THE GRAND OPERA HOUSE OF THE SOUTH, INC, Crowley, Louisiana FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008

Transcription

1 ff'^f THE GRAND OPERA HOUSE OF THE SOUTH, INC, FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 Under provisions of state law, this report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report Is available for public inspection at the Baton Rouge office of the Legislative Auditor and. where appropriate, at the office of the parish clerk of court. Release Date ihl/o

2 THE GRAND OPERA HOUSE OF THE SOUTH, INC. Crov^ey, Louisiana TITLE TABLE OF CONTENTS STATEMENT OR SCHEDULE PAGE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS: Statements of Financial Position Statements of Activities Statements of Functional Expenses Statements of Cash Flows Notes to Financial Statements A B 0 D SUPPLEMENTAL INFORMATION 12 INTERNAL CONTROL AND COMPLIANCE Independent Auditors' Report on Intemal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Govemment Auditing Standards ' 1314 OTHER SUPPLEMENTAL INFORMATION Schedule of Findings and Questioned Costs Summary Schedule of Prior Year Findings Management's Corrective Action Plan

3 BROADHURST, HAMILTON & COMPANY CERTIFIED PUBLIC ACCOUNTANTS ROBERT C. BROADHURST, CPA (1989) JOE E HAMLTON, CPA BARBARAB. HAMLTON, CPA NICOLE D. BROUSSARD, CPA 62SN. AVENUE 0 P.O. DRAWER SOS CROWLEY, LOUISIANA S TEU (337) S FAX: (337) June 1,2010 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Advisory Board The Grand Opera House ofthe South, Inc. We have audited the accompanying statements of financial position of The Grand Opera House of the South, Inc. (a nonprofit organization), as of December 31,2009 and 2008, and the related statements of activities, functional expenses, and cash fiows for the years then ended. These financial statements are the responsibility of the Organization's management. Our responsibility Is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained In Govemment Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also Includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, In all material respects, the financial position of The Grand Opera House of the South, Inc. as of December 31, 2009 and 2008, and the changes In its net assets and its cashflows for the years then ended In conformity with accounting principles generally accepted in the United States of America. In accordance with Govemment Auditing Sfa/idan::fs, we have also issued our report dated June 1, 2010, on our consideration of The Grand Opera House ofthe South, Inc.'s intemal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an Integral part of an audit perfomied in accordance wjth Govemment Auditing Standards and should be considered in assessing the results of our audit. Broadhurst, Hamilton & Company BROADHURST, HAMILTON & COMPANY Certified Public Accountants

4 THE GRAND OPERA HOUSE OF THE SOUTH. INC. STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER AND 2008 CURRENT ASSETS Cash Investment Inventory Donations receivable ASSETS 2009 $ 4, , $ 58, , Total Current Assets $ FIXED ASSETS Property, building, and equipment Less: accumulated depreciation Total Net Fixed Assets TOTAL ASSETS $ 5,233, $ $ $ 5,197, $ $ LIABILITIES AND NET ASSETS CURRENT LIABiUTlES Accounts payable Accmed expense Prepaid rental income Loan payable Lines of credit 8,080 12,800 4, , ,453 21, , Total Current Liabilities $ $ NET ASSETS Unrestricted Total Net Assets $ $ $ $ TOTAL LIABILITIES AND NET ASSETS $ $ The accompanying notes are an integral part of these financial statements. STATEMENT A

5 THE GRAND OPERA HOUSE OF THE SOUTH. INC. STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED DECEMBER AND 2008 UNRESTRICTED NET ASSETS PUBLIC SUPPORT: Cash contributions State grants In kind donations Total Public Support REVENUES: Gross profit on sale of prints Performances revenue Rental Income Miscellaneous Income Investment Income Total Revenues TOTAL PUBLIC SUPPORT AND REVENUES $ 55,809 $ 101, $ $ $ $ ,885 65,658 22,373 11,989 3, $ $ $ $ EXPENSES: Program activities: Performances Supporting services: Management services Fund raising services Total Supporting Services TOTAL EXPENSES $ $ $ 223,765 $ 223,813 $ $ $ $ INCREASE/(DECREASE) IN UNRESTRICTED NET ASSETS $ (279,504) $ 428,664 NET ASSETS. BEGINNING OF YEAR NET ASSETS, END OF YEAR $ $ The accompanying notes are an Integral part of these financial statements. STATEMENT B

6 THE GRAND OPERA HOUSE OF THE SOUTH. INC. STATEMENTS OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER PROGRAM ACTIVITIES Performances SUPPORTING SERVICES Fund Management Raising Services Services Total Total Expenses Accounting fees $ Advertising Artist fees Concession fees Credit card fees Depreciation Dues and subscriptions Education and seminars Equipment rental Fund raising expense Grant writer Insurance Interest expense Intemet access Licenses and permits Lobby expense Miscellaneous expense Office expense Postage and delivery Printing and reproduction Professional fees Property taxes Refreshments Repairs and maintenance Sales taxes Security Service charges Technician Telephone Travel Utilities Website 12, ,787 11, ,714 1, , ,960 6,503 $ 5,726 $ ,310 72, ,595 2, ,737 8,196 2,911 15,993 3, ,726 $ 5, , , ,000 2,595 2, ,993 _ ,549 44, , ,199 42, ,000 3,210 2, ,083 15, , TOTAL FUNCTIONAL EXPENSES $ $ $ $ The accompanying notes are an Integral part of these financial statements. STATEMENT C (Continued)

7 THE GRAND OPERA HOUSE OF THE SOUTH, INC. Crowley. Louisiana STATEMENTS OF FUNCTIONAL EXPENSES FORTHE YEAR ENDED DECEMBER Accounting fees $ Advertising Artist fees Concession fees Credit card fees Depreciation Dues and subscriptions Education and seminars Equipment rental Fund raising expense Grant writer Insurance Interest expense Intemet access Licenses and permits Lobby expense Miscellaneous expense Office expense Postage and delivery Printing and reproduction Professional fees Property taxes Refreshments Repairs and maintenance Sales taxes Security Service charges Technician Telephone Travel Utilities Website _ i PROGRAM ACTIVITIES Performances 22, ,666 40,899 Ill 6, , SUPPORTING SERVICES Fund Management Raising Services Services $ 6,0^5 3, ,455 2,425 54,458 80, ,000 2, , , ,556 $ $ Total 6,085 3, ,455 2,425 54,458 80, ,000 2,538 1,204 1,127 1, ,603 _ _ Total Expenses $ ,737 40,899 1,455 2, , , , , _ 3,588 2,007 _ 125 1,424 8, ,556 _ TOTAL FUNCTIONAL EXPENSES %^ $ 223,813 $. S $ The accompanying notes are an integral part of these financial statements. STATEMENT C (Concluded)

8 THE GRAND OPERA HOUSE OF THE SOUTH, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER AND 2008 CASH FLOWS FROM OPERATING ACTIVITIES lncrease/(decrease) in net assets Adjustments to reconcile Increase In net assets to net cash provided by operating activities: Depreciation Change In assets: (lncrease)/decrease In current assets: Inventory Donations receivable Grants receivable lncrease/(decrease) in current liabilities: Accounts payable Accrued rental income Accrued expenses $ ( ) $ (5,373) 4,500 (8.856) 38 6, Net Cash Provided by Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES? f ) : S Purchase of fixed assets Net Cash Used by Investing Activities $ f35.079) $ f ) $ (35.079) $ ( ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from line of credit and loans Net Cash Provided by Financing Activities $ $ $ $ NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS $ (54,390) $ CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR $ $ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: Interest Taxes $ $ $ $ The accompanying notes are an Integral part of these financial statements. STATEMENT D

9 THE GRAND OPERA HOUSE OF THE SOUTH. INC. Crowley. Louisiana NOTES TO FINANCIAL STATEMENTS DECEMBER AND 2008 N0TE1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Nature of Activities The Grand Opera House of the South, Inc. (Organization) is a notforprofit charitable organization. The Organization was organized to provide educational and overall awareness of the arts through sponsorship of performances, cultural events and presentations. The Organization is primarily funded through grants from various organizations and state agencies as well as contributions from the general public. B. Financial Statement Presentation The Organization's financial statements are presented in accordance with requirements established by the Financial Accounting Standards Board (FASB) as set forth in the Statemerit of Financial Accounting Standards No. 117, "Financial Statements for NotForProfit Organizations." Accordingly, the net assets ofthe organization are classified to present the following classes: (a) unrestricted net assets. (b) temporarily restricted net assets, and (c) permanently restricted net assets. Alt net assets are unrestricted. C. Revenue Recognition All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases these net asset classes. However, if a restriction Is fulfilled in the same time period In which the contribution is received, the Organization reports the support as unrestricted. Grant revenue Is recognized as it Is earned in accordance with approved contracts. D. Cash and cash equivalents For purposes ofthe statement of cash flows, the Organization considers alt Investments with original maturities of three months or less to be cash equivalents. At December 31, 2009 and investments considered to be cash equivalents on the statement of cash flows were $394 and $393. respectively. A recap of cash and cash equivalents as of December and 2008 Is as follows: Cash $ $ Investments Total Cash and Cash Equivalents $ $ E. Investments The Organization's primary purpose for investing is to earn Interest income on money that has been determined to be in excess of immediate cash needs. Investments have been recorded at cost, which approximates market value. The market value of the investments does not fluctuate. (Continued)

10 THE GRAND OPERA HOUSE OF THE SOUTH. INC. NOTES TO FINANCIAL STATEMENTS DECEMBER AND 2008 F. Receivables The Organization considers receivables to be fully collectible since the balance consists principally of payments due under governmental contracts. If amounts due become uncollectible, they will be charged to operations when the determination Is made. G. Inventories Purchased inventories of saleable goods are stated at cost. H. Property. Building, and Equipment The Organization records property, building and equipment acquisitions at cost. Donated assets are recorded at estimated value at date of the donation. The Organization's policy is to capitalize alt expenditures for major additions of property, building and equipment. Expenditures for maintenance and repairs are charged to expense as incurred. Assets are depreciated using the double declining balance method over their useful lives. Depreciation expense for the years ending December 31, 2009 and 2008, was $134,714 and $40,899. respectively. ' Income Taxes The Organization qualifies as a taxexempt organization under Section 501(c)(3) ofthe Intemal Revenue Code and, therefore has no provision for federal income taxes. In addition, the Organization has been detemiined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509(a) ofthe Code. J. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis In the statement of activities. Accordingly, certain costs have been allocated between the programs and supporting services benefitted based on estimates by management. K. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and tiabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. L. Fair Values of Financial Instruments Cash and cash equivalents carrying amounts reported In the statement of financial position approximate fair values because of the short maturities of those investments. M. Advertising Advertising costs are charged to operations when incurred. Advertising expense for the year ending December 31, 2009 and 2008 was $12,513 and $3,339, respectively. (Continued)

11 THE GRAND OPERA HOUSE OF THE SOUTH, INC. Crowley. Louisiana NOTES TO FINANCIAL STATEMENTS DECEMBER AND 2008 N. Compensated Absences The Organization does not have a formal leave policy since it does not currently have any paid employees. NOTE 2: GRANTS AWARDED AND GRANTS RECEIVABLE The GrandyOpera House of the South, Inc. was awarded several grants during the years ending December 31, 2009 and 2008 for the restoration of the Grand Opera House. For the year ending December 31, 2009, one of the three grants that were awarded was not received by year end. For the year ending December , two of the three grants that were awarded were not received by year end. These grants have several stipulations which have not been fulfilled by the Grant Opera House of the South. Inc. as of December 31, 2009 and Two of these stipulations Include a percentage of completion and a time restriction before the final payment can be Issued. Due to the fact these stipulations have not been met by year end a grant receivable was not recorded at December and Below Is a schedule of grants awarded and grants receivable at December 31, 2009 and 2008: Grants awarded Acadiana Arts Council, Inc. United States Department of the Interior National Park Service $ 10,313 $ 19, ,152 State of Louisiana Facility and Planning Control Total Grants $ $ Grants receivable Acadiana Arts Council, Inc. United States Department ofthe Interior National Park Service State of Louisiana Facility and Planning Control Total Grants Receivable (Continued)

12 THE GRAND OPERA HOUSE OF THE SOUTH, INC. 10 NOTES TO FINANCIAL STATEMENTS DECEMBER AND 2008 NOTE 3: FIXED ASSETS At December and 2008, fixed assets consisted of the following: Property and Building Equipment Total Property. Building and Equipment Less: Accumulated Depreciation 2009 $ 5,172, $ 5,233, $ 5,138, $ 5, Property, Building and Equipment. Net $ $ The Grand Opera House of the South. Inc. began restoration of the Grand Opera House in Phase I and II ofthe restoration ofthe Grand Opera House have been completed in At December and Property and Building consisted ofthe following: Property and Building $ $ 1,100,000 Restoration cost of Building Total Property and Building $ $ NOTE 4: LINES OF CREDIT At December , the Organization had two revolving lines of credit maturing In a year with a financial institution in the amount of $1,700,000 dated September 7, 2010 and $300,000 dated December 14, The Organization has made all draws on the first line of credit totaling $1.700,000 and all draws on the second line of credit totaling $300,000. At December 31, 2009, the balance of the two lines of credit Is $2,000,000 and the Interest rates are 2% above the current certificate of deposit rate. At December 31,2009, the Organization accrtjed $12,800 In interest due to the financial institution. At December 31, 2008, the Organization had two revolving lines of credit maturing in a year with a financial institution In the amount of $1,700,000 dated September 7, 2009 and $300,000 dated December 17, The Organization has made all draws on the first line of credit totaling $1,700,000 and all draws on the second line of credit totaling $300,000. At December 31, 2008, the balance of the two lines of credit Is $1,999,967 and the interest rates are 4%. At December 31,2008. the Organization accrued $21,656 in interest due to the financial institution. (Continued)

13 THE GRAND OPERA HOUSE OF THE SOUTH, INC. 11 NOTES TO FINANCIAL STATEMENTS DECEMBER AND 2008 NOTE 5: LOAN PAYABLE This Is a noninterest bearing loan from Mr. L. J. Gielen. The purpose of the loan is to provide the interim cash flow needed to support operations while waiting for the receipt of Federal and State Grant Funds. Mr. Gielen is the owner of the Corporation that originally donated the building and an avid supporter of The Grand Opera House of the South. Inc. The Intention of the Board is to repay the loan upon the collection of Federal and State Grant funds. NOTE 6: CONCENTRATION OF CREDIT RISK At various times during the year, cash and cash equivalents on deposit with one banking institution exceeded the $100,000 Insured by the Federal Deposit Insurance Corporation. Management monitors the financial condition of the financial institution on a regular basis, along with their balances In cash and cash equivalents to minimize this potential risk. The Organization received significant support from donors who are members of its board of directors or advisory board. NOTE 7: INCOME TAXES The Organization Is exempt from income taxes under Section 501 (c)(3) of the Intemal Revenue Code. NOTE 8: BOARD OF DIRECTORS' COMPENSATION The Board of Directors is a voluntary board; therefore, no compensation or per diem has been paid to any Director. NOTE 9: RELATED PARTY TRANSACTIONS During the year ending December 31, 2009, the corporation that donated the Opera House Building to The Grand Opera House of the South. Inc.. began renting the bottom floor of the Opera House Building. The rental fee Income for the year ending December was $13,500. This corporation is affiliated with the Executive Director of The Grand Opera House of the South, Inc. NOTE 10: LITIGATION AND CLAIMS The Organization is not aware of any claims, asserted or unasserted, pending as of December 31, 2009 and NOTE 11: PRIORYEAR RESTATEMENT OF NET ASSETS Net Assets for the year ending December 31, and 2008 have not been restated. (Concluded)

14 SUPPLEMENTAL INFORMATION 12

15 BROADHURST, HAMILTON & COMPANY CERTIFIED PUBLIC ACCOUNTANTS 13 ROBERTO. BROADHURST, CPA (1989) JOE E. HAMLTON, CPA BARBARAB. HAMLTON, CPA NICOLE D. BROUSSARD, CPA 62SN. AVENUE G P. O. DRAWER 606 CROWLEY, LOUISIANA S0S TEL: (337) FAX: (337) June 1,2010 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Directors and Advisory Board Grand Opera House ofthe South, Inc. We have audited the financial statements of The Grand Opera House of the South, Inc. (a nonprofit organization) as of and for the years ended December 31, 2009 and 2008, and have issued our report thereon dated June We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained In Govemment Auditing Standards, issued by the Comptroller General ofthe United States. Internal Control Over Financial Reportlnq In planning and performing our audit, we considered The Grand Opera House ofthe South Inc.'s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of The Grand Opera House of the South, Inc.'s Intemal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the organization's Intemal control over financial reporting. A deficiency in intemal control exists when the design or operation of a control does not allow management or employees, In the nonnal 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 financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of the 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 Intemal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies In Intemal control overfinanclal reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies In internal control overfinanclal reporting, described In the accompanying schedule of findings and questioned costs that we consider to be significant deficiencies in intemal control over financial reporting. We consider the deficiency described in the accompanying schedule of findings and questioned costs and Identified as item to be a significant deficiency in intemal control over financial reporting. A significant deficiency Is a deficiency, or combination of deficiencies, in intemal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

16 14 Compliance and Other Matters As part of obtaining reasonable assurance about whether The Grand Opera House of the South, Inc.'s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no Instances of noncompliance or other matters that are required to be reported under Govemment Auditing Standards. The Grand Opera House ofthe South, Inc.'s response to the findings identified In our audit is described in the accompanying schedule of findings and questioned costs. We did not audit The Grand Opera House of the South, Inc.'s response and, accordingly, we express no opinion on It. This report is intended solely for the information and use of the Board of Directors, management, others within the organization, the Louisiana Legislative Auditor, and federal awarding agencies and is not intended to be and should not be used by anyone other than these specific parties. Under Louisiana Revised Statue 24:513, this report is distributed by the Legislative Auditor as a public document, therefore its distribution Is not limited. Broadhurst, Hamilton & Company BROADHURST. HAMILTON & COMPANY Certified Public Accountants

17 OTHER SUPPLEMENTAL INFORMATION 15

18 THE GRAND OPERA HOUSE OF THE SOUTH. INC. 16 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER Section I Summary of Auditor's Report A. Financial Statements Type of auditor's report issued Unqualified Internal Control over financial reporting: Material Weakness(es) identified? No Control deficiency(ies) identified not considered to be a material weakness ' Yes Noncompliance material to financial statements noted No B. Federal Avrards Not Applicable Section II Financial Statement Findings INTERNAL CONTROLS Segregation of Duties Condition: Due to the size of the administrative staff, there is very little segregation of duties within the accounting function of the organization. Virtually all duties and operational authority resides with one individual, the executive director. Criteria: The accounting functions should be perfomied by multiple individuals to assure a proper segregation of duties. Effect: The organization is unable to assure that Its assets are properiy safeguarded. Questioned Costs: Not applicable. Recommendation: Duties and responsibilities should be evaluated continuously, to reallocate job functions, where necessary, In order to attain the most appropriate intemal control and check over net assets and funds. Some procedures that may be instituted are (1) dual signature checks and (2) the person preparing the checks should be different from the person who receives and deposits cash. These procedures will probably necessitate the acceptance of certain responsibilities by the officers of the Board of Directors. Management agreed In July 2008 to start using dual signatures on check disbursements as a means of increasing control over disbursements. Our examination has shown that dual signatures are not being used on all check disbursements. Management's Response: See Corrective Action Plan.

19 THE GRAND OPERA HOUSE OF THE SOUTH, INC. 17 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER Section III Federal Award Findings and Questioned Cost At December 31, 2009, the Grand Opera House of the South, Inc. did not meet the requirements to have a single audit in accordance with OMB Circular A133; therefore this section is not applicable. (Concluded)

20 THE GRAND OPERA HOUSE OF THE SOUTH, INC. 18 SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS DECEMBER Section I Internal Control and Compliance Material to the Basic Financial Statements Intemal Control No material weaknesses were noted during the audit of the basic financial statements for the year ended December 31, Segregation of Duties. Compliance Condition: Due to the size of the administrative staff, there Is very little segregation of duties within the accounting function of the organization. Virtually all duties and operational authority resides with one individual, the executive director. Status: The status of this item is curtently unresolved. See No compliance findings material to the basic financial statements were noted during the audit for the year ended December 31, Section II Internal Control and Compliance Material to Federal Awards At December 31, 2008, the Grand Opera House of the South, Inc. did not meet the requirements to have a single audit in accordance with OMB Circular A133; therefore this section Is not applicable. Section III Management Letter A management letter was not issued in connection with the audit of the basic financial statements for the year ended December 31,2008.

21 THE GRAND OPERA HOUSE OF THE SOUTH, INC. 19 MANAGEMENT'S CORRECTIVE ACTION PLAN DECEMBER Segregation of Duties Due to limited staff, duties are segregated to whereby the Executive Director enters data and the Board of Directors reviews and approves the transactions. These monitoring procedures are performed by the Board of Directors during their monthly board meetings. The financial statement Is presented by the Executive Director at each board meeting for review and approval. The Board discusses expenditures and receipts for the month, questioning any unusual Items. Many of the upcoming expenditures are discussed and approved at the meetings. The Board of Directors reviews all recommendations made to determine if it Is practical to Implement them. The Board will make a stronger effort to Insure that the policy of using dual signature checks Is adhered to.