CULTURAL COUNCIL OF NOTES TO FINANCIAL STATEMENTS PALM BEACH COUNTY, INC.

For the Year Ended September 30, 2022

15. Business and Credit Concentrations

The Council receives grants from the County and the TDC as reflected in the Statement of Activities. Direct funding by these agencies represent approximately 75% of the Council's 2022 total revenue and support, and requires the fulfillment of certain conditions as set forth in the contract documents. Failure to fulfill such obligations could result in a reduction of future funding. A significant reduction in the level of this support could have a substantial effect on the Council's programs and activities. Although there is a possibility of such an occurrence, management believes this contingency to be remote, since by accepting the terms and conditions of the contracts, it will operate in accordance with the agreements.

At various times during the year, the Council has funds on deposit that exceed the $250,000 insured by the Federal Deposit Insurance Corporation. The Council minimizes its risk by depositing cash in financial institutions with a high credit standing. The Council has not experienced any losses of such funds and management believes the Council is not exposed to significant risk on cash. As of September 30, 2022, the Council had approximately $571,100 in excess of insured limits.

16. Lease Commitments

The Council leases office equipment with lease terms extending through May 2023. As of September 30, 2022 the future minimum lease payments under operating leases was approximately $5,500.

17. Payroll Protection Program Loan

The Council submitted a second loan application with its bank under the Paycheck Protection Program (the “PPP Loan”) as part of the Coronavirus Aid Relief, and Economic Security Act (“CARES ACT”) for $250,000 to fund payroll, rent, utilities, and other costs. The loan was approved and funded on February 2, 2021, and fully forgiven on December 20, 2021.

18. Contract with Lake Worth Community Redevelopment Agency

In September 2009, the Council entered into an agreement with the City of Lake Worth Community Redevelopment Agency (the "CRA") under which the CRA agreed to contribute to the rehabilitation of a building to be used as the Council’s headquarters. The funds provided to the Council came in the form of a ten-year forgivable, interest-free, and non-amortizing loan in the amount of $700,000. The loan is forgivable over a ten-year period from the issuance of the certificate of occupancy (December 2011) provided that the Council continuously occupies the building to house its headquarters. The amount owed to the CRA will be reduced by 50% after five years (December 2016) of occupancy and will be further reduced by an additional 10% each year of the remaining five years of occupancy.

Through Mary M. Montgomery’s Foundation, The BMC Charitable Foundation, Inc., the Council obtained a building located at 601 Lake Avenue, Lake Worth, Florida, valued at $1,350,000. The Council continues to use and operate the building as its corporate headquarters and in support of education and promotion of cultural arts in Palm Beach County. As of September 30, 2022 the loan was fully forgiven.

PALM BEACH COUNTY, INC.

For the Year Ended September 30, 2022

19. Subsequent Events

The Council’s management has evaluated subsequent events through January 11, 2023, the date on which the financial statements were available to be issued, and determined the following events to disclose in these financial statements.

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

To the Board of Directors of Cultural Council of Palm Beach County, Inc. Lake Worth, Florida

We have audited, in accordance with the auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Cultural Council of Palm Beach County, Inc. (a not-for-profit corporation), which comprise the statement of financial position as of September 30, 2022, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated January 11, 2023.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Cultural Council of Palm Beach County, Inc.’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Cultural Council of Palm Beach County, Inc.’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Cultural Council of Palm Beach County, Inc.’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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Cultural Council of Palm Beach County, Inc.’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 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

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 organization’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 organization’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

West Palm Beach, Florida

January 11, 2023

Holyfield

Certified Public Accountants & Advisors

125 Butler Street  West Palm Beach, FL 33407

(561) 689-6000  Fax (561) 689-6001  www.holyfieldandthomas.com

To the Board of Directors and Management of Cultural Council of Palm Beach County, Inc.

Lake Worth Beach, Florida

In planning and performing our audit of the financial statements of Cultural Council of Palm Beach County, Inc. (the “Organization”) as of and for the year ended September 30, 2022, in accordance with auditing standards generally accepted in the United States of America, we considered Organization’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 opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization’s internal control.

Definitions Related to Internal Control Deficiencies

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 Organization’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 Responsibilities

Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all such deficiencies have been identified. We did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weakness may exist that have not been identified. * * *

This communication is intended solely for the information and use of management, those charged with governance and others within the Council and is not intended to be and should not be used by anyone other than these specified parties.

Very truly yours,

West Palm Beach, Florida

January 11, 2023