Independent Accountant’s Review Report

Abstract

Previous articleNext article FreeIndependent Accountant’s Review ReportPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreTo the CouncilBibliographical Society of America, Inc.We have reviewed the accompanying financial statements of Bibliographical Society of America, Inc. which comprise the statement of financial position as of December 31, 2017 and the related statements of activities and cash flows for the year then ended and the related notes to the financial statements. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.Accountant’s ResponsibilityOur responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.Accountant’s ConclusionBased on our review, we are not aware of any material modifications that should be made to the accompanying 2017 financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.Report on 2016 Financial StatementsThe 2016 financial statements were audited by us and we expressed an unmodified opinion on them in our report dated April 25, 2017. We have not performed any auditing procedures on the financial statements since April 25, 2017.January 24, 2018Statement of Financial PositionAssets December 31 20172016Current assets(Reviewed)(Audited) Cash$ 40,517$ 54,017 Investments, at fair value3,701,5093,323,249 Contributions receivable1,5004,127 Prepaid expenses—11,758 Total assets$3,743,526$3,393,151Current Liabilities and Net AssetsCurrent liabilities Accounts payable$ 1,198$ 5,500 Unearned revenue7,8106,995 Total current liabilities9,00812,495Net assets Unrestricted—operating30,55798,787 Unrestricted—designated by the Council35,60532,920 Total unrestricted66,162131,707 Temporarily restricted3,295,1932,875,786 Permanently restricted373,163373,163 Total net assets3,734,5183,380,656 Total current liabilities and net assets$ 3,743,526$ 3,393,151See notes to financial statements.Statement of Activities for the Year Ended December 31, 2017 (With Summarized Totals For the Year Ended December 31, 2016) 20172016 UnrestrictedTemporarily RestrictedPermanently RestrictedTotalTotalSupport and revenue(Reviewed)(Reviewed)(Reviewed)(Reviewed)(Audited) Membership dues$ 24,790$ —$ —$ 24,790$ 27,070 Interest—12—1214 Dividends3,09176,167—79,25875,106 Operating contributions17,8582,400—20,25832,340 Sales of books————121 Royalties2,838——2,8384,136 Administrative fee15,236(15,236)——— Annual meeting2,980——2,9802,640 PBSA journal income9,750——9,7509,000 Net assets released from restrictions51,494(51,494)———Total support and revenue128,03711,849—139,886150,427Expenses BSA office56,469——56,46953,243 PBSA office18,370——18,37018,583 Conventions, meetings, dues and insurance26,205——26,20526,106 Professional services62,579——62,57954,006 Grants, prizes and other46,498——46,49846,498 Bad debt————4,000Total expenses210,121——210,121202,436Excess (deficiency) before other additions and deductions(82,084)11,849—(70,235)(52,009)Other additions and deductions Permanently restricted contributions————1,750 Realized gain on sale of investments2,96873,153—76,12134,507 Change in unrealized value of investments13,571334,405—347,976222,330Increase (decrease) in net assets(65,545)419,407—353,862206,578Net assets, beginning of year131,7072,875,786373,1633,380,6563,174,078Net assets, end of year$ 66,162$ 3,295,193$ 373,163$ 3,734,518$ 3,380,656See notes to financial statements.Statement of Activities For the Year Ended December 31, 2016 UnrestrictedTemporarily RestrictedPermanently RestrictedTotalSupport and revenue(Audited)(Audited)(Audited)(Audited) Membership dues$ 27,070$ —$ —$ 27,070 Interest—14—14 Dividends4,19870,908—75,106 Operating contributions32,340——32,340 Sales of books—121—121 Royalties4,136——4,136 Administrative fee14,184(14,184)—— Annual meeting2,640——2,640 PBSA journal income9,000——9,000 Net assets released from restrictions51,082(51,082)——Total support and revenue 144,650 5,777 — 150,427Expenses BSA office53,243——53,243 PBSA office18,583——18,583 Conventions, meetings, dues and insurance26,106——26,106 Professional services 54,006 — — 54,006 Grants, prizes and other46,498——46,498 Bad debt4,000——4,000Total expenses202,436——202,436Excess (deficiency) before other additions and deductions(57,786)5,777—(52,009)Other additions and deductions Permanently restricted contributions——1,7501,750 Realized gain on sale of investments1,92932,578—34,507 Change in unrealized value of investments12,430209,900—222,330 Transfer(2,572)2,572——Increase (decrease) in net assets(45,999)250,8271,750206,578Net assets, beginning of year177,7062,624,959371,4133,174,078Net assets, end of year$ 131,707$ 2,875,786$ 373,163$ 3,380,656See notes to financial statements.Statement of Cash Flows For the Year Ended December 31 20172016Cash flows from operating activities(Reviewed)(Audited) Increase in net assets$ 353,862$ 206,578 Adjustments to reconcile increase in net assets to net cash (used in) operating activities Realized (gain) on sale of investments(76,121)(34,507) Change in unrealized value of investments(347,976)(222,330) Permanently restricted contributions—(1,750) (Increase) decrease in assets Contributions receivable2,6271,873 Prepaid expenses11,758(11,758) Increase (decrease) in current liabilities Accounts payable(4,302)3,750 Unearned revenue815(5,670) Net cash (used in) operating activities(59,337)(63,814)Cash flows from investing activities Proceeds from sales and maturities of investments292,4793,421,422 Purchases of investments(246,642)(3,374,726) Net cash provided by investing activities45,83746,696Cash flows from financing activities Permanently restricted contributions—1,750 Net (decrease) in cash(13,500)(15,368)Cash, beginning of year54,01769,385Cash, end of year$ 40,517$ 54,017See notes to financial statements.Notes to Financial Statements December 31, 2017Note 1: Nature of OrganizationThe Bibliographical Society of America, Inc. (the “Society”) was organized in 1904 and incorporated in 1927 (amended in 1941) in Washington D.C. The Society is authorized to conduct its activities within the state of New York. The Society promotes and underwrites works in the field of bibliography and publishes a quarterly journal of bibliographical studies.Note 2: Summary of Significant Accounting PoliciesNet assetsUnrestricted net assets consist of amounts that can be spent at the discretion of the Society. Temporarily restricted net assets consist of contributions and investment return earned on permanently restricted net assets that are restricted by the donor for a specific purpose or relate to future periods. Permanently restricted net assets consist of contributions that are restricted by the donor in that the principal must remain in perpetuity but that the investment return earned on such funds may be spent in accordance with the donor’s terms.Temporarily restricted net assets and unrestricted net assets designated by the Council are summarized as follows: (see also note 8)Temporarily restricted net assets:• The Harper and Cole Funds are available for printing and publications.• The W.L. Mitchell Prize Fund is to be spent on funding a prize on bibliographical or documentary work on British periodicals or newspapers of the 18th century.• The Justin G. Schiller Prize Fund is to be used to support a prize of Bibliographical work on Pre-20th-Century Children’s Books.• PBSA Endowment Fund is to be used to support the general operations of the Society and to strengthen and preserve the ongoing publication of the papers of the Bibliographical Society of America, Inc., as appropriated by the Council.• The Katharine F. Pantzer Fund is to be used for fellowships for descriptive bibliography.• The Stationers’ Register Online Project Fund is to be used to fund an online database of the Stationers’ Company.Unrestricted net assets designated by Council:• The New Scholars Fund provides a forum for early-career scholars to present examples of their research.Cash equivalentsThe Society deems all highly liquid investments with original maturities of ninety days or less to be cash equivalents. Except for what is included in the Society’s investment portfolio, the Society has no cash equivalents as of December 31, 2017 and December 31, 2016.InvestmentsThe fair value of the Society’s investments has been determined by using publicly reported market values. Donated investments are recorded at the fair value on the date of receipt. Realized gains and losses on the sale of investments are determined on the “first-in, first-out” basis. Realized and unrealized gains/losses and interest and dividends earned on the temporarily and permanently restricted net assets are reported as revenue of the temporarily restricted class of net assets. All other realized and unrealized gains/losses and interest and dividends earned are recorded as unrestricted revenue.Allowance for doubtful accountsAs of December 31, 2017 and December 31, 2016, the Society’s management has determined that there are no potentially uncollectible receivables and therefore has not provided for an allowance for doubtful accounts. Such estimate is based on management’s experience, the aging of the receivables, subsequent receipts and current economic conditions. The Society feels this is reasonable.Book sales and publicationsSales of books published with funds from the Harper Fund are recorded as revenue of the Harper Fund until the cost of these books has been recovered. If a published book does not recover its costs within five years after publication, the remaining costs are written off against the temporarily restricted net assets of the Harper Fund and removed from the book inventory total.The Society entered into a consignment agreement with a book dealer whereby the book dealer will sell certain books on behalf of the Society. Copies of the books delivered to the book dealer remain property of the Society until sold by the book dealer. The book dealer is responsible for the insurance coverage on the books and any loss or damage that may occur. The agreement may be terminated by either of the parties on 180 days written notice as outlined in the agreement.In October 2014, the Society entered into an agreement with a university for the publication of the Society’s journal. Beginning in 2015, the Society receives 10% of all gross revenue from the journal with a minimum of $8,000, with the minimum increasing annually to $12,000 in 2019.Membership duesMembership dues are recorded as revenue in the applicable membership period. Lifetime dues are recorded as revenue in the year they are paid.Net assets released from restrictionsThe Society reports interest and dividend revenue earned on permanently restricted net assets as temporarily restricted revenue as they are received with donor stipulations that limit the use of the revenue. When the purpose of the restrictions is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.Administrative feeTo cover various general and administrative charges, the Society charges a 20% fee based on the interest and dividend revenue of the temporarily restricted net assets and records it as revenue of the operating fund.Concentrations of credit riskThe Society’s financial instruments that are potentially exposed to concentrations of credit risk consist primarily of cash, investments and contributions receivable. The Society places its cash and money market funds with what it believes to be quality financial institutions. Investments are exposed to various risks such as interest rate, market volatility, liquidity and credit. Due to the level of uncertainty related to changes in interest rates, market volatility, liquidity and credit risks, it is reasonably possible that changes in these risks could materially affect the fair value of the investments reported in the statement of financial position as of December 31, 2017. The Society routinely assesses with its investment advisors the financial strength of its holdings in its investment portfolio in an effort to minimize the concentrations of credit risk. Contributions receivable consist mainly of amounts due from individual contributors. Management monitors the collectibility of its receivables. Management believes that no significant concentrations of credit risk exist with respect to the Society’s cash, investments and contributions receivable.Use of estimatesThe 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 amounts reported in the financial statements. Actual results could differ from these estimates.Subsequent eventsThe Society has evaluated events and transactions for potential recognition or disclosure through January 24, 2018, which is the date the financial statements were available to be issued. This evaluation did not result in any subsequent events that necessitated disclosure and/or adjustments.Note 3: InvestmentsThe following is a summary of the investments as of December 31, 2017 and December 31, 2016: 20172016 CostFair ValueCostFair ValueMoney market funds$ 16,302$ 16,302$ 6,431$ 6,431 Mutual funds822,341827,965914,777907,450 Bond funds822,341827,965914,777907,450 Equity funds2,208,0372,857,2422,095,1882,409,368 Total$ 3,046,680$ 3,701,509$ 3,016,396$ 3,323,249Unrealized gain at December 31, 2017 and December 31, 2016: $ 654,829 $ 306,853Change in unrealized value of investments $ 347,976 $ 222,330The BSA portfolio consists primarily of a strategic allocation of mutual funds. These assets tend toward a 70/30 ratio of equity/fixed income securities. For assets measured at fair value on a recurring basis, as of December 31, 2017, accounting standards require quantitative disclosure about the fair value measurement separately for each major class of assets. The Society’s investments have been classified in the highest level of hierarchy (Level 1). These quoted prices are in active markets for identical assets.Note 4: Functional ExpensesThe following is a summary of expenses on a functional basis for the year ended December 31, 2017 and December 31, 2016: 2017 Program ServicesManagement and GeneralTotalBSA office$ 45,175$ 11,294$ 56,469PBSA office18,370—18,370Conventions, meetings, dues and insurance20,9645,24126,205Professional services29,77431,82561,599Grants, prizes and other43,498—43,498BSA Fellowships3,000—3,000Web site maintenance784196980 Total expenses$ 161,565$ 48,556$ 210,121 2016 Program ServicesManagement and GeneralTotalBSA office$ 42,594$ 10,649$ 53,243PBSA office18,583—18,583Conventions, meetings, dues and insurance20,8855,22126,106Professional services21,71130,32552,036Grants, prizes and other43,498—43,498BSA Fellowships3,000—3,000Web site maintenance1,5763941,970Bad debt—4,0004,000 Total expenses$ 151,847$ 50,589$ 202,436Allocation of expensesThe costs of providing the various programs and other activities have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited.Note 5: Tax StatusThe Society is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code (the “Code”). In addition, the Society has been determined by the Internal Revenue Service to be a publicly supported organization, and not a private foundation under the meaning of Section 509(a)(1) of the Code. The Society qualifies for maximum charitable contribution deductions for donors.Note 6: Permanently Restricted Net AssetsPermanently restricted net assets consist of the following permanent endowment funds as of December 31, 2017 and December 31, 2016: 20172016Harper Fund $ 240,787 $ 240,787Cole Memorial Fund$ 2,421 $ 2,421 Cole Publication Fund34,55236,97334,55236,973W.L. Mitchell Prize Fund 10,000 10,000Justin G. Schiller Prize Fund 30,000 30,000PBSA Endowment Fund 55,403 55,403 Total $ 373,163 $ 373,163Note 7: EndowmentThe Society’s endowment consists of various individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the Council. As required by accounting principles generally accepted in the United States of America (“GAAP”), net assets associated with endowment funds, including funds designated by the Council to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions.InterpretationThe Society follows the New York State Not-For-Profit Corporation Law (N-PCL) when adhering to donor-restricted contributions. The Society preserves the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Society classifies as permanently restricted net assets (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 added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified as permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Society in a manner consistent with the standard of prudence prescribed by N-PCL.The Society considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) The duration and preservation of the fund; (2) The purposes of the Society and the donor-restricted endowment fund; (3) General economic conditions; (4) The possible effect of inflation and deflation; (5) The expected total return from income and the appreciation of investments; (6) Other resources of the Society; and (7) The investment policies of the Society.Objectives and goalsThe Society relies on its portfolio of investment funds to provide support for the various missions of the organization, and the Society desires to maintain that support both now and into the future. Accordingly, the longer-term objective of this portfolio is to support a spending rate of 4–5% of the value of the portfolio plus enough return to protect the assets from inflation and preserve the purchasing power of the assets over time. As the Society takes a total return approach to its investment portfolio, the Society does not need to rely solely on fixed income security yield or dividend income to generate the 4-5% spending rate. Capital can be distributed from yield, dividends, or from principal. The Society recognizes the market performance varies in the short term and that any specified rate of return will not be obtainable in all periods.The Society recognizes that the optimal portfolio structure to meet its total return objective will typically be equity oriented. Fixed income securities in the portfolio shall be used to provide more reliable current income, liquidity, and stability and to offset the inherently greater volatility of equity.Recognizing the Society’s moderate risk profile in terms of security-specific risk as well as total portfolio volatility, the Society wishes to have a strategic asset allocation target of 70% equity and 30% fixed income over time. While this split is the Society’s long term target, the Society recognizes that the actual asset allocation in any particular period may vary in the discretion of the investment manager but always in accordance with the following guidelines:Within the context of the above background, the investment manager shall construct a diversified asset allocation methodology that will allocate assets among the following classes:Asset classTarget AllocationDomestic large cap equities50%Domestic small cap equities10%Developed international equities5%Emerging international equities5%Fixed income30%Objectives and goals (continued)All fixed income investments should be of relatively high quality and liquid.Alternative strategies (hedge funds, commodities, private equity, derivatives, swap agreements, short sales of securities, and similar strategies), while offering higher potential returns over time, are generally considered to be beyond the Society’s risk tolerance and also to be unduly costly with respect to financial management fees. Consequently, such strategies may be used only with the prior authorization of the Finance Committee of the Society.The Society recognizes that actual allocations will vary from time to time form the target allocations as the investment manager makes strategic allocation decisions in different market environments.Cash flow expectationsThe Society currently has moderate cash flow needs from this portfolio of investments.Risk toleranceThe Society accepts a moderate level of risk in this portfolio, commensurate with that of a diversified portfolio of publicly traded stocks and fixed income instruments which are subject to different economic inputs and risks. Compliance by the investment manager with this statement of risk tolerance is required to ensure that the Council of the Society meets it fiduciary obligation of prudence in the handling of the Society’s financial assets.There are no restrictions with respect to asset classes or specific investments except as specifically provided in the Society’s investment policy. The Society anticipates that the total equity exposure of the portfolio will range from 40 to 80% and the fixed income exposure of the portfolio will range from 20 to 60%. The Society has set no quantitative ranges within the equity class but nevertheless expects the manager to maintain sufficient diversification within this class to be consistent with the requirement of moderate risk. For both the equity and the fixed income classes, the Society expects that allocations at the extremes of the permitted ranges will be rare.The Society generally expects its funds to be invested in efficient, transparent, and liquid public markets. As a consequence, it has a strong preference for diversified exchange traded funds that track well-known domestic and foreign market indices. Although the actual asset allocation will change from time to time and over time, the Society requires that the investment horizon for the entire portfolio and for each individual investment be long term.RebalancingIn order to attempt to keep the investment manager’s investment plan consistent with the portfolio’s objectives, the investment manager shall review the account quarterly for rebalancing to the strategic goals. In addition, if there are significant events, such as major market volatility or a large deposit or withdrawal from the account, the investment manager will be expected to review the allocation at that time. The actual allocation of the portfolio shall be reviewed by the investment manager with the Committee at least annually and, in addition, at any time at the request of the investment manager or the Committee.Funds with deficienciesFrom time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the Society to retain as a fund of perpetual duration. In accordance with accounting principles generally accepted in the United States of America, deficiencies of this nature are reported in unrestricted net assets. There were no permanent endowment fund deficiencies as of December 31, 2017.Endowment Net Asset Composition by Type of Fund as of December 31, 2017: UnrestrictedTemporarily RestrictedPermanently RestrictedTotalDonor-restricted endowment funds$ —$ 3,292,793$ 373,163$ 3,665,956Council-designated endowment funds35,605——35,605 Total funds$ 35,605$ 3,292,793$ 373,163$ 3,701,561Changes in Endowment Net Assets for the Year Ended December 31, 2017: UnrestrictedTemporarily RestrictedPermanently RestrictedTotalEndowment net assets beginning of year$ 32,920$ 2,875,786$ 373,163$ 3,281,869Investment return: Investment income76976,179—76,948 Net appreciation (realized and unrealized)4,113407,558—411,671Total investment gain4,882483,737—488,619Contributions—2,400—2,400Administrative fee(154)(15,236)—(15,390)Appropriation for expenditures(2,043)——(2,043)Net assets released from restrictions—(51,494)—(51,494)Endowment net assets, end of year$ 35,605$ 3,295,193$ 373,163$ 3,703,961View Table ImageEndowment Net Asset Composition by Type of Fund as of December 31, 2016: UnrestrictedTemporarily RestrictedPermanently RestrictedTotalDonor-restricted endowment funds$ —$ 2,875,786$ 373,163$ 3,248,949Council-designated endowment funds32,920——32,920 Total funds$ 32,920$ 2,875,786$ 373,163$ 3,281,869View Table ImageChanges in Endowment Net Assets for the Year Ended December 31, 2016: UnrestrictedTemporarily RestrictedPermanently RestrictedTotalEndowment net assets beginning of year$ 34,133$ 2,624,959$ 371,413$ 3,030,505Investment return: Investment income80470,922—71,726 Net appreciation (realized and unrealized)2,748242,478—245,226Total investment gain3,552313,400—316,952Contributions and revenue 1211,7501,871Administrative fee(161)(14,184)—(14,345)Appropriation for expenditures(2,032)——(2,032)Transfer(2,572)2,572——Net assets released from restrictions—(51,082)—(51,082)Endowment net assets, end of year$ 32,920$ 2,875,786$ 373,163$ 3,281,869View Table ImageNote 8: Temporarily Restricted Net Assets and Unrestricted Net Assets Designated by the CouncilThe following is a summary of the activity of the temporarily restricted net assets and the unrestricted net assets designated by the Council for the year ended December 31, 2017: Temporarily Restricted Net Assets (Donor-Restricted FundsUnrestricted Net assets (Designated by The Council) Harper FundCole FundW.L. Mitchell Prize FundJustin G. Schiller Prize FundPBSA Endowment FundKatharine F. Pantzer FundStationers’ Register online ProjectTemporarily Restricted Net AssetsTotal New Scholars FundSupport and revenue Contributions $ — $ — $ — $ — $ — $ — $ 2,400 $ 2,400 $ — Interest74———1—12— Dividends44,56719,9023891,0221,7758,512—76,167769 Administrative fee(8,915)(3,981)(78)(204)(355)(1,703)—(15,236)(154)Total support and revenue35,65915,9253118181,4206,8102,40063,343615Net assets released from restrictions and appropriated for expenditures Journal editorial services18,370——————18,370— Custodial and investment management fees14,1156,3031233245632,696—24,124243 Grants and prizes—————9,000—9,0001,800Total net assets released from restrictions32,4856,30312332456311,696—51,4942,043 Increase (decrease) before other additions3,1749,622188494857(4,886)2,40011,849(1,428)Other additions Realized gain on sale of investments42,80319,1143739821,7068,175—73,153738 Change in unrealized value of investments195,66787,3771,7054,4897,79437,373—334,4053,375Increase in net assets241,644116,1132,2665,96510,35740,6622,400419,4072,685Net assets, beginning of year1,660,111811,8456,68713,70020,287363,156—2,875,78632,920Net assets, end of year$ 1,901,755$ 927,958$ 8,953$ 19,665$ 30,644$ 403,818$ 2,400$ 3,295,193$ 35,605 Previous articleNext article DetailsFiguresReferencesCited by The Papers of the Bibliographical Society of America Volume 112, Number 4December 2018 Published for the Bibliographical Society of America Article DOIhttps://doi.org/10.1086/700179 © 2018 by the Bibliographical Society of America. 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