The Lost Accord
Needless to say, the certified public accountant was turned away at the door. The Association’s attorney Kenneth Souser sent a reply saying that the question was not whether the Association was unable to meet its financial obligations, but rather the extent to which it maybe able to raise funds in the future to meet expenses. And some other lawyer talk which meant this is none of anyone’s goddam business. Furthermore, he said, copies of the Association’s regular audits are distributed to more than 12,000 subscribers and contributors, which is news to the subscribers and contributors.
They do get a consolidated financial statement of the Philadelphia Orchestra Association and the Academy of Music tucked in with their annual reports. It grows increasingly briefer and more cryptic each year. Last year (1964-65 season) the statement of assets and liabilities was dropped. This year (1965-66) the accountants’ report was gone. It couldn’t be called "an audit" by any stretch of the imagination.
Balis explains that the annual report had to be mailed out this year before the books were audited. Actually, the auditors were busy working and would have an audit ready early in November. Any Association member could come in and see it. By mid-November there was still no audit available.
Through the labor dispute, for purposes of explaining the Association’s position on finances, Balis had continuously used an unaudited, incomplete statement for a 14-month period ending August 31st. He referred repeatedly to a $456,315 deficit to plead poverty. The information he neglected to supply was that this operating deficit was reduced to $24,120 by endowment fund income and membership campaign contributions and then erased by a surplus of an undetermined amount. By Balis’ own admission, as of June 30th, the surplus was $225,462. Two months later it must have been less, but certainly enough to pay off debts and then some. (At the end of the 1965 season, the surplus was $83,495.)
Preparing a consolidated statement for the two corporations (Association and Academy of Music) is confusing enough, but engaging in some questionable accounting practices adds to the confusion. Since last season’s statement didn’t include assets and liabilities, no surplus was recorded and the impression was that it ended up the season in the red. It also recorded royalties on a cash basis and didn’t capitalize capital improvements and equipment expenditures — both of which were taken exception to in the attached accountants’ report. The only motive the Association could have for hedging this way is to appear poorer than it actually is.
UNDER COVER. As the strike progressed, these tactics seemed to pay off handsomely in a hardening of the attitudes of some people. A professor at the University of Pennsylvania wrote a letter to Balis saying he’d bequeathed half of his estate to the orchestra, but when he found he’s earning less than the minimum salary of a musician, he decided to change his will. Box holders for Saturday night concerts grumbled they weren’t going to donate the money from unused tickets to the pension fund the way they had the last time there was a strike. After all, weren’t the men of the orchestra asking the impossible if they expected a debt-ridden organization to raise their salaries and benefits?
