Palm Beach County Sporst Commission
1. Palm Beach County Sports Commission FY24 Audit Report
OVG Hospitality Management
2. OVG Hospitality FY24 Audit Report
3. OVG Mangement FY24 Audit Report
Discover The Palm Beaches
4. Discover The Palm Beaches FY24 Audit Report
Cultural Council for Palm Beach County
5. Cultural Council of Palm Beach County FY24 Audit Report
Palm Beach County Film & Television Commission
6. Palm
8645 N. Military Trail
Suite 503
Palm Beach Gardens, FL 33410
March 20, 2025
Palm Beach County Sports Commission, Inc. 2195 Southern Boulevard, Suite 550 West Palm Beach, FL 33406
We have audited the financial statements of Palm Beach County Sports Commission, Inc. for the year ended September 30, 2024, and have issued our report thereon dated March 17, 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter dated October 24, 2023. Professional standards also require that we communicate to you the following information related to our audit.
You are responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Palm Beach County Sports Commission Inc. are described in Note 1 to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during the year. We noted no transactions entered into by the Company 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 and are based on your 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:
Your estimate of the allocation of functional expenses is based on time and effort observed and measured by management. We evaluated the key factors and assumptions used to develop the allocation of expenses tin determining that it is reasonable in relation to the financial statements taken as a whole.
There were no other financial statement disclosures which are particularly sensitive because of their significance to financial statement users.
The financial statement disclosures are neutral, consistent, and clear.
We encountered no significant difficulties in performing and completing our audit.
Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We did not find any misstatements.
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether 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 our audit.
There were no other audit findings or issues.
This information is intended solely for the use of Palm Beach County Sports Commission, Inc. and those charged with governance and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Mark Escoffery, P.A.
INDEPENDENT AUDITOR’S REPORT AND FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
8645 N. Military Trail
Suite 503
Palm Beach Gardens, FL 33410
Certified Public Accountant
To The Board of Directors
Palm Beach County Sports Commission, Inc.
West Palm Beach, Florida
Opinion
I have audited the accompanying Financial Statements of Palm Beach County Sports Commission, Inc., (‘the Organization”) (a not-for-profit organization) which comprise the Statements of Financial Position as of September 30, 2024 and 2023, and the related Statements of Activities, Functional Expenses and Cash Flows for the years then ended, and the related notes to the financial statements.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Organization as of September 30, 2024 and 2023 and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
I conducted my audit in accordance with auditing standards generally accepted in the United States of America. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am required to be independent of Palm Beach County Sports Commission, Inc. and to meet my other ethical responsibilities in accordance with the relevant ethical requirements relating to my audit. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
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 Palm Beach County Sports Commission, Inc.’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
My 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 my opinion. 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 will always 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 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, I:
• 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 Palm Beach County Sports Commission, Inc.'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 Palm Beach County Sports Commission, Inc.'s ability to continue as a going concern for a reasonable period of time.
I am 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 I identified during the audit.
In accordance with Government Auditing Standards, I have also issued my report dated March 17, 2025, on my consideration of Palm Beach County Sports Commission, Inc.’s internal control over financial reporting and on my 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 my testing of internal 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 in considering the Organization’s internal control over financial reporting and compliance.
Palm Beach Gardens, Florida March 17, 2025
PALM BEACH COUNTY SPORTS COMMISSION, INC. STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2024 AND 2023
STATEMENT OF ACTIVITIES FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
PALM
STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
PALM BEACH COUNTY SPORTS COMMISSION, INC. STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
PALM BEACH COUNTY SPORTS COMMISSION, INC. STATEMENT OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Decrease (increase) in operating assets:
BEACH COUNTY
COMMISSION,
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The Palm Beach County Sports Commission, Inc. ("the Commission") is a Florida based not-forprofit organization that has a contractual agreement (Note 2) with Palm Beach County, Florida (A Political Subdivision of the State of Florida) ("the County") dedicated to attracting and supporting tourism to the County through sports promotion and events. The Commission also (through its private “non-contract” support) promotes youth sports in the County. Both “contract” and “noncontract” activities utilize local facilities, create hotel room nights, and have a positive economic impact on the County.
The Financial Statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the financial statements for the year ended September 30, 2023, from which the summarized information was derived. Certain 2023 amounts may be reclassified to conform to 2024 classifications. Such reclassifications had no effect on the change in net assets as previously reported.
The Commission's financial statements are prepared on the accrual basis of accounting and in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-14 (Topic 958), and the provisions of the American Institute of Certified Public Accountants (AICPA) "Audit and Accounting Guide for Not-for-Profit Organizations."
Net assets and revenue, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Organization and changes therein are classified as follows:
Net assets without donor restrictions: Net assets that are not subject to donor-imposed restrictions and may be expended for any purpose in performing the primary objectives of the Organization. The Organization's board may designate assets without restrictions for specific operational purposes from time to time. The Commission releases any purpose restrictions when the asset is in place in service for the use stipulated by the donor (e.g., grantors).
Net assets with donor restrictions: Net assets subject to stipulations imposed by donors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the Organization and/or by the passage of time.
Revenue is reported as an increase in net assets without donor restrictions unless use of the related assets is limited by donor-imposed or contractual restrictions. Expenses are reported as decreases in net assets without donor restrictions.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
Cash equivalents consist of short-term highly liquid investments which are readily convertible into cash within ninety days of purchase.
Accounts receivables are carried at the amount of the commitment expected to be recovered. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Management does not believe an allowance for bad debts is necessary, and none is provided.
Inventory consists of items donated and are recorded at fair market value.
As part of the Commission's contract with the County beginning in 2017 the Commission received refundable advances to be used for operating expenses. The total refundable advance as of September 30, 2024, is $600,000 and accordingly a liability is recorded in the same amount.
All contributions are available for unrestricted use, unless specifically restricted by the donor. Amounts designated for future periods or restricted by the donor for specific purposes are reported as contributions with donor restrictions.
Support that is restricted by the donor is reported as an increase in net assets if the restriction expires in the reporting period in which the support is recognized. All other donor restricted support is reported as an increase in net assets with donor restrictions, depending on the nature of the restrictions. When a donor restriction expires (that is, when a stipulated time restriction ends, or purpose restriction is accomplished) net assets with donor restrictions are reclassified to unrestricted net assets and reported in the Statement of Activities as net assets released from restrictions.
Financial instruments that subject the Commission to concentrations of credit risk include cash. While the Commission attempts to limit its financial exposure, its deposit balances have at times exceeded federally insured limits. The Commission maintains accounts at institutions insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Commission has not experienced any losses on such balances.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The Commission records goods and services contributed by volunteers as support and expenses if they meet the criteria for measurement. Contributed goods are recorded at fair value at the date of donation. Donated services are recognized as contributions if the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Commission. Donated goods, services, and certain operating expenses paid on behalf of the Commission (Note 7).
The costs of program services and supporting activities have been summarized on a functional basis in the Statements of Activities. Program services are the costs that fulfill the purpose or mission for which the Commission exists. Supporting activities are all activities, other than program services, that include management and general expenses and fundraising expenses.
The Statement of Functional Expenses presents detail of the natural classification of expenses by function. Accordingly, certain costs have been allocated among programs and supporting activities benefited based on estimates of time and effort.
The preparation of financial statements in conformity with generally accepted accounting principles include the use of estimates that affect the financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Accordingly, actual results could differ from those estimates.
The Commission is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. However, income from certain activities not directly related to the Commission's taxexempt purpose is subject to taxation as unrelated business income. Management does not believe any income tax is due and there is no provision for taxes in these financial statements.
The Commission's Form 990, Return of Organization Exempt from Income Tax, for the years ended September 30, 2023, 2022, and 2021 are subject to examination by the IRS, generally for three years after being filed. There are no current examinations by the Internal Revenue Service.
The Commission's advertising is primarily non-direct, and such costs are expensed as incurred. For the years ended September 30, 2024 and 2023, the Commission incurred approximately $182,668 and $169,905, respectively, in advertising costs, which are reported as advertising in the Statement of Functional Expenses.
TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
Effective October 1, 2022, the Commission adopted FASB ASC 842, Leases. The new standard establishes a right of use (ROU) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases with a term of less than 12 months will not record a right of use asset and lease liability and the payments will be recognized into profit or loss on a straight-line basis over the lease term.
The Commission elected to adopt FASB ASC 842, Leases, using the optional transition method that allows the Commission to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of net assets in the period of adoption.
The Commission elected to adopt the package of practical expedients available under the transition guidance with the new standard. This package includes the following: relief from determination of lease contracts included in existing or expiring leases at the point of adoption, relief from having to reevaluate the classification of leases in effect at the point of adoption, and relief from reevaluation of existing leases that have initial direct costs associated with the execution of the lease contract. The Commission also elected to adopt the practical expedient to use hindsight to determine the lease term and assess the impairment of the right of use assets.
See Note 6 – Commitments for a discussion of the impact of implementing FASB ASC 842, Leases.
As of October 1, 2020, the Commission adopted the provisions of FASB ASU 2014-09 – Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled. The Commission has evaluated the impact of the standard and determined that it did not result in significant changes to its method of revenue recognition.
As of October 1, 2020, the Commission adopted amendments to provisions of FASB ASU 2016-18 –Statement of Cash Flows (Topic 230): Restricted Cash. The implementation of ASU 2016-18 affects the presentation in the statement of cash flows to provide information that reconciles cash and restricted cash to amounts reported in the statement of financial position.
The Commission enters a multi-year administrative services and agency contract with the County. The contract provides that the Commission will perform or administer various functions such as attracting sports events, advertising, public relations, sports marketing and trade shows, familiarization tours and other projects and promotional services to assist the County in its sporting promotion efforts. Expenses made by the Commission under the contract are billed primarily on the cash basis and are subject to approval by the County prior to reimbursement. Effective February 1, 2015, the County levied a sixth cent of Bed Tax with an additional allocation to the Commission of 11.62%. Increasing the funding for this contract to 8.16% of the second, third, fifth, and sixth cent of the Tourist Development Tax.
YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The Commission’s contract with the County is on a reimbursement basis, and any portion of the contract budget unspent for the fiscal year is put back into the Commission’s reserve for future use. As of September 30, 2024, the cumulative reserve balance totaled $4,999,466 and remains earmarked for the Commission's use in accordance with the contract with the County.
On September 13, 2022, the Commission and the County entered into a new five-year agreement (R20221019) for the period October 1, 2022, through September 30, 2027. The contract is amended annually for certain exhibits (e.g., budget, org chart, etc.) but the body of the contract historically remains unchanged throughout the contract period.
The Commission also has in-kind activity with the County as further illustrated in Note 7.
The Commission incurs certain expenses in the normal course of its operations which are not reimbursed under the contract with the County. These expenses are related primarily to sports events, sponsorships, and membership services that are not covered under the contract with the County. The total amount of these expenses was approximately $213,743 and $178,286 for the years ended September 30, 2024, and 2023, respectively. This includes $9,170 and $9,800 of in-kind expenses for the years ended September 30, 2024, and 2023, that are shown under the Business Entities column in the table presented in Note 7.
The Commission adopted a 401(k) Plan and Trust on January 1, 2015, for the benefit of all eligible employees to save for retirement on a tax-advantage basis. Employees are eligible to participate in the plan after completion of 6 months of service. At that time, the employer will make Safe Harbor nonelective contributions equal to 3% of employee’s compensation and contributes discretionary or ProfitSharing contributions of 9.17%, which is fully vested. Effective January 1, 2015, employees under the plan may elect to contribute into the plan by making 401(k) salary deferrals which results in a reduction in their taxable wages or elect to contribute into a Roth 401(k) subject to federal income tax. Both employee deferrals in addition to employee rollover contributions from a previous employer’s Simplified Employee Pension Plan (SEP) are 100% vested immediately. Contributions made by the Commission to the 401(k) Plan for the years ended September 30, 2024, and 2023 were $118,232 and $96,702, respectively.
Vacation pay is accrued by employees starting on their date of hire. If employees do not take their vacation in the ensuing twelve months, they may rollover unused vacation into the following year subject to certain limits. Accrued vacation for the years ended September 30, 2024 and 2023 was $45,609 and $38,330, respectively.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The Commission's administrative office located in West Palm Beach are provided by the County for the benefit of the Commission. The Commission leases office equipment under non-cancelable operating leases with expiration dates that extend through February 2028.
Future minimum lease payments under the operating leases are as follows:
Fiscal Year Ending September 30,
Operating lease expense totaled $17,442 and $15,413 for the years ended September 30, 2024 and 2023, respectively, recorded within Equipment Rental and Maintenance Expense on the accompanying statement of functional expenses.
The implementation of FASB ASC 842, Leases did not have a material effect on the financial statements for the year ended September 30, 2024 and 2023, respectively.
Donated goods and services that meet the criteria for recognition are reflected as in-kind contributions on the accompanying statement of activities. During the fiscal year, the County paid grants, indirect operating expenses, telephone, tax collector commissions, and inspector general fees on behalf of the Commission.
The Commission receives the use of donated facilities of its administrative offices provided by the County. The fair value of office space rent, common area maintenance, and related overhead costs are calculated by the County and are included within the Indirect Operating Expenses line item in the statement of activities.
BEACH COUNTY SPORTS COMMISSION, INC.
TO THE
STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
Several business entities have donated goods and services including supplies, advertising, and professional services. These goods and services are recorded at their estimated fair value. In-kind contributions for the years ended September 30, 2024, and 2023 are as follows:
The Commission also receives donated sports memorabilia and other goods to be auctioned at events. The contributed auction items are recorded at the estimated fair value when donated. For the fiscal year ended September 30, 2024, donated auction items valued at $965 were recorded as inventory on the Statement of Financial Position.
For the years ended September 30, 2024, and 2023, the Commission received 88% of its revenue, from expense reimbursements and indirect payments to others paid by Palm Beach County.
The Fair Value Measurement Topic of the FASB Accounting Standards Codification defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements for fair value measurements. The Commission measures the fair value of assets and liabilities as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between independent observable inputs and unobservable inputs used to measure fair value as follows:
Level 1: Quoted prices (unadjusted) inactive markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
BEACH COUNTY SPORTS COMMISSION,
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
Level 2: Inputs other than quoted market prices included within Level 1 that are observable for an asset or liability) either directly or indirectly.
Level 3: Unobservable inputs for an asset or liability. Level 3 inputs should be used to measure fair value to the extent that observable Level 1 or 2 inputs are not available.
Generally accepted accounting principles require disclosure of an estimate of fair value of certain financial instruments. The Commission's significant financial instruments are cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other short-term assets and liabilities. For these financial instruments (Level 1), carrying values approximates fair value because of the short maturity of these instruments.
As described in Note 2, the Commission has a contractual agreement with the County, and the disbursement of funds received under this agreement generally requires compliance with the terms and conditions specified in the agreement. Failure to comply with the terms of the agreement could reduce or eliminate the amount of funds available to the Commission from the County. A significant reduction in the level of funding received from the County would have a substantial effect on the Commission's programs. While this is possible, management believes it is unlikely. The Commission has a longstanding successful relationship with the County and has to date accomplished the objectives of the Commission the provisions of the agreement.
The Commission recognizes monies received from Florida Sports Foundation as designated with a restricted purpose. These donor-restricted funds are awarded to supplement a grant from the Sports Commission to a Category G grantee and for purposes that include business development, coop marketing, digital media, event hosting, event servicing and familiarization tours.
As of September 30, 2024, and 2023, these net assets with donor restrictions totaled $544,090 and $613,931, respectively. Net assets were released from donor restrictions by incurring expenses satisfying the restrictions noted above of $393,263 and $211,200 for the years ended September 30, 2024, and 2023, respectively.
During the prior fiscal year, the Commission supported a not-for-profit organization (African American Golfers Hall of Fame) of which a member of the Board of Directors is that corporations President.
The Commission paid $4,900 to this related party for the years ended September 30, 2024, and 2023.
TO THE
STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The following financial assets available to meet cash needs for general expenditure, without donor restrictions or other designations limiting their use, within one year of the date of the statement of financial position:
Less: Donor-imposed restriction amounts
Total financial assets available to meet general expenditures over the
As part of the Commission’s liquidity management, it structures its financial assets to be available for general expenditures and other obligations as they come due. To further help manage its liquidity needs, the Commission has advanced cash from the County in prior fiscal years totaling $600,000. This is due to the reimbursement process which could take 45-60 days.
Additionally, the Commission has a cumulative reserve totaling $4,999,466 as of September 30, 2024. This reserve increases or decreases each year depending on bed tax collections and whether the Commission goes over/under budget at the end of the fiscal year. Although the Commission does not intend to spend from their reserve other than amounts appropriated for general expenditures as part of its annual contract budget approval and appropriation, amounts from their reserve could be made available, if necessary, with permission from the County and are earmarked by County Ordinance for the Commission.
The Commission has evaluated events that occurred subsequent to the year-end for potential recognition or disclosure in the financial statements through the date on which the financial statements were available to be issued.
The date when the financial statements were available to be issued was March 17, 2025.
Subsequent to year end, the Commission was notified by the Florida Sports Foundation (FSF) that the FSF grant program has fully obligated its budgetary allotment for the 2024-2025 fiscal year. As a result, no funding will be available for events starting between April 1 and September 30, 2025 (Q3 and Q4 of fiscal year 2025). Previously approved grants from Q1 and Q2 will still be honored and paid out as scheduled. The FSF plans to re-engage the program beginning with their Q2 Board Meeting in September 2025, with funding resuming for events after October 1, 2025.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
Management is currently evaluating whether the Commission has any planned events or commitments during this period that were relying on FSF funding. To the extent that affected events are identified, the Commission will explore alternative funding sources. The Commission's arrangements with event partners typically include provisions making financial commitments contingent upon funding availability.
8645 N. Military Trail
Suite 503
Palm Beach Gardens, FL 33410
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
Palm Beach County Sports Commission, Inc.
West Palm Beach, Florida
I have audited the financial statements of the Palm Beach County Sports Commission, Inc. (“the Organization”) (a not-for-profit organization) as of and for the years ended September 30, 2024 and 2023, and have issued my report thereon dated March 17, 2025. I conducted my audits 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.
In planning and performing my audits, I considered the Organization’s internal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressing my 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, I do not express an opinion on the effectiveness of the Organization’s internal control over financing 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 a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statement will not be prevented or detected and corrected on a timely basis.
My 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 internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. I did not identify any deficiencies in internal control over financial reporting that I consider to be material weaknesses, as defined above.
Palm Beach County Sports Commission, Inc.
West Palm Beach, Florida
As part of obtaining reasonable assurance about whether the Organization’s financial statements are free of material misstatement, I 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 my audit, and accordingly, I do not express such an opinion. The results of my 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, the Board of Directors, and others within the entity, and is not intended to be and should not be used by anyone other than these specified parties.
Palm Beach Gardens, Florida
March 17, 2025
8645 N. Military Trail
Suite 503
Palm Beach Gardens, FL 33410
March 7, 2025
To the General Manager and Management of Ovations Food Services, L.P. d/b/a OVG Hospitality Palm Beach County Convention Center West Palm Beach, Florida
We have audited the Statement of Profit and Loss of Ovations Food Services, L.P. d/b/a OVG Hospitality for the year ended September 30, 2024, and have issued our report thereon dated March 7, 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter dated October 24, 2022. Professional standards also require that we communicate to you the following information related to our audit.
You are responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Ovations Food Services, L.P. d/b/a OVG Hospitality are described in Note 2 to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during the year. We noted no transactions entered into by the Company 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.
There were no other financial statement disclosures which are particularly sensitive because of their significance to financial statement users.
The financial statement disclosures are neutral, consistent, and clear.
We encountered no significant difficulties in performing and completing our audit.
Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We did not find any misstatements.
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether 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 our audit.
There were no other audit findings or issues.
This information is intended solely for the use of Ovations Food Services, L.P. d/b/a OVG Hospitality and those charged with governance and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Mark Escoffery, P.A.
OVATIONS FOOD SERVICES, L.P. d/b/a OVG HOSPITALITY
PALM BEACH COUNTY CONVENTION CENTER LOCATION WEST PALM BEACH, FLORIDA
INDEPENDENT AUDITOR’S REPORT AND FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
PALM BEACH COUNTY CONVENTION CENTER LOCATION
BEACH,
8645 N. Military Trail
Suite 503
Palm Beach Gardens, FL 33410
To the General Manager and Management of Ovations Food Services, L.P. d/b/a OVG Hospitality Palm Beach County Convention Center West Palm Beach, Florida
We have audited the accompanying Statements of Profit and Loss of Ovations Food Services, L.P. d/b/a OVG Hospitality (a Florida partnership), for the years ended September 30, 2024 and 2023, and the related notes to the financial statements.
In our opinion, the September 30, 2024 and 2023 financial statements referred to above presents fairly, in all material respects, the results of Ovations Food Services, L.P. d/b/a OVG Hospitality’s operations for the years ended September 30, 2024 and 2023 pursuant to the Food and Beverage Services Agreement referred to in Notes 1 and 2.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 Ovations Food Services, L.P. d/b/a OVG Hospitality 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 opinion.
We draw attention to notes 1 and 2 of the financial statement, which describes the financial statement was prepared for the purpose of complying with the provisions of the Food and Beverage Services Agreement between the Board of County Commissioners of Palm Beach County, and Ovations Food Services, L.P. d/b/a OVG Hospitality, which is a basis of accounting other than accounting principles generally accepted in the United States of America.
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 Ovations Food Services, L.P. d/b/a OVG Hospitality’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
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 opinion. 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 will always 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, 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 Ovations Food Services, L.P. d/b/a OVG Hospitality’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 Ovations Food Services, L.P. d/b/a OVG Hospitality’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.
Palm Beach Gardens, Florida March 7, 2025
STATEMENT OF PROFIT AND LOSS YEARS ENDED SEPTEMBER 30, 2024 AND 2023
Ovations Food Services, L.P. d/b/a OVG Hospitality (the “Company”) and Palm Beach County are parties to a Food and Beverage Services Agreement dated July 1, 2010 (the “Agreement”), wherein the County granted the Company the exclusive right to provide food and beverage and catering services (the “Food and Beverage Services”) at the Palm Beach County Convention Center (the “Center”) subject to certain exceptions, as defined within the contract. The Agreement commenced on July 1, 2010, and will continue through September 30, 2015, a period of five (5) years and three (3) months.
There was an amendment to the original agreement with an effective date of October 1, 2015 which extended the term of the original agreement for an additional period of five (5) years commencing on October 1, 2015 and ending on September 30, 2020 (the “Extended Term”). Reference Article 2 Term. There was a second amendment to the original agreement on June 16, 2020 which extended the term of the agreement for an additional twelve (12) months commencing on October 1, 2020 and ending on September 30, 2021 (the “Extended Term”).
A third amendment to the original agreement was executed on June 15, 2021 which extended the term of the agreement for an additional twelve (12) months commencing on October 1, 2021 and ending on September 30, 2022 (the “Extended Term”).
The Company signed a new agreement with Palm Beach County that was executed on August 22, 2022 with a term of five years beginning October 1, 2022 and continuing through September 30, 2027 with the potential for one five year extension at the end of the first term.
Pursuant to the terms of the Agreement, the Company and Palm Beach County have agreed to distribute the net profits, as defined, from the Food and Beverage Services provided at the Center as follows:
• The County will receive 93% of the net profits, as defined;
• The Company will receive 7% of the net profits, as defined;
The Company has remitted total payments to the County of $ $2,896,837 and $2,377,184 for the years ended September 30, 2024, and September 30, 2023, respectively. The County paid or credited to Ovations a total of $ 218,044 for the year ended September 30, 2024 and owed the Company a total of $80,061 for the year ended September 30, 2023. The amounts owed or credited from the County to the Company represent reimbursements for months where the Center incurred a loss.
Also, pursuant to the terms of the Agreement, the Company is required to maintain a $1,000,000 performance bond under which Palm Beach County can draw upon in the event the Company does not faithfully perform, as defined, in accordance with the terms of the Agreement. The performance bond held with Hartford Fire Insurance Company covers a one (1) year period through June 30, 2024 and 2023, with annual renewals.
PALM BEACH COUNTY CONVENTION CENTER LOCATION WEST PALM BEACH, FLORIDA
NOTES TO THE STATEMENT OF PROFIT AND LOSS YEARS ENDED 30, 2024 AND 2023
NOTE 1 – FOOD AND BEVERAGE AGREEMENT (Cont’d)
The following is a monthly schedule of gross receipts from the following sources:
NOTES TO THE STATEMENT OF PROFIT AND LOSS YEARS ENDED 30, 2024 AND 2023
Revenue
The Company recognizes gross receipts when products are sold or services are provided to its customers.
Expense Recognition
The Company recognizes expenses based upon the accrual method of accounting unless otherwise disclosed.
Pursuant to the terms of the Agreement, the Company provides for the purchase of small wares expended against a cumulative monthly marketing reserve fund (the “Fund”) calculated at 2% of gross receipts, which is included in other expenses in the accompanying statement. The Company can use the amounts in the Fund to pay the cost of marketing activities and for the purchase of small wares, as defined. The Fund is not required to be deposited into a separate bank account. Upon the expiration or termination of the Agreement, the Company shall remit to Palm Beach County the then-outstanding balance of the Fund. As of September 30, 2024 and 2023, the cumulative balance in the reserve fund was $146,917 and $159,959, respectively.
The Company’s operations at the Center are covered under workers’ compensation and comprehensive general liability (umbrella) insurance coverage obtained by Ovations Food Services, LP and its affiliates on a consolidated basis. The total cost of this coverage has been allocated to the operating location of Ovations Food Services, LP and its affiliates, including the Center. In the accompanying statement, charges for workers’ compensation and liability coverage totaling $167,129 and $135,127 in 2024 and 2023, respectively, are included in “other payroll cost and benefits” and other expenses.
The Company has entered into various subcontractor agreements to provide certain concession and catering services at the Center. There was $604,500 of subcontract revenue recognized in 2024 and $459,758 in 2023. These amounts have been properly included in the accompanying statements as part of “subcontract and other income.”
The Company adds to its catering contracts a service charge which covers all the incidental expenses incurred by Ovations to carry out the terms of the catering contract or agreement. These charges totaled $1,177,246 in 2024 and $972,933 in 2023.
Included in “subcontract and other income” are flow-through revenues of $118,797 and $37,600 for the year ended September 30, 2024 and 2023, respectively, pertaining to consignment income from services provided by the Palm Beach County Convention Center. These revenues are remitted to the building and the consignment income is included as an offsetting expense in “Administration and Other Expenses.”
According to the Agreement with Palm Beach County, Ovations is entitled to receive an “incentive fee” based upon meeting certain performance measures each year. The incentive fee is calculated at 1% applied to gross sales up to $2,500,000, and up to 2% in addition based upon sales in excess of $2,500,000 up to $4,000,000. The qualitative performance measures are generally assessed subsequent to the close of the fiscal year. For the years ended September 30, 2024 and 2023, no incentive fees were earned.
Global Economic Conditions - Following the end of the COVID-19 pandemic in mid-2023, the Company has experienced continued recovery in its operations and financial performance. The Company has successfully implemented various strategies to mitigate financial, operational, and liquidity risks that emerged during and after the pandemic period.
Despite the improved economic landscape, the Company remains vigilant about potential risks, including supply chain disruptions, inflation impacts, labor market fluctuations, and regional economic uncertainties. As of September 30, 2024, the Company has established robust contingency plans and maintains sufficient liquidity to address potential future disruptions.
Management continues to monitor economic indicators and market conditions, regularly evaluating the effectiveness of its risk mitigation strategies. The Company remains committed to making necessary adjustments to ensure long-term stability and success in a dynamic global economy.
The Company evaluated subsequent events through March 7, 2025, the date the financial statements were available to be issued.
Ending, September 30, 2024
PALM BEACH COUNTY CONVENTION CENTER LOCATION WEST PALM BEACH, FLORIDA NOTES TO STATEMENT OF PROFIT AND LOSS YEAR ENDED SEPTEMBER 30,
OVATIONS FOOD SERVICES, L.P. d/b/a OVG HOSPITALITY
PALM BEACH COUNTY CONVENTION CENTER LOCATION
WEST PALM BEACH, FLORIDA
NOTES TO STATEMENT OF PROFIT AND LOSS YEAR ENDED SETPTEMBER 30, 2024
c
c
c
c
c c c c c c c c c c c
c c c c c c c c c c c
c c c c c c c c c c c
c c c c c c c c c c c
c c c c c c c c c c c
c
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561)689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
In planning and performing our audit of the financial statements of the Operations of the Palm Beach County Convention Center (Convention Center) as of and for the years ended September 30, 2024 and 2023, in accordance with auditing standards generally accepted in the United States of America, we considered the Convention Center’s system of internal control over financial reporting (internal control) as a basis for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Convention Center’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Convention Center’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 combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the Convention Center’s financial statements will not be prevented, or detected and corrected on a timely basis.
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 material weaknesses. 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.
This communication is intended solely for the information and use of management, and others within the Convention Center, and is not intended to be and should not be, used by anyone other than these specified parties.
West Palm Beach, FL April 8, 2025
c
c
c
c
c c c c c c c c c c c
c c c c c c c c c c c
c c c c c c c c c c c
c c c c c c c c c c c
c c c c c c c c c c c
c
April 1, 2025
Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561)689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
To the General Manager and Management of Global Spectrum, L.P.
Palm Beach County Convention Center
West Palm Beach, Florida
We have audited the financial statements of the Operations of the Palm Beach County Convention Center (Convention Center) for the years ended September 30, 2024 and 2023, and we expect to issue our report thereon in April 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted 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 November 4, 2024. Professional standards also require that we communicate to you the following information related to our audit.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Convention Center are described in Note 1 to the financial statements. The Convention Center adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments –Credit Losses: Measurement of Credit Losses on Financial Instruments, which requires the immediate recognition of estimated expected credit losses over the life of a financial instrument, including trade, or accounts, receivable. Although it was adopted this year, as required, it did not have a material impact on the financial statements. We noted no transactions entered into by the Convention Center 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 estimates affecting the financial statements were:
The settlement value of accrued and deferred obligations.
We evaluated the methods, assumptions, and data used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole.
Disclosures
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users.
General Manager and Management of Global Spectrum, L.P.
Palm Beach County Convention Center
April 1, 2025
Page 2
The most sensitive disclosures affecting the financial statements were:
Basis of presentation included in Note 1, for the purpose of complying with the provisions of the Convention Center Operating Agreement (Management Agreement) prepared in the format of special-purpose financial statements, and the
Management Agreement in Note 2.
The financial statement disclosures are neutral, consistent, and clear.
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. There were no uncorrected misstatements, and there were only two reclassification entries for financial statement presentation purposes only. See attached reclassifying journal entries report.
For purposes of this letter, a disagreement with management is a disagreement on 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.
We have requested certain representations from management that are included in the management representation letter to be dated upon issuance of the financial statements.
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 Palm Beach County Convention Center’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 Convention Center’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
General Manager and Management of Global Spectrum, L.P.
Palm Beach County Convention Center
April 1, 2025
Page 3
We are not aware of any documents that contain the audited financial statements. If such documents were to be published, we would have a responsibility to determine that such financial information was not materially inconsistent with the audited statements of Palm Beach County Convention Center.
With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with U.S. generally accepted accounting principles, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
We are pleased to respond to any questions you have about the audit or the contents of this letter. We appreciate the opportunity to be of service to you with respect to your audit and accounting needs.
This information is intended solely for the use of the General Manager, management of the Operations at the Palm Beach County Convention Center Managed by Global Spectrum, L.P. and the Board of County Commissioners of Palm Beach County and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Holyfield & Thomas, LLC
To reclassify PBC and Ovations receivables to appropriate due to/due from accounts for financial statement presentation.
To reclassify amount due to Global, Ovation and PBC to proper due to/due from accounts for financial statement presentation.
92,852.0092,852.00
OPERATIONS AT THE PALM BEACH COUNTY CONVENTION CENTER MANAGED BY GLOBAL SPECTRUM, L.P.
REPORT ON AUDITS OF SPECIAL-PURPOSE FINANCIAL STATEMENTS
For the Years Ended September 30, 2024 and 2023
c
c
c
c
c c c c c c c c c c c
c c c c c c c c c c c
c c c c c c c c c c c
c
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561) 689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
To the General Manager and Management of Global Spectrum, L.P. Palm Beach County Convention Center West Palm Beach, Florida
Opinion
We have audited the accompanying special-purpose statements of assets and liabilities of the Operations at the Palm Beach County Convention Center, Managed by Global Spectrum, L.P., as of September 30, 2024 and 2023, and the related special-purpose statements of revenues, expenses and transfers, and cash flows for the years then ended, and the related notes to the special-purpose financial statements.
In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the assets and liabilities of the Operations at the Palm Beach County Convention Center, Managed by Global Spectrum, L.P. as of September 30, 2024 and 2023, and the revenues, expenses, transfers, and cash flows for the years then ended, in accordance with the basis of accounting described in Notes 1 and 2.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 Palm Beach County Convention Center and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
We draw attention to Notes 1 and 2 of the special-purpose financial statements, which describe the basis of accounting and purpose for which the special-purpose financial statements are prepared. The special-purpose financial statements are prepared for the purpose of complying with the provisions of the Convention Center Operating Agreement (Management Agreement) between the Board of County Commissioners of Palm Beach County and Global Spectrum, L.P., which is a basis of accounting other than accounting principles generally accepted in the United States of America, to comply with the financial reporting provisions of the Management Agreement referred to above.. As a result, the financial statements may not be suitable for another purpose. Our opinion is not modified with respect to this matter.
Management is responsible for the preparation and fair presentation of the special-purpose financial statements in accordance with the financial reporting provisions of the Management Agreement referred to in Notes 1 and 2; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the special-purpose financial statements that are free from material misstatement, whether due to fraud or error.
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 opinion. 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 will always 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, 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 Palm Beach County Convention Center’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 Palm Beach County Convention Center'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.
Our audit was conducted for the purpose of forming an opinion on the special-purpose financial statements as a whole. The combining schedule of revenues, expenses and transfers (unaudited) on page 13 and the related notes on page 14 are presented for purposes of additional analysis and are not a required part of the special-purpose 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 special-purpose financial statements. The information, except for that portion marked “unaudited,” on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the special-purpose financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special-purpose financial statements or to the special-purpose 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 special-purpose financial statements as a whole.
Our report is intended solely for the information and use of the boards of directors and management of Palm Beach County Convention Center, Board of County Commissioners of Palm Beach County, and Global Spectrum, L.P. and is not intended to be and should not be used by anyone other than these specified parties.
West Palm Beach, Florida April 8, 2025
OPERATIONS AT THE PALM BEACH COUNTY CONVENTION CENTER MANAGED BY GLOBAL SPECTRUM, L.P.
SPECIAL-PURPOSE STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 2024 AND 2023
OPERATIONS AT THE PALM BEACH COUNTY CONVENTION CENTER MANAGED BY GLOBAL SPECTRUM, L.P.
SPECIAL-PURPOSE STATEMENTS OF REVENUES, EXPENSES AND TRANSFERS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
OPERATIONS AT THE PALM BEACH COUNTY CONVENTION CENTER MANAGED BY GLOBAL SPECTRUM, L.P.
SPECIAL-PURPOSE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
See accompanying notes to special-purpose financial statements.
OPERATIONS AT THE PALM BEACH COUNTY CONVENTION CENTER MANAGED BY GLOBAL SPECTRUM, L.P.
SPECIAL-PURPOSE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
Reconciliation of excess revenues over expense (expenses over revenues), before transfers to net cash provided by (used in) operating activities:
Excess revenues over expense, (excess expenses over revenues), before transfers278,350$ (97,280)$
Adjustments to reconcile excess revenues over expense (expenses over revenues), before transfers to net cash provided by (used in) operating activities: (Increase) decrease in certain assets: Accounts receivable from events(10,996) (10,303)
See accompanying notes to special-purpose financial statements.
TO SPECIAL-PURPOSE
FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The Board of County Commissioners of Palm Beach County (the "County") entered into an agreement with a third party, Global Spectrum, L.P. (the “Organization”), a Pennsylvania limited partnership, which provides for the outsourcing of management and operation of the Palm Beach County Convention Center (the “Facility”) to the Organization. The Facility is owned by the County and is located in the City of West Palm Beach, Florida. The operations primarily include revenues generated from the rental of the Facility’s meeting rooms, audio/visual equipment and parking services.
The special-purpose financial statements were prepared for the purpose of complying with the provisions of the Convention Center Operating Agreement (Management Agreement) between the County and the Organization and are not intended to be a complete presentation of the Facility’s assets, liabilities, revenues, and expenses in accordance with accounting principles generally accepted in the United States of America.
The special-purpose financial statements only present the assets, liabilities, revenues, expenses, and transfers of the Facility that are managed by the Organization pursuant to the provisions of the Management Agreement.
Revenues and expenses are recognized in the special-purpose financial statements on the accrual basis of accounting. Revenue consists of rental and service income, and other ancillary income. Rental and service income is recognized when the event occurs. Ancillary income is recognized at the time of sale. All expenses are recorded when the good or service is provided.
The special-purpose financial statements follow Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820-10, Fair Value Measurements and Disclosures, which provides a common definition of fair value, establishes a framework to measure fair value within accounting principles generally accepted in the United States of America, and expands the disclosures about fair value measurements. The standard does not create any new fair value measurements. Instead, it applies under existing accounting pronouncements that require or permit fair value measurements.
For assets and liabilities measured at fair value on a recurring basis, entities should disclose information that allows financial statement users to assess (1) the inputs used to develop such measurements, such as Level 1 (i.e., quoted price in an active market for an identical asset or liability), Level 2 (i.e., quoted price for similar assets or liabilities in active markets), or Level 3 (i.e., unobservable inputs); and (2) the effect on changes in net assets of recurring measurements that use significant unobservable (Level 3) inputs. The special-purpose financial statements do not include financial instruments measured at fair value on a recurring basis.
The following methods and assumptions were used by the Organization in estimating fair value of financial instruments that are not disclosed under ASC 820-10.
Cash: The carrying amount reported approximates fair value due to the $1 value of checking and saving bank accounts.
Accounts receivable: The carrying amount reported approximates fair value due to the shortterm of the receivables.
Accounts payable and accrued expenses: The carrying amount reported approximates fair value due to the short-term duration of the instruments.
Due to (from) others: The carrying amount reported approximates fair value due to the shortterm duration of the instruments.
The preparation of the special-purpose financial statements in conformity with provisions of the Management Agreement require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the special-purpose financial statement and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Cash
Cash consists of cash on hand, and cash in checking and saving accounts. Cash in the amounts of approximately $1,962,200 and $1,658,300 is designated for advanced deposits for events that will occur subsequent to September 30, 2024 and 2023, respectively. As of September 30, 2023, the amount of advance deposits for events liability exceeded the cash balance by approximately $35,900. The difference was due to additional escrow amounts that were contracted directly with the Facility rather than the County for miscellaneous revenues, and therefore weren’t included in the escrow cash account.
Accounts receivable and amounts due from/to Palm Beach County, other related parties, and customers are carried at their original charged amounts, net of the allowance for doubtful accounts. The allowance reflects the expected future credit losses over the life of the financial asset. The Facility separates accounts receivable into risk pools based on the customer and their aging. The allowance for doubtful accounts is established based on prior and forecasted collection experience, as well as current and future economic factors, that in management’s judgement, could influence the ability of the accounts receivable debtor to repay the amounts per the credit terms. Receivables are written-off when deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded when received. The allowance for doubtful accounts as of September 30, 2024 and 2023 was approximately $37,400.
As of September 30, 2024 and 2023, deferred revenue includes designated advance deposits and other amounts for events scheduled for a subsequent fiscal year. These deposits are included in the accompanying special-purpose financial statements in deferred revenue.
Advertising
Advertising costs are expensed when incurred. Advertising costs totaled approximately $16,900 and $15,400 for the years ended September 30, 2024 and 2023, respectively.
The Facility is not subject to federal or state income tax because its operations fall under the tax-exempt status of the County.
The current expected credit loss (CECL) model established by Accounting Standards Update (ASU) 201613, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, requires the immediate recognition of estimated expected credit losses over the life of a financial instrument, including trade, or accounts, receivable. ASU 2016-13 and subsequent amendments are codified in Accounting Standards Codification (ASC) 326. ASC 326 is effective for all not-for-profit entities for fiscal years beginning after December 15, 2022. The Facility adopted the new standard effective October 1, 2023, using the modified retrospective approach. However, the adoption of this ASU did not have a material impact on these financial statements.
In July 2012, the County amended and restated its operating agreement with the Organization to operate and manage the Facility, except for food, beverage, and catering services. The Management Agreement provides that Discover Palm Beach County, Inc. (a Palm Beach County not-for-profit agency) is responsible for the Organization’s long-term sales (i.e., booking events that will not occur for 18 months or more in the future). This agreement covered the period from October 1, 2012, through September 30, 2017, with an option to renew for an additional five years thereafter. In July 2017, the County and the Organization extended its operating agreement for another five years through September 30, 2022. A second amendment was entered into in May 2022, extending the operating agreement to September 30, 2023. A new five-year operating agreement was entered into between the Organization and the County beginning December 1, 2023, and ending September 30, 2028 with the option for one five-year renewal.
The Management Agreement requires that net proceeds from the operation of the Facility are paid to the County and that operating deficits, if any, are funded by the County. The Organization provided net payments to the County during fiscal year 2024 and net receipts during fiscal year 2023.
These amounts are presented net on the special-purpose statements of revenues, expenses and transfers as contractual funding transfers. Should the funding reimbursements from the County not be provided, the ongoing operations would be impaired. The County's approved budget for fiscal year ended September 30, 2024 and 2023 amounted to $6,040,000 and $5,780,000, respectively.
The County directly paid for machinery and equipment, insurance, legal, inspector general fee, and indirect operating expenses, which totaled $1,079,557 and $938,700 for the fiscal years ended September 30, 2024 and 2023, respectively. These expenses are not included in the accompanying special-purpose financial statements. Total management fees, including incentives for the years ended September 30, 2024 and 2023, were $303,003 and $259,015, respectively, of which $78,750 and $90,500 remained unpaid as of September 30, 2024 and 2023, respectively. The unpaid balances of management fees are included as accrued expenses in the statements of assets and liabilities.
All of the Facility staff are employed by the Organization. The Facility does not have any employees. The County reimbursed the Organization for employee salaries and related benefits in fiscal years 2024 and 2023. These amounts are included in contracted services in the special-purpose statements of revenues, expenses, and transfers.
The County engaged Ovations Food Services, L.P. (a related party to the Organization) to provide food, beverage, and catering services at the Facility. Global Spectrum, L.P. is not a party to this agreement and has no responsibility for food, beverage, and catering services. The activities of food, beverage and catering services are not included in the special-purpose statements of revenues, expenses and transfers for the years ended September 30, 2024 and 2023; however the activity for the year ended September 30, 2024 is included as unaudited combining information in the supplemental combining schedule of revenues, expenses and transfers.
The Organization incurred expenses, including prepaid expenses for software, operating expenses, and insurance deposits, for services to be provided after fiscal years ending September 30, 2024 and 2023, and these amounts have been properly included in prepaid expenses in the special-purpose statements of assets and liabilities.
While the Organization and other parties may be involved in various legal actions arising in the normal course of business, management does not believe such matters will have a material negative effect upon the Convention Center Operations or these special-purpose financial statements.
TO SPECIAL-PURPOSE FINANCIAL
FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023
The Organization leases minimal equipment, but does have various maintenance contracts. However, there are no long-term leases/contracts that create commitments into future years as they can be terminated at any time, or are on a month-to-month basis.
The Organization earns a management fee as compensation for operating the Facility. Management fees include both fixed and variable portions. The total amount earned for the years ended September 30, 2024 and 2023 by the Organization was $303,003 and $259,015, respectively. Management fees include $78,750 and $38,500 as an incentive fee for the years ended September 30, 2024 and 2023, respectively. Accrued balance of incentive fee as of September 30, 2024 and 2023, amounted to $78,750 and $90,500, respectively, pending approval from the County. Accounts payable for fixed management fee as of September 30, 2024 and 2023, amounted to $-0-, and $73,505, respectively.
In addition, the Facility purchases certain operating services including employee benefits and related expenses, insurance coverage, and meeting and convention expenses from the Organization. Total expense for these services for the years ended September 30, 2024 and 2023 purchased from the Organization was $1,016,086 and $985,002, respectively. Accounts payable for operating services as of September 30, 2024 and 2023, amounted to $50,097 and $387,455, respectively.
Business Concentration
The Facility received approximately 27% and 29% of total revenues from five customers during the years ended September 30, 2024 and 2023, respectively. One of the five customers represents approximately 10% and 9% of total revenues for the years ended September 30, 2024 and 2023, respectively.
Credit Concentration
The Organization maintains its cash in bank deposit accounts, which at times may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000. As of September 30, 2024 and 2023, there were approximately $2,930,700 and $2,848,900, respectively, in excess of the FDIC limit. The Organization has not experienced any losses on such accounts and management believes the Organization is not exposed to any significant credit risk arising from such balances.
Management has evaluated subsequent events through April 8, 2025, the date on which the specialpurpose financial statements were available to be issued, and determined there were no further events to disclose in these special-purpose financial statements.
COMBINING SCHEDULE OF REVENUES, EXPENSES AND TRANSFERS (UNAUDITED) FOR THE YEAR ENDED SEPTEMBER 30, 2024
AT THE
NOTES TO SUPPLEMENTARY INFORMATION (UNAUDITED) FOR THE YEAR ENDED SEPTEMBER 30, 2024
The accompanying supplemental combining schedule of revenues, expenses and transfers (unaudited) presents the activities of the Operations at the Palm Beach County Convention Center, managed by Global Spectrum, L.P., and the food, beverage and catering services managed by a third-party vendor, Ovations Food Services, L.P., for the year ended September 30, 2024.
The accompanying supplementary information is presented using the accrual basis of accounting.
See independent auditor’s report.
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561)689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
TotheBoardofDirectorsandManagementof Discover Palm Beach County, Inc.
West Palm Beach, Florida
In planning and performing our audit of the financial statements of Discover Palm Beach County, Inc. (the “Organization”) as of and for the year ended September 30, 2024, in accordance with auditing standards generally accepted in the United States of America, we considered the Organization’s internal control over financial reporting (internal control) as a basisfordesigningauditproceduresthatareappropriateinthecircumstancesforthepurpose 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.
A deficiency ininternalcontrolexistswhenthedesignor operationof acontroldoes notallow 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.
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 material weaknesses. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, we do provide a current status remark concerning deficiencies in internal control arising from the prior engagement that we considered to be a control deficiency, or a comment for your consideration in addressing best practices in internal control.
Discover Palm Beach County, Inc.
March 21, 2025
Page 2
During prior year audits, journal entries were recorded to achieve proper cut-off at year-end. Generally Accepted Accounting Principles require transactions to be recorded in the correct period.Werecommendedthatattentionbegiventotransactiondatestoensuretheproperperiod is posted.
Management’s response: The processing of transactions at year-end was a challenge in previous year auditsdue tothemanagingof expensesbetween thecontractreimbursement process, which is in a cash basis and the financial reporting time frame, which is on an accrual basis. As a result of the in-depth review of the Fiscal Year End process, we created in the prior period a comprehensive year-end checklist that reduced adjusting entries required in order to reconcile back to the county funding report.
Current status: Our current year’s audit did not reflect any adjusting journal entry necessary to achieve proper cut-off at year end.
TheOrganization’swritten responsetothecomments mentioned abovehave not beensubjected to the audit procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.
This communication is intended solely for the information and use of management, the Board of Directors, and others within the Organization, and is not intended to be, and should not be, used by anyone other than these specified parties.
West Palm Beach, Florida March 21, 2025
c
c
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561)689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
March 11, 2025
To the Audit Committee of Discover Palm Beach County, Inc.
West Palm Beach, Florida
We have audited the financial statements of Discover Palm Beach County, Inc. (the “Organization”) for the year ended September 30, 2024, and plan to issue our report in March 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted 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 October 14, 2024. Professional standards also require that we communicate to you the following information related to our audit.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Discover Palm Beach County, Inc. are described in Note 1 to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during 2023-2024. We noted no transactions entered into by the Organization 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 estimates affecting the financial statements were:
Management’s estimate of the realized value of accounts receivable from Palm Beach County, which is based on expenses incurred by the Organization and related cost-reimbursement submissions to Palm Beach County.
Management’s estimate of the settlement value of accounts payable, accrued expenses, and deferred revenue, which is based on management’s experience and analysis.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was:
The disclosure of transactions with Palm Beach County and economic dependency presented in Note 3 to the financial statements.
The financial statement disclosures are neutral, consistent, and clear.
Discover Palm Beach County, Inc.
March 11, 2025
Page 2
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Journal entries recorded this year are listed in page 4. There were no uncorrected adjustments.
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.
We have requested certain representations from management that are included in the management representation letter to be dated upon the issuance of the report.
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 Organization’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 Organization’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with U.S. generally accepted accounting principles, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
We are pleased to respond to any questions you have about the audit or the contents of this letter. We appreciate the opportunity to be of service to you with respect to your audit and accounting needs.
Discover Palm Beach County, Inc.
March 11, 2025
Page 3
This information is intended solely for the use of the Audit Committee and management of Discover Palm Beach County, Inc. 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
March 11, 2025
Discover Palm Beach County, Inc.!
March 11, 2025 Page 4
Adjusting Journal Entries JE # 1 01-800-74310 Inspector General Fee
To adjust balance of in-kind contributions to agree to amount reported by TDC.
REPORTONAUDITOF
FortheYearsEnded September30,2024and2023
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561) 689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
TotheBoardofDirectorsof
DiscoverPalmBeachCounty,Inc.
WestPalmBeach,Florida
Opinion
We have audited the accompanying financial statements of Discover Palm Beach County, Inc. (anot-for-profit corporation) which comprise the statements of financial position as of September 30, 2024 and 2023, andthe relatedstatementsof activities, cashflows, andfunctional expenses for theyearsthen ended,andtherelatednotes tothefinancial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Discover Palm Beach County,Inc., as of September 30, 2024 and 2023, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted inthe United States of America.
BasisofOpinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 Discover Palm Beach County, Inc. 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 opinion.
ResponsibilitiesofManagementfortheFinancialStatements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, 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 tofraud 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 Discover Palm Beach County, Inc.’s ability to continue as a going concern within one year after the date that thefinancial statements are availabletobeissued.
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 opinion. 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 will always 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, including omissions, are considered material if there is a substantial likelihood that, individually or inthe aggregate, theywouldinfluence thejudgment madeby areasonable user basedonthe financial statements.
In performingan audit inaccordancewith generally accepted auditingstandards, 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 anddisclosuresin thefinancial 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 Discover Palm Beach County, Inc.’s internal control.Accordingly, nosuch opinion isexpressed.
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 thefinancial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Discover Palm Beach County, Inc.’s ability to continue asa goingconcernfor areasonableperiod 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 controlrelatedmattersthat weidentified duringtheaudit.
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of functional expenses – contract and non-contract on page 17 is presented for purposes 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 or to 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 awhole.
West Palm Beach, Florida
March 21, 2025
As of September 30, 2024 and 2023
See accompanying notes to financial statements.
For the Years Ended September 30, 2024 and 2023
See accompanying notes to financial statements.
For the Years Ended September 30, 2024 and 2023
See accompanying notes to financial statements.
For the Year Ended September 30, 2024
For the Year Ended September 30, 2023
For the Years Ended September 30, 2024 and 2023
Nature of Organization
Discover Palm Beach County, Inc. (d/b/a Discover The Palm Beaches) (the “Organization”) serves as Palm Beach County’s travel planning resource for domestic and international travelers. As the official destinationmarketingorganizationcharged withpromoting Palm BeachCounty(the“County”) as aleisure travel and meetings destination, Discover The Palm Beaches plans and executes initiatives in a broad rangeofareasincludingsales,marketing,research,visitorservices,andindustryrelations.
Formed in 1983, Discover Palm Beach County, Inc. is a private, not-for-profit corporation funded primarily by the collection of the Palm Beach County tourist development tax, or “bed tax”, paid by lodging guests for short-term stays in Palm Beach County. The Organization’s mission is to increase visitation and contributetotheoveralleconomicdevelopmentinPalmBeachCounty.
Basis of Accounting
The financial statements of the Organization are prepared using the accrual basis of accounting whereas revenues are recognized when earned and expenses are recognized when incurred. This basis of accountingconformstoaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.
The Organization’s financial statements are presented in accordance with FASB Accounting Standards Codification (FASB ASC) 958-205 Not-for-Profit Entities Presentation of Financial Statements. This standardrequirestheclassificationoftheOrganization’s statements of financialpositionandstatementsof activities according to two classes of net assets: net assets without donor restrictions and net assets with donorrestrictions:
Net assets without donor restrictions – this classification includes those net assets whose use is not restricted by donors, even though their use may be limited in other respects, such as by contract or by Board designation. Changes in net assets arising from exchange transactions (except income and gains on assets that are restricted by donors or by law) are included in net assetswithoutdonor restrictions.
Net assets with donor restrictions – this classification includes those net assets whose use by the Organization has been limited by donors to either a later period of time, or after a specified date, or for a specified purpose. This classification also includes net assets that must be maintained by the Organization in perpetuity. Net assets with donor restrictions in perpetuity increase when the Organization receives contributions for which donor-imposed restrictions limiting the Organization’s use of an asset or its economic benefits neither expire with the passage of time nor can be removed by the Organization meeting certain requirements. As of September 30, 2024and2023, theOrganization had no net assets with donor restrictions.
For the Years Ended September 30, 2024 and 2023
1.Summaryof Significant AccountingPolicies,continued
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date ofthefinancial statements andthereported amounts ofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.
FASB ASC Topic 820-10, Fair Value Measurements, establishes a framework for measuring fair value. This framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3measurement).
The three levels ofthefair value hierarchyunderFASB ASC Topic 820-10aredescribedbelow:
Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Organization has the ability to access.
Level 2 – Inputs tothevaluationmethodology include:
Quotedprices forsimilar assets or liabilities in activemarkets;
Quoted prices for identical or similar assets or liabilities in inactive markets;
Inputs other than quoted prices that are observable for the asset or liability;
Inputs that are derived principally from or corroborated by observable market databy correlation or othermeans.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observablefor substantially thefull termof the asset or liability.
Level 3 – Inputs to the valuation methodology are unobservable and significant to thefair valuemeasurement.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need tomaximizethe use of observableinputs and minimizetheuse of unobservableinputs.
For the Years Ended September 30, 2024 and 2023
Fair Value of Financial Instruments, continued
The following methods and assumptions were used by the Organization in estimating the fair value of financial instrumentsthatwere not disclosedunder FASB ASC Topic 820.
Cash and cash equivalents, reimbursement, receivables, accounts payable, and accrued liabilities – The carrying amount reported approximates their fair values due to their short-term nature.
The following methods and assumptions were used bytheOrganization inestimating thefairvalueof financial instruments thataremeasured atfair value on arecurring basis under FASBASC Topic820.
Investments in and obligations under deferred compensation plan – consists of mutual funds valued at quoted market price by the custodian as of September 30, 2024. These investments areallmeasuredaccording toLevel 1.
The Organization considers cash held inchecking and short-term investments with original maturities of threemonths or lessto be cash equivalents.
Reimbursement due from Palm Beach County
The Organization records contract reimbursements due from Palm Beach County as allowable expenses areincurred,approved,andbilled.Allamountsaredeemedfullycollectibleandnoallowanceisconsidered necessary.
Membership and other receivables consist of amounts charged to local hotels and other local businesses for participation in the Organization’s advertising programs, all of which arecarried at net realizable value. The Organization provides an allowance for uncollectible accounts that is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. As of September 30, 2024and2023, there was no allowance for uncollectibleaccounts.
Inventory consists of promotional items (not for sale), and is stated at the lower of cost (first-in, first-out method)ormarket.
Prepaid expenses
Prepaid expenses consist of expenses (generally deposits) for operations, sales, and marketing activities scheduledtooccursubsequenttotheyear-end.
For the Years Ended September 30, 2024 and 2023
Accrued Expenses
Accruedexpensesconsistofaccruedpayroll,relatedpayrolltaxes,andemployeebenefits.
Deferred revenue consists of contract income received for expenses paid for operations, sales, and marketing activities scheduledto occur subsequent to year-end. This category also includes three months of membership revenue collected and deferred in connection the membership period which runs on a calendaryear.
TheOrganizationprovidesadeferredcompensation planasmorefullydescribedinNote4.Inaccordance with the terms of such arrangements, the fair value of plan assets is reported as both an asset subject to theclaimsofcreditorsandasaliabilitytotheplanbeneficiary.
In connection with the Organization’s administrative services and agency contract, as further described in Note3,Palm BeachCountyadvancedtheOrganization$6,000,000for useinfacilitatingvendor payments andotherworkingcapitalneeds,pendingreimbursementofrequestedexpenses.
Contract income –isreceivedfromtheCountyona cost-reimbursementbasis. Revenuesfrom the contract are deemed earned and recognized in the statements of activities when expenses are incurredandapprovedforthepurposesspecified.
Membership income – Partner membership benefits include listings on the Organization’s website, listings in the Organization’s official publications, access to partner events, and opportunities to participateintradeshowsandevents.Membershipincome is recognizedasrevenuewhenearned overthemembershipperiod,whichisgenerallyoverthecalendaryear.
Special promotional activity income – is revenue received from other organizations and individuals in order to participate in promotional events with the Organization. Special promotional activity incomeisrecognizedasrevenuewhenthetradeshoworotherpromotionaleventoccurs.
In accordance with FASB ASC 958-605, Revenue Recognition, the Organization records the value of those donated services and in-kind contributions that require specialized skills and that would typically needtobepurchasedifnotprovidedbydonation.Donatedservicesandin-kindcontributionsincludethose that create or enhance the Organization’s efforts to provide certain tourism, marketing, and sales-related programs to promote Palm Beach County, Florida as a tourist destination. These services are reflected in the financial statements at the date of receipt at their estimated fair market value as in-kind income and expenseintheperiodrendered.
continued
During the years ended September 30, 2024 and 2023, the Organization received donated services and in-kindcontributions, such as receptions androom accommodations for clients andgroups and other noncashcontributions,whicharerecordedasdonatedservicesandin-kindcontributions attheir estimatedfair value at the date of donation. During the years ended September 30, 2024 and 2023, the total amount of in-kind contributions and donated services received amounted to approximately $3,993,000 and $3,388,000fortheyearsendedSeptember30,2024and2023,respectively.
The costs of providing the various programsandother activities have been detailed in thestatements of functional expenses and summarized on a functional basis in the statements of activities. Expenses associated with a specific program are charged directly to that program. Expenses which benefit more than oneprogram areallocated based ontherelative benefit provided.
Advertising
The Organization expenses the cost of advertising as incurred. During the years ended September 30, 2024 and 2023, the Organization incurred approximately $16,641,000 and $18,020,000, respectively, in advertising costs, which are reported as marketing - advertising in the statements of functional expenses. Of such amounts, donated services represent approximately $3,789,000 and $3,207,000 for the years endedSeptember30,2024and2023,respectively.
The Organization has a policy to accumulate unused vacation up to a maximum of 192 hours on accrual earning levels. All accumulated vacation leave must be used in the following year with no carryover. Sick leave may be accumulated up to a maximum of 60 days (480 hours) and carried indefinitely, but is not paid out for other than sick time under any circumstances. Accumulated unpaid vacation benefitsareaccrued as a liability and chargedto expense.
Certain accounts in the prior year financial statements may have been reclassified in order to conform withthecurrent yearfinancial statement presentation.
The Organization is exempt from federal and state income taxes under Section 501(c)(6) of the Internal Revenue Code of 1986 and Chapter 220.13 of Florida Statutes. However, income from certain activities not directly related to the Organization's tax-exempt purpose is subject to taxation as unrelated business income. Management does not believe that the Organization engaged in any unrelated business activities during the years ended September 30, 2024 and 2023, and accordingly there is no provision forincometaxesreflectedintheaccompanyingfinancialstatements.
For the Years Ended September 30, 2024 and 2023
Income Taxes, continued
The Organization follows FASB ASC 740-10, Accounting for Uncertainty in Income Taxes. This pronouncement seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. It prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. An entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. The Organization assesses its income tax positions based on management’sevaluationofthefacts,circumstancesandinformationavailableatthereportingdate.
TheOrganizationusesthe prescribedmore likelythan notthreshold whenmaking itsassessment. For the years ended September 30, 2024 and 2023, the Organization did not accrue any interest expense or penaltiesrelatedtotaxpositions,andtherearenoopenFederalorStatetaxyearscurrentlyunderaudit.
Financial assets available for general expenditure within one year, that is, without donor restrictions or other restrictions limitingtheir usecomprisethefollowing:
assets availabletomeet general expenditures overthenext 12months $10,114,920
The Organization receives significant revenue from a Palm Beach County contract, which typically covers over 90% of its operating expenditures on a direct reimbursement basis. The Organization regularly monitors liquidity required to meet its operating needs and other contractual commitments. The related resources have been included in the quantitative information detailing the financial assets available tomeet general expenditures within oneyear.
The Organization and the County entered into an agreement for administrative services commencing on October 1, 2022 and expiring on September 30, 2027. The contract provides that the Organization will perform or administer various functions such as advertising, public relations, tour package development, consumer and trade shows, destination reviews, foreign representation, and other projects and promotional services to assist the County in its tourism promotion effort. Expenses made by the Organization under the contract are subject to budgetary approval by the County and must be consistent with the County’s Tourist Development Plan. For the years ended September 30, 2024 and 2023, the contract budget was $27,212,286 and $14,397,527, respectively, which includes the County direct expenses(i.e.,“in-kindcontributions”)totaling$311,471and$180,437,respectively.
For the Years Ended September 30, 2024 and 2023
3.TransactionswithPalm BeachCountyandEconomicDependency,continued
On behalf of the Organization, the County provided office space and directly paid communication and certain advertising expenses, which totaled approximately $204,000 and $180,000 for the years ended September 30, 2024 and 2023 respectively. This amount is included in Contract Income, Palm Beach County in the statements of activities and is reported according to its natural and functional classifications in the statements of activities and statements of functional expenses. In addition, the County provides the Organizationwithallfurniture,fixtures,andequipmentnecessaryforitsoperations.
Management believes the Organization has sufficient planned revenues from the agreement with the County to operate and fulfill its mission. The revenue provided under contracts with the County amounted to approximately $26,300,000 and $26,900,000, which represents 84% and 87% of the Organization’s total revenue, respectively, for the years ended September 30, 2024 and 2023. The loss of this agreement could have a negative impact upon the Organization. In addition, for the years ended September 30, 2024 and 2023, the County owed the Organization approximately $3,833,600 and $5,032,000, respectively, for costs relatedtothiscontract.
In connection with the County contract, the Organization submits requests for reimbursement of allowable payments and expenditures and records the corresponding revenue as the request is approved and paid. Subsequent adjustments made in accordance with US GAAP to certain payments and expenditures may often create timing differences between the contract utilization according to the County and the amounts reported in these financial statements. The fiscal year-end amounts and related adjustments aresummarized asfollows:
*Reconciling items include accrualbasistransactions.
The Organization has a defined contribution plan, which provides retirement benefits for substantially all employeesmeeting certain eligibility requirements. Employees areeligibleafter one year of service. There arenomatchingcontributionsfromtheOrganization.TheOrganizationmaymakecontributionstotheplan consisting of a 3% Safe Harbor contribution and a discretionary contribution not to exceed 9.17% of the employee’s actual salary. Employees are immediately vested in the Safe Harbor contribution and fully vested in any discretionary contributions after three years of service with the Organization. Contributions for the years ended September 30, 2024 and 2023 totaled approximately $564,000 and $481,000, respectively.
For the Years Ended September 30, 2024 and 2023
In addition, the Organization has a deferred compensation retirement plan, which provides retirement benefits for certain of its key employees. Under the plan, employees are allowed to defer amounts of compensation up to the maximum allowable IRS limits. There are no matching contributions from the Organization. The Organization may make discretionary contributions to the plan. During the years ended September30, 2024and2023,theOrganizationmadenodiscretionarycontributionstothisplan.Funds of the plan are invested in mutual funds as directed by the employee. These funds had a fair value of approximately$226,500and$246,400asofSeptember30,2024and2023,respectively.
Fortheyears endedSeptember 30, 2024and2023,theOrganizationdidnotincur administrativecostsfor eitherplan.
Contributed goods andservices arereflected as donated servicesand in-kind contributions support and expenses in the accompanying financial statements. The products and professional services are recorded at their estimated fair value. On behalf of the Organization, the County directly paid approximately $160,700 and $145,700 of administrative expenses, $24,400 and $19,500 of inspector general expenses, and $18,600 and $15,200 of technology support expenses for the years ended September 30, 2024and2023, respectively.
In addition, the Organization recognized approximately $3,789,000 and $3,207,500 of advertising, promotion, and consulting as donated services, for the years ended September 30, 2024 and 2023, respectively. These amounts primarily include co-op advertising with sports fundraisers and international airlines, and are recognized as support, under the caption of donated services in the statements of activities, and as marketing – advertising in the statement of functional expenses. Advertising and promotion are valued based on prices of advertising time and/or space. Consulting services are value basedonthepriceoftheservicesprovided.
The Organization maintains its cash and cash equivalents in one qualified public depository pursuant to Florida State Statute, Chapter 280, Florida Security for Public Deposits Act, and are covered by either federaldepositoryinsuranceorcollateralheldbytheChiefFinancialOfficerofFlorida.
Any losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as collateral, and, if necessary, assessments against other qualified public depositories of the same type as the depository in default. Management believes the Organization is not exposed to any significant credit riskonitsdeposits.
For the Years Ended September 30, 2024 and 2023
7. Subsequent Events
Management has evaluated subsequent events through March 21 2025, the date on which these financial statements were available to be issued, and determined that there were no further disclosures required in these financial statements.
For the Year Ended September 30, 2024
c
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561)689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
c
c
To the Board of Directors and Management of Cultural Councilof Palm Beach County, Inc.
Lake Worth Beach, Florida
InplanningandperformingourauditofthefinancialstatementsofCulturalCouncilofPalmBeachCounty, Inc. (the “Organization”) as of and for the year ended September 30, 2024, in accordance with auditing standardsgenerally acceptedintheUnitedStatesofAmerica, weconsideredtheOrganization’sinternal 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, butnotforthepurposeofexpressinganopinionontheeffectivenessoftheOrganization’sinternalcontrol. Accordingly, we do not express an opinion on the effectiveness of the Organization’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 detectandcorrect,misstatementsonatimelybasis.A materialweakness isadeficiencyoracombination of deficiencies in internalcontrol,suchthat there is a reasonable possibility that amaterial misstatement of the Organization’s financial statements will not be prevented, or detected and corrected, on a timely basis.
Ourconsiderationofinternalcontrolwasforthelimitedpurposedescribedinthefirstparagraphandwas notdesignedtoidentifyalldeficienciesininternalcontrolthatmightbematerialweaknesses.Giventhese limitations, during our audit 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 Organization, and is not intended to be and should not be used by anyone other than thesespecified parties.
West Palm Beach, Florida January 14, 2025
c
Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561) 689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
c
c
c
December 19, 2024
To the Audit Committee of Cultural Council of Palm Beach County, Inc. Lake Worth Beach, Florida
We have audited the financial statements of Cultural Council of Palm Beach County, Inc. (the “Organization”) for the year ended September 30, 2024, and intend to issue our report in January 2025. 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 October 15, 2024. Professional standards also require that we communicate to you the following information related to our audit.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Organization are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changes during 2024. We noted no transactions entered into by the Organization 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.
Estimates
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 estimates affecting the financial statements is related to the realizable value of grants and pledges receivable, fair value of beneficial interest in trust, and useful life of property and equipment.
Management’s estimate of the above is based on management’s knowledge and experience about past and current events and assumptions about future events. We evaluated the methods, assumptions, and data used to develop the estimates in determining that they are reasonable in relation to the financial statements taken as a whole.
Disclosures
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements is related to the disclosure of restricted net assets and net asset classification using the guidance of FASB ASC 958-205, Presentation of Financial Statements as presented in Note 11 to the financial statements.
The financial statement disclosures are neutral, consistent, and clear.
Cultural Council of Palm Beach County, Inc.
December 19, 2024
Page 2
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Professional standards require us to accumulate all adjustments identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Journal entries recorded by management are listed on page 4. There were no uncorrected misstatements.
For purposes of this letter, a disagreement with management is a disagreement on 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.
We have requested certain representations from management that are included in the management representation letter.
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 Organization’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 Organization’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
We are not aware of any documents that contain the audited financial statements. If such documents were to be published, we would have a responsibility to determine that such financial information was not materially inconsistent with the audited financial statements of the Organization
We are pleased to respond to any questions you have about the audit or the contents of this letter. We appreciate the opportunity to be of service to you with respect to your audit and accounting needs.
This information is intended solely for the use of the Board of Directors, Executive Committee, and management of the Organization and is not intended to be and should not be used by anyone other than these specified parties.
Cultural Council of Palm Beach County, Inc.
December 19, 2024
Page 3
Very truly yours,
West Palm Beach, Florida
December 19, 2024
To
Cultural Council of Palm Beach County, Inc.
December 19, 2024 Page 5
Proposed Journal Entries JE # 1
None in the Current Year.
CULTURALCOUNCILOF PALMBEACHCOUNTY,INC.
REPORTONAUDITOF FINANCIALSTATEMENTS
FortheYearEndedSeptember30,2024 (withcomparabletotalsfor2023)
c
c
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561)689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
TotheBoardofDirectorsof
CulturalCouncilofPalmBeachCounty,Inc.
LakeWorthBeach,Florida
We have audited the accompanying financial statements of Cultural Council of Palm Beach County, Inc., (a Florida nonprofit corporation), which comprise the statement of financial position as of September 30, 2024, andthe related statementsof activities, cashflows, and functional expenses for theyearthenended,andtherelatednotestothefinancialstatements.
In our opinion, the financial statements present fairly, in allmaterial respects, the financial position of Cultural Council of Palm Beach County, Inc., as of September 30, 2024, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally acceptedintheUnitedStatesofAmerica.
WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesof Americaandthestandardsapplicabletofinancialauditscontainedin Government Auditing Standards, issued by the Comptroller General of the United States.Ourresponsibilitiesunderthosestandardsare furtherdescribedintheAuditor’sResponsibilitiesfortheAuditoftheFinancialStatementssectionofour report.WearerequiredtobeindependentofCulturalCouncilofPalmBeachCounty,Inc.andtomeetour otherethicalresponsibilities,inaccordancewiththerelevantethicalrequirementsrelatingtoouraudit.We believethattheaudit evidence we haveobtained issufficient and appropriatetoprovidea basisfor our auditopinions.
Management is responsible for the preparation and fair presentation of the financial statements in accordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica;andforthe design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that arefree frommaterial misstatement, whether duetofraud or error.
Inpreparingthefinancialstatements,managementisrequiredtoevaluatewhetherthereareconditions or events, considered in the aggregate, that raise substantial doubt about Cultural Council of Palm Beach County, Inc.’s ability to continue as a going concern within one year after the date that the financialstatementsareavailabletobeissued.
Auditor’sResponsibilitiesfortheAuditoftheFinancialStatements
Our objectivesaretoobtainreasonableassuranceabout whetherthefinancialstatementsasawhole arefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthat includesouropinion.Reasonableassuranceisahighlevelofassurancebutisnotabsoluteassurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement whenitexists.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanfor one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,ortheoverrideofinternalcontrol.Misstatementsareconsideredmaterialifthereis a substantial likelihood that, individually or in the aggregate, they would influence the judgment made byareasonableuserbasedonthefinancialstatements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards,we:
Exerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.
Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherdue to fraud or error, and design and perform audit procedures responsive to those risks. Such proceduresincludeexamining,onatestbasis,evidenceregardingtheamountsanddisclosures inthefinancialstatements.
Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressingan opinion on the effectiveness of the Cultural Council of Palm Beach County, Inc.’s internal control.Accordingly,nosuchopinionisexpressed.
Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificant accountingestimatesmadebymanagement,aswellasevaluatetheoverallpresentationofthe financialstatements.
Concludewhether,inourjudgment,thereareconditionsorevents,consideredintheaggregate, that raise substantial doubt about the Cultural Council of Palm Beach County, Inc.’s ability to continueasagoingconcernforareasonableperiodoftime.
Wearerequiredtocommunicatewiththosechargedwithgovernanceregarding,amongothermatters, theplannedscopeandtimingoftheaudit,significantauditfindings,andcertaininternalcontrolrelated mattersthatweidentifiedduringtheaudit.
Inaccordancewith Government Auditing Standards,wehavealsoissuedourreportdatedJanuary14, 2025, on our consideration of Cultural Council of Palm Beach County, Inc.’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts,andgrantagreementsandothermatters.Thepurposeofthatreportistodescribethescope ofourtestingofinternalcontroloverfinancialreportingandcomplianceandtheresultsofthattesting, and not to provide an opinion on the effectiveness of Cultural Council of Palm Beach County, Inc.’s internal control over financial reporting or on compliance. That report is an integral part of an audit performedinaccordancewith Government Auditing Standards inconsideringCulturalCouncilofPalm BeachCounty,Inc.’sinternalcontroloverfinancialreportingandcompliance.
We have previously audited the CouncilCultural Council of Palm Beach County, Inc.’s 2023 financial statements,andweexpressedanunmodifiedauditopiniononthoseauditedfinancialstatementsinour report dated January 16, 2024. In our opinion, the summarized comparative information presented hereinasofandfortheyearendedSeptember30,2023,isconsistent,inallmaterialrespects,withthe auditedfinancialstatementsfromwhichithasbeenderived.
WestPalmBeach,Florida
January14,2025
As of September 30, 2024 (with comparable totals for 2023)
For the Year Ended September 30, 2024 (with
For the Year Ended September 30, 2024 (with
For the Year Ended September 30, 2024
Reconciliation of change in net assets to net cash provided by (used in) operating activities:
Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities:
(decrease) in certain liabilities:
Supplemental disclosure of noncash investing and financing activities: During2024,theCouncilincurreddebtof$6,506 in theformofanoperatingleasefortheright-of-useof office equipment.
See accompanying notes to financial statements.
For the Year Ended September 30, 2024
For the Year Ended September 30, 2024
1.BusinessandSummaryof Significant Accounting Policies
Organization
Cultural Council of Palm Beach County, Inc. (the "Council") is a not-for-profit corporation whose main goalistopromotevisualandperformingartsandculturalactivitiesinPalmBeachCounty,Florida(the "County"). The Council commits its energies and resources to supporting the establishment of new cultural institutions, enhancing existing organizations, and encouraging opportunities for individual artists. The Council reviews applications for and monitors the use of certain funds provided by the TouristDevelopmentCouncil("TDC").
The accompanying financial statements of the Council have been prepared on the accrual basis of accounting, whereby revenues and support are recognized when earned, and expenses when the corresponding liability is incurred. This basis of accounting conforms to accounting principles generally acceptedintheUnitedStatesofAmerica.
The accompanying financial statements have been prepared on the accrual basis of accounting in conformity with the disclosure and display requirements of the Financial Accounting Standards Board (FASB) as set forth under FASB Accounting Standards Codification (FASB ASC) 958-205 Not-for-Profit Entities, Presentation of Financial Statements. Accordingly,thenetassetsoftheCouncilarereportedin eachofthefollowingclasses:
Net assets without donor restrictions –thisclassificationincludesthosenetassetswhoseuseis not restricted by donors, even though their use may be limited in other respects, such as by contract or by Board designation. Changes in net assets arising from exchange transactions (exceptincomeandgainsonassetsthatarerestrictedbydonorsorbylaw)areincludedinnet assetswithoutdonorrestrictions.TheCouncilreleasesanypurposerestrictionswhentheasset isplacedinservicefortheusestipulatedbythedonor.
Net assets with donor restrictions – this classification includes those net assets whose use by theCouncilhasbeenlimitedbydonorstoeitheralaterperiodoftime,orafteraspecifieddate, orfor aspecifiedpurpose. Thisclassification also includes netassetsthatmustbemaintained by theCouncilinperpetuity. Net assetswithdonor restrictions inperpetuity increasewhenthe Councilreceivescontributionsforwhichdonor-imposedrestrictionslimitingtheCouncil’suseof anassetoritseconomicbenefitsneitherexpirewiththepassageoftimenorcanberemovedby theCouncilmeetingcertainrequirements.
Management uses estimates and assumptions in preparing financial statements in conformity with accounting principles generally accepted in the United States of America. Those estimates and assumptionsaffectthereportedamountsofassetsandliabilities,thedisclosureofcontingentassetsand liabilities,andthereportedrevenueandexpenses.Actualresultscouldvaryfromtheestimatesthatwere used.
For the Year Ended September 30, 2024
The Council follows FASB ASC 820, Fair Value Measurement. This standard defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires expanded disclosures about fair value measurementsoffinancialinstruments.
The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs when available. Observable inputs are those that market participants would useinpricingtheassetorliabilitybasedonthebestinformationavailableinthecircumstances.
Thefairvaluehierarchygivesthehighestprioritytoquotedpricesinactivemarketsforidenticalassets orliabilities(Level1)andlowestprioritytounobservableinputs(Level3).Ifinputsusedtomeasurethe financial instruments fall within different levels of the hierarchy, the categorization is based on the lowestlevelofinputthatissignificanttothefairvaluemeasurementoftheinstrument.
Thethreelevelsofthefairvaluehierarchyaredescribedbelow:
Level1– Inputsthat utilize quotedprices(unadjusted) inactivemarketsfor identical assetsor liabilitiesthattheCouncilhastheabilitytoaccess.
Level2– Inputsthatincludequotedpricesforsimilarassetsandliabilitiesinactivemarketsand inputs that are observable for the asset or liability, either directly or indirectly, for substantiallythefulltermofthefinancialinstrument.Fairvaluesfortheseinstruments areestimatedusingpricingmodelsorquotedpricesofassetsandliabilitiesofsimilar characteristics.
Level3– Inputsthatareunobservablefortheassetsorliabilities, whicharetypicallybasedon anentity’sownassumptions,asthereislittle,ifany,relatedmarketactivity.
Theasset’sorliability’sfairvaluemeasurementlevelwithinthefairvaluehierarchyisbasedonthelowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximizetheuseofobservableinputsandminimizetheuseofunobservableinputs.
Cashandcashequivalentsconsistprimarilyofsaving,checking,andmoneymarketaccountsatfederally charteredbanks.Forpurposesofthestatementofcashflows,allhighlyliquidinvestmentswithamaturity ofthreemonthsorlesswhenpurchasedarealsoconsideredtobecashequivalents,exceptforcashand money market balances held within the investment portfolio and as reported as part of the investment category.
Investments
Investmentsincludeindividualpubliclytradedequitiesandcashequivalents.TheCouncilcontractswith investmentmanagerstoperformongoinginvestmentfunctionsandinvestmentperformancemonitoring, andinvestsaccordingtotheguidelinesthatareestablishedbytheCouncil'sCommitteeandapproved bytheBoardofDirectors.
For the Year Ended September 30, 2024
1.BusinessandSummaryof Significant Accounting Policies,continued
Investments, continued
Purchasesandsalesofinvestmentsarerecordedonatrade-datebasis.Interestincomeisrecordedon theaccrualbasis.Dividendsarerecordedontheex-dividenddate.Realizedgainsorlossesonthesale of marketable securities are calculated using the specific-identification method. Change in unrealized gains and losses represents thechange in thefair value of the individual investments forthe year, or since the acquisition date, if acquired during the year. Investments are stated at fair value based on quotedmarketpriceswithinactivemarkets.Investmentincomeandgainsarereportedasincreasesinnet assetswithoutdonorrestrictions.
Grants receivable –consistofgrantreimbursementsduefromPalmBeachCountyandtheTDC.
Pledges receivable – consist of pledges (unconditional promises togive)from members of the Council'sBoardofDirectorsandfromdonorsformajorGifts, andotherprograms.Pledgesare recorded when the promise is made. Pledges expected to be collected within one year are recorded at their net realizable value. Pledges expected to be collected in future years are initially recorded atfairvalue using the present value oftheirestimatedfuturecashflows. The discounts on those amounts are computed using an interest rate applicable to the years in which the promises are received, with the annual change in discount included in contribution incomeinthestatementofactivities.Conditionalpromisestogivearerecognizedonlywhenthe conditionsonwhichtheydependaresubstantiallymetandthepromisesbecomeunconditional.
As of September 30, 2024, the Council had outstanding conditional promises to give of approximately $1,000,000, related to the grant program entitled “Pooled Funds to Increase AccesstotheArts.”
An allowance for doubtful accounts is provided for receivables for which there is a question as to ultimate collectibility. Uncollectible accounts are reserved for when management has determined that theamountwillnotbecollected.AsofSeptember30,2024,noallowancewasdeemednecessary,as allreceivablesaredeemedcollectible.
Asapartofitsnormaloperations,theCouncilpayscertainexpensesincludinginsurance,postage,utility, anddepositspriortotheactualuseofthoseassets.Suchamountsarerecordedasprepaidexpensesin thestatementoffinancialpositionandarerecognizedasexpenseasthebenefitisrealized.
Property and equipment is stated at cost, at the date of purchase, or fair value at the date of the donation. All purchases with a cost of $2,500 or more and a useful life in excess of one year are capitalized. Depreciationiscomputed usingthestraight-line method overthe estimated useful lives of theassetsrangingbetween3-39years.
In 2010, the Council received a donation of land and building (i.e., Montgomery Building), valued at $1,350,000 for use as its primary location. The Council reports these donated assets as net assets withoutdonorrestrictionsbecausethedonatedassetswereappropriatelyplacedinserviceasspecified bythedonor.
For the Year Ended September 30, 2024
1.BusinessandSummaryof Significant Accounting Policies,continued
As ofSeptember 30,2024,the Council's accrued expenses includecosts ofaccrued employeebenefits andvariousotherexpenses.
In connection with the Council’s administrative services and agency contract, Palm Beach County advancedtheCouncil$1,000,000foruseinfacilitatingvendorpaymentsandotherworkingcapitalneeds, pendingreimbursementofrequestedexpensesandreplenishmentofthereserveaccount.
TheCouncilhasreimbursementarrangementswithvariousgrantorswherebytheCouncilreceivesfunds aheadof the expenditures.In accordancewiththeterms of thesearrangements, any fundsthat are not spentwithinthecontractperiodmustberefundedtothegrantors.
Contributions, including unconditional promises to give, are recognized as revenue when the donor's commitmentisreceived.TheCouncilfollowstheguidanceofFASBASC958-605, Revenue Recognition Contributions received are recorded as with or without donor restrictions depending on the existence and/ornatureofanydonorrestrictions.Allcontributionsareconsideredavailablewithoutdonorrestriction useunlessspecificallyrestrictedbythedonor.
Under this standard, contributions that are initially restricted as to time or purpose are required to be reportedaswithdonorrestrictionssupportandarelaterreclassifiedtonetassetswithoutdonorrestrictions uponexpirationofthetimeorpurposerestriction.Iftherestrictionplaceduponacontributionismetwithin thesameaccountingperiodasthereceiptofthecontribution,thestandardpermitsthecontributiontobe reportedwithoutdonorrestrictions.
TheStateofFlorida–LocalArtsAgencyprovidestheCouncilwithprogramfundingthatistobe used for program and/or supporting services. The Council recognizes revenue from grants in the period in whichtheamountsareearned.
CountyContract–Countyincomeisonacostreimbursementbasis.RevenuefromtheCountycontract is deemed earned and recognized in the statement of activities when reimbursement invoices are submittedtotheCountyforspecifiedexpenditures.
Revenues from the State of Florida – Specialty License Plate Program are considered contributions that are recorded as net assets with donor restrictions. These contributions and expenditures were madeinaccordancewithFloridaStatutes§320.08056and§320.08058.AsofSeptember30,2024,the Council received approximately $34,200 of its revenue from the State of Florida – Specialty License PlateProgram.
For the Year Ended September 30, 2024
1.BusinessandSummaryof Significant Accounting Policies,continued
ThecostsofprovidingthevariousservicestheCounciloffershavebeensummarizedonafunctionalbasis in the statement of activities. Expenses directly attributable to a specific functional area are reported as expenses of those functional areas. Other expenses are allocated among programs and supporting servicesbasedoneithertherelativesalariesincurredorrelativesquarefootageoccupancyoftheprogram inrelationtothetotalsquarefootageofthebuilding.
Contributed Property –Contributionsofpropertyarerecordedassupportattheirestimatedfair value at the date of donation. Such contributions are reported as support without donor restrictions unless the donor has restricted the use of the contributed asset to a specific purpose. Assets contributed with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Council reports expirations of donor restrictions when the contributed or acquired assets are placedinserviceasinstructedbythedonorandreclassifiesnetassetswithdonorrestrictionsto netassetswithoutdonorrestrictions.
Contributed Services – The Council follows the guidance of FASB ASC 958-605, Revenue Recognition,fortheaccountingofcontributedservices.Inaccordancewiththisguidance,donated servicesarerecognizedascontributionsiftheservices(a)createorenhancenonfinancialassets or(b)requirespecializedskills,areperformedbypeoplewiththoseskills,andwouldotherwisebe purchasedbytheCouncil.Theseservicesarereflectedinthefinancialstatementattheirestimated fair market value on their date of receipt. Generally, contributed services that do not satisfy the criteria and are not recognized in the financial statements. However, certain operating expenses arepaidonbehalfoftheCouncilasdescribedinNote13.
The Councilmaintains aretail storeto promotethe works of local artists and vendors. These items are heldonconsignmentandthereforearenotrecordedontheCouncil’sfinancialstatements.Salesderived fromthestoreandgalleryarerecognizedasrevenuewhensoldandtotaledapproximately$47,300forthe year ended September 30, 2024. Commissions to the artists and related costs to cultural organizations amountedtoapproximately$28,100forthesamefiscalperiod.
Advertising
Advertising costs are expensed when incurred. Total advertising expense for the year ended September 30,2024was $2,894,100andisreflectedunder agency,advertising,andmarketinginthe statementoffunctionalexpenses.
For the Year Ended September 30, 2024
The Councilaccounts for allleases in accordance with ASC 842, Leases, recognizing lease liabilities andright-of-use(ROU)assetsinthestatementoffinancialpositionforallleasesthatmeetthedefinition of a lease, except for short-term leases with lease terms of 12 months or less where the practical expedienttonotrecognizeleaseliabilitiesandROUassetsiselected.Leasepaymentsarerecognized asoccupancyinthestatementofactivitiesonastraight-linebasisoverthetermofthelease.
The Council is a Florida not-for-profit corporation, other than a private foundation, pursuant to Internal RevenueCodeSection501(c)(3)and,assuch,isnotrequiredtopayincometaxesonitsexemptfunction income.However,incomefromcertainactivitiesnotdirectlyrelatedtotheCouncil'stax-exemptpurposeis subjecttotaxationasunrelatedbusinessincome.FortheyearendedSeptember30,2024,management doesnotbelievetheCouncilhasanyliabilitywithrespecttounrelatedbusinessactivities,andthereforeno provisionforincometaxeshasbeenmade.
The Council follows the guidance of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes, which seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. This standard prescribes a recognition threshold and measurementattributeforfinancialstatementrecognitionandmeasurementofataxpositionthatanentity takesorexpectstotakeinataxreturn.Anentitymayonlyrecognizeorcontinuetorecognizetaxpositions that meet a “more likely than not” threshold. The Council assesses its income tax positions based on management’s evaluation of the facts, circumstances, and information available at the reporting date. Managementdoesnot believethattheCouncilhas anysignificantuncertaintax positionsthat wouldbe material to the financial statements. Furthermore, there are no Federal or State open-year tax returns underaudit.
Thefinancialstatementsincludecertainprioryearsummarizedcomparativeinformationintotalbutnotby net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, suchinformationshouldbereadinconjunctionwiththeCouncil’sfinancialstatementsfortheyearended September 30, 2023, from which the summarized information was derived. Certain 2023 amounts may have been reclassified to conform to 2024 classifications with no effect on the previously reported changeinnetassets.
Financialassetsavailableforgeneralexpenditurewithinoneyear,thatis,withoutdonorrestrictionsor otherrestrictionslimitingtheirusearecomprisedofthefollowing:
973,822
For the Year Ended September 30, 2024
The Council regularly monitors liquidity required to meet its operating needs and other contractual commitments. The Council has various sources of liquidity at its disposal, including investments designated by the Board for contingencies plus a $250,000 line of credit, all of which may be drawn uponintheeventofunanticipatedfinancialdistressoranimmediateliquidityneed.PartoftheCouncil’s liquidity management plan is to invest cash in excess of the monthly requirements into short-term investments.
The Council receives significant revenue from a contract with Palm Beach County which typically coversover70%ofitsoperatingexpendituresonadirectreimbursementbasis.Italsoreceivesgrants and otherprivatedonations,someof whichhavedonorrestrictionstobe usedinaccordancewiththe purpose of the restrictions, typically program costs that fulfill the mission of the Council. Because a donor’s restriction requires resources to be used in a particular manner or in a future period, the Council must maintain sufficient resources to meet those responsibilities to its donors. Some of the Council’s net assets with donor restrictions are available for general expenditure within one year of September30, 2024becausetherestrictionsonthenetassetsareexpectedtobemet byconducting thenormalprogramactivitiesoftheCouncilinthecomingyear.Accordingly,therelatedresourceshave been included in the quantitative information detailing the financial assets available to meet general expenditureswithinoneyear.
ThefollowingmethodsandassumptionswereusedbytheCouncilinestimatingthefairvalueoffinancial instrumentsthatwerenotdisclosedunderFASBASCTopic820.
Cash equivalents –Thecarryingamountreportedapproximatesfairvalue.
Grants receivable – The carrying amount approximates fair value due to the short term of thereceivables.
Pledges receivable –Valuedatthepresentvalueoftheestimatedfuturecashflowusingan approximatediscountrateof1.0%.
Accounts payable, accrued expenses, and grants payable – The carrying amount reported approximatesfairvalueduetotheshort-termdurationoftheinstruments.
Obligation under operating leases –Thecarryingamountsreportedapproximatesfairvalue astheapplicableinterestratesapproximatecurrentmarketrates.
Thefollowingmethods and assumptions wereusedbythe Councilinestimatingthefair value ofassets that are measured at fair value on a recurring basis under FASB ASC Topic 820. There have been no changesinthemethodologiesusedasofSeptember30,2024.
Exchange traded funds (ETFs)- fixed income, US & international equity –valuedatthequoted marketpricebythecustodianasofthelastbusinessdayoftheyear.
Beneficial interest in trust –ValuedatLevel3basedontheCouncil’sshareofthefairvalueof theassetsthatareheldbythecustodian,whichprovidesaperpetualstreamofincometothe Council.
For the Year Ended September 30, 2024
Thefollowingtablesetsforthbylevel,withinthefairvaluehierarchy,theCouncil’sassetsatfairvalue asofSeptember30,2024:
The table below sets forth a summary of changes in the fair value of the Council’s Level 3 asset, beneficialinterestintrust,fortheyearendedSeptember30,2024.
FASBASC820-10requiresdisclosureofquantitativeinformationabouttheunobservableinputsusedto measureLevel3assetsandliabilities.ThefollowingtableprovidesinformationaboutLevel3assets:
FASBASC958, Not-for-Profit Entities, Presentation of Financial Statements,providesguidanceonthe net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) and improves disclosures about an organization’s endowment funds (both donor-restricted endowmentfundsandBoard-designatedendowmentfunds),whetherornottheorganizationissubject toUPMIFA.
The State of Florida adopted the Florida Uniform Prudent Management of Institutional Funds Act (FUPMIFA),whichprovidesa)consistentinvestmentandspendingstandardstoallformsofcharitable funds,b)strengthensthe conceptofprudent investing,c) abandons historic dollar value asafloor for expenditures and provides more flexibility to the organization in making decisions about whether to expendanyportionofanendowmentfund,andd)providesaprocessforthereleaseormodificationof restrictions on a gift instrument. The adoption by the Council of the provisions of the new law did not haveasignificantchangeinitsmanagementandinvestmentpoliciesofendowments.
For the Year Ended September 30, 2024
Asaresultofthisinterpretation,theCouncilclassifiesasnetassetsrestrictedinperpetuitybydonor(a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is addedtothefund.Theremainingportionofthedonor-restrictedendowment fundthat isnotclassified as net assets restricted in perpetuity by donor is classified as net assets restricted for a specific purpose by donor until those amounts are appropriated for expenditure by the Council in a manner consistentwiththestandardofprudence.
Generally,theendowmentfundsareusedtofurtherthemissionoftheCouncil. Endowmentfundsare usedtoprovidesufficientliquiditytosupportongoingoperationsoftheCouncil,providefundsforcapital expendituresasmayberequiredfromtimetotime,launchnewinitiatives,andbuildanendowmentthat willgenerateincomethatmaybeusedforgeneraloperationsandsupporttheprogramsoftheCouncil. Donorrestrictedendowmentfundswillbeusedforthepurposesdesignatedbythedonors’restrictions.
Investments shall be made solely in the best interest of the Council. The endowment funds shall be investedwithcare,skill,prudenceanddiligenceunderprevailingcircumstances,thataprudentperson acting in like capacity and familiar with such matters would use in the investment of an organization similartotheCouncil.
The Investment Committee is responsible for the oversight and management of the Council’s endowment funds, adhering to the limitations established for each endowment. Investments of the endowment funds shall be diversified to minimize the risk of large losses resulting from overconcentration of funds in a specific maturity, issue or type/class of securities. In managing the endowmentfunds,theInvestmentCommitteewillconsiderthefollowingfactors,ifrelevant:
Generaleconomicconditions;
Possibleeffectofinflationordeflation;
Roleofeachinvestmentwithintheoverallinvestmentportfolio;
Expectedreturn(incomeand/orappreciation);
TheCouncil’sotherresources;
Needtomakedistributionsforoperatingfunds,needtopreservecapital;
AnyspecialvalueanassetmayholdforbenefittotheCouncil;and
Totheextentapplicable,anyexpectedtaxconsequencesofdecisionorstrategies.
The Council’s endowment net asset composition by type as of September 30, 2024 consisted of the following:
For the Year Ended September 30, 2024
4.Endowments,continued
ChangesintheendowmentnetassetsfortheyearendedSeptember30,2024,andthereconciliationto theCouncil’snetassetcategoriesispresentedasfollows:
WithDonor Designated Restrictions Total
TheCouncil’sBoardshallannuallydeterminetheamount,if any,offundstobeallocatedfromBoardDesignatedand/orDonorRestrictedEndowmentfundstoworkingcapitalorcapitalreserves,provided that any such allocation is consistent with endowment restrictions. During the year ended September 30,2024,therewerenodistributionsmadefromtheendowment.
The Councilannually entersintoanadministrative servicesand agencycontractwiththeCounty.The contractprovidesthattheCouncilwillperformandadministervariousprogramservicessuchasgrants administration, marketing administration, and marketing and advertising with funds provided by the TDCto promote cultural arts in the County. For the year ending September 30, 2024, thefunding for thiscontractisprovidedby20.72%oftherevenuegeneratedfrom2nd,3rd,5th,and6th centofthePalm BeachCounty6.00%TouristDevelopmentTax(alsoreferredtoasthe"BedTax").Thecontractforthe year ended September 30, 2024was for an amount not to exceed$4,712,223 (per modifiedbudget). As of September 30, 2024, the Council had amounts receivable from Palm Beach County totaling approximately$857,800relatingtoprogramservicereimbursements.
Inaddition,underthiscontract,theCouncilactsasanagentfortheCountybyreviewingapplicationsof cultural organizations and local artists and requesting funding on their behalf. These "Category B" monies(knowninternally asCategoryBandCategoryC-II),whicharealsofundedby20.72%Tourist Development Tax, are requested by the Council from the County, and are to be paid directly to the grantee.ThesefundsarenotrecordedasrevenueorexpensesoftheCouncil.Duringtheyearended September 30, 2024, the Council, under the direction of the TDC, administered approximately $7,027,777of"CategoryB"grantmoniestoculturalorganizations.
The Council also entered into an agreement with the County to implement and administer a cultural development program, Category C-I, which provides grants to small and emerging non-profit cultural organizations."CategoryC"monies(knowninternallyasCategoryC-I),arefundedbytheCounty’sad valoremtaxesandtotaledapproximately$249,900fortheyearendedSeptember30,2024.Thefunds arerequestedfromtheCountybytheCouncilandarethendistributedtotheawardedgrantee.
For the Year Ended September 30, 2024
5.Contractwith PalmBeach County,continued
Additionally, aportionofthefunds,notto exceed 15%,maybeusedbytheCounciltoadministerthe program. As of September 30, 2024, the Council had grants receivable from Palm Beach County totaling approximately $50,000 and the Council had grants payable to the grantees of approximately $41,900relatingto"CategoryC”monies.
*Reconcilingitemsincludeaccrualbasistransactions.
Pledgesreceivableconsistofunconditionalpromisestogivefromindividuals.Pledgesthatareexpectedto becollectedwithinoneyeararerecordedattheirnetrealizablevalue,whilethosethatareexpectedtobe collected in future years are recorded at the present value of their estimated future cash flows. The discountonthoseamountsiscomputedusinganinterestrateapplicabletothemeasurementdateofthe receivables.PledgesreceivableasofSeptember30,2024,consistedofthefollowing:
Management believes that pledges receivable are fully collectible and, therefore, no allowance for uncollectiblereceivableswasconsiderednecessary.
AsofSeptember30,2024,majorcategoriesofinvestmentswerecomprisedofthefollowing:
Investment income consists of dividends and interest, and is reported net of fees in the statement of activities. Investment management fees are paid quarterly based upon a percentage of assets under managementandamountedtoapproximately$2,500fortheyearendedSeptember30,2024.
For the Year Ended September 30, 2024
The Council is the income beneficiary of a perpetual trust, whose assets are held by the Community Foundation for Palm Beach and Martin Counties, Inc. (the “Foundation”) as an endowed component fund(“Fund”).UnderthetermsoftheFund,theFoundation’sBoardofDirectorshasavariancepower tomodifyanyrestrictionorconditiononthedistributionoffundsforanyspecificcharitablepurposeorto specified organizations, if in their sole judgement (without the approval of any trustee, custodian, or agent), such restriction or conditions becomes, in effect, unnecessary, incapable of fulfillment or inconsistent with the charitable needs of the community or the area served by the Foundation. The FundissubjecttotheFoundation’sinvestmentandspendingpolicies.Therewasnodistributionduring theyearendedSeptember30,2024.
PropertyandequipmentasofSeptember30,2024,consistedofthefollowing:
3,843,456
1,200,625
$ 2,642,831
ThroughMaryM.Montgomery’sFoundation,TheBMCCharitableFoundation,Inc.,theCouncilobtaineda buildinglocatedat601LakeAvenue,LakeWorth,Florida,valuedat$1,350,000.TheCouncilcontinuesto useandoperatethebuildingasitscorporateheadquartersandinsupportofeducationandpromotionof culturalartsinPalmBeachCounty.
The Council received a commitment from a financial institution for a line of credit in the amount of $250,000securedbyequipment,fixtures,andgeneralintangibles.Interestisduemonthlyatthegreater of the Bank’s Prime Rate (9.37% as of September 30, 2024). As of September 30, 2024, there is no outstandingbalance.
For the Year Ended September 30, 2024
NetassetswithdonorrestrictionsasofSeptember30,2024,consistedofthefollowing:
TheCouncilhasestablisheda401(k)definedcontributionplanforthebenefitofsubstantiallyalleligible employees. Employees who work 1,000 hours or more are eligible to receive a fully vested employer contribution after one year of employment and are eligible to contribute to the plan after 90 days of employment. The Councilcurrently contributes 6% (amandatory 3% Safe Harbor contribution and an additional 3% discretionary contribution) of the employee’s base salary, regardless of the employee’s contribution. The employee may contribute to the Plan up to the total deferral allowed by law. The Council’scontributiontothisplanwasapproximately$82,100fortheyearendedSeptember30,2024, andisincludedinthepayrolltaxesandemployeebenefitslineinthestatementoffunctionalexpenses.
Contributedgoodsandservicesarereflectedascontributionsin-kindsupport,andexpensesorassets intheaccompanyingfinancialstatements.Attimes,businessescontributeequipment,advertising,and otherprofessionalservices.Theproductsandprofessionalservicesarerecordedattheirestimatedfair value. On behalf of the Council, the County directly paid approximately $178,000 of tax collector commission expenses, $124,600 of administrative expenses, and $14,800 of inspector general expensesfortheyearendedSeptember30,2024.
The Council recognized $252,421 of advertising, promotion, and consulting as in-kind general administrative expenses, which are reflected in the statement of activities as part of in-kind administration support.The allocation of the use of the in-kind by type is included in the statement of functional expenses. Advertising and promotion, totaling $241,350, are valued based on prices of advertisingtimeand/orspace.Consultingservices,totaling$11,071, arevalued basedonthepriceof theservicesprovided.
For the Year Ended September 30, 2024
TheCouncilreceivesgrantsfromtheCountyandtheTDCasreflectedinthestatementofactivities.Direct fundingbytheseagenciesrepresentapproximately70%oftheCouncil's2024totalrevenueandsupport, andrequiresthefulfillmentofcertainconditionsassetforthinthecontractdocuments.Failuretofulfillsuch obligationscouldresultinareductionoffuturefunding.Asignificantreductioninthelevelofthissupport couldhaveasubstantialeffectontheCouncil'sprogramsandactivities.Althoughthereisapossibilityof such an occurrence,management believes this contingencyto beremote, since by acceptingtheterms andconditionsofthecontracts,itwilloperateinaccordancewiththeagreements.
Atvarioustimesduringtheyear,theCouncilhasfundsondepositthatexceedthe$250,000insuredbythe Federal Deposit Insurance Corporation. The Council minimizes its risk by depositing cash in financial institutionswithahighcreditstanding.AsofSeptember30,2024,theCouncilhadapproximately$735,800 in excess of insured limits. Balances at brokerage accounts are guaranteed by the Securities Investor ProtectionCorporation(SIPC)upto$500,000,whichincludesa$250,000limitforcash.AsofSeptember 30,2024,thesecuritybalancesexceededtheSIPCinsurancelimit.TheCouncilhasnotexperiencedany lossesofsuchfundsandmanagementbelievestheCouncilisnotexposedtosignificantriskoncash.
The Council leases office equipment (including service) under non-cancelable operating leases that expireatvariousdatesthroughJuly2026.
Operatingright-of-useassetsasofSeptember30,2024,consistedofthefollowing:
OperatingleaseobligationsasofSeptember30,2024,consistedofthefollowing:
Undiscounted future lease payments under operating leases as of September 30, 2024, foreach of the nextthreeyears,include:
For the Year Ended September 30, 2024
The discount for the office equipment has been calculated using an interest rate of 3.5%, which approximatestheincrementalborrowingrateoftheCouncilfortheacquisitionoftherelatedassetsatthe timetheleasesweresigned.
OperatingleaseexpensefortheyearendedSeptember30,2024,isincludedwithintheequipmentrental categoryinthestatementoffunctionalexpensesandconsistedofthefollowing:
The Council’s management has evaluated subsequent events through January 14, 2025, the date on which the financial statements were available tobe issued and determined that there were no further disclosuresrequiredtobepresentedinthesefinancialstatements.
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561) 689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
TotheBoardofDirectorsof CulturalCouncilofPalmBeachCounty,Inc.
LakeWorth,Florida
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in 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, 2024, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated January 14, 2025.
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) as a basis for designingauditproceduresthatareappropriateinthecircumstancesforthepurposeofexpressingour opinion on the financial statements, but not for the purpose of expressing an opinion on the effectivenessofCulturalCouncilofPalmBeachCounty,Inc.’sinternalcontrol.Accordingly,wedonot 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 managementoremployees,inthenormalcourseofperformingtheirassignedfunctions,toprevent,or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combinationofdeficiencies,ininternalcontrol,suchthatthereisareasonablepossibilitythatamaterial misstatementoftheentity’sfinancialstatementswillnotbeprevented,ordetectedandcorrectedona timelybasis.A significant deficiency isadeficiency,oracombinationofdeficiencies,ininternalcontrol thatislessseverethanamaterialweakness,yetimportantenoughtomeritattentionbythosecharged withgovernance.
Ourconsiderationofinternalcontrolwasforthelimitedpurposedescribedinthefirstparagraphofthis section and was not designed to identify all deficiencies in internal control that might be material weaknessesorsignificantdeficiencies.Giventheselimitations,duringourauditwedidnotidentifyany deficiencies in internal control that we consider to be material weaknesses. However, material weaknessesorsignificantdeficienciesmayexistthatwerenotidentified.
AspartofobtainingreasonableassuranceaboutwhetherCulturalCouncilofPalmBeachCounty,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 onthe financial statements. However, providing an opinion on compliancewiththoseprovisionswasnotanobjectiveofouraudit,andaccordingly,wedonotexpress suchanopinion.Theresultsofourtestsdisclosednoinstancesofnoncomplianceorothermattersthat arerequiredtobereportedunder Government Auditing Standards
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 Cultural Council of Palm Beach County, Inc.’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 Cultural Council of Palm Beach County, Inc.’s internal control and compliance. Accordingly, this communicationisnotsuitableforanyotherpurpose.
West Palm Beach, Florida
January 14, 2025
& Thomas, LLC
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 Palm Beach County Film and Television Commission, Inc.
West Palm Beach, Florida
Ladies and Gentlemen:
In planning and performing our audit of the financial statements of Palm Beach County Film and Television Commission, Inc. (the “Organization”) as of and for the year ended September 30, 2024, in accordance with auditing standards generally accepted in the United States of America, we considered the Organization’s system of 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
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 atimely basis.
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 material weaknesses. 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.
This communication is intended solely for the information and use of management, those charged with governance and others within the Organization and is not intended to be and should not be used by anyone other than thesespecified parties.
Very truly yours, Holyfield & Thomas, LLC
West Palm Beach, Florida April 8, 2025
c
c
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561)689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
To the Audit Committeeof Palm Beach County Film and Television Commission, Inc.
West Palm Beach, Florida
We have audited the financial statements of Palm Beach County Film and Television Commission, Inc. (the “Organization”) for the year ended September 30, 2024, and expect to issue our report in March 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted 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 October 29, 2024. Professional standards also require that we communicate to you the following information related to ouraudit.
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Organization are described in Note 1 to the financial statements. No new accounting policies were adopted, and the application of existing polices was not changed during 2023-2024. We noted no transactions entered into by the Organization 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.
Estimates
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 significant estimate for the current year financial statements is accrued vacation. We evaluated the methods, assumptions, and dataused to develop the estimated amounts in determining that they are reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements is related to the disclosure of Liquidity and Availability of Resources as presented in Note 2 to the financial statements.
The financial statement disclosures are neutral, consistent, and clear.
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Palm Beach County Film and Television Commission, Inc.
March 5, 2025
Page 2 of 3
Professional standards require us to accumulate all misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no uncorrectedmisstatements during the current year.
For purposes of this letter, a disagreement with management is a disagreement on 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 courseof our audit.
We will request certain representations from management that are included in the management representation letter to be dated upon issuance of the report.
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 Organization’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 Organization’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
We are not aware of any documents that contain the audited financial statements. If such documents were to be published, we would have a responsibility to determine that such financial information was not materially inconsistent with the audited statements of the Organization.
With respect to the supplementary information accompanying the financial statements, wemade certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with U.S. generally accepted accounting principles, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves
Palm Beach County Film and Television Commission, Inc.
March 5, 2025
Page 3 of 3
Closing
We are pleased to respond to any questions you have about the audit or the contents of this letter. We appreciate the opportunity to be of serviceto you with respect to your audit and accounting needs.
This information is intended solely for the use of Audit Committee and management of Palm Beach County Film and Television Commission, Inc. and is not intended to be, and should not be, used by anyone other than thesespecified parties.
Very truly yours,
West Palm Beach, Florida
REPORTONAUDITOF FINANCIALSTATEMENTS
ForTheYearEndedSeptember30,2024 (with comparable totals for 2023)
c
Certified Public Accountants & Advisors
125 Butler Street West Palm Beach, FL 33407 (561)689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com
c
c c c c c c c c c c c
c
TotheBoardofDirectorsof
Palm Beach County Film andTelevision Commission,Inc.
WestPalmBeach,Florida
Opinion
We have audited the accompanying financial statements of Palm Beach County Film and Television Commission, Inc. (a nonprofit organization), which comprise the statement of financial position as of September 30, 2024, and the related statements of activities, functional expenses, and cash flows for the yearthen ended, andtherelatednotesto thefinancial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Palm Beach County Film and Television Commission, Inc. as of September 30, 2024, and the changes in net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted inthe United States of America
BasisforOpinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 Palm Beach County Film and Television Commission, Inc. 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 opinion.
ResponsibilitiesofManagementfortheFinancialStatements
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 raisesubstantial doubt about Palm Beach County Film and Television Commission, Inc.'s ability to continue as a going concern within one year after the date that thefinancial statementsare availabletobe issued.
Auditor’sResponsibilitiesfortheAuditoftheFinancialstatements
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 opinion. 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 will always 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 performingan audit inaccordancewith generally accepted auditingstandards, we:
Exercise professionaljudgmentandmaintain 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 inthefinancial 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 Palm Beach County Film and Television Commission, Inc.'s internal control.Accordingly, nosuch opinion isexpressed.
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, thereareconditions or events, considered inthe aggregate, that raise substantial doubt about Palm Beach County Film and Television Commission, Inc.'s ability tocontinue asagoing concernfor areasonableperiod 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 mattersthatwe identifiedduringthe audit.
We have previously audited the Palm Beach County Film and Television Commission, Inc.’s 2023 financial statements, and we expressed an unmodified audit opinion of those audited financial statements in our report dated March 13, 2024. In our opinion, the summarized comparative information presented herein as of and for the year ended September 30, 2023 is consistent, in all material respects, with the auditedfinancialstatementsfromwhichithasbeenderived.
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses – contract and non-contract on page 16 is presented for purposes 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 or to 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 asa whole.
WestPalmBeach,Florida
April8,2025
As of September 30, 2024 (with comparable totals for 2023)
For the Year Ended September 30, 2024 (with comparable totals for
See accompanying notes to financial statements.
For the Year Ended September 30, 2024 (with comparable totals for 2023)
Adjustments to reconcile change in net assets to net cash used in operating activities: (Increase) decrease in operating assets:
For the Year Ended September 30, 2024
For the Year Ended September 30, 2024
Palm Beach County Film and Television Commission, Inc. (the "FTC") is a not-for-profit organization incorporated in 1989 in the State of Florida. The FTC’s mission is to generate a positive impact on business tourism and the economy in Palm Beach County (the “County”) through the growth of the film, television, digital media and still photography industry, by attracting on-location production and educating the local workforce and providing services to both the visiting and the indigenous production community.
In 2016, FTC added a new business strategy that actively pursues episodic TV shows/content that positively showcases the Palm Beach County tourism brand. The Tourism Branded Content Sponsorship Program stimulates the creation of carefully crafted, high quality programming with established distribution to brand The Palm Beaches within niche markets.Through the allocated budget line items Development and Sponsorships and TDC Marketing Stimulus (now part of the overall Palm Beach County Contract), the FTCcan strategically leverage production costs to generatemoretargeted production.
The FTC produces the Palm Beaches Student Showcase of Films, the largest statewide film competition and award show for Florida student filmmakers, graphic designers and digital media artists. The FTC provides scholarships and grants to students and schools through a contract with the Department of Housing and Economic Development (the “DHED”). Awards are determined through an annual competition, which is consideredthecornerstoneof theeducationoutreachinitiative of theFTC.
The accompanying financial statements of the FTC have been prepared on the accrual basis of accounting, whereby revenues and support are recognized when earned, and expenses when the corresponding liability is incurred. This basis of accounting conforms to accounting principles generally acceptedintheUnitedStatesofAmerica.
The accompanying financial statements have been prepared on the accrual basis of accounting in conformity with the disclosure and display requirements of the Financial Accounting Standards Board (FASB) as set forth under FASB Accounting Standards Codification (FASB ASC) 958-205 Not-for-Profit Entities, Presentation of Financial Statements. Accordingly,thenetassetsofFTCarereportedasfollows:
Net assets without donor restrictions – this classification includes those net assets whose use is not restricted by donors, even though their use may be limited in other respects, such as by contract or by board designation. Changes in net assets arising from exchange transactions (except income and gains on assets that are restricted by donors or by law) are included in net assets without donor restrictions. The FTC releases any purpose restrictions to this classification when funds are used for their intended purpose and when assets are placed in servicefor theusestipulated by thedonor.
For the Year Ended September 30, 2024
continued
Net assets with donor restrictions – this classification includes those net assets whose use by the FTC has been limited by donors to either a later period of time, or after a specified date, or for a specified purpose. This classification also includes net assets that must be maintained by the FTC in perpetuity. Net assets with donor restrictions in perpetuity increase when the FTC receives contributions for which donor-imposed restrictions limiting the FTC’s use of an asset or its economic benefits neither expire with the passage of time nor can be removed by the FTC meeting certain requirements. As of September 30, 2024, FTC had no net assets with donor restrictions.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reportedamountsanddisclosures. Accordingly,actualresultscoulddifferfromthoseestimates.
The FTC is required to maintain policies and procedures that make provision for one or more separate accounts for receipt of non-tourist tax revenues received by the FTC, such as membership dues, participationfees, andcontributions, andfor the payment from suchaccounts ofexpenses of the FTCthat arenotreimbursedpursuanttothePalmBeachCountyContract(asfurtherdescribedinNote4).TheFTC shall incur and pay only such expenses as are lawful, ordinary, and necessary administrative and operating expenses incurred in connection with the marketing and promotion of Palm Beach County tourism.
Cash and cash equivalents consist primarily of checking accounts at a federally chartered bank. For purposes of the statement of cash flows, all highly liquid investments with a maturity of three months or lesswhenpurchasedarealsoconsideredtobecashequivalents.
Reimbursement due from Palm Beach County
FTC records contract reimbursements due from Palm Beach County as allowable expenses are incurred, approved, and billed. All amounts are deemed fully collectible, and no allowance is considered necessary.
As a part of its normal operations, the FTC pays certain expenses including insurance, postage, and professional memberships prior to the actual use of those assets. Such amounts are recorded as prepaid expensesinthestatementoffinancialpositionandarerecognizedasexpenseasthebenefitisrealized.
For the Year Ended September 30, 2024
1. Organization and Summary of Significant Accounting Policies, continued
As of September 30, 2024, the FTC's accrued vacation include costs of accrued employee benefits of $24,846.
In connection with the FTC’s administrative services and agency contract (as further described in Note 4), Palm Beach County advanced FTC $500,000 for use in facilitating vendor payments and other working capital needs, pending reimbursement of requested expenses.
Incomegenerated bytheFTC can be classified as either Revenues or Support. Revenues are generated through exchange transactions, while Support is generated through non-exchange transactions. The largest portion of the FTC’s income comes from grants and contracts, both of which are non-exchange transactionsandareconsideredSupport.
Contract income from Palm Beach County and grant income from the DHED are recognized on a cost reimbursement basis. Revenue from contracts and grants are recognized when expenditures are made and recognizedfor the purposesspecified.
The FTC follows FASB ASC 958-065, Accounting for Contributions Received and Contributions Made In accordance with this standard, contributions received are recorded as with or without donor restrictions depending on the existence and/or nature of any such restrictions. Contributions that are initially restricted as to time or use are required to be reported as contributions with donor restrictions and are later reclassified to net assets without donor restrictions upon expiration of the time or use restriction. If the restriction placed upon a contribution is met within the same accounting period as the receipt of the contribution, FASB ASC 958-065 permits the contribution and the expense to be reported as net assets without donor restrictions. The FTC's donations from various sponsors are recorded as receivedandaregenerallywithoutdonorrestrictions.
Membership
Membershipincome consists of dues assessed annuallytomembers of theFTC’s BoardofDirectors,and is recognized upon receipt. These assessments are used to fund expenses that are not reimbursable undercontractorgrantagreements.
For the Year Ended September 30, 2024
1. Organization and Summary of Significant Accounting Policies, continued
Advertising
The FTC expenses advertising costs as incurred. Total expenditures for advertising costs for the year endedSeptember30,2024were$17,857.
The FTC follows FASB ASC Subtopic 958-605, Not-for-Profit Entities, Revenue Recognition for donated services from volunteers, board members, and other third parties who assist in fund-raising and education programs and from professionals who donate services. The value of the contributed services should be recognized when they (a) create or enhance a nonfinancial asset or (b) require specialized skills, are provided by entities or persons possessing those skills, and would need to be purchased if they were not donated. Generally, the value of volunteer services to the FTC does not satisfy thesecriteriaandis thereforenot recognized in thefinancial statements.
Costs of providingtheFTC’s various programs and other activities have been summarized ona functional basis in the statement of activities. Costs are allocated among film and television promotion, education, andmanagementandgeneralbasedonapercentageoftherelatedactivities.
TheFTCscholarshipsarepaidtoidentifiedrecipientsofThePalmBeachesStudentShowcaseofFilms.
The FTC is exempt from federal and state income taxes pursuant to Internal Revenue Code Section 501(c)(6) and Chapter 220.13 of the Florida Statues. Therefore, the financial statements do not reflect a provisionforincometaxes.
The FTC follows the guidance of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes, which seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. This standard prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. An entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. The FTC assesses its income tax positions based on management’s evaluation of the facts, circumstances, and information available at the reporting date. Management does not believe that the FTC has any significant uncertain tax positions that would be material to the financial statements. Furthermore, there is no federal or state open-year tax return under audit.
For the Year Ended September 30, 2024
1. Organization and Summary of Significant Accounting Policies, continued
The FTCfollows FASB ASC 820, Fair Value Measurement. Thisstandarddefinesfair value,establishesa framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires expanded disclosures about fair value measurements of financial instruments.
The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs when available. Observable inputs are those that market participants would use in pricingtheassetorliabilitybasedonthebestinformationavailableinthecircumstances.
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority tounobservable inputs (Level 3). If inputs used tomeasure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level of input thatis significant tothefair value measurement of theinstrument.
The three levels ofthefair value hierarchyaredescribed below:
Level 1 - Inputs that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that theFTC has theability to access.
Level 2 - Inputs that include quoted prices for similar assets and liabilities in activemarkets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Fair values for these instruments are estimated using pricing models or quoted prices of assets and liabilities of similar characteristics.
Level 3 - Inputs that are unobservable for the assets or liabilities, which are typically based on an entity’s own assumptions, as thereis little,if any, relatedmarket activity.
The asset’s or liability’s fair valuemeasurement level within the fair value hierarchy is basedonthe lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximizetheuseofobservableinputsandminimizetheuseofunobservableinputs.
The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the FTC’s financial statements for the year ended September 30, 2023, from which the summarized information was derived. Certain 2023 amounts may have been reclassified to conform to 2024 classifications with no effect on the previously reported change in net assets.
For the Year Ended September 30, 2024
Financial assets available for general expenditure within one year, that is, without donor restrictions or other restrictions limitingtheir usecomprisethefollowing:
duefrom PalmBeach County 544,723 Financial assets availabletomeet general expenditures overthenext 12months $ 747,384
The FTC receives significant income from its Palm Beach County Contract (see Note 4), which covers the majority of its operating expenditures on a direct reimbursement basis. The Organization also receives grantsandother incomethat mayormay notbe restrictedfor use in a particular program.
The following methods and assumptions were used by the FTC in estimating the fair value of financial instrumentsthatwerenotdisclosedunderFASBASCTopic820.
Cash equivalents –Thecarryingamountreported approximates fair value.
Reimbursement due from Palm Beach County – The carrying amount approximates fair value dueto the shortterm of the amounts due.
Accounts payable, accrued expenses, and other liabilities – The carrying amount reported approximatesfair valuedue totheshort-term duration of theinstruments.
The FTC has no assets or liabilities measured at fair value on a recurring basis under FASB ASC Topic 820,for2024. TherehavebeennochangesinthemethodologiesusedasofSeptember30,2024.
The FTC annually enters into an administrative services and administrative agency contract with the County. The contract provides that the FTC will perform, administer and, in certain cases, provide financial sponsorship for various functions, such as attracting and permitting film and television production, advertising, public relations, production marketing and trade shows, incorporating diversity in programing and operations, familiarization tours, and other projects and services to promote the growth of the film, television, digital media and still photography industry in the County. For the year ending September 30, 2024, the funding for this contract is provided by revenue generated from the 2nd, 3rd, 5th, and 6th cents of the Palm Beach County 6.00% Tourist Development Tax (also referred to as the "Bed Tax"). The contract, as amended, for the year ended September 30, 2024 was for an amountnot toexceed$2,297,172.
In connection with the County contract, the FTC submits requests for reimbursement of allowable payments and expenditures and records the corresponding revenue as the request is approved and paid. Subsequent adjustments made in accordance with US GAAP to certain payments and expenditures may often create timing differences between the contract utilization according to the County and amounts reported in these financial statements. The fiscal year-end amounts and related adjustments are summarized as follows:
For the Year Ended September 30, 2024
4. Contract with Palm Beach County, continued
Palm Beach County Contract
*Reconciling items include accrualbasistransactions.
The FTC originally entered into a grant agreement with the DHED on March 11, 2003. The grant agreement has been renewed and extended through September 2024. The grant agreement provides the financial resources to support educational programs in the film and television industry in Palm Beach County and implement the Palm Beach County Film and TV Tech Prep Program in order to foster a stronger and more balanced economy in Palm Beach County. For the year ended September 30, 2024,the FTCreceived atotal of $75,000associated withthis grant.
The FTC incurs certain expenses that are not reimbursed under the PBC contract or the DHED grant agreement. As of September 30, 2024, the total amount of non-contract and non-DHED expenses, less the in-kind, was $20,528.
FTC 401(k) Profit - Sharing Plan (“Plan”) are for full time employees who have completed one year of service and are eligible to participate in the Plan. During 2024, the employer contributions are 12.17% of an eligible employee’s compensation, and employees are fully vested after three years of service. During theyear ending September 30, 2024, theFTCcontributed $49,441for this 401(k) program.
Contributed services are reflected as in-kind support, and expenses or assets in the accompanying financial statements. On behalf of the FTC, the County directly paid $49,812 of administrative expenses, $2,757 of inspector general expenses, and $37,031 of tax collector commission expenses for the year ended September 30, 2024. The County also provided office space valued at $38,049 to FTC in exchange for no payment. Amounts recorded for these County- provided expenses and office space are based upon a comparative analysis of reports from the County, and the estimated fair value of amounts paid for rent for similar space in this market. In addition, FTC Board members contributed $1,300 in promotional and other miscellaneous services in exchange for membershipdues, and various organizations contributed services in connection with the Student Showcase of Films totaling $93,777. Such in-kind support is recorded at amounts theFTC estimated it would have paidfor theseservices.
For the Year Ended September 30, 2024
The FTC receives contract funding from the County as reflected in the statement of activities. Direct funding by the County represents approximately 86% of the FTC's 2024 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 couldhaveasubstantialeffectontheFTC'sprogramsandactivities. Althoughthereisapossibilityofsuch 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. In addition, management continually monitors the funding resources allocated by the County and adjusts the budget as necessary forongoingsponsorshipcommitmentsthroughtheFTC’sSponsorshipCommittee.
The FTC uses an FDIC insured financial institution to maintain its cash, which at times may exceed FDIC insured limit. The FTC has not experienced any losses in such accounts and believes it is not exposed to anysignificant creditriskon suchcash. AsofSeptember 30,2024,theFTChadapproximately $17,400 in excessofinsuredlimits.
The FTC has evaluated subsequent events through April 8, 2025, the date on which the financial statements were available to be issued, and determined that there were no further disclosures required to bepresented inthesefinancial statements.
For the Year Ended September 30, 2024
See independent auditors' report.