Highlight of Significant Accounting Policies
DESCRIPTION OF FUNDS
To ensure observance of limitations and restrictions placed on the use of resources available to the Guild, the accounts of the Guild are maintained on the accrual basis in accordance with the AICPA's Audit and Accounting Guide, Not-for-Profit Organizations. Fund accounting provides that resources for various purposes are classified for accounting and reporting purposes into net asset categories established according to their nature and purposes.
The assets, liabilities, and net assets of the Guild are reported in five self-balancing fund groups as follows:
Guild Operations Fund, which includes undesignated and designated resources, represents the portion of the funds that are available for Guild operations and Member services.
Theater Operations Fund represents funds restricted for use in activities associated with the Film Society for members' use and theater operations for non-members' use.
The Strike Fund was created in 1986 to provide loans and/or grants as determined by the Board of Directors to members adversely affected by a strike.
The Year 2000 and Good and Welfare Funds were created in October 1992 to provide special purpose funds for Guild operations and members.
FUNDS HELD IN TRUST
Funds held in trust are comprised of member payments, the client trust account, foreign levies, and undeliverable monies.
Member payments include monies received from production companies as a result of the use of excerpts and are to be paid to Guild members.
The client trust account represents funds received by the Guild on behalf of members as a result of legal proceedings and enforcement of the collective bargaining agreement initiated by the Guild.
Foreign levies monies are received from various European countries, and are due Guild members as a result of the exhibition of productions on foreign television. Currently, the Guild is holding monies, on behalf of members, from Argentina, Austria, Denmark, France, Germany, Mexico, Netherlands, Spain and Switzerland.
Undeliverable funds include: 1) checks and other monies due writers that are returned by the postal service because the either the writer is unknown at the address on file or the writer moved without leaving a forwarding address, and 2) foreign levies monies still held by the Guild more than seven years after all reasonable efforts to identify and locate the recipients of the funds are exhausted. In accordance with Guild Constitution, Article VIII, ¶ B.4, during the fiscal year ended March 31, 2003, the Board of Directors approved the policy of transferring all funds undeliverable after seven years into the Guild's treasury to defray the costs of Guild operations. The Constitutional obligation to pay funds from the Guild treasury to the recipients should they later be identified and located will apply. The Board also approved the collection of an administrative fee on foreign levy funds to be received in the future, as well as on foreign levy funds previously received but not yet distributed. The fee will be used to offset the expenses of negotiating and administering the foreign levies program.
CONCENTRATION OF CREDIT RISK
The Guild holds investments primarily in the form of marketable debt securities, equity mutual fund and money market funds. The Guild is exposed to credit risk for the amount of the investments in the event of nonperformance by other parties to the investment transactions. To date, the Guild has not incurred losses related to these investments and does not anticipate nonperformance by other parties.
The Guild places its cash with high quality financial institutions and in corporate paper. At March 31, 2003, the Guild has bank deposits in excess of federally insured limits. To date, the Guild has not incurred losses related to these deposits.
The composition of the investment portfolio as of March 31, 2003 is diversified, with holdings primarily in U.S. Agencies and government-backed securities and no other security or group of securities from the same issuer in excess of 10% of the Guild's investment portfolio.
FINANCIAL CORE STATUS ("FCS") NON-MEMBERSHIP DUES OBLIGATIONS
The law permits the Guild to assess FCS non-member dues up to an amount equal to its regular dues. During the fiscal year ended March 31, 2003, the Guild has set the FCS non-membership dues at 4.3% less than the regular dues. This reflects the Guild's dollar amount that corresponds to its nonchargeable expenditures.
During the fiscal year ending March 31, 2004, the Guild has set the FCS non-membership dues at 4.3% less than the regular dues. This reflects the Guild's estimate of the dollar amount that will correspond to its nonchargeable expenditures. Upon review of the chargeable and nonchargeable expenditures, after this fiscal year ends, a FCS non-member may be entitled to an adjustment of his or her FCS non-member dues.
LINE OF CREDIT
The Guild has a $4,000,000 line of credit with a bank, which bears interest at the bank's prime rate and expires on June 30, 2004. Under the terms of the line of credit, the Guild must maintain liquid assets of at least $2,000,000 in unrestricted cash or investment accounts. As of March 31, 2003, the Guild does not have any borrowings outstanding against the line of credit.