You are on page 1of 55

TheFloridaBarandSubsidiaries

FinancialStatementsand
SupplementalInformation
June30,2012and2011
The Florida Bar and Subsidiaries
Table of Contents
June 30, 2012 and 2011
Independent Auditors' 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 - 28
Supplementary Information
Consolidating Statement of Net Assets as of June 30,2012. 29 - 30
Consolidating Statement of Revenues, Expenses and Changes
in Net Assets for the year ended June 30,2012 31
Consolidating Statement of Cash Flows for the year ended
June 30, 2012. 32 - 33
General Fund Schedule of Budgeted and Actual Revenues and Expenses
for the year ended June 30, 2012. 34 - 42
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, 2012. 43
Clients' Security Fund Schedule of Budgeted and Actual Revenues and
Expenses for the year ended June 30, 2012. 44
Certification Fund Schedule of Budgeted and Actual Revenues and Expenses
for the year ended June 30, 2012. 45
Sections Fund Schedule of Budgeted and Actual Revenues and Expenses for the
year ended June 30,2012. 46 - 47
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 Auditing Standards 48 -49
Can. Rigplrlngram. LLC
1713 Mahan Drive
Tallahassee. FL 32308
(850) 8788177
t8SO) 8782344 (fax)
www.cricpa.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, 2012 and 2011, which comprise The Florida Bars basic financial
statements as listed in the table of contents. These financial statements are the
responsibility of 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, 2012 and 2011 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
October 1, 2012, on our consideration of The Florida Bar and Subsidiaries' internal control
over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of 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 be considered
in assessing the results of our audit.
Board of Governors
The Florida Bar
Page 2
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 3 through 7 be presented to supplement the
basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to
be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency
with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Our audits were conducted for the purpose of 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 of contents, is presented for
the purposes of additional analysis and is not a required part of the basic consolidated financial
statements of The Florida Bar. Such information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to prepare
the financial statements. The information has been subjected to the auditing procedures
applied in the audit of the basic consolidated financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the financial statements or to the financial
statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, the information is fairly
stated in all material respects in relation to the financial statements as a whole.
Wv\, ~ J ~ l,.t. C
October 1, 2012
Management's Discussion and Analysis
TheFloridaBarandSubsidiaries
Management'sDiscussionandAnalysis
The Florida Bar is the statewide professional and regulatory organization for lawyers with more
than 93,000 members. Headquartered in Tallahassee, The Florida Bar is a unified state barby
ruleoftheSupremeCourtofFlorida. MembershipinTheFloridaBarisanecessarycomponentof
Supreme Court ofFlorida regulation ofall lawyers licensed to practice law in Florida (Article IV,
Section 15, Florida Constitution). The foundation forthe organization is built on a philosophy of
equityand ethics. Through its programsand services, the Barsupportsthis philosophywithfour
pillarsthatfunction asthe mission ofThe Florida Bar: providing publicservice, protecting rights,
promoting professionalism and pursuing justice. The following management's discussion and
analysis is intended to provide the readers ofThe Florida Bar'sfinancial statements a general
overviewofthefinancial activities during the lasttwo fiscal years (FY)thatended on June 30,
2012and2011.
FinancialHighlights
TheFlorida Bar'stotal netassetsincreasedapproximately$1.5million(or3.1oJ' overthecourse
of FY12 operations. This was primarily generated from continued internal development of
softwareprogramswhich reduced salaryand benefitexpenses byincludingthem inthecostsof
capital assets. ForFY11, total netassetsincreasedapproximately$7.0million(or16.6%)which
wasacombinationofafavorableinvestmentreturnofalmost$6.0millionaswellasdevelopment
ofinternalsoftware.
Total operating revenues for FY12 were virtually unchanged from FY11 while total operating
expensesdecreasedapproximately$600,000(or1.4%). Incomparison,totaloperatingrevenues
and expensesgrewbyapproximately2.5% in FY11. Despite increasing growth in membership
and thus, annual fees, The Florida Barhas continued to see drops in advertising revenue and
continuing legal education programs. The Florida Bar responded to the drops in revenue by
seeking to utilizetechnology oroutsourcing to deliverits products and services more efficiently
andbydelayinghiringofvacantpositionsornotreplacingemployeesastheyretired.
The resources available to spend forthe General Fund ofThe Florida Barwere approximately
$1.9 million less than budgeted for FY12 and were approximately $2.8 million more than
budgetedforFY11. Theseresultswereprimarilyattributabletothegainsand lossesincurred by
TheFloridaBar'sinvestmentportfoliowhichexperiencedalossforFY12andasignificantgainin
FY11, as well as the weak economy. The Florida Bar was able to keep expenses within
budgetedlimitsinbothyears.
OverviewoftheFinancialStatements
This annual report consists ofthree parts - management's discussion and analysis, the basic
consolidated financial statements, and an optional section that presents supplementary
information. Thesupplementaryinformationincludesconsolidatingstatementsandcomparisonsof
actual results to budgeted results. The basic consolidated financial statements present the
consolidated financial position, results ofoperations, and cash flows ofthe Florida Bar and its
subsidiaries. The Florida Bar performs two overall activities as the statewide regulator ofthe
practice oflawand the professional association oflawyers. Its activities are accounted foras a
proprietary type enterprise fund because it charges fees to provide its services similar to a
businessenterprise.
SeetheIndependentAuditors' Report.
-3-
The Florida Bar and Subsidiaries
Management's Discussion and Analysis
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. The notes (beginning on page
12) are an integral part in providing a full understanding of The Florida Bar's financial statements.
Summary of Operations and Condensed Consolidated Financial Information
CONDENSED CONSOLIDATED STATEMENTS OF NET ASSETS
% Change 0/0 Change
June 30, 2012 2011 2010 2011 - 2012 2010 - 2011
Assets
Current and other assets $ 61,931,808 $ 61,520,549 $ 56,571,350 0.70/0 8.7%
Capital assets, net 10,411,528 9,555,406 7,564,589 9.00/0 26.30/0
Total assets $ 72,343,336 $ 71,075,955 $ 64,135,939 1.80/0 10.80/0
Liabilities
Current liabilities $ 16,452,056 $ 16,975,110 $ 15,599,098 -3.11'0 8.80/0
Other liabilities 2,522,588 2,317,538 4,108,184 8.80/0 -43.6%
Total liabilities 18,974,644 19,292,648 19,707,282 -1.61'0 -2.1%
Net assets
Invested in capital assets,
net of related debt 10,411,528 9,555,406 7,564,589 9.01'0 26.30/0
Restricted for scholarships 46,334 45,921 38,682 0.90/0 18.7%
Unrestricted 42,910,830 42,181,980 36,825,386 1.70/0 14.5%
Total net assets 53,368,692 51,783,307 44,428,657 3.10/0 16.6%
Total liabilities and net assets $ 72,343,336 $ 71,075,955 $ 64,135,939 1.80/0 10.80/0
The Florida Bar's cash and investments were virtually unchanged from FY11 to FY12 despite a
loss on the investment portfolio for FY12 of $669, 183. Cash and investments at June 30, 2012 and
2011 were approximately $60.4 million. In comparison, the gain on the investment portfolio of
approximately $6.0 million in FY11 had a significant impact on cash and investments which
increased from $53.6 million to $60.4 million from FY10 to FY11. The increase in capital assets
from June 30,2010 to June 30,2012 has been a function of the internal development of software
programs as well as a capital improvement program to remodel and refurbish The Florida Bar's
headquarters building.
The primary liability of The Florida Bar is deferred revenue resulting from advance collection of
member fees and prepayments for Continuing Legal Education registrations. Deferred revenue
See the Independent Auditors' Report.
- 4-
The Florida Bar and Subsidiaries
Management's Discussion and Analysis
increased from $10.9 million at June 30, 2010 to $11.3 million at June 30, 2011 then dropped back
to $11.2 million as of June 30, 2012 primarily due to the addition of the Florida Registered
Paralegal Program that began in FY08 but allowed paralegals to apply without a renewal fee until
FY 2011. FY 2011 was the first year for all FRP's to be renewing at once. Other liabilities in 2010
included deferred revenue for a Client Security Fund court ordered recovery for $1.6 million. No
such deferred recoveries were recorded for FY11 and FY12.
For more detailed information, see the accompanying Consolidated Statements of Net Assets.
CONDENSED CONSOLIDATED STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
/0 Change % Change
June 30, 2012 2011 2010 2011 - 2012 2010 - 2011
Operating revenues $ 42,692,524 $ 42,477,814 $ 41,356,998 0.50/0 2.7%
Operating expenses (40,407,950) (40,982,582) (40,021,048) -1.4% 2.4%
Net operating income 2,284,574 1,495,232 1,335,950 52.8% 11.9%
Non-operating revenues 5,917,596 3,925,155 -100.0% 50.8k
Non-operating expenses (699,189) (58,178) (80,806) 1101.8% -28.0
0
k
Net non-operating revenues (699,189) 5,859,418 3,844,349 -111.9% 52.4%
Change in net assets 1,585,385 7,354,650 5,180,299 -78.4% 42.0%
Net assets, beginning 51,783,307 44,428,657 39,248,358 16.60/0 13.2k
Net assets, ending $ 53,368,692 $ 51,783,307 $ 44,428,657 3.1% 16.6%
The Florida Bar operated without an increase in Annual Fees to its members over the past three
years. The increases in Annual Fees received by The Florida Bar have consistently been
approximately 2% to 3% per year commensurate with the membership growth rate. Nevertheless,
Continuing Education Program revenue has continued to decline as more competition has been
experienced from outside vendors as well as the increased use of less expensive internet and
telephonic options by members. Additionally, advertising revenue received for ads in The Florida
Bar Journal and News have continued to decline as a result of the weak economy.
Operating expenses were kept in line with revenue growth in FY11 as compared to FY10 and
actually dropped more than revenue for FY12. This is attributable to various steps taken by The
Florida Bar including (1) efforts to transition away from print and mail to electronic communication
and delivery of Continuing Education materials and other communications to members, (2)
outsourcing of functions that could be done by outside vendors at less cost than continuing to do
those functions internally, and (3) delaying hiring of replacements as employees retired or left the
employ of The Florida Bar. Expenses were also reduced in all three years by the capitalization of
internal development of software.
See the Independent Auditors' Report.
-5-
The Florida Bar and Subsidiaries
Management's Discussion and Analysis
The increase in net assets for FY11 and FY10 was primarily attributable to the favorable
investment climate and for FY12, the cost saving measures described above.
For more detailed information, see the accompanying Consolidated Statements of Revenues,
Expenses, and Changes in Net Assets.
Budgetary Highlights For the years ended June 30, 2012 and 2011, The Florida Bar's budget
funded most departments at a continuation level. The original operating budgets for the General
Fund (excluding the wholly-owned subsidiary and controlled entities) for the years ended June 30,
2012 and 2011 approved by the Florida Supreme Court, planned on an increase in net assets of
$66,936 and $340,381, respectively. After Board of Governor amendments, the planned decrease
became ($686,361) and ($1 ,128,194), respectively.
For FY12, significant budget amendments included an additional contribution to the Client Security
Fund, a public education program to help educate the general public about judicial merit retention,
moving a staff position from the Client Security Fund operations to the General Fund,
improvements for the Fort Lauderdale branch office, costs to update the Bar's webpage, and the
cost to add a paper shredding program to The Florida Bar's document destruction staff procedures.
For FY11, significant budget amendments included an additional contribution to the Client Security
Fund and to the Building Fund, increased costs for the lawyer referral services when the Miami-
Dade area was added back to The Florida Bar's operations, costs for a new lockbox vendor, and
an increase in costs for the Florida Bar elections.
Included in the supplemental information is an actual to budget comparison for each department for
FY12.
CAPITAL ASSETS
The Florida Bar invested the following in Capital Assets:
0/0 Change 0/0 Change
June 30, 2012 2011 2010 2011 - 2012 2010 - 2011
Land
Building and improvements
Landscaping and parking
Equipment and furnishings
Software
Software in development
Construction in progress
Total, prior to depreciation and
amortization
Accumulated depreciation
and amortization
Net capital assets
$
$
1,306,690
11,352,944
120,318
4,802,272
2,433,713
1,113,841
18,615
21,148,393
(10,736,865)
10,411,528
$ 1,306,690
10,728,573
120,318
4,684,035
1,680,573
817,692
14,683
19,352,564
(9,797,158)
$ 9,555,406
$ 1,306,690
9,615,208
120,318
4,562,368
1,231,757
142,237
60,763
17,039,341
(9,474,752)
$ 7,564,589
0.00/0
5.80/0
0.00/0
2.50/0
44.80/0
36.20/0
26.8%
9.30/0
9.6%
9.00/0
0.00/0
11.6%
0.00/0
2.70/0
36.40/0
474.9k
-75.80/0
13.6k
3.40/0
26.30/0
See the Independent Auditors' Report.
- 6-
The Florida Bar and Subsidiaries
Management's Discussion and Analysis
During FY10, The Florida Bar began a significant refurbishment of the headquarters building in
Tallahassee. The remodeling had mostly been completed as of the end of FY12 and was
funded through available cash. Additions to software and software in development began in
2010 as a result of a new accounting standard that required the cost of internally developed
software to be capitalized. Prior to that time, all software costs were expensed as incurred. The
Florida Bar will continue to add to these costs as new programs are created or significantly
updated. Presently, The Florida Bar has no plans to significantly alter its investment in capital
assets other than to continue to add to costs of developed software.
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 required
annual fee payments by lawyers, 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.
See the Independent Auditors' Report.
- 7-
Financial Statements
The Florida Bar and Subsidiaries
Consolidated Statements of Net Assets
June 3D, 2012 2011
Assets
Current assets
Cash and cash equivalents $ 17,958,410 $ 14,502,362
Short-term investments 42,469,481 45,930,388
Accounts receivable, net 512,481 494,844
Prepaid expenses and other assets 991,436 592,955
Total current assets 61,931,808 61,520,549
Capital assets, net
Land 1,306,690 1,306,690
Buildings and improvements 11,352,944 10,728,573
Landscaping and parking 120,318 120,318
Equipment and furnishings 4,802,272 4,684,035
Software 2,433,713 1,680,573
Software development in progress 1,113,841 817,692
Construction in progress 18,615 14,683
Accumulated depreciation (10,736,865) (9,797,158)
Total capital assets, net 10,411,528 9,555,406
Total assets $ 72,343,336 $ 71,075,955
Liabilities and Net Assets
Current liabilities
Accounts payable $ 1,770,767 $ 1,745,073
Client Security Fund claims payable 2,242,075 2,568,189
Accrued expenses 1,176,897 1,237,482
Deferred revenues 11,213,395 11,375,450
Security deposits 48,922 48,916
Total current liabilities 16,452,056 16,975,110
Non-current liabilities
Compensated absences payable 2,522,588 2,317,538
Total non-current liabilities 2,522,588 2,317,538
Total liabilities 18,974,644 19,292,648
Net assets
Invested in capital assets, net of related debt 10,411,528 9,555,406
Restricted for scholarships 46,334 45,921
Unrestricted 42,910,830 42,181,980
Total net assets 53,368,692 51,783,307
Total liabilities and net assets $ 72,343,336 $ 71,075,955
See accompanying notes to the consolidated financial statements.
-8-
The Florida Bar and Subsidiaries
Consolidated Statements of Revenues, Expenses and Changes in Net Assets
Years ended June 3D, 2012 2011
Operating revenues
Annual fees $ 23,754,161 $ 23,094,112
Other fees from members 6,269,655 6,253,705
Sales of products and services 8,884,912 9,512,668
Advertising 1,599,039 1,730,692
Young lawyers 874,708 903,972
Grants and other 1,310,049 982,665
Total operating revenues 42,692,524 42,477,814
Operating expenses
Regulation of the practice of law 16,495,825 16,534,580
Cost of products and services provided to members 10,111,082 10,218,814
Unauthorized practice of law 1,506,205 1,440,549
Public service programs 3,282,089 3,609,484
Communications with members and the public 3,955,230 3,589,399
Administration 1,991,810 2,407,751
Legislation 437,330 720,736
Young lawyers 798,120 685,739
Depreciation and amortization 1,029,784 931,560
Other programs and costs 800,475 843,970
Total operating expenses 40,407,950 40,982,582
Operating income 2,284,574 1,495,232
Non-operating revenues (expenses)
Investment earnings (loss) (669,183) 5,917,596
Loss on disposal of capital assets (30,006) (58,178)
Total non-operating revenues (expenses) (699,189) 5,859,418
Change in net assets 1,585,385 7,354,650
Total net assets, beginning of year 51,783,307 44,428,657
Total net assets, end of year $ 53,368,692 $ 51,783,307
See accompanying notes to the consolidated financial statements.
- 9-
The Florida Bar and Subsidiaries
Consolidated Statements of Cash Flows
2011 Years ended June 30, 2012
Cash flows from operating activities:
Receipts from members, customers and other sources $ 46,653,755 $ 43,098,254
Payments to employees, suppliers and other vendors (44,077,708) (39,230,201 )
Net cash provided by operating activities 2,576,047 3,868,053
Cash flows from capital and related financing activities:
ACquisition of capital assets (1,911,723) (2,976,820)
Net cash (used in) capital and related financing activities (1,911,723) (2,976,820)
Cash flows from investing activities:
Redemption of investments 23,175,427 29,550,168
Purchase of investments (21,226,436) (35,476,755)
Investment income, net 842,733 2,997,801
Net cash provided by (used in) investing activities 2,791,724 (2,928,786)
Increase (decrease) in cash and cash equivalents: 3,456,048 (2,037,553)
Cash and cash equivalents, beginning of year 14,502,362 16,539,915
Cash and cash equivalents, end of year $ 17,958,410 $ 14,502,362
See accompanying notes to the consolidated financial statements.
- 10-
TheFloridaBarandSubsidiaries
ConsolidatedStatementsofCashFlows(Continued)
2011 Years ended June 30, 2012
Reconciliationofoperatingincometonetcash
providedbyoperatingactivities:
Operatingincome $ 2,284,574 $ 1,495,232
Adjustmentstoreconcileoperatingincometonetcash
providedbyoperatingactivities:
Depreciationandamortization 1,029,784 931,560
(Increase)decreasein:
Accountsreceivable, net (17,637) 179,526
Prepaidexpensesandotherassets (398,481) (16,622)
CSFrecoveryreceivable 1,692,991
Increase(decrease)in:
Accountspayable 21,505
Claimspayable (326,114)
Accruedexpenses (60,585)
Deferredrevenues (162,055)
Deferredrevenues- CSFrecovery
Securitydeposits 6
Com ensatedabsenses a able 205,050
Netcash provided byoperatingactivities 2,576,047 $
Non-cashinvesting,capital, andfinancingacitivities
Changein thefairvalueofinvestments $ (2,046,563) $ 2,294,078
Lossondisposalofassets $ (30,006) $ (58,178)
Seeaccompanying notestotheconsolidatedfinancial statements.
- 11 -
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE1- NATUREOFBUSINESS
The Florida Barand Subsidiaries(TheFlorida Bar)isthestatewide professionalorganizationof
lawyers. Itservesasanadvocateand intermediaryforattorneys,thecourtandthe public. The
FloridaBarwasestablishedasaunifiedstatebarbyruleoftheSupremeCourtofFlorida. The
Florida Bar regulates lawyers in Florida, investigates the unauthorized practice of law, offers
continuing legaleducation, publisheslawjournalsandoffersothermemberservices.
NOTE2- SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES
Reporting Entity
TheFlorida Barisa unifiedstate barorganizedasan armoftheSupremeCourtoftheStateof
Florida. It is considered a govemmental entity because it was established by, and has the
potentialtobedissolvedby, theSupremeCourtofFlorida. Therefore,TheFloridaBaradoptedthe
provisions ofStatement No. 34 ("Statement No. 34") ofthe Governmental Accounting Standards
Board (GASB) "Basic Financial Statements - and Management's Discussion and Analysis - for
State and Local Governments," asamendedbyStatementNo. 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
financiallyaccountable, be required to be included in The Florida Bar'sfinancial statements. The
Florida Barisfinanciallyaccountable ifitappointsavoting majorityofan organization'sgoverning
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 Baris required toconsiderotherorganizationsforwhichthe
nature and significance oftheir relationship with The Florida Bar are such that exclusion would
cause the reporting entity'sfinancial statements to be misleading or incomplete. Management's
analysis hasdisclosed no component unitsthat should be included in The Florida Bar'sfinancial
statements.
Basis of Presentation
The Florida Barisaccountedforasaproprietarytypeenterprisefund. The Florida Barappliesall
applicable pronouncements ofthe Financial Accounting Standards Board (FASB) issued on or
before November 30, 1989 that are not in conflict with applicable GASB pronouncements.
Enterprise funds are used to account for activities that are financed and operated in a manner
similarto privatebusinessenterprises: (1)wherethecostsofprovidinggoodsand servicestothe
general public on a continuing basis are to be financed through usercharges; 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
generallyresultfrom providing goodsand servicesin connection with aproprietaryfund'songoing
operations. Operating expenses for The Florida Bar include the costs ofpersonnel, contractual
services, supplies, utilities, repairs and maintenance, and depreciation and amortization ofcapital
assets. All revenues and expenses not meeting this definition are reported as non-operating
revenuesandexpenses.
- 12-
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE2- SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
Basis ofAccounting
Basis ofaccounting 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 ofaccounting in accordance with accounting principles generally accepted in the
UnitedStatesofAmerica. Underthismethod, revenuesarerecognizedwhentheyareearnedand
expenses are recognized when they are incurred. The measurementfocus ofproprietary fund
types is on a flow of economic resources method, which emphasizes the determination ofnet
income, financial position, and cash flow. All fund assets and liabilities, currentand non-current,
areaccountedforintheConsolidatedStatementsofNetAssets.
Cash and Cash Equivalents
All demanddepositaccountsand short-term highlyliquid investmentswith original maturitiesof
threemonthsorlessarereportedascashequivalents.
Investments
Investmentsarereportedatfairvalues. Fairvaluesforsecuritiestradedonnationalorinternational
exchanges orover-the-counterare valued atquoted market prices. Fairvalues ofsecurities not
tradedonanexchangeorover-the-counterareestimated based onthe netassetvalues provided
bytheinvesteecalculatedinaccordancewithFASBTopic946.
Capital Assets
Capital assets are stated atcost less accumulated depreciation and amortization. The value of
softwaredevelopedforThe Florida Bar'suse includesall directand indirectcoststhatare related
to development activities. The costs of capital assets are depreciated or amortized over the
estimated useful lives ofthe 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
accumulateddepreciationoramortizationareremovedfromtheaccountsandanyresultinggainor
loss is reflected in the Consolidated Statements of Revenues, Expenses and Changes in Net
Assets, intheperiodofdisposal.
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 offunds by
errant Florida Bar members. The Fund is financed by $25 ofthe annual fees due from each
Florida Bar member who is in good-standing (including inactive members). Claims payable
representamountsthathavebeenapprovedforpaymentfromtheFund.
Deferred Revenues
Deferred revenuesconsistprimarilyofmembershipfeescollected in advance, prepaid advertising
andprepaid legaleducationcourses.
-13-
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE2- SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)
Allocation of Expenses
Thecostsofprovidingthevariousprograms, services, andotheractivitieshavebeensummarized
on afunctional basis in theConsolidated StatementofRevenues, Expensesand Changes in Net
Assets. Accordingly, certain costs have been allocated among the programs and supporting
servicesbenefited.
Principles of Consolidation
Theaccompanying consolidatedfinancial statementsincludetheaccountsofThe Florida Barand
itswholly-owned subsidiary, TheFlorida BarBuilding Corporation, and itsothercontrolledentities,
Florida Lawyers Association for the Maintenance of Excellence, Inc. and The Florida Attorneys
CharitableTrust. All significant intercompanytransactions and accounts have been eliminated in
consolidation.
Income Taxes
The Florida Barisanadministrativeagencyofthe SupremeCourtofFlorida and is notsubjectto
federal orstate incometax. TheFlorida BarBuildingCorporation, Florida LawyersAssociationfor
theMaintenanceofExcellence, Inc. andTheFloridaAttorneysCharitableTrusthavebeengranted
exemption from federal and state income taxes except on unrelated business income under
Sections501(c)(25),501(c)(6),and501(c)(3),respectively,oftheInternalRevenueCode.
Estimates
Thepreparationoffinancial statementsinconformitywithaccountingprinciplesgenerallyaccepted
in the United States ofAmerica requires managementto 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
expensesduringthereportingperiod. Actualresultscoulddifferfromthoseestimates.
Concentration
TheFloridaBarreceivesthemajorityofitsrevenuefromlawyerslicensedtopracticeintheStateof
Florida.
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 ofnetassets that are
associatedwithnon-liquid, capitalassets. Restrictedforscholarshipsconsistsofmoniesrestricted
fortheannualG. KirkHaasfund scholarships. Undesignatedassetsconsistofallotherassetsnot
includedinthepreviouscategories.
- 14-
The FloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE3- CASHANDCASHEQUIVALENTS
Cashand cashequivalentsaresubjecttocustodial creditrisk. Custodial creditrisk istheriskthat
in the event ofa bankorothercounterpartyfailure, The Florida Bar'scash and cash equivalents
maynotbereturned.TheFloridaBar'spolicywith respecttocustodialcreditriskisthatTheFlorida
Barwill 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.
Cashandcashequivalentsareheldatthreefinancial institutions. Theoperatingcashbalanceheld
in demand deposit accounts was $8, 136,446 and additional cash and money marketfunds was
$9,821,964 at June 30,2012. Operating cash in the amount of$7,020,997was insured bythe
FederalDepositInsuranceCorporation(FDIC)asofJune30, 2012and$1,115,449wasuninsured.
The additional cash and money market funds are held at a financial institution insured by the
SecuritiesInvestorProtectionCorporation(SIPC). TheSIPCprovidesupto$250,000incoverage
foruninvestedcashbalancesasofJune30, 2012.
NOTE4- INVESTMENTS
Investment Objectives and Policies
Investments are made for the sole interest and exclusive purpose of providing investment
returnsforThe Florida Bar. The Florida Bar'sinvestmentobjectivesand policiesare achieved
throughashort-termaccountportfolioandalong-termaccountportfolio.
Investmentguidelinesforbothportfoliosaredefinedbywritten InvestmentPolicies(thePolicies)
approved bytheFlorida Bar'sBoard ofGovernors. ThePoliciesestablishdiversified investment
strategies, bothbytypesofinvestmentand bymanager, minimumcreditqualities, and duration
limits. AnInvestmentCommitteehasoversight, within Policylimits, toimplementanddirectthe
investmentstrategies. The policies are reviewed atleastannuallyforanyadjustments required
due to changes or developments within the investment markets that may provide enhanced
investment and/or risk management opportunities, and recommendations for changes are
submittedforapprovalbytheBoardofGovernors.
The purpose ofthe short-term portfolio is to provide for The Florida Bar's short-term working
capitalneeds. Theshort-termportfoliopossessesashort-termtimehorizon(onetothreeyears)
and within this horizon, the primary objectives are to preserve capital and provide liquidityfor
short-term cash flow needs and to achieve attractive short-term yields consistent with
preservationofcapital.
The purpose ofthe long-term investment portfolio is to provide forThe 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 are to provide long-term growth of capital and income. The
secondaryobjectivesarehighcurrentincomeandliquidity.
-15-
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE4- INVESTMENTS(CONTINUED)
Investment Objectives and Policies
ThePoliciesrequiretheriskadjustedreturnsofan investmentoverafull marketcycletorankin
the top 50% of universal comparisons with similar objectives and the investment should
outperformthetargetpolicyindex. ThePoliciesestablishassetallocationguidelineswithregard
to acceptable assetclasses and prohibited investments, the overalltargeted assetmix, and the
representative indices for each asset class. The asset allocation guidelines as compared to
actualinvestmentbalanceswereasfollowsasofJune30, 2012:
Short-Term
Target Representative
AssetClasses Minimum Mix Maximum Actual Index
Short-Term Fixed income 35.00/0 50.0% 65.00/0 60.0% Barday'sCapitalIntermediateGovernment/CreditBond Index
Cashand Equivalents 35.00/0 50.00/0 65.0% 40.00/0 CitigroupU.S. gO-Day TreasuryBillsIndex
Long-Term
Target Representative
AssetClasses Minimum Mix Maximum Actual Index
U.S. LargeCapEquity 9.0% 14.0% 19.0% 16.0% Standard& ~ s 500Index
U.S.MidCapEquity 0.0% 2.0% 7.0% 2.0% RusseH Mid CapIndex
U.S. SmallCapEquity 0.0% 2.0% 7.0% 2.0% RusseH2000Index
International Equity 10.0% 15.0% 20.0% 10.0% MSCIEAFEIndex
InriSmallCapEquity 0.0% 2.0% 7.0% 2.0% MSCI EAFESmallCapIndex
EmergingMarketsEquity O.ook 5.0% 10.0% 10.0% MSCIEmergingMarketsndex
Commodtties 0.0% 3.0% 8.0% 2.0% DowJonesUBSCommodityIndex
REITs 0.0% 3.0% 8.0% 3.0% NAREITEquityIndexorDowJonesGlobalSelectREIT
Inflation-linkedSecurities 0.0% 3.0% 8.0% 3.0% BarclaysCapitalU.S.TIPSIndex
EmergingMarket Fixed
Income 0.0% 3.0% 8.0% 3.0% JPMorgan EmergingMarketsBond Index
U.S. FixedIncome 20.3% 29.0% 37.7% 25.0% Barclay'sCapitalIntermediateGov't1CreditBond Index
U.S. HighYield Fixed
Income 0.0% 4.0% 9.0% 3.0% Barclay'sCapitalU.S.CorporateHighYield Index
HedgeFunds 0.0% 6.0% 9.0% 6.0% HFRIConservativeIndexorHedgeFundofFundsIndex
ManagedFutures 0.0% 4.0% 7.0% 6.0% Barclay'sCTAIndex
Cash &Equivalents 0.0% 5.0% 10.0% 7.0% CitigroupU.S.9O-DayTreasuryBills
Performanceandcompliancereportsaresubmittedtothe InvestmentCommitteequarterly. The
Florida Bar employs an investment consultant who provides performance and compliance
reportingatboththeportfoliolevelandbyindividualinvestmentmanager.
- 16-
The Florida Bar and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 4 - INVESTMENTS (CONTINUED)
Investments
At June 30, The Florida Bar's investment balances were as follows:
June 30, 2012 2011
US Treasuries
Federal Agencies
Municipal Bonds
Corporate Bonds & Other Fixed Income
Mutual Funds - debt securities (ST)
Mutual Funds - equity securities
Equities
Managed Futures
Hedge Funds
$ 2,927,340 $ 2,969,136
3,067,484 1,868,073
864,039 597,718
2,936,091 3,140,379
12,146,414 13,524,632
2,397,274 4,075,142
13,762,452 16,374,713
2,183,150 1,334,948
2,185,237 2,045,647
Total investments $ 42,469,481 $ 45,930,388
The Florida Bar's investment securities are exposed to various risks, such as custodial credit
risk, interest rate risk, credit quality risk, foreign currency risk, concentration of credit risk, and
market conditions. 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.
Custodial Credit 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 Policies state that The Florida Bar 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
Stanley Smith Barney, LLC have Securities Investor Protection Corporation (SIPC) coverage up
to $500,000 per customer for cash and securities as of June 30, 2012 of which $250,000 may
be in uninvested cash. 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.
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
investments in U.S. Treasuries, federal agencies, municipal bonds, corporate bonds, and other
bonds are directly subject to interest rate risk. The interest rate risk is managed by requiring the
duration of the fixed income portfolio to average between plus or minus 20% of the duration of
the representative benchmark for the investment.
- 17-
The Florida Bar and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 4 - INVESTMENTS (CONTINUED)
Interest Rate Risk (Continued)
As of June 30, 2012, The Florida Bar's debt investments had the following maturities:
Investment Maturities (In Years)
Less than 1
June 30, Fair Value Year 1 - 5 Years 5 -10 Years Over 10 Years
US Treasuries $ 2,927,340 $
- $ 853,967 $ 1,666,289 $ 407,084
Federal Agencies 3,067,485 229,993 567,420 907,756 1,362,316
Municipal Bonds 864,039 97,859 328,773 275,024 162,383
Corporate Bonds & Other Fixed
Income 2,936,091 152,848 1,060,397 1,002,345 720,501
Total investments $ 9,794,955 $ 480,700 $ 2,810,557 $ 3,851,414 $ 2,652,284
The Florida Bar is not directly subject to interest rate risk for its investment in mutual funds that
purchase debt instruments, as The Florida Bar is able to sell their interest in these mutual funds
at will (subject to potential redemption fees). At June 30, 2012, the weighted average life
reported by the mutual fund managers for the mutual funds invested in debt instruments was
3.73 to 7.02 years.
Credit Quality Risk
The Policies require investments in fixed income debt securities to meet 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. In the event a bond's
credit rating is downgraded to a level below investment grade by two of the three ratings
agencies, the Investment Manager must notify the Investment Committee and provide the
Committee with the Manager's outlook on the investment. The Investment Committee must
approve continuing to hold the downgraded investment. The Manager must regularly update
the committee on the downgraded investment's status.
- 18-
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE4- INVESTMENTS(CONTINUED)
Credit Quality Risk (continued)
TheFloridaBar'sdebtinvestmentsbyrating atJune30, 2012arepresentedbelow:
Corporate
Bonds& MutualFunds
U.S. Federal Municipal OtherFixed Debt
QualityRating Treasuries Agencies Bonds Income Securities Total
U.S. Government
Agencies $ - $ 3,067,485 $ - $ 356,639 $ - $ 3,424,124
Aaa 2,927,340 313,744 926,239 4,167,323
Aa1 203,773 203,773
Aa2 209,851 209,851
Aa3 64,033 104,806 168,839
A1 106,640 106,640
A2 25,798 606,460 632,258
A3 46,840 245,999 292,839
Baa1 219,284 219,284
Baa2 370,024 370,024
Baa3
BelowInvestment
Grade
Unrated 12,146,414 12,146,414
Totalinvestments
$ 2,927,340 $ 3,067,485 $ 864,039 $ 2,936,091 $ 12,146,414 $ 21,941,369
Because mutual funds are listed and valued as a whole, not individual holdings, information
aboutspecificratings cannot be obtained howeverthe mutual funds do have exposureto non-
investment grade securities. Investments in mutual funds are with the understanding that the
investment policies stated in the mutual fund's prospectus supersedes the guidelines
establishedbyTheFloridaBar.
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. dollarsand, thus, are notexposedtoforeign currencyrisk. Investmentsin
foreign currency-denominated government bonds, any type offoreign corporate bond, orany
- 19-
The Florida Bar and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 4 - INVESTMENTS (CONTINUED)
Foreign Currency Risk (continued)
other type of foreign currency are not allowed. 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 policies approve 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.
Concentration of Credit Risk
The Investment Policies require investments to be diversified such that there is not an undue
concentration in a single industry sector except for its Concentrated Portfolios. Investments in
equity securities are subject to a maximum 5k commitment at cost and 10
%
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 15k 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.
Investments in cash and cash equivalents are limited to no more than 100/0 of the account's
market value in a single issue (at cost), with the exception of issues backed by the U.S.
Government and its agencies and diversified money market funds.
Derivative Instruments
As of June 30, 2012, the Florida Bar's investment policy states that investments in options,
derivatives and financial futures are prohibited in separately managed accounts other than its
Alternative Investment assets. 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.
NOTE 5 - ACCOUNTS RECEIVABLE, NET
The following is a summary of accounts receivable, net:
June 30, 2012 2011
Accounts receivable $ 537,381 $ 519,744
Allowance for doubtful accounts (24,900) (24,900)
Accounts receivable, net $ 512,481 $ 494,844
- 20-
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE6- CAPITALASSETS, NET
July1,2011 Additions Deletions Transfers June30, 2012
Capitalassetsnotbeingdepreciatedoramortized:
Land
Softwaredevelopmentin progress
Construction in progress
$1,306,690
817,692
14,683
$ -
968,854
18,615
$ - $ - $ 1,306,690
(672,705) 1,113,841
(14,683) 18,615
Totalcapnalassetsnotdepreciatedoramortized 2,139,065 987,469 (687,388) 2,439,146
Capitalassetsbeing depreciatedoramortized:
Buildingsand improvements
Landscaping and parking
Equipmentandfurnishings
Software
Totalcapnalassetsbeing depreciatedor
amortized
10,728,573
120,318
4,684,035
1,680,573
17,213,499
609,688
238,320
80,435
928,443
(120,083)
(120,083)
14,683
672,705
687,388
11,352,944
120,318
4,802,272
2,433,713
18,709,247
Lessaccumulateddepreciationoramortization
for:
Buildingsand improvements
Landscaping and parking
Equipmentandfurnishings
Software
(5,784,535)
(120,318)
(3,311,147)
(581,158)
(406,907)
(389,049)
(233,828)
90,077
(6,191,442)
(120,318)
(3,610,119)
(814,986)
Totalaccumulateddepreciationor
amortization (9,797,158) (1,029,784) 90,077 (10,736,865)
Totalcapitalassetsbeingdepreciatedor
amortized, net 7,416,341 (101,341) (30,006) 687,388 7,972,382
Totalcapitalassets, net $9,555,406 $ 886,128 $ (30,006) $
-
$ 10,411,528
Depreciation and amortization expense for the years ended June 30, 2012 and 2011 was
$1,029,784and $931,560,respectively.
- 21 -
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE7- LONG-TERM LIABILITIES
Compensated Absences Payable
Compensatedabsencespayableconsistedofthefollowing:
June 3D,
Accruedvacation
Accruedsickleave
Totalcompensatedabsences
2012
$ 1,439,898
1,082,690
$ 2,522,588
$
$
2011
1,333,310
984,228
2,317,538
Changes in Long-Term Liabilities
Changesinlong-termliabilitiesaresummarizedasfollows:
Accrued vacation
Accrued sickleave
Totallong-termliabilities
Balance
July1, 2011
$1,333,310
984,228
2,317,538
Additions
$1,140,972
693,124
1,834,096
$
$
NOTE8- REVENUEANDEXPENSECLASSIFICATION
The significant revenue and expense accounts presented in the consolidated financial
statementsaredescribedasfollows:
Other Fees from Members
Includes revenues from members other than annual fees such as advertising approval fees,
certificationfeesandsectiondues.
Sales of Products and Services
Includesrevenues from sourcessuch asContinuing Legal Education(CLE)registrations, sales
ofpublicationsandmeetingrevenues.
Grants and Other
Includes grants received from The Florida Bar Foundation, cost recoveries from discipline
cases, rentsreceived inTheBarCenterBuildingFundandothersourcesofrevenue.
Regulation of the Practice of Law
IncludesexpensesincurredforLawyerRegulation, LawyerAdvertising, Ethics, ContinuingLegal
EducationRules(CLER), MembershipRecordsandCertification.
- 22-
The Florida Bar and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 8 - REVENUE AND EXPENSE CLASSIFICATION (CONTINUED)
Cost of Products 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.
Communication with Members and the Public
Includes the expenses of the Public Information Department and The Florida Bar Journal and
News.
Administration
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 9 - 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 150/0 of covered compensation for the years ended June 30,2012 and 2011,
respectively, and 4.3% on covered compensation exceeding 80% of the Social Security wage
base. 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
0%
3- 4 years
40%
4 - 5 years 600/0
5 - 6 years
80%
Greater than 6 years 100%
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,
2012 and 2011 for the Plan years ended December 31, 2011 and 2010 and was $2,128,115
and $2,236,636, respectively.
The Florida Bar also has a deferred compensation plan. The plan is for the benefit of all eligible
employees who elect to participate.
- 23-
The Florida Bar and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 10- 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 of 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.
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, 2012 and 2011, The Florida Bar contributed $87,777 and $85,511,
respectively, to the plan for the annual required contributions. The Florida Bar contributed an
additional $173,283 for the year ended June 30, 2012 to cover the unfunded liability calculated
at January 1, 2012.
Annual OPEB Cost and Net OPEB Obligation. The Florida Bar's annual other postemployment
benefit (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 costs each year and amortize any unfunded actuarial liabilities (or
funding excess) over a period not to exceed thirty years. Based on the January 1, 2012,
actuarial valuation, the ARC is .62% of active payroll payable for the calendar years 2012
through 2013. The following table shows the components of The Florida Bar's 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 $ 87,777
Interest on net OPES obligation
Adjustments to annual required contribution
Annual OPES cost (expense) $ 87,777
Net OPES obligation - July 1, 2011 $
Annual OPES cost (expense) for 2012 (87,777)
Contributions made during FY 2012 87,777
Net OPES obligation - June 30, 2012 $
- 24-
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE10- RETIREEPOSTEMPLOYMENTHEALTHBENEFITS(CONTINUED)
The Florida Bar's annual OPEB cost, the percentage ofannual OPEB cost contributed to the
plan, andthenetOPEBobligationfor2012andtheprecedingthreeyearswereasfollows:
Annual PercentageofAnnualOPEBCost NetOPEB
FiscalYearEnded OPEBCost Contribtued Obligation
6/30/2010 $268,980 100%
6/30/2011 85,511 100
%
6/30/2012 87,777 100%
Funded Status and Funding Progress. As of January 1, 2012, the most recent actuarial
valuation date, the plan was 91% funded. The actuarial accrued liability for benefits was
calculatedtobe $1,886,227andtheactuarialvalueoftheassetswas$1,712,944, resulting ina
funding deficitof$173,283. Thecovered payroll(annualpayrollofactiveemployeescovered by
the plan) was $14,402,420, and the ratio ofthe unfunded actuarial accrued liability(UAAL) to
the covered payroll was 1.20%. This deficit was funded by the Florida Bar priorto June 30,
2012.
Actuarial valuations ofan ongoing plan involveestimatesofthevalue ofreported amountsand
assumptionsaboutthe probabilityofoccurrenceofeventsfarintothefuture. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts
determined regarding thefunded statusofthe planandtheannual required contributionsofthe
employeraresubjecttocontinual revisionasactual resultsarecomparedwithpastexpectations
andnewestimatesaremadeaboutthefuture.
Actuarial Methods and Assumptions. Projectionsofbenefitsforfinancial reporting purposesare
based onthe substantive plan (theplanasunderstood bytheemployerand theplan members)
and includethetypesofbenefitsprovidedatthetimeofeachvaluationandthehistoricalpattern
ofsharing ofbenefitcosts betweentheemployerand plan memberstothatpoint. Theactuarial
methods and assumptions used includetechniques that are designed to reduce the effects of
short-term volatility in actuarial accrued liabilities and the actuarial value ofassets, consistent
withthelong-termperspectiveofthecalculations.
The projected unit credit actuarial cost method was used for the January 1, 2012 actuarial
valuation. Theactuarialassumptionsincludeda7.5% investmentrateofreturn,whichistherate
ofthe expected long-term investment returns on plan assets and an annual healthcare cost
trend rate of9.50/0 initially, reduced bydecrementsto an ultimaterate of5.0% intheyear2018
and beyond. Both rates included a 3.0% inflation assumption. TFBRHP holds plan assets in
trustsolelyto provide benefitsto retirees and theirbeneficiaries. The UAAL is being amortized
asalevel percentageofprojected payrollonaclosed basis. Theremaining amortization period
atJanuary1, 2012was30years.
- 25-
TheFloridaBarandSubsidiaries
NotestoConsolidatedFinancialStatements
NOTE10- RETIREE POSTEMPLOYMENTHEALTHBENEFITS(CONTINUED)
REQUIREDSUPPLEMENTARYINFORMATION
Scheduleof FundingProgress
Actuarial
Accrued
Liability UAALasa
Actuarial (AAL)- Unfunded Percentage
Actuarial Value Projected AAL Funded Covered ofCovered
Valuation ofAssets UnitCredit (UAAL) Ratio Payroll Payroll
Date (a) (b) (b- a) (alb) (c) (b- a)Ic)
1/1/06 $ - $ 1,203,784 $ 1,203,784 0.00% $ 12,946,872 9.300/0
1/1/08 1,288,476 1,216,209 (72,267) 105.940/0 14,296,752 -0.51%
1/1/10 1,293,906 1,584,797 290,891 81.64% 14,557,008 2.000/0
1/1/12 1,712,944 1,886,227 173,283 90.810/0 14,402,420 1.200/0
NOTE11 - LEASES
The Florida Bar is the lessee ofoffice space under operating leases expiring in various years
throughtheyear2018,withescalationclauses.
The Florida Bar also leases office space from its wholly-owned subsidiary, The Florida Bar
Building Corporation. The intercompany rental income and rental expense have been
eliminated inconsolidation.
Futureminimumrentalpaymentstounrelatedentitiesareasfollows:
YearsendingJune30, Amount
2013 $ 714,702
2014 737,079
2015 760,227
2016 711,048
2017 623,524
Thereafter 197,623
Totalminimumfuturerental payments $ 3,744,203
Total rental expense for the fiscal year ended June 30, 2012 and 2011 was $784,499 and
$721,505, respectively.
TheFlorida Barisalsothelessorofcertainofficespaceinabuildingowned byTheFloridaBar.
The space is rented to unrelated entities under operating leases expiring in various years
throughthe year2014. Rental incomeforthefiscal years ended June30, 2012and 2011 was
$286,784and$279,790, respectively.
- 26-
The Florida Bar and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 11 - LEASES (CONTINUED)
Future minimum rental receipts are as follows:
Years ending June 30,
2013
2014
Total minimum future rental receipts
$
$
Amount
293,818
73,894
367,712
NOTE 12 - 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.
NOTE 13 - 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 2020. 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, 2012:
Estimated
liquidating
Event damages
Annual Meeting $ 856,264
Board of Governors Meetings 105,840
Mid-Year Meeting 183,932
Section Meetings 867,325
Continuing Legal Education Seminars 113,453
Total commitment $ 2,126,814
- 27-
The Florida Bar and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 14 - DESIGNATED FUND BALANCES
The Florida Bar has designated certain net assets to be used for specific program purposes. As
of June 30, 2012 and 2011, the designated net assets were $15,818,367 and $15,009,718,
respectively.
NOTE 15 - 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.
- 28-
Supplementary Information
The Florida Bar and Subsidiaries
Consolidating Statement of Net Assets
Clients'
General Bar Center Security Certification Sections Eliminating Total
June 3D, 2012 Fund Fund Fund Fund Fund Entries All Funds
Assets
Current assets
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Due from other funds
Prepaid expenses ~ other assets
Total current assets
$ 16,798,414
42,469,481
512,481
-
1,015,806
60,796,182
$ 1,159,996
5,505,761
747
6,666,504
$ -
6,617,399
-
6,617,399
$ -
902,879
-
902,879
$ -
5,036,043
-
5,036,043
$
(18,062,082)
(25,117)
(18,087,199)
$ 17,958,410
42,469,481
512,481
991,436
61,931,808
Capital assets, net
Land
Buildings and improvements
Landscaping and parking
Equipment and furnishings
Software
Software development in process
Construction in progress
Accumulated depreciation
and amortization
Total capital assets, net 2,739,963
(814,986)
2,433,713
1,113,841
7,395
7,671,565
(9,921,879)
1,306,690
11,352,944
120,318
4,802,272
11,220
-
-
-
-
-
-
-
-
10,411,528
(10,736,865)
1,306,690
11,352,944
120,318
4,802,272
2,433,713
1,113,841
18,615
Restricted assets
Investment in The Florida Bar
Building Corporation
Total restricted assets
1,611,647
1,611,647
-
-
-
-
-
-
-
-
(1,611,647)
(1,611,647)
Total assets $ 65,147,792 $ 14,338,069 $ 6,617,399 $ 902,879 $ 5,036,043 $ 72,343,336
See Independent Auditors' Report.
- 29-
The Florida Bar and Subsidiaries
Consolidating Statement of Net Assets
(Continued)
Clients'
General Bar Center Security Certification Sections Eliminating Total
June 30,2012 Fund Fund Fund Fund Fund Entries All Funds
Liabilities and Net Assets
Total current liabilities
Current liabilities
Accounts payable
Client security fund claims payable
Accrued expenses
Due to other funds
Deferred revenues
Security deposits
$
32,182,058
3,114,111
-
1,225,819
16,628,733
11,213,395
-
$
115,122
41,083
-
-
-
74,039
$
2,242,075
-
2,242,075
-
-
-
$
-
-
-
-
-
$
-
-
-
-
-
$
(18,087,199)
(1,384,427)
(48,922)
(16,628,733)
(25,117)
$ 1,770,767
2,242,075
1,176,897
11,213,395
48,922
16,452,056
Total non-current liablities
Non-current liabilities
Compensated absences payable
2,522,588
2,522,588 2,522,588
2,522,588
Total liabilities 34,704,646 115,122 2,242,075 (18,087,199) 18,974,644
Total net assets
Net assets
Invested in capital assets, net of related debt
Restricted for scholarships
Unrestricted
Designated
Undesignated
Contributed capital
30,443,146
2,739,963
46,334
564,386
27,092,463
-
14,222,947
7,671,565
4,939,735
1,611,647
4,375,324
4,375,324
-
902,879
902,879
-
5,036,043
5,036,043
-
(1,611,647)
(1,611,647)
10,411,528
46,334
15,818,367
27,092,463
-
53,368,692
Total liabilities and net assets $ 65,147,792 $14,338,069 $ 6,617,399 $ 902,879 $ 5,036,043 $ (19,698,846) $ 72,343,336
See Independent Auditors' Report.
- 30-
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 June 30, 2012 Fund Fund Fund Fund Fund Entries All Funds
Operating revenues
Annual fees
Other fees from members
Sales of products and services
Advertising
Young lawyers
Grants and other
Total operating revenues
$ 23,754,161
3,666,950
6,596,105
1,599,039
874,708
310,859
36,801,822
$ -
-
-
1,095,927
1,095,927
$ -
-
-
800,431
800,431
$ -
1,309,320
3,915
-
1,313,235
$ -
1,293,385
2,284,892
-
3,578,277
$
(897,168)
(897,168)
$ 23,754,161
6,269,655
8,884,912
1,599,039
874,708
1,310,049
42,692,524
Operating expenses
Regulation of the practice of law
Cost of products and services provided to members
Unauthorized practice of law
Public service programs
Communication with members and the public
Administration
Legislation
Young lawyers
Depreciation and amortization
Other programs and costs
Total operating expenses
15,681,398
6,696,438
1,544,775
596,632
4,056,512
2,042,814
448,529
818,558
227,494
521,886
32,635,036
-
-
-
-
-
-
-
-
798,101
379,644
1,177,745
-
-
-
2,700,353
-
-
-
-
4,033
-
2,704,386
1,205,956
-
-
-
-
-
-
-
156
-
1,206,112
-
3,581,839
-
-
-
-
-
-
-
-
3,581,839
(391,529)
(167,195)
(38,570)
(14,896)
(101,282)
(51,004)
(11,199)
(20,438)
-
(101,055)
(897,168)
16,495,825
10,111,082
1,506,205
3,282,089
3,955,230
1,991,810
437,330
798,120
1,029,784
800,475
40,407,950
Operating Income (loss) 4,166,786 (81,818) (1,903,955) 107,123 (3,562) - 2,284,574
revenues (expenses)
Investment earnings
Loss on disposal of capital assets
Total non-operating revenues (expenses)
(492,708)
-
(492,708)
(68,745)
(30,006)
(98,751)
(35,557)
-
(35,557)
(7,747)
-
(7,747)
(64,426)
-
(64,426)
-
-
-
(669,183)
(30,006)
(699,189)
Change In net assets 3,674,078 (180,569) (1,939,512) 99,376 (67,988) 1,585,385
Net assets, beginning of year 29,630,198 13,762,911 4,094,311 803,503 5,104,031 (1,611,647) 51,783,307
Transfers (to) from other funds (2,861,130) 640,605 2,220,525
Net assets, end of year $ 30,443,146 $ 14,222,947 $ 4,375,324 $ 902,879 $ 5,036,043 $ (1,611,647) $ 53,368,692

- 31 -
The Florida Bar and Subsidiaries
Consolidating Statement of Cash Flows
Clients'
General Bar Center Security Certification Sections Eliminating Total
Year ended June 30,2012 Fund Fund Fund Fund Fund Entries All Funds
Cash flows from operating activities:
Receipts from members, customers and other sources
Payments to employees, suppliers and other vendors
Net cash provided by operating activities
$ 36,661,958
(35,839,574)
822,384
$ 2,039,501
(393,568)
1,645,933
$ 3,020,956
(2,985,399)
35,557
$ 1,313,235
(1,305,488)
7,747
$ 3,578,277
(3,513,851)
64.426
$ 39,828
(39,828)
-
$ 46,653,755
(44,077,708)
2,576,047
Cash flows from capital and related financing activities:
Acquisition of capital assets
Net cash (used in) capital and related financing activities
(1,050,350)
(1,050,350)
(861,373)
(861,373)
-
-
-
-
-
-
-
-
(1,911,723)
(1,911,723)
Cash flows from investing activities:
Redemption of investments
Purchase of investments
Investmentincome, net
Net cash (used in) provided by investing activities
23,175.427
(21,226,436)
1,019,208
2,968,199
-
-
(68,745)
(68,745)
-
-
(35,557)
(35,557)
-
-
(7,747)
(7,747)
-
-
(64,426)
(64.426)
-
-
-
-
23,175.427
(21,226.436)
842,733
2,791,724
Increase in cash and cash equivalents 2,740,233 715,815 3.456,048
Cash and cash equivalents, beginning of year 14,058,181 444,181 - - - - 14,502,362
Cash and cash equivalents, end of year $16,798.414 $ 1,159,996 $ $ $ $ $ 17,958,410
See Independent Auditors' Report.
- 32-
The Florida Bar and Subsidiaries
Consolidating Statement of Cash Flows
(Continued)
Year ended June 30,2012
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 operating activities:
Operating income (loss) $ 4,166,786 $ (81,818) $ (1,903,955) $ 107,123 $ (3,562) $ $ 2,284,574
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities
Depreciation and amortization 227,494 798,101 4,033 156 1,029,784
Transfers (to) from other funds (2,861,130) 640,605 2,220,525
(Increase) decrease in:
Accounts receivable, net 22,191 (39,828) (17,637)
Due from other funds 302,969 41,068 (99,532) 67,988 (312,493)
CSF recovery receivable
Prepaid expense and other assets (398,437) (44) (398,481)
Increase (decrease) in:
Accounts payable 1,384,179 (13,886) (1,348,788) 21,505
Claims payable (326,114) (326,114)
Accrued expenses (60,580) (5) (60,585)
Deferred revenues (162,055) (162,055)
Deferred revenues - CSF recovery
Security deposits - 6 6
Due to other funds (1,701,114) - - - - 1,701,114
Compensated absences payable 205,050 - - - - - 205,050
Net cash provided by operating activities $ 822,384 $ 1,645,933 $ 35,557 $ 7,747 $ 64,426 $ - $ 2,576,047
See Independent Auditors' Report.
- 33-
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
Variance
Favorable
Year ended June 30, 2012 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
News
Building and grounds
Other revenue
G. Kirk Haas Fund (restricted revenue)
$ 23,754,161
(492,726)
301,945
721,675
839,470
101,880
469
547,800
19,037
580,225
504,093
141,704
3,074,196
717,199
195,421
412,539
15,340
167,039
672,461
594,891
755,031
874,708
12,889
59,924
460,767
1,138,272
88,027
5,264
4,586
Total revenues - budgetary basis 36,268,287
$ 23,494,347 $ 259,814
1,920,000 (2,412,726)
262,300 39,645
768,937 (47,262)
656,878 182,592
113,525 (11,645)
144 (144)
2,549 (2,080)
275 (275)
575,350 (27,550)
24,702 (5,665)
575,000 5,225
605,375 (101,282)
141,704
3,304,937 (230,741)
687,078 30,121
170,017 25,404
425,050 (12,511)
9,675 5,665
207,210 (40,171 )
573,351 99,110
530,000 64,891
768,086 (13,055)
676,937 197,771
10,500 2,389
99,448 (39,524)
519,786 (59,019)
1,161,517 (23,245)
91,220 (3,193)
300 4,964
3,250 1,336
38,237,744 (1,969,457)
See Independent Auditors' Report.
- 34-
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30,2012 Actual Budgeted (Unfavorable)
Expenses - budgetary basis
General administration
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total general administration
Board and officer
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total board and officer
669,521
45,495
6,155
10,020
731,191
225,323
25,208
11,449
338,479
600,459
1,140,292 470,771
68,257 22,762
4,341 (1,814)
20,252 10,232
1,233,142 501,951
253,346 28,023
26,573 1,365
16,326 4,877
371,975 33,496
668,220 67,761
Legislation
Staff and office expense 100,438
Contract services 293,115
Travel 2,799
Internal service and administration 57,876
Other operating expenses 908
Total legislation 455,136
Authorized house counsel
Staff and office expense 8,963
Internal service and administration 2,356
Other operating expenses 3,045
Total authorized house counsel 14,364
General counsel
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
137,440
379,463
2,324
32,543
1,076
Total general counsel 552,846
Division director - legal
Staff and office expense (13,930)
Travel 12,962
Internal service and administration 750
Other operating expenses 230
Total division director - legal 12
115,305 14,867
302,000 8,885
3,316 517
66,212 8,336
417 (491)
487,250 32,114
9,139 176
1,544 (812)
2,991 (54)
13,674 (690)
143,096 5,656
650,576 271,113
3,316 992
552 (31,991 )
711 (365)
798,251 245,405
(21,592) (7,662)
18,780 5,818
2,312 1,562
500 270
(12)
See Independent Auditors' Report.
- 35-
624
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Expenses - budgetary basis
Attorney Consumer Assistance Program
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total Attorney Consumer Assistance Program
Lawyer regulation
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Total lawyer regulation 11,217,444
Professional enhancement program
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total professional enhancement program
Division director - ethics, UPL and professionalism
Staff and office expense
Travel
Less cost dist.
Internal service and administration
Other operating expenses
Total division director - ethics, UPL and professionalism
Unlicensed practice of law
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total unlicensed practice of law
1,201,365
881
154,916
46,981
1,404,143
9,284,052
2,402
133,220
1,440,200
357,570
23,504
7,369
3,786
2,569
37,228
(6,623)
6,486
92
45
1,302,319
28,038
220,783
31,813
1,582,953
1,307,980
1,505
193,799
48,232
1,551,516
9,600,987
148,602
1,608,100
403,216
11,760,905
28,031
8,551
5,007
2,761
44,350
52,393
7,157
(169,287)
16,551
60
(93,126)
1,321,037
42,257
239,433
42,284
1,645,011
106,615
38,883
1,251
147,373
316,935
(2,402)
15,382
167,900
45,646
543,461
4,527
1,182
1,221
192
7,122
59,016
671
(169,287)
16,459
15
(93,126)
18,718
14,219
18,650
10,471
62,058
Lawyer assistance program/substance abuse
Internal service and administration 53,206 59,818 6,612
Other operating expenses 470,000 470,000
Total lawyer assistance program/substance abuse 523,206 529,818 6,612
See Independent Auditors' Report.
- 36-
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Expenses - budgetary basis
Ethics
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total ethics
Lawyer advertising
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Total lawyer advertising
669,709
3,552
84,178
3,046
760,485
676,673
12,400
1,998
85,180
5,774
782,025
Records management
Staff and office expense 321,906
Travel 241
Internal service and administration 64,047
Other operating expenses 434
Total records management 386,628
Rules
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total rules
105,128
609
11,971
12
117,720
718,507 48,798
4,875 1,323
99,849 15,671
5,797 2,751
829,028 68,543
733,900 57,227
12,400
3,944 1,946
109,234 24,054
9,196 3,422
868,674 86,649
265,085 (56,821 )
1,176 935
40,358 (23,689)
(434)
306,619 (80,009)
107,100 1,972
701 92
13,781 1,810
125 113
121,707 3,987
Ethics/advertising staff pool
Staff and office expense
Internal service and administration
Total ethics/advertsising pool
(876)
873
(3)
950
950
876
77
953
Professionalism
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Total professionalism
289,938
4,900
5,827
36,787
5,551
343,003
403,732
4,906
13,188
69,174
21,416
512,416
113,794
6
7,361
32,387
15,865
169,413
Multijurisdictional practice
Staff and office expense
Internal service and administration
Other operating expenses
Total multijurisdictional practice
15,617
1,770
17
17,404
22,360
2,848
15
25,223
6,743
1,078
(2)
7,819
Florida Registered Paralegal
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Total Florida Registered Paralegal
153,722
8,900
2,914
28,873
8,362
202,771
147,318
8,900
3,555
10,433
10,850
181,056
(6,404)
641
(18,440)
2,488
(21 ,715)
See Independent Auditors' Report.
- 37-
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Expenses - budgetary basis
Shipping and receiving
Staff and office expense 140,728 160,896 20,168
Internal service and administration (3,753) (4,000) (247)
Other operating expenses 131 93 (38)
Less cost distribution (137,104) (189,045) (51,941)
Total shipping and receiving 2 (32,056) (32,058)
Building and grounds
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Less cost distribution
1,736,945
2,161
209
2
(1,651,283)
Total building and grounds 88,034
Meetings and conventions
Staff and office expense 393,829
Contract services 2,811
Travel 13,542
Internal service and administration 176,965
Other operating expenses 356,353
Less cost distribution (73,517)
Total meetings and conventions 869,983
Information systems
Staff and office expense 2,989,020
Contract services 420,221
Travel 11,004
Internal service and administration 548
Other operating expenses 79,116
Less cost distribution (3,499,913)
Total information systems (4)
Human resource management
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Less cost distribution
301,531
48,963
10,914
17,024
(378,432)
1,776,943 39,998
3,705 1,544
245 36
3 1
(1,699,105) (47,822)
81,791 (6,243)
424,178 30,349
2,629 (182)
23,965 10,423
200,999 24,034
454,801 98,448
(39,936) 33,581
1,066,636 196,653
3,399,800 410,780
498,000 77,779
20,446 9,442
637 89
142,579 63,463
(4,013,715) (513,802)
47,747 47,751
291,977 (9,554)
50,000 1,037
3,508 3,508
20,524 9,610
19,206 2,182
(384,518) (6,086)
Total human resource management 697 697
See Independent Auditors' Report.
- 38-
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Expenses - budgetary basis
Division director - programs
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total division director - programs
(1,969)
1,331
489
156
7
(6,450) (4,481 )
4,091 2,760
1,710 1,221
296 140
(353) (360)
Continuing legal education programs
Staff and office expense 829,427
Travel 44,248
Internal service and administration 668,189
Other operating expenses 1,300,808
Total continuing legal education programs 2,842,672
Continuing legal education rule
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total continuing legal education rule
200,547
554
36,987
21,832
259,920
812,879
68,236
964,343
1,353,607
3,199,065
(16,548)
23,988
296,154
52,799
356,393
286,397
1,611
61,268
22,581
371,857
85,850
1,057
24,281
749
111,937
140,138
24,679
1,200
166,017
(34,789)
4,806
578
(29,405)
Course approval center
Staff and office expense 174,927
Internal service and administration 19,873
Other operating expenses 622
Total course approval center 195,422
Legal education and specialization pool
Staff and office expense 2,841 (7,983) (10,824)
Internal service and administration (2,838) (7,830) (4,992)
Total legal education and specialization pool 3 (15,813) (15,816)
Professional development pool
Staff and office expense (2,158)
Internal service and administration 824
Other operating expenses 1,329
Total professional development pool (5)
Public service programs
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total public service programs
342,857
929
110,719
176,115
630,620
(5,485) (3,327)
385 (439)
1,100 (229)
(4,000) (3,995)
380,677 37,820
2,343 1,414
80,581 (30,138)
201,273 25,158
664,874 34,254
See Independent Auditors' Report.
- 39-
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Expenses - budgetary basis
Foreign legal consultants
Staff and office expense
Internal service and administration
Other operating expenses
Total foreign legal consultants
6,482
1,146
139
7,767
5,995 (487)
913 (233)
278 139
7,186 (581 )
Print shop
Staff and office expense 236,751 336,265 99,514
Other operating expenses 17,329 30,894 13,565
Less cost distribution (254,073) (371,032) (116,959)
Total print shop 7 (3,873) (3,880)
Law office management advisory services
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total law office management advisory services
242,093
23,537
35,573
12,001
313,204
Member benefits program
Staff and office expense 36,043
Internal service and administration 27,140
Other operating expenses 199,756
Total member benefits program 262,939
323,381 81,288
41,289 17,752
50,054 14,481
17,031 5,030
431,755 118,551
48,544 12,501
36,020 8,880
206,190 6,434
290,754 27,815
Legal publications
Staff and office expense 259,695
Travel 1,124
Internal service and administration 34,460
Other operating expenses 21,842
Total legal publications 317,121
Court rules
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total court rules
317,072
9,117
40,677
18,144
385,010
320,019 60,324
3,562 2,438
60,154 25,694
27,688 5,846
411,423 94,302
378,646 61,574
14,002 4,885
50,652 9,975
22,971 4,827
466,271 81,261
Section administration
Staff and office expense 627,787 675,458 47,671
Travel 1,651 1,789 138
Internal service and administration 474,370 591,861 117,491
Other operating expenses 9,300 1,035 (8,265)
Total section administration 1,113,108 1,270,143 157,035
See Independent Auditors' Report.
- 40-
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Expenses - budgetary basis
Young lawyers division
Staff and office expense
Travel
Internal service and administration
Other operating expenses
60,822
11,257
100,151
688,829
Total young lawyers division 861,059
Committee
Staff and office expense 97,572
Travel 5,543
Internal service and administration 22,257
Other operating expenses 30,745
Total committee 156,117
Public information
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Total public information
Diversity Initiatives
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Total diversity initiatives
Office systems
Staff and office expense
Internal service and administration
Other operating expenses
Less cost distribution
727,780
183,540
48,790
231,751
119,762
1,311,623
94,583
12,572
19,098
34,037
160,290
443,233
960
(444,183)
57,719 (3,103)
12,083 826
95,536 (4,615)
739,977 51,148
905,315 44,256
89,286 (8,286)
3,820 (1,723)
18,270 (3,987)
39,521 8,776
150,897 (5,220)
740,972 13,192
385,524 201,984
75,974 27,184
231,460 (291)
149,324 29,562
1,583,254 271,631
107,181 12,598
775 (11,797)
9,458 (9,640)
69,000 34,963
186,414 26,124
494,323 51,090
320 (640)
147 147
(502,511 ) (58,328)
Total office systems 10 (7,721 ) (7,731 )
"Journal" - "News" staff pool
Staff and office expense (8,434)
Travel 2,678
Internal service and administration 4,240
Other operating expenses 1,526
Total "Journal" - "News" staff pool 10
"Journal"
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Less cost distribution
276,081
1,356
88,083
501,669
(6,750)
Total "Journal" 860,439
(30,044) (21,610)
3,502 824
11,278 7,038
3,206 1,680
(12,058) (12,068)
290,346 14,265
1,637 281
110,735 22,652
550,839 49,170
(7,500) (750)
946,057 85,618
See Independent Auditors' Report.
- 41 -
The Florida Bar and Subsidiaries
General Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Expenses - budgetary basis
"News"
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Less cost distribution
Total "News"
506,239
9,520
184,692
1,264,187
(160,016)
1,804,622
527,322 21,083
12,023 2,503
206,542 21,850
1,272,949 8,762
(189,993) (29,977)
1,828,843 24,221
Finance and records
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Less cost distribution
Total finance and records
1,838,954
47,020
5,222
215,507
318,956
(1,490,556)
935,103
2,009,531 170,577
71,900 24,880
5,991 769
362,944 147,437
353,374 34,418
(1,786,740) (296,184)
1,017,000 81,897
Research, planning and evaluation
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Total research, planning and evaluation
Division director - administration
Staff and office expense
Travel
Internal service and administration
Other operating expenses
Less cost distribution
167,329
11,000
3,796
1,762
11,538
195,425
151,487
3
17,761
68
(169,319)
172,936 5,607
12,605 1,605
5,554 1,758
1,431 (331)
10,156 (1,382)
202,682 7,257
143,532 (7,955)
100 97
8,152 (9,609)
306 238
(156,498) 12,821
Total division directors - administration (4,408) (4,408)
G. Kirk Haas Fund (restricted fund) 5,000 2,500 (2,500)
Total expenses 33,304,523 36,703,580 3,399,057
Excess of revenues over expenses - budgetary basis $ 2,963,764 $ 1,534,164 $ 1,429,600
See Independent Auditors' Report.
- 42-
The Florida Bar and Subsidiaries
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
Excess of
Revenues
Operating Over (Under)
Year ended June 30, 2012 Revenues Expenses Expenses
Totals on budgetary basis $ 36,268,287 $ 33,304,523 $ 2,963,764
Add:
Subsidiary operations
Florida Lawyers Association for the Maintenance of
Excellence, Inc.
The Florida Attorneys Charitable Trust
23,908
46,901
881
468
23,027
46,433
Less:
Adjustments for financial statement presentation purposes
Net change in the fair value of investments 492,726 492,726
Budgeted items treated as interfund transfers for basic
financial statement purposes
Depreciation
Contributions (30,000)
(640,836)
(30,000)
640,836
Total operating revenues, expenses and income per Consolidating
Schedule of Statement of Revenues, Expenses and Changes in
Net Assets $ 36,801,822 $ 32,635,036 $ 4,166,786
See Independent Auditors' Report.
- 43-
The Florida Bar and Subsidiaries
Clients' Security Fund Schedule of Budgeted and Actual Revenues and Expenses
Variance
Favorable
Year ended June 30,2012 Actual Budget (Unfavorable)
Operatingrevenues
Annualcontribution* $ 2,220,525 $ 2,220,525 $
Recoveries 800,431 13,250 787,181
Totaloperatingrevenues 3,020,956 2,233,775 787,181
Operatingexpenses
Staffandofficeexpense 158,218 209,336 51,118
Travel 7,609 7,949 340
Internalserviceandadministration 89,776 127,692 37,916
Claimspaid 2,462,167 2,480,525 18,358
Otheroperatingexpenses (13,384) 1,826 15,210
Totaloperatingexpenses 2,704,386 2,827,328 122,942
Operatingincome(loss) 316,570 (593,553) 664,239
Non-operatingrevenues
Investmentearnings(loss) (35,557) 225,000 (260,557)
Total non-operatingrevenues (35,557) 225,000 (260,557)
Changein netassets $ 281,013 $ (368,553) $ 403,682
* Theannualcontributionfromthegeneralfund istreatedasabudgeted revenueitem onthis
statement. However,itistreatedasan interfundtransferin thebasicfinancial statementssection
ofthisreport. Thedifferencebetweenthebudgetbasisstatementandthebasicfinancialstatement
isreconciledasfollows:
Changein netassets- budgetarybasis $ 281,013
Less: annualcontributiontreatedasan interfund
transferonthebasic'financialstatements (2,220,525)
Changein netassetsperConsolidatingScheduleof
StatementofRevenues, ExpensesandChangesin
NetAssets $ (1,939,512)
SeeIndependentAuditors'Report.
- 44-
The Florida Bar and Subsidiaries
Certification Fund Schedule of Budgeted and Actual Revenues and Expenses
Year ended June 30,2012
Operating revenues
Member Fees
Sales
Total operating revenues
Operating expenses
Staff and office expense
Contract services
Travel
Internal service and administration
Other operating expenses
Total operating expenses
Operating income (loss)
Non-operating revenues
Investment earnings (loss)
Total non-operating revenues
Change in net assets per Consolidating Schedule of
Statement of Revenues, Expenses and Changes in
Net Assets
Actual Budget
Variance
Favorable
(Unfavorable)
$ 1,309,320
3,915
1,313,235
$ 1,249,653
11,100
1,260,753
$ 59,667
(7,185)
52,482
816,110
46,945
51,488
149,723
141,846
1,206,112
922,241
53,200
61,164
176,710
178,521
1,391,836
106,131
6,255
9,676
26,987
36,675
185,724
107,123 (131,083) 238,206
(7,747)
(7,747)
40,000
40,000
(47,747)
(47,747)
$ 99,376 $ (91,083) $ 190,459
See Independent Auditors' Report.
- 45-
The Florida Bar and Subsidiaries
Sections Fund Schedule of Budgeted and Actual Revenues and Expenses
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Revenues - budgetary basis
Administrative law $ 15,159 $ 31,143 $ (15,984)
Alternative dispute resolution 12,675 9,125 3,550
Appellate practice and advocacy 75,621 96,512 (20,891 )
Business law 509,386 479,185 30,201
City, county, and local government 56,317 76,768 (20,451 )
Council of sections (89) 6,600 (6,689)
Criminal law 78,238 84,147 (5,909)
Elder law 81,472 131,777 (50,305)
Entertainment, arts and sports law 22,948 42,094 (19,146)
Environmental and land use law 50,836 77,127 (26,291 )
Equal opportunity law (1,477) 3,527 (5,004)
Family law 558,162 536,501 21,661
General practice 120,320 122,269 (1,949)
Government lawyers 6,094 27,013 (20,919)
Health law 44,981 45,166 (185)
International law 80,141 164,386 (84,245)
Labor and employment law 83,695 98,152 (14,457)
Out-of-state practice 13,243 18,255 (5,012)
Public interest law 6,726 8,454 (1,728)
Real property, probate and trust law 935,465 1,227,695 (292,230)
Tax law 295,869 300,767 (4,898)
Trial lawyers 405,856 436,670 (30,814)
Workers' compensation 62,213 80,037 (17,824)
Total revenues - budgetary basis 3,513,851 4,103,370 (589,519)
See Independent Auditors' Report.
- 46-
The Florida Bar and Subsidiaries
Sections Fund Schedule of Budgeted and Actual Revenues and Expenses
(Continued)
Variance
Favorable
Year ended June 30, 2012 Actual Budgeted (Unfavorable)
Operating expenses - budgetary basis
Administrative law 21,703 38,056 16,353
Alternative dispute resolution 2,955 2,975 20
Appellate practice and advocacy 53,282 67,951 14,669
Business law 425,939 455,742 29,803
City, county, and local government 68,559 91,804 23,245
Council of sections 2,243 4,162 1,919
Criminal law 88,160 113,383 25,223
Elder law 60,530 134,597 74,067
Entertainment, arts and sports law 16,553 33,717 17,164
Environmental and land use law 91,506 118,960 27,454
Equal opportunity law 2,131 3,626 1,495
Family law 464,309 467,553 3,244
General practice 100,691 126,895 26,204
Government lawyers 19,995 35,580 15,585
Health law 23,626 44,642 21,016
International law 85,929 158,977 73,048
Labor and employment law 90,484 112,648 22,164
Out-of-state practice 18,440 24,680 6,240
Public interest law 4,472 6,947 2,475
Real property, probate and trust law 1,162,196 1,447,435 285,239
Tax law 221,390 255,292 33,902
Trial lawyers 477,754 490,031 12,277
Workers' compensation 78,992 89,474 10,482
Total expenses - budgetary basis 3,581,839 4,325,127 743,288
Change in net assets per the Consolidating Schedule of
Statement of Revenues, Expenses and Changes in Net
Assets $ (67,988) $ (221,757) $ 153,769
See Independent Auditors' Report.
- 47-
Other Reports
Ca". Riggs &Ingram. llC
1713Mahan Drive
Tallahassee. Fl32308
1850)878-8777
(850)878-2344{fax}
wwwericpa com
REPORTONINTERNALCONTROLOVERFINANCIALREPORTINGANDON
COMPLIANCEANDOTHERMATTERSBASEDONANAUDITOFFINANCIAL
STATEMENTSPERFORMEDINACCORDANCEWITH
GOVERNMENTAUDITING STANDARDS
BoardofGovernors
TheFloridaBar
Tallahassee, Florida
We have audited the basicfinancial statements ofThe Florida Barand Subsidiaries asof
andfortheyearendedJune30, 2012, and haveissuedourreportthereondatedOctober1,
2012. Weconducted ourauditinaccordancewithauditing standardsgenerallyacceptedin
the United States ofAmerica and the standards applicable to financial audits contained in
Government Auditing Standards, issuedbytheComptrollerGeneraloftheUnitedStates.
InternalControlOverFinancialReporting
In planning and performing our audit, we considered The Florida Bar and Subsidiaries'
internal control overfinancial reporting as a basisfordesigning ourauditing proceduresfor
thepurposeofexpressingouropinionsonthefinancialstatements,butnotforthepurposeof
expressing an opinion on the effectiveness of The Florida Bar and Subsidiaries' internal
control over financial reporting. Accordingly, we do not express an opinion on the
effectivenessofTheFloridaBarandSubsidiaries'internalcontroloverfinancialreporting.
Adeficiencyininternalcontrolexistswhenthedesignoroperationofacontroldoesnotallow
managementoremployees, in the normal course ofperforming theirassignedfunctions, to
prevent, ordetect and correct misstatements on a timely basis. A material weakness is a
deficiency,oracombinationofdeficiencies,in internalcontrolsuchthatthereisareasonable
possibility that a material misstatement of the entity's financial statements will not be
prevented,ordetectedandcorrectedonatimelybasis.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all
deficiencies in internal control overfinancial reporting that might be deficiencies, significant
deficiencies, ormaterialweaknesses. Wedid notidentifyanydeficiencies in internal control
overfinancialreportingthatwe considertobematerialweaknesses,asdefinedabove.
- 48-
Board of Governors
The Florida Bar
Compliance and Other Matters
As part of obtaining reasonable assurance about whether The Florida Bar and Subsidiaries'
financial statements are free of material misstatement, we performed tests of its compliance with
certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our
audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance that are required to be reported under Government Auditing
Standards.
This report is intended solely for the information and use of the Board of Governors and
management and is not intended to be and should not be used by anyone other than these
specified parties.
tMA, ~ ~ I-L. C
October 1, 2012
- 49-