2002 AUDITED USCF FINANCIALS
The long delayed audited financials for USCF's 2001-2002 fiscal year have finally been released, after an unexpected delay of eight months. Some of the highlights follow. The federation is expected to soon post a full report at its website, www.uschess.org.
The federation's balance sheet as of 5/31/02 showed $865,221 in Operating Assets and $668,996 in Life Membership Assets, for a total of $1,534.217. Liabilities totaled $2,361,101, leaving a total deficit of ($826,884). However, these liabilities included $1,310,857 in "Deferred Revenue- Life and Sustaining Memberships," revenue deferred over a 20 year period to provide for services to life and sustaining members. While erasing this debt is an important long term USCF goal, the federation's obligation to its life and sustaining members poses no current threat to its survival.
The $826,884 deficit of 5/02 was $183,989 greater than the deficit of $642,895 previously reported for 5/01. However, the auditors restated the 5/01 deficit as $911,248 due to unrecorded accounts payable, deferred revenue, and accrued liabilities that had previously been incorrectly reported. So the 2001-2002 fiscal year actually showed an increase in reported net assets of $84,364.
The auditor's report from Nugent & Haeussler, P.C. includes the following statements:
"In our opinion, the financial statements referred to above present fairly, in all material aspects, the financial position of the United States of America Chess Federation as of May 31, 2002 and the changes in its net assets and its cash flows for the the year then ended in conformity with generally accepted accounting principles.
As discussed in Note 7 to the financial statements, the Federation has changed its method of accounting for life and sustaining membership deferred revenue.
As discussed in Note 12 to the financial statements, certain errors resulting in an understatement of previously reported expenses in prior years have been discovered by the Federation's management during the current year. Accordingly, the 2002 financial statements have been restated and and adjustment has been made to net assets as of June 1, 2001."
Note 7 states the following:
DEFERRED REVENUE- LIFE AND SUSTAINING MEMBERSHIPS.
As of June 1, 2001, the Federation began to defer dues that it received from life and sustaining members over 20 years from the time they become life members. In prior years, the Federation recorded a liability based on the actuarially determined future cost to provide services to these members. This method was not in conformity with Generally Accepted Accounting Principles. Previously, the Federation's record keeping system did not provide sufficient data to accurately record this deferred revenue. Accordingly, the cumulative impact of this new treatment is being recorded as a change in accounting principle.
This change in accounting will better match dues revenue to expenses as they are incurred. This change resulted in a cumulative effect on prior years of $659,908. The following is a summary of deferred life and sustaining membership income activity for the year ended May 31, 2002:
Life and Sustaining Membership Liability-
June 1,
2001..............................................................................................................
$2,002,510
Cumulative effect of Accounting
Change............................................................
(659,908)
Beginning Balance- Deferred Revenue Life & Sustaining Memberships..........
1,342,602
Membership Dues
Received...................................................................................
124,355
Amount Recorded as
Income.................................................................................
(156,100)
Ending Balance- Deferred Revenue Life and Sustaining Memberships...........
$1,310,857
Note 12 states the following:
PRIOR PERIOD ADJUSTMENTS.
Certain discrepancies, resulting in the understatement of the reported net loss in the Federation's previously issued financial statements, have been corrected in the current year. This resulted in the following changes to the net assets as of June 1, 2001:
Net Deficit
As previously reported, June 1,
2001...................................... (642,895)
Adjustments:
Unrecorded accounts payable, deferred revenue, and
accrued
liabilities................................................................
(194,286)
Net other
adjustments........................................................
(74,067)
AS RESTATED, June 1, 2001................................................ (911,248)