Page 29 - November report 2023

AUDIT & RISK COMMITTEE MINUTES (DRAFT) (2) B. John Chenoweth explained the Draft 990-T.
We had a loss of $160,469 for 2022 for Unrelated Trade or Business Income as shown on Part 11, line 18. Our NOL is now at $329,682 for future years.
No tax is due for 2022 and there is an overpayment of $20,000 which we will apply to 2023 estimate.
C. John Chenoweth explained the eight draft state returns.
1) Florida - no payment is required.
2) Illinois - no payment is required.
3) Minnesota - a $50.00 payment will be made for the 2022 Annual Report. Dick questioned the amount which has doubled. John will check into this as it may include a $25 penalty for late filing.
4) New York - no payment is required.
5) North Carolina - no payment is required. 6) Utah - no payment is required.
7) Virginia - no payment is required.
8) West Virginia - no payment is required.
3. 2022 Draft Audit
Walt Maxwell, our new partner in charge replacing John Templeton at our request and starting his 2nd year, began by making some general comments about the audit which started in June and has been reviewed by staff and outside consultants from 8:45 to 9:45 AM. He began with the 2022 Audit by saying it was an unqualified opinion with no exceptions noted. It is on a modified cash basis rather than GAAP basis.
On Page 11, Walt noted there are 3 levels of Fair Value Measurement. Hugh questioned in Note 4 the sharp change in foreign equities from level 2 to level 3 and level 1 between 2021 and 2022. Jonathan responded after the meeting “You may choose to send a condensed version of that to the committee member that inquired about the level 3 balances at year-end. I believe the biggest piece of that increase to level 3 is indeed the addition of the new Baxter Street Offshore Fund of $9.7M at year-end. This fund was opened by using $SM each from Silchester International Value Equity Trust and Vanguard Developed Index Fund ($10M total). This $10M of non-U.S. equities was valued at level 1, but Baxter is considered level 3 per their audited financial statements. This would explain most of the movement from level 1 to 3 within the Non-U.S. Developed Equity category. This would not be considered a “reclassification” of the financial statements.”
On Pages 15 and 16 Buzz questioned the explanation of Deferred compensation arrangement. It was confusing to him that two numbers mentioned did not agree. It showed the deferred compensation payable amounted to $294,658. Later it indicated in future years we would pay out $309,391. Why didn’t those numbers agree? Tommy explained that under Malcolm’s Deferred compensation arrangement he earns or loses exactly what the Foundation earns or loses. In 2022 the Foundation lost 13.15% which equated to a loss of $72,344.30 in the Deferred compensation arrangement. In addition to that, we made a payment in December 2022 of $183,145, see attached schedule. Going forward in 2023 and 2024 we are now assuming an annual return of 7.76% which would result in payouts of $147,329 and $162,062. Amounts will be adjusted for attached schedule.
On Page 17, Note 10 is a description of the pandemic and its potential threat.
Buzz asked if the auditors were able to work from QuickBooks for 2022 rather than from Dick’s spreadsheets. Jonathan confirmed that they were.
The Audit Committee approved the 2022 Audit with suggested revisions and instructed Templeton to finalize the audit with exceptions noted.
Page 27 HORIZONS