2010-2009 June 30 The Florida Bar and Subsidiaries, Financial Statements and Supplemental...

8/11/2019 2010-2009 June 30 The Florida Bar and Subsidiaries, Financial Statements and Supplemental Information

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The Florida Bar and Subsidiaries

Financial Statements and

Supplemental

Information

June 30, 2010 and 2009


2/54

The Florida

Bar

and

Subsidiaries

Table of Contents

June 30,2010 and 2009

IndependentAuditors Report

1 2

Management s Discussion and Analysis 3-7

Financial Statements

Consolidated Statements of Net Assets

8

Consolidated Statements of Revenues, Expenses, and Changes in Net Assets 9

Consolidated Statements of Cash Flows

10 -

11

Notes to Consolidated Financial Statements

12

- 27

Supplementary Information

Consolidating Statement of Net Assets as of June 30,2010. 28 - 29

Consolidating Statement of Revenues, Expenses and Changes

in Net Assets for the year ended June

30

2010 30

Consolidating Statement of Cash Flows for the year ended

June

30

2010. 31 - 32

General Fund Schedule of Budgeted and Actual Revenues and Expenses

for the year ended June 30 2010. 33 - 41

General Fund Reconciliation of Revenues and Expenses on a Budgetary Basis to

Totals Per the Consolidating Statement of Revenues, Expenses

and Changes in Net Assets for the year ended June

30

2010. 42

Clients Security Fund Schedule of Budgeted and Actual Revenues and

Expenses for the year ended June 30,2010. 43

Certification Fund Schedule of Budgeted and Actual Revenues and Expenses

for the year ended June

30

2010. 44

Sections Fund Schedule of Budgeted and Actual Revenues and Expenses for the

year ended June 30,2010. 45 - 46

Other Reports

Report on Internal Control Over Financial Reporting and On Compliance and

Other Matters Based on an Audit of Financial Statements Performed in

Accordance with

Government uditing Standards

47 -48


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Carr Riggs Ingram. U

1113

Mahan

Drive

Tallahassee. Fl32308

850) 878-8177

850) 878-2344 fax)

www.cncpa.com

Independent Auditors Report

Board of Governors

The Florida Bar

Tallahassee, Florida

We have audited the accompanying consolidated financial statements of the business

type activities of The Florida Bar and Subsidiaries (The Florida Bar) as of and for the

years ended June 30, 2010 and 2009, which comprise The Florida Bar s basic financial

statements as listed in the table of contents. These financial statements are the

responsibility o The Florida Bar s management. Our responsibility is to express

an

opinion

on

these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the

United States of America and the standards applicable to financial audits contained in

Government Auditing Standards

issued by the Comptroller General of the United States.

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement.

An

audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audits provide a reasonable

basis for our opinion.

In

our opinion, the consolidated financial statements referred to above present fairly, in all

material respects, the financial position of the business-type activities of The Florida Bar

and Subsidiaries as of June 30, 2010 and 2009, and the changes in financial position and

cash flows thereof for the years then ended in conformity with accounting principles

generally accepted

in

the United States of America.

In

accordance with

Government Auditing Standards

we have also issued our report dated

November

3,

2010, on our consideration of The Florida Bar and Subsidiaries internal

control over financial reporting and on our tests

o

its compliance with certain provisions

o

laws, regulations, contracts, and grant agreements and other matters. The purpose of

that report is to describe the scope of our testing

o

internal control over financial reporting

and compliance and the results of that testing, and not to provide an opinion on the

internal control over financial reporting or on compliance. That report is an integral part of

an audit performed in accordance with Government Auditing Standards and should e

considered in assessing the results of our audit.


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Board

o

Governors

The Florida Bar

Page 2

The management s discussion and analysis on pages 3 through 7 is not a required part

o

the

basic financial statements but is supplementary information required by accounting principles

generally accepted in the United States

o

America. We have applied certain limited procedures,

which consisted principally

o

inquiries

o

management regarding the methods

o

measurement

and presentation

o

the required supplementary information. However, we did not audit the

information and express no opinion on it.

Our audits were performed for the purpose o forming an opinion on the consolidated financial

statements that collectively comprise The Florida Bar and Subsidiaries basic financial

statements. The supplementary information as listed in the table

o

contents, is presented for

the purposes o additional analysis and is not a required part o the basic consolidated financial

statements

o

The Florida Bar. Such information has been subjected to the auditing procedures

applied in the audit o the basic consolidated financial statements and, in our opinion, is fairly

stated in all material respects in relation to the basic consolidated financial statements taken as

a whole.

~ / ~ . J ~ / L .

Tallahassee, Florida

November 3 2010


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Management s

Discussion

and

Analysis


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Management s Discussion and Analysis

The Florida Bar is the statewide professional and regulatory organization for lawyers with more

than 89,000 members. Headquartered in Tallahassee, The Florida Bar is a unified state bar by

rule of the Supreme Court of Florida. Membership in The Florida Bar is a necessary component of

Supreme Court of Florida regulation

of

all lawyers licensed to practice law in Florida (Article IV

Section 15, Florida Constitution). The foundation for the organization is built on a philosophy of

equity and ethics. Through its programs and services, the Bar supports this philosophy with four

pillars that function as the mission

of

The Florida Bar: providing public service, protecting rights,

promoting professionalism and pursuing justice.

Overview

of

the Financial Statements

This annual report consists of three parts - management's discussion and analysis, the basic

consolidated financial statements, and an optional section that presents supplementary

information. The supplementary information includes consolidating statements and comparisons

of

actual results to budgeted results. The basic consolidated financial statements present the

consolidated financial position, results

of

operations, and cash flows

of

the Florida Bar and its

subsidiaries. The Florida Bar performs two overall activities as the statewide regulator

of

the

practice of law and the professional association

of

lawyers. Its activities are accounted for as a

proprietary type enterprise fund because it charges fees to provide its services similar to a

business enterprise.

The Statement

of

Net Assets includes all of The Florida Bar's assets and liabilities. The net assets

are the difference between The Florida Bar's assets and liabilities. The Statement of Revenues,

Expenses, and Changes in Net Assets include all of The Florida Bar's revenues and expenses

regardless

of

when the cash is received

or

paid. The change in net assets is one way to measure

The Florida Bar's financial health or position. A Statement of Cash Flows provides additional

information regarding the change in The Florida Bar's cash position.

Summary

of

Operations

The Florida Bar adopted the provisions

of

Governmental Accounting Standards Board (GASB)

Statement

No.

51, ccounting and Financial Reporting for Intangible ssets as

of

July

1

2009.

This statement requires all intangible assets to be capitalized in the statement

of

net assets. The

Florida Bar possessed software purchased from external sources that had not been previously

capitalized. Capital assets, operating expenses and net assets have been restated for all periods

presented to reflect the change in accounting from the adoption of this standard.

At June 30, 2010 and 2009, The Florida Bar had $64,135,939 and $55,270,769 (as restated),

respectively in total assets. f this amount $53,623,921 and $45,425,002 was held in cash and

investments and $7,564,589 and $7,226,645 (as restated) was invested in capital assets at June

30, 2010 and 2009, respectively. The primary liability

at

June 30, 2010 and 2009 was deferred

revenue

of

$10,981

981

and $7,670,851, respectively, resulting from advance collection

of

member

fees and prepayments for Continuing Legal Education registrations. Our net assets were

$44,428,657 and $39,248,358 (as restated) at June

30 2010

and 2009, respectively.

These amounts are in line with the prior year's balances after restatement given the current

changes in net assets. The original operating budgets for the General Fund (excluding the wholly

owned subsidiary and controlled entities) for the years ended June

30 2010

and 2009 approved by

the Florida Supreme Court, planned on an increase in net assets

of

$21,760 and $94,033,

respectively. After Board

of

Governor amendments, the planned increase became $1,484,740 and

See the Independent Auditors' Report.

-


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The Florida

Bar

and Subsidiaries

Management's Discussion and Analysis

1,287,840, respectively. General Fund actual operations resulted n a change n net assets of

6,489,783 and ( 1,527,857), respectively. The increase n net assets resulted primarily from the

effects of a more favorable investment climate during the past fiscal year and decreases n

operating costs of the various departments

of

The Florida Bar. Included

n

the supplemental

information s an actual to budget comparison for each department.

For the year ended June 30, 2010 and 2009, The Florida Bar's budget funded most departments at

a continuation level.

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF NET ASSETS

2009

une

30

2010

(as restated)

Change

Assets

Current assets

54,878,359 46,351,133 8,527,226

Capital assets, net

7,564,589

7,226,645

337,944

Restricted assets 1,692,991 1,692,991

Total assets 64,135,939 55,270,769

8,865,170

Liabilities

Current liabilities 15,599,098 11,922,237 3,676,861

Other liabilities

4,108,184

4,100,174

8,010

Total liabilities

19,707,282

16,022,411

3,684,871

Net assets

Invested in capital assets, net

of

related debt

7,564,589

5,775,010

1,789,579

Restricted for scholarships

38,682

32,405

6,277

Unrestricted

36,825,386 33,440,943 3,384,443

Total net assets

44,428,657 39,248,358 5,180,299

Total liabilities and net assets

64,135,939 55,270,769

8,865,170


- -


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The Florida

Bar

and Subsidiaries

Management s Discussion and Analysis

CONDENSED CONSOLIDATED STATEMENTS

OF

NET ASSETS

June

30

Assets

Current assets

Capital assets, net

Restricted assets

Total assets

2009

(as restated)

46,351,133

7,226,645

1,692,991

55,270,769

2008

(as restated)

54,867,164

7,053,053

61,920,217

Change

(8,516,031 )

173,592

1,692,991

(6,649,448)

Liabilities

Current liabilities

Other liabilities

Total liabilities

11,922,237

4,100,174

16,022,411

13,594,124

3,840,587

17,434,711

(1,671,887)

259,587

(1,412,300)

Net assets

Invested in capital assets, net of

related debt


Unrestricted

Total net assets

5,775,010

32,405

33,440,943

39,248,358

5,387,168

34,412

39,063,926

44,485,506

387,842

(2,007)

(5,622,983)

(5,237,148)

Total liabilities and net assets 55,270,769

61,920,217

(6,649,448)

For more detailed information, see the accompanying Consolidated Statements of Net Assets.

CONDENSED CONSOLIDATED STATEMENTS

OF

REVENUES, EXPENSES

ND

CHANGES IN

NET

ASSETS

2009

June 30

2010

(as restated)

Change

Operating revenues

41,356,998 41,102,989

254,009

Operating expenses

(40,021,048)

(41,761,770)

1,740,722

Net operating revenues

1,335,950 (658,781) 1,994,731

Non-operating revenues

3,844,349

3,844,349

Non-operating expenses

(4,578,366) 4,578,366

Net non-operating revenues

3,844,349 (4,578,366) 8,422,715

(Decrease) Increase in net assets

Net assets, beginning

5,180,299

39,248,358

(5,237,147)

44,485,506

10,417,446

(5,237,148)

Net assets, ending

44,428,657

39,248,359

5,180,298

See the Independent Auditors Report.

-


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CONDENSED CONSOLIDATED STATEMENTS OF REVENUES, EXPENSES

AND CHANGES IN NET ASSETS

2009 2008

une 30

(as restated)

(as restated)

Change

Net operating revenues

Operating revenues

Operating expenses

(658,781)

41,102,989

(41,761,770)

786,536

40,560,544

(39,774,008)

(1,445,317)

542,445

(1,987,762)

Non-operating revenues

Non-operating expenses

Net non-operating revenues

(4,578,366)

(4,578,366)

1,320,375

(144,074)

1,176,301

(1,320,375)

(4,434,292)

(5,754,667)

(Decrease) Increase in net assets

Net assets, beginning

(5,237,147)

44,485,506

1,962,837

42,522,669

(7,199,984)

1,962,837

Net assets, ending

39,248,359 44,485,506 (5,237,147)

For more detailed information, see the accompanying Consolidated Statements

o

Revenues,

Expenses, and Changes in Net Assets.

CAPITAL ASSETS

The Florida Bar had invested the following n Capital Assets:

2009

une 30

2010

(as restated)

Change

Land

1,306,690

1,306,690

Building and improvements

9,615,208 9,630,046 (14,838)

Landscaping and parking

120,318 120,318

Equipment and furnishings

4,562,368

4,792,884

(230,516)

Software

1,231,757

491,534

740,223

Software in development

142,237 142,237

Construction in progress

60,763 6,243 54,520

Total, prior to depreciation

17,039,341 16,347,715 691,626

Accumulated depreciation

(9,474,752)

(9,121,070)

(353,682)

Net capital assets

7,564,589 7,226,645

337,944


-


10/54

The Florida

ar

and

Subsidiaries


CAPITAL ASSETS

2009

2008

une

3D

(as restated) (as restated)

Change

Land

1,306,690

Building and improvements

9,630,046


120,318


4,792,884

Software

491,534

Construction n progress

6,243

Total, prior to depreciation

16,347,715

Accumulated depreciation (9,121,070)

Net capital assets 7,226,645

1,306,690

8,983,412 646,634

120,318

4,629,153

163,731

491,534

19,526

(13,283)

15,550,633

797,082

(8,497,580) (623,490)

7,053,053 173,592

Presently, The Florida Bar has no plans to significantly alter its investment in capital assets

other than to continue to add costs of developed software.

DEBT

At June 30, 2009, The Florida Bar had 1,451 ,635 outstanding in a mortgage loan. The

mortgage loan was paid off in October 2009.

Future Financial Plan

The Florida Bar was created by the Supreme Court of Florida to assist the Supreme Court in

regulating the practice of law in Florida. The Florida Bar is primarily funded through payments

by lawyers of their required annual fees, sales of continuing education programs to lawyers, and

other fees for regulation of attorneys or sales of legal related products and services. There is no

plan to materially change these revenue streams for the next two years. Accordingly, there are

no present plans to materially increase the scope

or

nature of the services provided to the

citizens of Florida and the lawyers authorized to serve them.


-


11/54

inancial Statements


12/54

The Florida ar and Subsidiaries

Consolidated Statements of Net Assets

une

30

Assets

2010

2009

(as restated)

Current assets

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Prepaid expenses and other assets

16,539,915

37,084,006

678,105

576,333

13,910,031

31,514,971

567,166

358,965

Total current assets 54,878,359

46,351,133

Capital assets, net

Land

1,306,690

1,306,690

Buildings and improvements 9,615,208 9,630,046


120,318

120,318


4,562,368

4,792,884

Software 1,231,757 491,534

Software development

n

progress

142,237

Construction n progress 60,763

6,243

Accumulated depreciation 9,474,752) (9,121,070)

Total capital assets, net 7,564,589 7,226,645

Restricted assets

Client Security Fund recovery receivable

1,692,991

1,692,991

Total assets

64,135,939 55,270,769

Liabilities and Net Assets

Current liabilities

Current portion

of long-term debt

-

1,451,635

Accounts payable

1,185,251

1,668,864

Client Security Fund claims payable

2,245,484 79,646

Accrued expenses

1,137,469 1,002,335

Deferred revenues

10,981,981 7,670,851

Security deposits

48,913 48,906

Total current liabilities 15,599,098 11,922,237

Non-current liabilities

Compensated absences payable

2,415,193

2,407,183

Deferred revenue for CSF recovery 1,692,991

1,692,991

Total non-current liabilities

4,108,184

4,100,174

Total liabilities

19,707,282

16,022,411

Net assets

Invested n capital assets, net

of

related debt

7,564,589 5,775,010


38,682 32,405

Unrestricted

36,825,386

33,440,943

Total net assets

44,428,657 39,248,358

Total liabilities and net assets

64,135,939 55,270,769

See accompanying notes to the consolidated financial statements.

-


13/54

The Florida

ar

and

Subsidiaries

Consolidated Statements

of

Revenues, Expenses and Changes in Net Assets

2009

Years ended June 30

2010 as restated)

Operating revenues

Annual fees

22,559,757

22,035,716

Other fees from members 6,123,246

6,106,088

Sales of products and services 9,607,272

9,551,215

Advertising 1,807,323

2,084,265

Young lawyers 691,921

554,687

Grants and other

567,479

771,018

Total operating revenues

41,356,998

41,102,989

Operating expenses

Regulation

of

the practice of law

16,009,178

15,791,436

Cost of products and services provided to members

10,622,494

12,647,506

Unauthorized practice

of

law

1,396,252

1,383,724

Public service programs

3,298,382 2,896,958

Communications with members and the public

3,995,938 4,095,417

Administration

2,050,296

2,483,553

Legislation

428,137

657,496

Young lawyers

576,058

564,163

Depreciation

864,894

826,822

Other programs and costs

779,419

414,695

Total operating expenses

40,021,048 41,761,770

Operating income loss)

1,335,950

658,781)

Non-operating revenues expenses)

Investment earnings

3,925,155

4,442,728)

Interest expense

(35,855)

121,703)

Loss on disposal of capital assets

(44,951) 13,935)

Total non-operating revenues expenses)

3,844,349 4,578,366)

Change

in

net assets

5,180,299

5,237,147)

Total net assets, beginn ing of year

39,248,358

44,485,505

Total net assets, end of year

44,428,657 39,248,358


-


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of

Cash Flows

2009

Years ended une

30

2010

(as restated)

Cash

flows from operating activities:

Receipts from members, customers and other sources

47,352,268 38,769,936

Payments to employees, suppliers and other vendors

(40,343,225) (41,519,016)

Net cash provided by (used in) operating activities 7,009,043

(2,749,080)

Cash

flows

from

non-capital

and

related

financing activities:

Reduction

of

debt

(1,451,635) (214,251 )

Interest paid

(35,855) (121,703)

Net cash (used in) non-capital and related financing activities

(1,487,490) (335,954)

Cash

flows

from capital and related financing

activities:

Acquisition of capital assets

(1,247,789) (1,014,350)

Net cash (used in) capital and related financing activities

(1,247,789)

(1,014,350)

Cash

flows from investing activities:

Redemption of investments

Purchase

of

investments, net

of

change in fair value

Investment income

Net cash (used in) provided by investing activities

18,175,941

(23,744,976)

3,925,155

(1,643,880)

17,546,867

(9, 153,257)

(4,442,728)

3,950,882

Increase (decrease) in

cash

and cash

equivalents:

2,629,884

(148,502)

Cash and cash

equivalents beginning of

year 13,910,031

14,058,533

Cash and cash equivalents end

of year

16,539,915

13,910,031


- 10


15/54



of

Cash Flows Continued)

2009

Years ended June 30

2010

as restated)

Reconciliation

of

operating income loss)

to

net cash

provided by used in) operating activities:

Operating income loss)

Adjustments to reconcile operating income loss) to net cash

provided by used in) operating activities:

Depreciation

Increase) decrease in:



Increase decrease) in:

Accounts payable

Claims payable

Accrued expenses

Deferred revenues

Security deposits

Compensated absenses payable

Net cash provided by used in) operating activit ies

1,335,950

864,894

(110,939)

(217,368)

(483,613)

2,165,838

135,134

3,311,130

7

8,010

7,009,043

658,781)

826,822

1,998,854)

279,782

263,744

285,174)

17,676)

1,177,484)

310

18,231

2,749,080)

Non-cash investing, capital, and financing acitivities

Change in the fair value

of

investments

Loss on disposal

of

assets

2,502,176

44,951

2,638,440)

13,935

Supplemental information

Cash paid for interest

35,855 121,703


-


16/54

The Florida Bar and

Subsidiaries


NOTE 1 - NATURE OF BUSINESS

The Florida Bar and Subsidiaries (The Florida Bar) is the statewide professional organization

of

lawyers. It serves as an advocate and intermediary for attorneys, the court and the public. The

Florida Bar was established as a unified state bar by rule of the Supreme Court

of

Florida. The

Florida Bar regulates lawyers

in

Florida, investigates the unauthorized practice

of

law, offers

continuing legal education, publishes law journals and offers other member services.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting ntity

The Florida Bar is a unified state bar organized as an arm

of

the Supreme Court

of

the State of

Florida. It is considered a govemmental entity because it was established by and has the

potential to be dissolved by, the Supreme Court

of

Florida. Therefore, The Florida Bar adopted the

provisions

of

Statement No. 34 ("Statement No. 34")

of

the Governmental Accounting Standards

Board

IIBasic Financial Statements - and Management's Discussion and nalysis - for State and

Local

Governments,

as amended by Statement No. 37.

In

evaluating The Florida Bar as a reporting entity, management has considered all potential

component units for which The Florida Bar may be financially accountable and if found to be

financially accountable, be required to be included

in

The Florida

Bars

financial statements. The

Florida Bar is financially accountable if it appoints a voting majority

of

an organization's governing

board and (1) it is able to impose its will on an organization

or

(2) there is a potential for an

organization to provide specific financial benefit to

or

impose specific financial burden on The

Florida Bar. Additionally, The Florida Bar is required to consider other organizations for which the

nature and significance

of

their relationship with The Florida Bar are such that exclusion would

cause the reporting entity's 'financial statements to be misleading or incomplete. Management's

analysis has disclosed

no

component units that should be included

in

The Florida

Bars

financial

statements.

Basis

of

Presentation

The Florida Bar is accounted for as a proprietary type enterprise fund. Enterprise funds are used

to account for activities that are financed and operated in a manner similar to private business

enterprises: (1) where the costs of providing goods and services to the general public on a

continuing basis are to be financed through user charges; or (2) where the periodic determination

of

net income is considered appropriate. Proprietary funds distinguish operating revenues and

expenses from non-operating items. Operating revenues and expenses generally result from

providing goods and services

in

connection with a proprietary fund's ongoing operations.

Operating expenses for The Florida Bar include the costs

of

personnel, contractual services,

supplies, utilities, repairs and maintenance, and depreciation on capital assets. All revenues and

expenses not meeting this definition are reported as non-operating revenues and expenses.

2 -


17/54

The Florida Bar and

Subsidiaries

Notes

to

Consolidated Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

asis

of

ccounting

Basis

of

accounting refers to when revenues and expenses are recognized in the accounts and

reported in the financial statements. These financial statements have been prepared on the

accrual basis

of

accounting in accordance with accounting principles generally accepted

n

the

United States

of

America. Under this method, revenues are recognized when they are eamed and

expenses are recognized when they are incurred. The measurement focus

of

proprietary fund

types is on a flow

of

economic resources method, which emphasizes the determination

of

net

income, financial position, and cash flow. All fund assets and liabilities, current and non-current,

are accounted for in the Consolidated Statements

of

Net Assets.

Cash and Cash Equivalents

All demand deposit accounts and short-term highly liquid investments with original maturities

of

three months

or

less are reported as cash equivalents.

Investments

Investments are reported at fair values, which are based on quoted market prices.

Capital

ssets

Capital assets are stated at cost less accumulated depreciation. The value of software developed

for The Florida Bar's use includes all direct and indirect costs that are related to development

activities. The cost

of

capital assets is depreciated over the estimated useful lives

of

the related

assets, ranging from 5 to 40 years, using the straight-line method. When capital assets are retired

or

otherwise disposed of, the costs and related accumulated depreciation are removed from the

accounts and any resulting gain or loss is reflected in the Consolidated Statements of Revenues,

Expenses and Changes in Net Assets, in the period

of

disposal.

Claims Payable

The Florida Bar voluntarily created the Clients' Security Fund (the Fund) to provide possible

compensation to people who have suffered financial losses due to misappropriation

of

funds by

errant Florida Bar members. The Fund is financed by $25

of

the annual fees due from each

Florida Bar member who is in good-standing (including inactive members). Claims payable

represent amounts that have been approved for payment from the Fund.

Deferred Revenues

Deferred revenues consist primarily of membership fees collected in advance, prepaid advertising

and prepaid legal education courses.

-13


18/54

The Florida Bar and

Subsidiaries



Derivative Financial Instruments

The Florida Bar follows the provisions of Governmental Accounting Standards Board (GASB)

Technical Bulletin No. 2003-1, Disclosure Requirements for Derivatives Not Reported at Fair Value

on the Statement of Net Assets, an amendment to GASB Technical Bulletin 94-1. GASB Technical

Bulletin

No

2003-1 provides an updated definition

of

derivatives and requires certain disclosures

regarding the government's objective for entering into derivative transactions and the derivative's

terms, fair value, and risk exposures.

llocation

of

Expenses

The costs

of

providing the various programs, services, and other activities have been summarized

on a functional basis in the Consolidated Statement

of

Revenues, Expenses and Changes in Net

Assets. Accordingly, certain costs have been allocated among the programs and supporting

services benefited.

Principles ofConsolidation

The accompanying consolidated financial statements include the accounts

of

The Florida Bar and

its wholly-owned subsidiary, The Florida Bar Building Corporation, and its other controlled entities,

Florida Lawyers Association for the Maintenance

of

Excellence, Inc., and The Florida Attorneys

Charitable Trust. All significant intercompany transactions and accounts have been eliminated in

consolidation.

Income Taxes

The Florida Bar is an administrative agency

of

the Supreme Court and is not subject to federal

or

state income tax. The Florida Bar Building Corporation, Florida Lawyers Association for the

Maintenance

of

Excellence, Inc., and The Florida Attorneys Charitable Trust have been granted

exemption from federal and state income taxes except on unrelated business income under

Sections 501 (c)(25), 501 (c)(6), and 501 (c)(3), respectively, of the Internal Revenue Code.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted

in the United States

of

America requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and

liabilities at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting period. Actual results could differ from those estimates.

Concentration

The Florida Bar receives the majority

of

its revenue from lawyers licensed to practice in the State of

Florida.

-


19/54

The Florida Bar and

Subsidiaries



Net Assets

Net assets are categorized as invested

in

capital assets, restricted for scholarships, and

undesignated. Invested

in

capital assets is intended to reflect the portion

of

net assets that are

associated with non-liquid, capital assets. Restricted for scholarships consists

of

monies restricted

for the annual G. Kirk Haas fund scholarships. Undesignated assets consist

of

all other assets not

included

in

the previous categories.

Subsequent Events

Subsequent events have been evaluated through the date

of

the auditors' report.

Adoption

of

Pronouncement

As

of

July

1,

2009, The Florida Bar adopted the provisions

of

GASB Statement No. 51,

The

Accounting nd Financial Reporting for Intangible Assets

This statement provides the accounting

and reporting requirements for intangible assets. Intangible assets owned by The Florida Bar

include purchased licensed computer software from external sources and internally developed

computer software.

As

a result

of

the adoption

of

GASB No. 51, The Florida Bar restated the prior

year balances to reflect the capitalization

of

purchased licensed computer software and the

applicable accumulated depreciation and depreciation expense. The Florida Bar did not have the

records available to record an adjustment for internally developed computer software developed

in

prior years. GASB No.

51

allows The Florida Bar to account for internally developed software on a

prospective basis.

The following table summarizes the balances as previously reported and the adjustments made to

reflect the adoption

of

GASB No. 51:

2009

2009

as

previously

reported)

Adjustments

(as restated)

Software

491,534 491,534


8,777,343) 343,727)

9,121 ,070)

Depreciation expense 771,679

55,143

826,822

Net

assets, beginning of

year 44,282,555 202,950

44,485,505

Net

assets, end

of year

39,100,551 147,807

39,248,358

NOTE 3 - CASH AND CASH EQUIVALENTS

Cash and cash equivalents are subject to custodial credit risk. Custodial credit risk is the risk that

in

the event

of

a bank or other counterparty failure, The Florida Bar's cash and cash equivalents

may not be returned. The Florida Bar's policy with respect to custodial credit risk is that The Florida

15-


20/54

The Florida

Bar

and Subsidiaries

Notes

to


NOTE 3 - CASH AND CASH EQUIVALENTS (CONTINUED)

Bar will only maintain demand deposit accounts with financial institutions in which management

believes the risk to

be

limited because the financial institutions are large with strong financial

positions.

Cash and cash equivalents are held at two financial institutions. Operating cash is insured by the

Federal Deposit Insurance Corporation (FDIC) up to $250,000. Operating

a1sh

balances were

$6,095,443 and $4,818,643 at June

30

2010 and 2009, respectively. Additional cash and money

market funds are held at a financial institution insured by the Securities Investor Protection

Corporation up to $100,000. Additional cash and money market funds were $10,444,472 and

$9,091,388 at June 30 2010 and 2009, respectively.

NOTE 4 - INVESTMENTS

Investment Objectives

nd

Policies

Investments will be made for the sole interest and exclusive purpose of providing investment

returns for The Florida Bar. The Florida Bar's investment objectives and policies are achieved

through a short-term account portfolio and a long-term account portfolio. The ultimate

responsibility for the proper supervision of The Florida Bar's investment portfolio rests with the

Board of Governors and the Investment Committee.

The purpose of the short-term portfolio is to provide for The Florida Bar's short-term working

capital needs. The short-term portfolio possesses a short-term time horizon (one to three years)

and within this horizon, the primary objectives

of

the short-term portfolio are to preserve capital

for short-term cash flow needs, provide liquidity, and to achieve attractive short-term yields

consistent with the preservation

of

capital.

The purpose of the long-term investment portfolio

is

to provide for The Florida Bar's operating

needs and to fund The Florida Bar's programs both today and into the future. The long-term

portfolio possesses an intermediate to long-term horizon (five to seven years) and within this

horizon, the primary objectives of the long-term portfolio are to provide long-term growth of

capital and income.

The asset allocation guidelines with regard to acceptable asset classes, the overall target asset

mix, and the representative indices of each asset class were as follows as

of

June 30, 2010:

Short Term

Target Representative

Asset Classes Minimum

Mix Maximum Index

Short-Term Fixed income

35.0% 50.0%

65.0% Barday 's Intermediate Government Credit Index

Cash and Equivalents 35.0% 50.0%

65.0% Citigroup gO-Day U.S. Treasury Bills

- 6-


21/54



NOTE 4 - INVESTMENTS (CONTINUED)

Long-Term

Asset Classes Minimum

Target

Mix

Maximum

Representative

Index

Large Cap Equity

20.0 26.0

Standard & Poor's 500 Index

Mid Cap Equity 3.0

o

k 6.0

9.0

Russell Mid Cap Index

Small Cap Equity 3.0%

6.0

o

k 9.0

Russell 2000 Small Cap Index

International Equity

9.8k

14.0 18.2 MSCI EAFE Index

Emerging Markets Equity

0.0%

2.0

o

k 5.0

MSCI Emerging Markets Free Index

Real Assets

0.0

2.0

o

k 5.0

o

k

Dow Jones AIG Commodity Index

REITs

O ook

3.0%

6.0

NAREIT Equity Index

TIPS

0.0 3.0

o

k 6.0

Barclay's Treasury US TIPS Index

Fixed income

28.00 40.00

o

k 52.00

o

k

Barclay's Intermediate Govemment Credit Index

Cash and Equivalents 2.0 4.0 10.0

Citigroup 90-Day U.S. Treasury Bills

Subsequent to June 30, 2010, the target asset mix and asset mix restrictions were revised to

allow a more global perspective and to increase diversification.

Investments

At June 30, The Florida Bar's investment balances were as follows:

2010

2009

June 30 FairValu8 Maturity Rating Fair Value

Mutual funds - debt securities (ST) *

8,177,376

2 year average **

Ba to Aaa

5,533,187

US Treasuries 3,117,964

9 year average**

Aaa

1,839,013

Federal Agencies 2,339,271

14 year average**

Aaa

2,292,022

Corporate Bonds &Other Fixed Income

4,518,691

12 year average** Baa3 to Aaa

4,846,233

Municipal Bonds

1,112,604

10 year average** Baa1 to Aaa 1,428,541

US Treasury Bonds

1 year average ** Aaa

1,499,775

Mutual funds - equity securities

3,217,164

N A

N A

3,042,304

Stocks

14,600,936 N A

N A

11,033,896

Total investments 37,084,006

31,514,971

* The Florida Bar invests

n

short-term mutual funds, which consist of debt securities (Le. fixed income securities).

The Florida Bar's short-term mutual funds are not invested directly in fixed income debt securities. The Florida Bar

s

able to sell their interest n these mutual funds at will (SUbject to potential redemption fees).

** Represents the weighted average maturity

of

debt securities held by The Florida Bar.

17-


22/54




The Florida Bar investment securities are exposed to various risks, such as interest rate, market

conditions, and credit risks. Due to the level of risk associated with certain investment

securities, it is at least reasonably possible that changes in the value of investment securities

will occur in the near term and that such changes could materially affect investment balances.

redit Risk

Investments in fixed income debt securities through mutual funds must adhere to the policy of

meeting

an

average quality rating of A or higher for the long-term portfolio and AA or higher for

the short-term portfolio by either Standard & Poor's, Moody's or Fitch Investors Service at the

time of purchase. Investments

in

corporate holdings must

be

rated investment grade or better

by

either Standard & Poor's, Moody's or Fitch Investors Service at the time of purchase. The

Florida Bar's Investment Committee must approve continuing to hold any downgraded

investments.

oncentration

o

redit Risk

Investments in equity securities are subject to a maximum

50 0

commitment at cost and

100/0

weighting at market of the account's total market value for any individual security or single

issuer. Investments in fixed income securities are subject to no more than 50 0 of the account's

market value invested in a single issue (at cost) or in direct obligations of a single issuer (at

market) with the exception of the U.S. Government and its agencies so long as any such

government or agency issue shall

be

backed with the full faith and credit of the U.S.

Government. In addition,

no

more than

15

of the fixed income securities may be invested in

mortgage backed or asset backed securities of a single issuer, with the exception of those

issued

by

the U.S. Government, its agencies, or its sponsored agencies.

Interest Rate Risk

Interest rate risk arises from investments in debt instruments and is defined as the risk that

changes in interest rates will adversely affect the fair value of an investment. The Florida Bar's

investment

in

U.S. Treasuries, federal agencies, corporate bonds, municipal bonds and U.S.

Treasury bonds are directly subject to the interest rate risk of debt instruments. The Florida Bar

is not directly subject to the interest rate risk for its short-term debt instruments, as investments

in these debt securities are entered into through mutual funds and The Florida Bar is able to sell

their interest in these mutual funds at will (subject to potential redemption fees). Additionally,

The Florida Bar has elected to participate

in

mutual funds with target durations of one to two

years (low duration funds). However, investments

in

mutual funds are with the understanding

that the investment policies stated in the mutual fund's prospectus supersedes the guidelines

established by The Florida Bar.

ustodial redit Risk

Custodial credit risk is the risk that in the event of the failure of the custodial entity, The Florida

Bar's deposits may not be returned to

it.

The Florida Bar's policy

is

that it will only hold

investment securities that are insured or registered and held by The Florida Bar or its

designated agent, in the name of The Florida Bar. Investments held through its agent, Morgan

-

18 -


23/54

The Florida Bar and

Subsidiaries



Stanley Smith Barney, LLC have Securities Investor Protection Corporation (SIPC) coverage up

to $500,000 per customer for cash and securities. Morgan Stanley Smith Barney, LLC also has

purchased "Excess SIPC" protection above the SIPC limits. This excess coverage is subject to

a firmwide cap for Morgan Stanley

of

1 billion with no per-client limit for securities and a $1.9

million per-client limit for the cash portion of any remaining shortfall. Investments in PIMCO

mutual funds are held by a third party trust company.

Foreign Currency Risk

Investments in international equity securities are limited to SEC-Registered, U.S. exchange

listed, U.S. dollar-denominated securities

in

foreign domiciled issuers. Investments

in

international debt securities are limited to SEe-registered,

U.S.

dollar-denominated,

U.S.

government backed securities issued by foreign governments. The Florida Bar invests in

international securities through American Depository Receipts (ADRs). ADRs represent

investments

in

shares of foreign companies traded on the U.S. financial markets and are

denominated in U.S. dollars and, thus, are not exposed to foreign currency risk. Investments

in

foreign currency-denominated government bonds, any type of foreign corporate bond, or any

other type of foreign currency are not allovved. Securities of foreign companies traded on

foreign stock exchanges may be purchased only with the written permission of The Florida Bar's

Investment Committee. Additionally, the investment policy approves the use of mutual funds,

which may include foreign securities, with the understanding that the investment policies stated

in the mutual fund's prospectus supersede the guidelines set forth in The Florida Bar's

investment policy.

Derivative Instruments

As of June

30,

2010, the Florida Bar's investment policy states that investments

in

options,

derivatives and financial futures are prohibited in separately managed accounts. Additionally,

the investment policy approves the use of mutual funds, which may include derivative

instruments, with the understanding that the investment policies stated in the mutual fund's

prospectus supersede the guidelines set forth in The Florida Bar's investment policy.

Subsequent to June 30, 2010, the investment policy was modified to allow investments in

Exchange Traded Funds (ETFs) and other alternative investments not previously allovved such

as hedge funds and managed futures.

NOTE 5 - ACCOUNTS RECEIVABLE, NET

The following is a summary of accounts receivable, net:

June 30

2010 2009

Accounts receivable

703,005

592,066

Allowance for doubtful accounts

(24,900)

(24,900)


678,105

567,166

-

19-


24/54

The Florida Bar and

Subsidiaries

Notes

to


Depreciation expense for the years ended June 30, 2010 and 2009 was 864,894 and

826,822, respectively.

NOTE 7 - LONG-TERM LIABILITIES

Compensated

bsences

Payable

Compensated absences payable consisted of the following:

June 30 2010

2009

Accrued vacation

1,447,838 1,479,665

Accrued sick leave

967,355

927,518

Total compensated absences

2,415,193

2,407,183

-

2 -


25/54

The Florida Bar and

Subsidiaries


NOTE 7 - LONG-TERM LIABILITIES (CONTINUED)

Long-Term Debt

The following is a summary of long-term debt:

June 30 2010

2009

Renewal mortgage note payable to Bank of America

in

the amount

of $2,986,384 due on October 15, 2009. Monthly payments of

principal began on November 15, 1999 at $9,383 with annual

increases of $723 per month each November 15th based

on a 15

year amortization with a balloon payment of $1,396,760 at maturity.

Interest was payable monthly based on a contract rate equal to the

London Interbank Offering Rate (LIBOR) plus 47 basis points.

However, the interest rate was swapped in a hedge transaction.

See Note 8 below. The mortgage was collateralized by real estate

owned by The Florida Bar Building Corporation and guaranteed by

The Florida Bar.

- $ 1,451,635

Current portion

(1,451,635)

Long-term debt, less current portion

-

Changes

n

Long-Term Liabilities

Changes in long-term liabilities are summarized as follows:

Long-term debt

Compensated absences

Deferred revenue for

CSF

recovery

Total long-term liabilities

Balance

July 1, 2009

$ 1,451,635

2,407,183

1,692,991

$ 5,551,809

Additions

$ -

1,642,916

$1,642,916

Reductions

$ (1,451,635)

(1,634,906)

$ (3,086,541)

Balance

une

30, 2010

$

2,415,193

1,692,991

4,108,184

NOTE 8 - DERIVATIVE DISCLOSURE - INTEREST RATE

SWAP

Objective

of

the interest rate

swap_

In October 1999, The Florida Bar refinanced

an 8.5

fixed rate mortgage to a variable rate mortgage based on the LIBOR rate plus .47%. To

manage its interest rate exposure under the variable rate renewal mortgage note payable to

Bank of America, The Florida Bar entered into a hedge transaction on October 13, 1999 to swap

its floating rate for a fixed rate through a 120 month interest rate swap provided by Bank of

America.

- 2


26/54



NOTE 8 - DERIVATIVE DISCLOSURE INTEREST RATE

SWAP

(CONTINUED)

Terms.

The swap was for the notional amount

of

2,986,384 which was equal to the principal

amount

of

the underlying variable rate debt. The notional amount declined each year as the

principal amount

of

the associated debt declined. The swap was entered into at the same time

that the debt was refinanced (October 1999). Under the swap, The Florida Bar paid the Bank

of

America a contracted interest rate

of

30-day LIBOR plus

470/0

and received a payment from

Bank of America based on the coupon rate of the swap which was 6.97%. The net effect

of

the

two contractual rates was an effective fixed rate

of 7 440/0

The swap matured on October 15,

2009 and was an effective hedge for The Florida Bar.

NOTE 9 - REVENUE

AND

EXPENSE CLASSIFICATION

The significant revenue and expense accounts presented in the consolidated financial

statements are described as follows:

Other ees from Members

Includes revenues from members other than annual fees such as advertising approval fees,

certification fees and section dues.

Sales ofProducts andServices

Includes revenues from sources such as Continuing Legal Education (CLE) registrations, sales

of

publications and meeting revenues.

Grants and Other

Includes grants received from The Florida Bar Foundation, cost recoveries from discipline

cases, rents received in The Bar Center Building Fund and other sources

of

revenue.

Regulation of the Practice ofLaw

Includes expenses incurred for Lawyer Regulation, Lawyer Advertising, Ethics, Continuing Legal

Education Rules (CLER), Membership Records and Certification.

Cost ofProducts and Services Provided to Members

Includes expenses such as the cost

of

CLE courses and publications, Legal Office Management

Advisory Services (LOMAS), voluntary member assistance programs, meetings, committee

activity and section activity.

ommunication with Members and

the

Public

Includes the expenses

of

the Public Information Department and The Florida Bar Journal and

News

- 22 -


27/54

The Florida Bar and

Subsidiaries


NOTE 9 - REVENUE AND EXPENSE CLASSIFICATION (CONTINUED)

dministration

Includes board and officer expenses, the cost

of

the Executive Director's office, General

Counsel, Research, Planning and Evaluation, and liability and property insurance.

NOTE 10 - RETIREMENT PLANS

The Florida Bar sponsors a defined contribution pension plan, The Florida Bar Employees'

Pension Plan (the Plan), which is available to all salaried personnel having completed six

months

of

service. The Plan is administered by The Florida Bar Retirement Committee. The

Plan may be amended at any time by The Florida Bar. Employer contributions are discretionary

and are currently made for all eligible employees employed on December 31 based on a

formula which was 15 and 13k of covered compensation for the years ended June 30

20010

and 2009, respectively, and 4 3k on covered compensation exceeding

800/0 of

the Social

Security wage base for the years ended June 30 2010 and 2009. The employer contributions

are allocated to separate participant accounts and invested by the Trustee

in

the funds selected

by the employee from those offered by the Plan Administrator. Participant accounts vest based

on the following schedule:

Less than 3 years

00/0

3 - 4 years

40

4 - 5 years 60

0

k

5 6 years 800/0

greater than 6 years

1000/0

Forfeited contributions are held in a separate account and are used to reduce future employer

contributions. The plan has been amended to comply with all applicable Federal tax laws. The

pension contribution made equaled the contribution required during the years ended June 30

2010 and 2009 for the Plan years ended December 31 2009 and 2008 and was $2,133,962

and $1,925,958 , respectively.

The Florida Bar also has a deferred compensation plan. The plan is for the benefit of all eligible

employees who elect to participate.

NOTE

11

- RETIREE POSTEMPLOYMENT HEALTH BENEFITS

Plan Description

The Florida Bar Retiree Health Plan (TFBRHP) is a single-employer defined

benefit healthcare plan administered by The Florida Bar. TFBRHP provides health insurance

benefits to eligible employees at early retirement, disability

or

full retirement. The Florida Bar

has the authority to establish and amend benefit provisions to TFBRHP. TFBRHP issues a

stand-alone financial report that includes the financial statements and required disclosures.

This report may be obtained by writing to The Florida Bar, 651 East Jefferson Street,

Tallahassee, Florida 32399-2300.

-

23-


28/54


Notes

to


NOTE 11 - RETIREE POSTEMPLOYMENT HEALTH BENEFITS (CONTINUED)

Funding Policy. TFBRHP

is funded through contributions

made by The

Florida Bar.

The

contribution requirements are established and

may

be amended

by The

Florida Bar. Currently,

there are no required contributions by active

or

retired employees. The required contribution

from the Florida Bar is based on an actuarially determined percentage of total active payroll. For

fiscal years ended June

30,2010

and 2009, The Florida Bar contributed 268,980 and 52,700,

respectively, to the plan.

Annual OPEB Cost and Net OPEB Obligation. The

Florida Bar's annual

other

postemployment

bene'fit (OPEB)

cost

(expense) is calculated based on the annual required contribution

of

the

employer ARC), an amount actuarially determined in accordance with the parameters of GASB

Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is

projected to cover normal cost each year and amortize any unfunded actuarial liabilities

or

funding excess)

over

a period not

to

exceed thirty years. Based on the January 1, 2010,

actuarial valuation, the

ARC

is

0.58

of

active payroll payable

for

the calendar years 2010

through 2011. The following table shows the components

of The

Florida

Bars

annual

OPEB

cost

for

the year, the amount actually contributed to the plan, and changes in The Florida Bar's

net OPEB obligation to TFBRHP:

Annual required contribution

69,265

Interest on net OPES obligation

Adjustments to annual required contribution

199,716

Annual OPES cost (expense) 268,981

Net OPES obligation - July

1,

2009

Annual OPES cost (expense) for 2010 268,981

Contributions made during FY 2010

(268,981)

Net OPES obligation - June 30, 2010

The Florida Bar's annual OPEB cost, the percentage of annual OPEB cost contributed to the

plan, and the net

OPEB

obligation

for 2009

and the preceding two years were as follows:

Annual

Percentage of Annual OPEB

Cost

NetOPEB

Fiscal Year Ended OPEB

Cost

Contribtued

Obligation

6/30/2008 58,733 110.27k (6,033)

6/30/2009

58,733

9 k

6/30/2010 268,980

100%

-

24-


29/54



NOTE

11

- RETIREE POSTEMPLOYMENT HEALTH BENEFITS (CONTINUED)

Funded Status and Funding Progress

As of

January

1,

2010, the most recent actuarial

valuation date, the plan was

820/0

funded. The actuarial accrued liability for benefits was

calculated to be 1,584,797 and the actuarial value of the assets was 1,293,906, resulting in a

funding deficit

of

290,891. The covered payroll (annual payroll

of

active employees covered by

the plan) was 14,557,008, and the ratio

of

the UAAL to the covered payroll was

2.000/0.

Actuarial valuations

of

an ongoing plan involve estimates

of

the value

of

reported amounts and

assumptions about the probability of occurrence

of

events far into the future. Examples include

assumptions about future employment, mortality, and the healthcare cost trend. Amounts

determined regarding the funded status of the plan and the annual required contributions of the

employer are subject to continual revision as actual results are compared with past expectations

and new estimates are made about the future.

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are

based on the substantive plan (the plan as understood by the employer and the plan members)

and include the types of benefits provided at the time of each valuation and the historical pattern

of

sharing

of

benefit costs between the employer and plan members to that point. The actuarial

methods and assumptions used include techniques that are designed to reduce the effects

of

short-term volatility in actuarial accrued liabilities and the actuarial value

of

assets, consistent

with the long-term perspective of the calculations.

In the January

1,

2010 actuarial valuation, the projected unit credit actuarial cost method was

used. The actuarial assumptions included a 7.500/0 investment rate of return, which is the rate of

the expected long-term investment returns on plan assets and an annual healthcare cost trend

rate

of 100/0

initially, reduced by decrements to an ultimate rate

of 50/0

in the year 2016 and

beyond. Both rates included a 3 inflation assumption. As of the January

1,

2010 actuarial

valuation, TFBRHP had plan assets

in

trust solely to provide benefits to retirees and their

beneficiaries. The UAAL is being amortized as a level percentage of projected payroll on an

open basis. The remaining amortization period at January 1, 2010 was 30 years.

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of

unding

Progress

Actuarial Value

Projected

AAL

Funded Covered

of

Covered

Valuation

of

Assets Unit Credit

(UAAL) Ratio Payroll

Payroll

Date

(a) (b)

b

a)

(alb) (c)

(b a) I c)

1/1/06

-

1,203,784 1,203,784 0.000/0 12,946,872

9.30

1/1/08 1,288,476

1,216,209 (72,267)

105.94

14,296,752

-0.51 %

1/1/10 1,293,906

1,584,797 290,891

81.64

14,557,008

2.00

- 25-


30/54


Notes

to


NOTE

2

- LEASES

The Florida Bar is the lessee

of

office space under operating leases expiring in various years

through the year 2018, with escalation clauses.

The Florida Bar leases office space from its wholly-owned subsidiary, The Florida Bar Building

Corporation. The intercompany rental income and rental expense have been eliminated in

consolidation.

Future minimum rental payments are as follows:

Years ending June 30

Amount

2 11 628,178

2012

692,742

2013 714,702

2014 737,079

2015 760,227

Thereafter

1,532,195

Total minimum future rental payments 5,065,123

Total rental expense for the fiscal year ended June 30, 2010 and 2009 was 794,110 and

882,953, respectively.

The Florida Bar is also the lessor of certain office space in a building owned by The Florida Bar.

The space is rented to unrelated entities under operating leases expiring in various years

through the year 2014. Rental income for the fiscal years ended June 30, 2010 and 2009 was

272,966 and 268,967, respectively.

Future minimum rental receipts are as follows:

Years ending June 30

Amount

2011

279,790

2012

286,784

2013

293,818

2014

73,894

Total minimum future rental receipts

934,286

NOTE

3

- CONTINGENCIES

The Florida Bar is involved in several actions

as

defendant and/or co-defendant. The majority

of the actions are expected to be settled with little

or

no financial impact to The Florida Bar. An

accurate assessment of any significant liability is not determinable although management

of

The

Florida Bar believes that the possibility

of

any significant liability arising from current litigation is

extremely remote.

- 26-


31/54

The Florida

Bar

and Subsidiaries


NOTE

14

- COMMITMENTS

The Florida Bar has contracted with various hotels or convention centers to reserve facilities,

rooms, and food and beverage services for various meetings and seminars to

be

held through

fiscal year 2015. If The Florida Bar should choose to cancel the contracts, liquidating damages

would be due to the hotels or convention centers. Generally, liquidating damages are

graduated based on the time between cancellation and the scheduled arrival date of the

meeting and are calculated based on a percentage of anticipated revenues by the particular

hotel or convention center.

The following is a schedule

of

estimated liquidating damages that The Florida Bar would incur

should they cancel all the contracts as of June 30 2010:

Estimated

liquidating

Event

damages

Annual

Meeting

$

157,324

Board

of

Governors Meetings

106,702

Mid-Year Meetings

144,203

Section Meetings

1,360,596

Continuing

Legal

Education

Seminars

21,896

Total commitment

1,790,721

NOTE 15 - DESIGNATED FUND BALANCES

The Florida Bar has designated certain net assets to be used for specific program purposes. As

of June

30

2010 and 2009, the designated net assets were $12,645,267 and $12,751 ,829,

respectively.

NOTE 16 - RISK MANAGEMENT PROGRAMS

The Florida Bar is exposed to various risks of loss related to torts; theft of damage to, and

destruction of assets; errors and omissions; injuries to employees; and natural disasters.

Workers' compensation, property, and general liability coverage are provided through

commercial insurance carriers. Management continuously reviews the limits of coverage and

believes that current coverage is adequate. There were no significant reductions in insurance

coverage from the previous year.

- 27


32/54

upplementary

nformation


33/54

The

Florida

Bar and

Subsidiaries

Consolidating Statement of Net ssets

Clients

General

Bar Center Security Certification Sections Eliminating

Total

June 30 2 1 Fund

Fund Fund Fund Fund Entries

All Funds

Assets

Current assets

Cash and cash equivalents

15,342,782 1,197,133

-

-

-

-

16,539,915

Short-term investments

37,084,006

- - - - -

37,084,006


713,171

-

- -

-

(35,066) 678,105

Due from other funds

-

3,527,156

6,400,684 782,439 4,319,746 (15,030,025)


599,863

1,587

- - -

(25,117) 576,333

Total current assets

53,739,822

4,725,876 6,400,684 782,439 4,319,746 (15,090,208) 54,878,359

Capital assets, net

Land

-

1,306,690

- - -

-

1,306,690

Buildings and improvements

-

9,615,208

- -

-

-

9,615,208


-

120,318

-

-

- -

120,318


-

4,562,368

- - - -

4,562,368

Software

-

1,231,757

-

- - -

1,231,757

Software development

n

process

142,237

-

- -

-

-

142,237

Construction

n

progress

-

60,763

- -

-

-

60,763


-

(9,474,752)

- - -

-

(9,474,752)

Total capital assets, net 142,237 7,422,352

- - - -

7,564,589

Restricted assets

CSF Recovery Receivable

-

-

1,692,991

- - -

1,692,991

Investment n The Florida Bar

Building Corporation

1,611,647

-

-

- -

(1,611,647)

Total restricted assets

1,611,647

-

1,692,991

- -

(1,611,647)

1,692,991

Total assets

55,493,706

12,148,228 8,093,675 782,439 4,319,746 (16,701,855) 64, 135,939

See Independent Auditors Report.

- -


34/54


Consolidating Statement of Net Assets

(Continued)

Clients'

General Bar Center Security Certification Sections Eliminating Total

June 3 2 1

Fund Fund

Fund

Fund Fund

Entries

All Funds

Liabilities and Net Assets

Current liabilities

Accounts payable

Claims payable

Accrued expenses

Due to other funds

Deferred revenues

Security deposits

Total current liabilities

1,155,930

1,186,381

14,981,113

10,981,981

28,305,405

74,030

64,387

138,417

-

2,245,484

2,245,484

(35,066)

(48,912)

(14,981,113)

(25,117)

(15,090,208)

1,185,251

2,245,484

1,137,469

10,981,981

48,913

15,599,098

Total non-current liablities

Non-current liabilities

Compensated absences payable

Deferred revenue for CSF recovery

2,415,193

2,415,193

1,692,991

1,692,991

2,415,193

1,692,991

4,108,184

Total liabilities

30,720,598 138,417 3,938,475

(15,090,208) 19,707,282

Net assets

Invested in capital assets, net of related debt

142,237 7,422,352

7,564,589


38,682 38,682

Unrestricted

Designated 412,070

2,975,812 4,155,200 782,439 4,319,746 12,645,267

Undesignated 24,180,119

24,180,119

Contributed capital - 1,611,647 - - - (1,611,647)

Total net assets 24,773,108 12,009,811 4,155,200 782,439 4,319,746 (1,611,647)

44,428,657

Total liabilities nd net assets

55,493,706 12,148,228 8,093,675 782,439 4,319,746 (16,701,855) 64,135,939

See Independent Auditors' Report.

- 9-


35/54

The Florida

Bar

and Subsidiaries

Consolidating Statement of Revenues, Expenses and Changes in Net Assets

Clients'

General Bar Center Security Certification

Sections Eliminating Total

Year ended une

30 2010 Fund Fund Fund Fund Fund Entries

All Funds

Operating revenues

Annual fees 22,559,757

22,559,757

Other fees from members 3,682,484 1,203,021 1,237,741 6,123,246

Sales of products and services 7,366,033 8,379 2,232,860 9,607,272

Advertising 1,807,323 1,807,323

Young lawyers 691,921 691,921

Grants and other 352,236 1,050,689 26,613 - - (862,059) 567,479

Total operating revenues 36,459,754 1,050,689 26,613 1,211,400 3,470,601 (862,059) 41,356,998

Operating expenses

Regulation of the practice of law 15,079,840 1,287,374 (358,036)

16.009,178

Cost of products and services provided to members 7,806,058 3,001,772 (185,336) 10,622,494

Unauthorized practice of law 1,430,209

(33,957)

1,396,252

Public service programs 693,228 2,621,613 (16,459) 3,298,382

Communication with members and the public 4,093,119 (97,181)

3,995,938

Administration 2,100,160

(49,864)

2,050,296

Legislation 438,549 (10,412) 428,137

Young lawyers 590,068 (14,010) 576,058

Depreciation and amortization - 864 ,894

864,894

Other programs and costs 525,141 351,082 - - - (96,804)

779,419

Total operating expenses 32,756,372 1,215,976 2,621,613 1,287,374 3,001,772 (862.059) 40,021,048

Operating Income (loss) 3,703,382 (165,287) (2,595,000) (75,974) 468,829 1,335,950

Non-operatlng revenues (expenses)

Investment earnings 2,786,401 399,762 343,770 50,326 344,896 - 3,925,155

Interest expense - (35,855) - - - - (35,855)

Loss

o

disposal of capital assets - (44,951) - - - - (44,951)

Total non-operating revenues 2,786,401 318,956 343,770 50,326 344,896 - 3,844,349

Change In net assets

6,489,783 153,669 (2,251,230) (25,648) 813,725 5,180,299

Net assets, beginning of year

21,104,122 11,156,970

4,284,805

808,087 3,506,021 (1,611,647) 39,248,358

Transfers (to) from other funds (2,820,797) 699,172

2,121,625

Net assets, end

of

year

24 n3 108 12,009,811

4,155,200 782,439 4,319,746

44,428,657


- 3 -


36/54

The Florida

ar

and Subsidiaries

Consolidating Statement of Cash Flows

Clients'

General Bar Center Security Certification Sections Eliminating Total

Year ended une 30,2010

Fund Fund Fund Fund Fund Entries All Funds

Cash flows from operating activities:

Receipts from members, customers and other sources 39,604,649 3,094,301 26,613 1,211,400 3,470,601 (55,296) 47,352,268

Payments to employees, suppliers and other vendors

(34,559,294) (391,621) (370,383) (1,261,726) (3,815,497) 55,296 (40,343,225)

Net cash provided by (used in) operating activities

5,045,355 2,702,680 (343,770) (50,326) (344,896) - 7,009,043

Cash flows from non-capital and related financing activities:

Reduction

of

debt -

(1,451,635) - - - - 1

A51,635

Interest paid - (35,855) - - - - (35,855)

Net cash (used in) non-capital and related financing

activities -

1 A87,490) - - - - 1 A87,490)

Cash flows from capital and related financing activities:

Acquisition

of

capital assets

(142,237) (1,105,552) - - - - (1,247,789)

Net cash (used in) capital and related financing activities

(142,237) (1,105,552) - - - - (1,247,789)

Cash flows from investing activities:

Redemption of investments

18,175,941 - - - - - 18,175,941

Purchase of investments, net of change in fair value (23,744,976) - - - - - (23,744,976)

Investment income 2,786,401 399,762 343,770 50,326 344,896 - 3,925,155

Net cash (used in) provided by investing activities

(2,782,634) 399,762 343,770 50,326 344,896 - (1,643,880)

Increase in cash and cash equivalents

2,120,484 509,400 2,629,884

Cash and cash equivalents, beginning of year

13,222,298

687,733

13,910,031

Cash and cash equivalents, end of year

15,342,7 82 1,197,133 16,539,915


-

3


37/54


Consolidating Statement

of

Cash

Flows

(Continued)

Year ended une 30 2010

General

Fund

Bar Center

Fund

Clients'

Security

Fund

Certification

Fund

Sections

Fund

Eliminating

Entries

Total

All Funds

Reconciliation of operating income (loss) to net cash provided

by

(used in) operating activities:

Operating income (loss)

3,703,382

Adjustments to reconcile operating income (loss) to

net cash provided by (used in) operating activities

Depreciation

Transfers (to) from other funds

(2,820,797)

(Increase) decrease in


(166,235)

Due from other funds

Prepaid expense and other assets

(215,781)

Increase (decrease) in

Accounts payable (1,669,314)

Claims payable

Accrued expenses 184,046

Deferred revenues

3,311,130

Security deposits

Due to other funds 2,710,914

Compensated absences payable 8,010

(165,287) (2,595,000)

(75,974) 468,829

1,335,950

(38,959)

7

864,894

699,172

1,344,440

(1,587)

2,165,838

2,121,625

(2,036,233)

25,648

(813,725)

(48,912)

1,224,660

55,296

1,479,870

(2,710,914)

8,010

(110,939)

864,894

(217,368)

(483,613)

2,165,838

135,134

3,311,130

7

Net cash provided by (used in) operating activities 5,045,355 2,702,680 (343,770) (50,326) (344,896) 7,009,043

Non-eash investing, capital and financing activiti es:

Change in the fair value

of

investments 2,502,176

2,502,176

Loss on disposal

of

assets - 44,951 44,951

Supplemental information:

Cash paid for interest

35,855 35,855


- -


38/54


General Fund Schedule o Budgeted and ctual Revenues and Expenses

Variance

Favorable

Year ended June 30 2010

Actual

Budgeted

(Unfavorable)

Revenues - budgetary basis

Annual fees

Investments

Authorized house counsel

Lawyer regulation

Florida registered paralegal program

Professional enhancement program

Division director - ethics, UPL and professionalism

Unlicensed practice

of

law

Ethics

Lawyer advertising

Professionalism

Multijurisdictional practice

Meetings and conventions

Addressing services

Continuing legal education program

Continuing legal education rule

Course approval center

Public service programs

Foreign legal consultants

Law office management advisory services

Member benefits program

Legal publications

Section administration

Young lawyers division

Committtee expenses

Public information

Journal

ews

Directory

Building and grounds

Other revenue

G

Kirk Haas Fund (restricted revenue)

Total revenues - budgetary basis

22,559,757

2,781,582

267,448

653,531

572,370

84,861

11,277

536,785

56,855

602,250

530,397

198,156

3,707,451

647,795

132,624

660,313

10,035

149,162

739,052

841,656

773,953

691,921

8,867

73,112

527,049

1,154,989

125,285

84,337

1,463

5,651

39,189,984

22,777,945

(218,188)

680,000

2,101,582

283,500

(16,052)

730,600

(77,069)

642,000

(69,630)

113,525

(28,664)

199

(199)

2,560

8,717

50

(50)

507,950 28,835

52,429

4,426

525,000

77,250

553,422

(23,025)

175,000 23,156

4,160,952

(453,501)

559,018

88,777

158,720

(26,096)

800,925

(140,612)

9,625

410

167,381

(18,219)

612,263 126,789

922,680 (81,024)

781,971

(8,018)

605,207

86,714

9,000

(133)

134,313

(61,201 )

615,837

(88,788)

1,489,936

(334,947)

133,137

(7,852)

68,900

15,437

10,000

(8,537)

1,000 4,651

38,285,045 904,939

See Independent Auditors Report.

-

-


39/54


General Fund Schedule

o

Budgeted and Actua l Revenues and Expenses

(Continued)

Variance

Favorable

Year ended June 30 2010

Actual

Budgeted (Unfavorable)

Expenses - budgetary basis

General administration

Staff and office expense

Travel

Internal service and administration

Other operating expenses

746,808

50,245

3,467

27,710

Total general administration 828,230

Legislation


Contract services

Travel



Total legislation

102,178

258,226

1,841

52,481

1,132

415,858

Authorized house counsel

Staff and office expense 7,570


988


1,380

Total authorized house counsel

9,938

899,746 152,938

63,591

13,346

2,798 (669)

33,654

5,944

999,789 7 ,559

224,203

(12,663)

28,083 845

19,980 5,934

480,991

99,954

753,257 94,070

Board and officer


Travel



Total board and officer

236,866

27,238

14,046

381,037

659,1

2010-2009 June 30 The Florida Bar and Subsidiaries, Financial Statements and Supplemental...

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