Committee-Minutes-Audit-6-11-07

Committee-Minutes-Audit-6-11-07

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1201 New York Avenue, N.W. · # 600 · Washington, D.C. · 20005-3931 Tel. 202-289-3100 · Fax 202-289-3174 · www.ahla.com MINUTES OF AUDIT, CERTIFICATION & CREDENTIALS COMMITTEE MEETING NASHVILLE, TENNESSEE, LOEWS VANDERBILT HOTEL THMONDAY, JUNE 11 , 2007 ATTENDEES ABSENT Gene Rupnik (Chair) Gregory A. Bryan Don Johnson Thomas Corcoran, Jr. Ilene D. Kamsler Richard C. Nelson Joseph Kane Gerald W. Petitt Joe Martin Robert Slater Montine McNulty Paul Riedel AH&LA STAFFRobert Steele, III Pamela Inman Joori Jeon GUESTS Roy Kennington Banks Brown Joseph McInerney Drew Smith Min Zhao I. CALL TO ORDER Meeting was called to order by Chair Gene Rupnik at 8:00 a.m. II. APPROVAL OF MINUTES It was moved, seconded, and unanimously. thVoted: to approve the minutes of the November 10 , 2006 meeting held in New York City. III. AH&LA CEO REPORT President and CEO Joseph McInerney discussed the general affairs of AH&LA and its affiliates. He pointed out that 2007 has started out to be a most positive and productive year for the three organizations. In the first five months of 2007, their significant accomplishments are as the follows: The total rooms membership in partner and direct member states has increased by 2.4 % through May 2007. AH&LA currently has 8,987 properties with 1,349,665 rooms; which is slightly ahead of its objectives. Three additional sales people were hired to sell membership in the direct member and ...

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1201 New York Avenue, N.W.·# 600·Washington, D.C.·200053931 Tel. 2022893100·Fax 2022893174·www.ahla.com
MINUTES OF AUDIT, CERTIFICATION & CREDENTIALS COMMITTEE MEETING NASHVILLE, TENNESSEE, LOEWS VANDERBILT HOTEL TH MONDAY, JUNE 11, 2007 ATTENDEES ABSENT Gene Rupnik (Chair)Gregory A. Bryan Don JohnsonThomas Corcoran, Jr. Ilene D. KamslerRichard C. Nelson Joseph KaneGerald W. Petitt Joe MartinRobert Slater Montine McNulty Paul RiedelAH&LA STAFF Robert Steele, III  PamelaInman GUESTSJoori Jeon  RoyKennington Banks BrownJoseph McInerney Drew SmithMin Zhao I.CALL TO ORDER Meeting was called to order by Chair Gene Rupnik at 8:00 a.m. II.APPROVAL OF MINUTES It was moved, seconded, and unanimously. th Voted, 2006 meeting held in New York City.: to approve the minutes of the November 10 III.AH&LA CEO REPORT President and CEO Joseph McInerney discussed the general affairs of AH&LA and its affiliates.
He pointed out that 2007 has started out to be a most positive and productive year for the three organizations.In the first five months of 2007, their significant accomplishments are as the follows: The total rooms membership in partner and direct member states has increased by 2.4 % through May 2007.AH&LA currently has 8,987 properties with 1,349,665 rooms; which is slightly ahead of its objectives.Three additional sales people were hired to sell membership in the direct member and partner states.Ten states have signed the membership sales agreements. A membership campaign is being developed to emphasize the importance of membership in AH&LA and partner state associations.AH&LA’s officers or staff have attended 15 partner state meetings, 29 industry and other association events, and five school functions.AH&LA has enhanced its visibility in the media.In addition, AH&LA is forming three additional committees. AH&LA held three very successful events: the American Lodging Investment Summit, which raised over one million dollars for the Educational Institute and the Foundation; a Dinner Tribute honoring J. W. Marriott, Jr.; and the Legislative Action Summit.AH&LA is assisting the Hispanic Hotel Owners Association in developing benefits for its members through the use of the Educational Institute products and exposure at AH&LA events.AH&LA is entering into a partnership with Esperanza USA and the U.S. Department of Labor for a program designed to respond to the employment and career needs of the Latino Community. AH&LA’s Government Affairs staff has made a significant impact on Capitol Hill and with the Administration.They have deepened AH&LA’s involvement with coalitions in order to more effectively address issues concerning the industry.The HotelPAC and the Legislative Readiness Fund have raised $378,147 this year and the AH&LA Legislative Readiness Fund has raised $245,000. IV.AH&LA AND AFFILIATES FINANCIAL REPORTS CFO Joori Jeon presented the Committee with AH&LA and its affiliates’ audited financial reports for 2006 as well as their 2007 financial results and forecasts. She stated that, in 2006, AH&LA achieved outstanding financial performance despite a shortfall in its dues revenues of $300K.The net income from conventions and conferences exceeded the budget.Other nondues revenues, including royalties, investment earnings and sublet income also exceeded the budget.Before unrealized gains on investments, AH&LA generated a net income of $270K compared to $112K budgeted.In 2006, AH&LA reduced expenses to offset the shortfall in its dues revenue.Total savings of $184K or 2.8% was achieved. th Due to timing factor, for the first four months ended April 30, 2007, AH&LA realized a net income of $213K compared to a budgeted loss of $110K.For 2007, AH&LA is projecting to incur a loss of $50K (compared to a loss of $110K in the budget) which is attributed mainly to the addition of four sales people.For 2007, dues revenue is forecasted to be $5.16M; which is slightly below the budget.AH&LA will generate total net income of $1.13M from conventions and conferences.Total operating expenses are forecasted at $6.88M; which is slightly below the budget.AH&LA has also strengthened its balance sheet position.
In 2006, before scholarships and research grants, the Foundation realized a net income of $1.85M compared to $328K budgeted.It had strong investment performance in of $1.26M over the budget.Proceeds from ALIS via AH&LA were $58K ahead of the budget.Its shortfall in fundraising revenue was due to the postponement of the Tribute Dinner.The Foundation’s overall operating expenses were on budget.It awarded $880K in scholarships and research grants. For 2007, the Foundation will realize a net income of $734K versus the $543k budgeted.Its investment earnings are forecasted to be $640K.Proceeds from ALIS exceeded the budget by $175K.$225K net income will be generated from the Tribute Diner, the Golf Classic and the Silent Auction events.One million dollars will be awarded in scholarships and research grants. In 2006, the Educational Institute generated a net income of $630K compared to $123K budgeted. Courserevenues exceeded the budget while text revenues fell below due to reclassification. Video,certification, seminars and special contract revenues also did not meet the budget.Total operating expenses amounted to eight million dollars; which was 7.8% below the budget.Significant savings were due to vacant positions and lower marketing expenditures. Through April 2007, the Educational Institute has incurred a net loss of $336K versus $521K budgeted. Forthe full year, it is expected to generate net income of $360K versus $183K budgeted. Totalforecasted revenues are $12.69M; which is slightly over the budget.The training contract in Egypt is valued at one million dollars.The Unlimited Training Library is used by 1,050 properties and generating significant revenues.The online testing for certification is set up and running.Total operating expenses are forecasted to be $8.5M, which is $250K or 2.6% below the budget due to less hiring and departmental reorganization. V.PARTNER STATE ASSOCIATION REPORT Pam Inman reviewed the list of State Associations which are delinquent in their payments as st of May 31, 2007. TheLouisianaHotel & Lodging Association has outstanding balances of $8,092 for its fourth quarter of 2006 dues. TheNew HampshireLodging & Restaurant Association has its first quarter 2007 dues outstanding for $6,244. TheNew JerseyHotel & Lodging Association has outstanding dues of $27,290 ($13,311 for the fourth quarter of 2006 and $13,979 for the first quarter of 2007). TheUtahNoHotel & Lodging Association has total outstanding dues of $44,933. remittances have been made for 2004 third and fourth quarter dues – totaling $12,273.The association still owes $16,365 for the second, third and fourth quarters 2005 dues.UH&LA also owes 2006 second and forth quarters’ dues for $16,295.However, it paid for its first quarter 2007 dues. It was moved, seconded, and unanimously.
Voted:the Louisiana Hotel & Lodging Association; the New Hampshire Lodging & Restaurant Association; and the New Jersey Hotel & Lodging Association are not eligible to vote. The Committee will not restrict the Utah Hotel & Lodging Association’s voting rights, since it is working with AH&LA to manage its affairs and resolve its outstanding dues. The Committee reminds us that, according to AH&LA’s bylaws, partnership agreements with a state lodging association may be terminated if a PSA is delinquent for more than 90 days in remitting to AH&LA dues collected for AH&LA. VI.AUDIT UPDATE Drew Smith of Larson & Allen briefed the Committee about the 2006 audit and new audit standards. Hepointed out the necessity to have management take more responsibilities for compiling external financial statements and maintaining internal control system.The Committee directs the staff to adopt the appropriate new accounting standards. VII.EXECUTIVE SESSION WITH LARSON & ALLEN The Committee went into executive session with Drew Smith of Larson & Allen. VIII.OLD BUSINESS There was no old business. IX.NEW BUSINESS The Committee recommends that the Chairman, Vice Chairman, Secretary/Treasurer and Past Chairman of AH&LA be voting members of the Audit, Certification and Credentials Committee. X.NEXT MEETING Tentatively scheduled for November 2007. XI.ADJOURNMENT The meeting was adjourned at 11:00 a.m. Respectfully submitted,
Joori Jeon Executive Vice President & Chief Financial Officer
AH&LA AUDIT CERTIFICATION & CREDENTIALS COMMITTEE REPORT TO THE AH&LA BOARD OF DIRECTORS JUNE 12, 2007 – NASHVILLE, TENNESSEE Good afternoon, my name is Gene Rupnik, Chairman of the Audit Certification & Credentials
Committee. Thefollowing comments and recommendations are from our meeting held on June th 11 ,2007. Joe McInerney provided the Committee with updates on the affairs of AH&LA, the Foundation, and the Educational Institute.He informed the Committee of AH&LA’s efforts to increase and
retain membership.Governmental Affairs’ activities and the involvement of coalitions to
enhance greater visibility for our industry were discussed.He also briefed the Committee on AH&LA’s ideas to strengthen and promote the industry’s multicultural and diversity programs. Joori Jeon presented the Committee with AH&LA and its affiliates’ audited financial reports for the year ended December 31, 2006 along with its respective 2007 forecast.In 2006, all three
organizations outperformed their budgets and forecasts.For 2007, AH&LA, the Foundation and the Educational Institute are forecasted to have positive financial results. Drew Smith of Larson Allen briefed the Committee about the 2006 audited financial reports.He expressed the necessity to have management take more responsibilities for compiling external
financial statements and enhancing internal control system in order to meet the requirements of the new audit standards. The Committee reviewed the “Partnership State Association Credentials Report” by Pam Inman.
The following states are ineligible to vote at the Board Meeting due to delinquencies or timing of submitting AH&LA dues: Louisiana Hotel & Lodging Association has outstanding balances of $8,393 for its first quarter of 2007 dues.
New Hampshire Lodging & Restaurant Association has its first quarter 2007 dues outstanding for $6,244. New Jersey Hotel & Lodging Association has outstanding dues of $27,290 ($13,311 for the fourth quarter of 2006 and $13,979 for the first quarter of 2007). Utah Hotel & Lodging Association has paid its first quarter dues and is working with AH&LA to
manage its affairs and resolve its outstanding dues.Therefore, Utah is eligible to vote at the Board Meeting. The Committee would like to point out that, according to AH&LA’s bylaws, partnership agreements with a state lodging association may be terminated if a PSA is delinquent for more than 90 days in remitting to AH&LA dues collected for AH&LA.
The Committee hereby recommends that the Chairman, Vice Chairman, Secretary/Treasurer and
Past Chairman of AH&LA be voting members of the Audit, Certification and Credentials Committee. Mr. Chairman, this concludes my report.We now need a motion and a vote of the board to accept the recommendations of this report. Thank you.