Endowment grant agreement, the initial principal shall be defined as
the Grant to which shall be added each year an amount that Donee determines will preserve the purchasing
power of the Grant from year to year. Donee may use the Consumer Price Index, or another appropriate
measure determined by Donee's governing body, as the primary barometer for determining a minimum amount
to be added to the Grant as an annual hedge against inflation. Donee may use unrealized appreciation, as
determined by "market value" measures, for such annual additions to the Grant, or it may use realized earnings
or income.
Management has determined that the initial corpus of $500,000 would have increased to approximately
$661,099 had it been invested at a rate to hedge against inflation since the year 2000. Accordingly the
permanently restricted balance of this award should be $661,099. As indicated in Note 10, the actual balance
held in investments is $660,633. The Endowment's unfunded portion is $466. Management does not believe
that they are required to restore the corpus amount at this time, however it is their intention to do so as the value
of the investment increases in the future. (See Note 10)
11
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 10 — ENDOWMENTS
As indicated in Note 9 the Museum received a permanently restricted grant of $500,000, which it has recorded
as an endowment. Changes in endowment net assets for the year ended June 30, 2011 were as follows:
Temporarily Permanently
Unrestricted Restricted Restricted Total
Donor Restricted Endowment Funds
Investments
Pledges receivable
Endowment net assets, beginning of
year
Contributions
Net appreciation (realized and
unrealized)
$ (466) $
$ (466)
$ (76,892)
76,426
Endowment net assets, end of year (466)
$ 661,099 $ 660,633
316,667 316,667
977,766 977,300
957,267 880,375
20,499 96,925
977,766 977,300
Return Objectives and Risk Parameters
The Museum has adopted investment and spending policies for endowment assets that attempt to provide a
predictable stream of funding to programs supported by its endowment while seeking to maintain purchasing
power of the endowment assets. Endowment assets include those assets of donor -restricted funds that the
Museum must hold in perpetuity or for a donor -specified period(s). Under this policy, as approved by the
Board of Trustees, the endowment assets are invested in a manner that is intended to produce returns while
assuming a moderate level of investment risk. Actual returns in any given year may vary from this amount.
Strategies Employed for Achieving Objectives
To satisfy its long-term rate -of -return objectives, the Museum relies on a total return strategy in which
investment returns are achieved through both capital appreciation (realized and unrealized) and current yield
(interest and dividends). The Museum targets a diversified asset allocation that includes equity investments,
fixed income investments, alternative investments and cash using prudent risk constraints.
Spending. Policy and How the Investment Objectives Relate to Spending Policy
The Museum's objectives for the Endowment is to preserve, protect, and grow the Museum's assets, as well as
the maintenance sufficient liquid reserves to meet obligations arising from planned activities. Currently, the
Museum has delayed any spending from the endowment funds until the endowment is restored to its original
corpus.
12
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 10 — ENDOWMENTS (Continued)
Funds with Deficiencies
From time to time, the fair value of assets associated with individual donor -restricted endowment funds may fall
below the level that the donors require the Museum to retain as a fund of perpetual duration, In accordance
with accounting principles generally accepted in the United States of America, deficiencies of this nature are
reported in unrestricted net assets. These deficiencies resulted from unfavorable market fluctuations that
occurred shortly after the investment of new permanently restricted contributions. (Also see Note 9)
NOTE 11— FAIR VALUE MEASUREMENTS
The Museum's investments of $660,633 are reported at fair value and held at the Miami Foundation ("the
Foundation"). Those assets are invested as follows:
Fair Value Measurements Using:
Quoted Prices in Active Significant Other Significant
Markets for Identical Observable Inputs Unobservable Inputs
Assets
Assets Fair Value (Level I) (Level 2) (Level 3)
Cash and money market $ 18,498 $ 18,498 $
funds
Bonds and government 221,312 221,312
securities
Equity securities 305,873 305,873
Hedge funds of funds 66,063 $66,063
Private Real Assets 48,887 48,887
investment trust
Total 660,633 594,570 $ 66,063
The Museum classified its investments as of June 30, 2011 based upon an established fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad
levels: Level 1 inputs consist of unadjusted quoted prices in active markets for identical assets and have the
highest priority, Level 2 inputs consist of observable inputs other than quoted prices for identical assets, and
Level 3 inputs have the lowest priority. The Museum uses appropriate valuation techniques based on the
available inputs to measure the fair value of its investments. When available, the Museum measures fair value
using Level 1 inputs because they generally provide the most reliable evidence of fair value. Level 3 inputs are
used only when Level 1 or Level 2 inputs were not available.
13
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011
NOTE 11— FAIR VALUE MEASUREMENTS (Continued)
The three -level valuation hierarchy is established for the measurement and disclosure of fair value. The
valuation hierarchy is based upon the transparency of inputs used to measure fair value. The three levels are as
follows:
Level 1 — asset value is based on actual quoted prices in active markets for identical securities (mark -to -market).
Level 2 — other significant observable inputs are used to arrive at fair value (including yield, quality, coupon
rate, maturity, issue type, quoted prices for similar securities, prepayment speeds, trading characteristics, etc.).
Level 3 — significant unobservable inputs (including management's own assumptions in determining the fair
value of investments).
NOTE 12 — COMMITMENTS
Agreements
The Museum entered into a lease agreement with the City of Miami to lease the land on Watson Island where
the new facilities were built. The term of the lease is 50 years with two renewal terms of 20 years each,
commencing on July 2001. The Museum must maintain the leased property and shall not make any structural
alterations to the new building without the written consent of the city. The amount payable on the lease is $2
annually.
In addition, the Museum has several noncancelable operating leases. Future maturities on these commitments
for the next five years are as follows:
June 30
2012 29,896
2013 24,196
2014 20,291
2015 18,601
$ 92,984
NOTE 13 — MANAGEMENT DISCUSSION & ANALYSIS
The Museum's revenues for the year ended June 30, 2011 totaled $6,271,869. This was an overall decrease of
$964,153 from prior year total revenues. The decrease in revenues is attributable to the following reason:
The Museum received a one-time unconditional promise to give of $1,000,000 during the year ended
June 30, 2010. The entire amount of the award was recorded in the fiscal year that it was awarded in
accordance with FASB ASC.
The Museum believes that if the $1,000,000 promise to give was excluded in the 2010 fiscal year that total
revenues for the years ended June 30, 2011 and 2010 would be consistent.
14
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
11
ij
11
SUPPLEMENTARY INFORMATION
El
DO
El
fl
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
VERDEJA IDE ARMAS
fl
0
0
0
o
fj
0
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON
SCHEDULE OF FUNCTIONAL EXPENSES
PEDRO M. DE ARMAS, C.P.A.
ALEJANDRO M. TRUJILLO, C.P.A.
OCTAVIO A. VERDEJA, C.P.A.
ANDRES ALFONSO, C.P.A.
YESLIE CASTRO, C.P.A.
MARIA C. PEREZ-ABREU, C.P.A.
RICHARD F. PUERTO, C.P.A.
OCTAVIO F. VERDEJA, C.P.A.
TAB VERDEJA, C.P.A.
To the Board of Directors
The Miami Children's Museum, Inc.
We have audited the financial statements ofMiami Children's Museum, Inc. as of for the
year end June 30, 2011, which contained an unqualified opinion on those financial
statements. Our audit was performed for the purpose of forming an opinion on the
financial statements as a whole. The schedule of functional expenses is presented for the
purpose of additional analysis and is not a required part of the financial statements. Such
information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the financial
statements. The information has been subjected to the auditing procedures applied in the
audit of the financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records
used to prepare the financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America.
In our opinion, the information is fairly stated in all material respects in relation to the
financial statements as a whole.
Coral Gables, Florida
September 20, 2011
15
CERTIFIED PUBLIC ACCOUNTANTS
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
A LIMITED LIABILITY PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
255 ALHMABRA CIRCLE, SUITE 560, Co m GABLEs, FL 33134 OFFICE: 305.446.3177 • FAx: 305.446.6370
WWWV-DCPA.COM
THE MIAMI CHILDREN'S MUSEUM, INC. (A NONPROFIT ORGANIZATION)
SCHEDULE OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED JUNE 30, 2011 (With comparative totals for the Year ended June 30, 2010)
Program Services
Supporting Activities
Total General Comparative
Kid Smart Building/ Education Program and Totals
Store Exhibits Programs Expenses Administrative Development Totals 2010
Personnel costs $ 105,743 $ 652,956 $ 1,611,319 $ 2,370,018 $ 242,643 $ 255,251 $ 2,867,912 $ 2,515,252
Professional fees 2,479 34,747 50,915 88,141 17,113 27,636 132,890 139,194
Bad debt expense 202 10,628 905 11,735 721 126 12,582 42,708
Exhibit Rental - 233,460 - 233,460 - 233,460 7,262
Supplies 6,634 17,657 110,530 134,821 1,641 1,668 138,130 139,901
Postage 595 3,168 2,801 6,564 1,674 3,193 11,431 11,519
Printing 11 33,317 15,014 48,342 2,619 4,462 55,423 36,222
Repairs & maintenance 8,039 231,441 27,881 267,361 18,501 6,311 292,173 296,347
Repairs & maintenance -Exhibits - 91,644 - 91,644 - 91,644
Advertising - 131,495 31,985 163,480 8,885 5,331 177,696 139,768
Travel & meetings 2,412 10,526 7,496 20,434 2,923 3,539 26,896 17,003
Dues & subscriptions 142 3,553 3,062 6,757 3,823 4,405 14,985 18,976
Insurance 2,887 151,800 12,929 167,616 10,294 1,796 179,706 253,040
Transportation 4 9,873 16,504 26,381 141 473 26,995 33,744
Licenses & fees 1,035 5,384 7,122 13,541 7,299 1,095 21,935 55,712
Utilities 3,765 198,147 17,069 218,981 13,630 2,589 235,200 273,020
Special events and gala 1,436 349 1,785 226,791 228,576 270,627
Other expenses 18,889 64,298 16,999 100,186 4,867 2,337 107,390 100,120
Interest expense 2,220 116,723 9,941 128,884 7,915 1,381 138,180 210,343
Cost of goods sold 110,313 - - 110,313 - - 110,313 92,431
In -kind expense 382 20,112 1,713 22,207 239,088 261,295 255,280
Depreciation and amortization 15,024 789,608 67,287 871,919 53,575 9,348 934,842 922,113
TOTALS
$ 280,776 $ 2,811,973 $ 2,011,821 $ 5,104,570 $ 864,143 $ 330,941 $ 6,299,654 $ 5,830,582
The accompanying notes are an integral part of these financial statements.
16
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
VERDEJA I DE ARMAS
[1]
EJ
0
0
0
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON INTERNAL
CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
PEDRO M. DE ARMAS, C.P.A.
ALEJANDRO M. TRUJILLO, C.P.A.
OCTAVK) A. VERDEJA, C.P.A.
ANDRES ALFONSO, C.P.A.
YESLIE CASTRO, C.P.A.
MARIA C. PEREZ-ABREU, C.P.A.
RICHARD F. PUERTO, C.P.A.
OCTAviO F. VERDEJA, C.P.A.
TAB VERDEJA, C.P.A.
To the Board of Directors
The Miami Children's Museum, Inc.
We have audited the financial statements of The Miami Children's Museum, Inc. (the
"Museum") as of and for the year ended June 30, 2011, and have issued our report
thereon dated September 20, 2011. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Organization's internal control
over financial reporting as a basis for designing our auditing procedures for the purpose
of expressing our opinion on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the Organization's internal control over
financial reporting. Accordingly, we do not express an opinion on the effectiveness of the
Organization's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not
allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct misstatements on a timely basis. A material
weakness is a deficiency, or combination of deficiencies, in 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.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all
deficiencies in the internal control over financial reporting that might be deficiencies,
significant deficiencies or material weaknesses. We did not identify any deficiencies in
internal control over financial reporting that we consider to be material weaknesses, as
defined above.
17
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk
A UNITED LIABILITY PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
255 ALHAAABRA CIRCLE, SUITE 560, CORAL GABLES, FL 33134 OFFICE: 305.446.3177 • PAX: 305.446.6370
WVVW.V-DCPA.COM
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Museum's financial
statements are free of 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 determination of financial
statement amounts. However, providing an opinion on compliance with those provisions
was not an objective of our audit, and accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of management, Board of
Directors of the Museum, federal awarding agencies, and other pass -through entities,
others within the entity, and is not intended to be and should not be used by anyone other
than these specified parties.
Coral Gables, Florida
September 20, 2011
0
0
CERTIFIED PUBLIC ACCOUNTANTS
18
Submitted into the public
record in connection with
items FR.3 on 04-12-12
Priscilla A. Thompson
City Clerk