CLARK FORK COALITIONNon-Profit

2019-001 IMPAIRMENT OF FIXED ASSETS Condition and Criteria: During the audit, the Organization did not factor-in the value of all assets considered as a group when recording an impairment, resulting in a smaller impairment loss than actual. Additionally, the impairment triggered an offsetting extinguishment of debt and the Organization netted the impairment loss against the gain from debt relief resulting in a zero effect on the statement of activities. All assets considered as a group should be taken into account when recording an impairment loss in order to avoid overstating assets. Additionally, an impairment loss and the related gain on debt relief should be reflected in gross on the statement of activities. Cause: The Organization did not have a process in place to identify all assets considered as a group before recording the impairment loss and also to ensure the impairment loss and gain from debt relief were recorded in gross. Effect: As a result, land was overstated by $75,228, expenses were understated by $2,898,589, and revenues were understated by $2,823,361. The potential effect is the overstatement of assets and understatement of revenues and expenses for similar transactions. Recommendation: We recommend management remain cognizant of all of the assets that are included in an appraisal report and appropriately include all assets in a transaction relating to the appraisal. Additionally, we recommend the Organization records any losses and gains in gross on the statement of activities as opposed to netting such transactions against each other.

2019-002 FINITE LIFE INTANGIBLE ASSETS Condition and Criteria: During the current year audit, we noted the Organization has been expensing the advanced payment of long-term water leases when paid as opposed to capitalizing them as intangible assets and amortizing them over the life of the lease. Expenses should be recognized in the time period in which the underlying expense is incurred as opposed to when the cash is disbursed. Cause: The Organization did not have a process in place to amortize long-term water leases over the life of the lease. Effect: As a result, assets and net assets were understated by $551,864 at the beginning of the year and expenses were understated and assets were overstated by $36,939 in the current year. The potential effect is the mis-matching of revenue and expenses over the term of leased water rights. Recommendation: We recommend management implement a system to capitalize and amortize new water right leases over the term of the lease instead of expensing it when paid.