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The Board of Directors of the American Philological Association met via conference call on April 30, 2013. Those present were Prof. Denis Feeney, President, Dr. Adam D. Blistein, Profs. Joseph Farrell, Sara Forsdyke, Bruce W. Frier, Kathryn J. Gutzwiller, Jeffrey Henderson, Ralph J. Hexter, John F. Miller, Kathryn A. Morgan, and Matthew Roller. Also present by invitation was the Association’s auditor, Mr. Ronald Scaramuzza, of Briggs, Bunting & Dougherty. Those absent were Profs. Ronnie Ancona, Michael Gagarin, Mary-Kay Gamel, Jonathan M. Hall, Sarah Iles Johnston, David H. Porter, and Ralph M. Rosen.

Prof. Feeney called the meeting to order at 2:00 p.m. The only agenda item for the call was a discussion with the auditor of the Association’s financial statements for the fiscal year that had ended on June 30, 2012. In advance of the call the Directors had received copoies of the statements as well as the Briggs firm’s “professional standards letter” outlining the scope of its responsibilities.

Mr. Scaramuzza began his presentation by stating that the firm’s report was unqualified which meant that the firm believe that the statements had no material misstatements. He also noted that the statements reflected the Association’s financial condition on a particular date, and results might have been different – particularly with regard to the APA’s investments – if its fiscal year had ended on a different date.

The Association’s total assets had decreased by about $100,000 during 2012, and its unrestricted assets, by about $150,000. The latter change meant that unrestricted assets as of June 30, 2012, were sufficient to cover 15 months of operations based on the APA’s spending patterns at that time as compared to 17 months as of June 30, 2011. Unrealized losses on the Association’s investments during the year were almost entirely responsible for the decreases.

Mr. Scaramuzza noted that almost all of the Association’s investments consisted of mutual funds, and the financial statements treated as investment income capital appreciation or depreciation of these funds plus dividends and capital gain distributions. In 2011 investment income had added almost $1 million to the Association’s assets, but in 2012, the APA had incurred a loss of almost $200,000 from this source.

Mr. Scaramuzza noted that the statement treated fellowships awarded by the Association as paid in the year in which they were offered, not necessarily in the year when funds were actually paid out. He also described how membership dues were allocated to two separate fiscal years because dues were based on a calendar year. As part of the Gateway Campaign, the Association had received NEH challenge grant funds before it had met all matching requirements. During the 2012 fiscal year the amount not yet earned was treated as a “refundable advance”. Since the Association had met all challenge grant requirements during the 2013 fiscal year, this amount would be treated as grant income in that year’s statement.

The Association’s Statement of Activities gave two figures for changes in net assets, one that excluded the impact of investment income and one that included it. The Association had adopted this method of presentation both because it had much less control over investment results than any other revenue or expense items, and because it illustrated the extent to which the Association depended on investment income. In the statements under review, the figures for unrestricted assets excluding investment income showed very little change between 2011 and 2012; those including investment income, significant changes, because of the different investment results for the two years that had already been described.

Revenues for 2012 were about $50,000 higher than for 2011, largely because of a larger annual meeting. Total expenses were about the same for the two years, and the percentage of expenses used for “supporting services” (membership management, fund raising, and general administration) was the same (21%) in both years.

The Board then reviewed the types of expenses incurred during the fiscal year. Salaries represented 42% of all expenses in both 2011 and 2012. AIA’s share of annual meeting revenue was higher in 2012 because revenue had also been higher. Once the impact of salaries allocated to the annual meeting was considered, this activity operated at a loss, but it came closer to breaking even when attendance was higher. Professional and management fees were lower in 2012 than in the previous year because of reduced activity in a Mellon Foundation-funded project to add features to the online version of L’Année philologique.

Mr. Scaramuzza then reviewed several of the notes appended to the statements. The Association had not changed accounting policies during the year. During the year the APA had signed a new lease for its office space, and under the terms of this document, incurred a liability for rent payments at least through 2014 and possibly through 2016. The auditors knew of no events that had taken place between July 1, and November 30, 2012, that required additional disclosure on the statements.

In the “professional standards letter” that accompanied the statements the auditors had described the conditions under which they had performed their work. Mr. Scaramuzza reminded the Board that the financial statements belonged to the Association; the auditors’ responsibility was to obtain reasonable assurance that they were accurate, and there remained the possibility that they had not discovered some errors. The auditors had made some minor corrections to initial statements prepared by staff who had provided good cooperation. Estimates played an important part in the statements, particularly the allocation of certain expenses to different Association activities.

The auditors had not issued any additional letters to the Board to describe significant deficiencies or material weaknesses in the Association’s financial operations, but Mr. Scaramuzza noted that an organization with such a small staff could not easily achieve an optimal segregation of duties. In those circumstances, it was important that the Financial Trustees received and carefully reviewed bank and investment statements.

Mr. Scaramuzza then disconnected from the call. Prof. Frier noted the significant improvement in financial markets since the beginning of the 2013 fiscal year. The next year’s statement was therefore likely to show positive figures for investment income. He invited Directors to suggest topics for the Finance Committee to discuss when it met during the next week.

There being no further business, the meeting was adjourned at 3:00 p.m.