Spring 2007 issue of Horizons

RubinBrown's Spring 2007 issue of Horizons covers Commitment and its place at the heart of your success. The issue also includes articles covering commitment to your financial plan, community service, quality and more.

A P u b l i c a t i o n b y R u b i n B r o w n L L P

Commitment: At the Heart of Your Success

INSIDE COMMITMENT TO YOUR FINANCIAL PLAN Page 5 COMMITMENT TO COMMUNITY SERVICE Page 9 CIVIC COMMITMENT, ST. LOUIS CARDINALS Page 13 COMMITMENT TO QUALITY, KANSAS CITY STEAKS Page 15

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS horizons

CONTENTS ii Welcome 1

RubinBrown New Hires & Promotions

3

ASK RubinBrown

5

For Your Money

7

International News: Baker Tilly USA

9

Feature Article: Community Commitment

11 Audit Committee 13 Guest Article: Mark Lamping - St. Louis Cardinals 15 Client Spotlight: Kansas City Steak Company Industry News 17 CONTRACTORS 19 HOME BUILDERS 21 HOSPITALITY 23 MANUFACTURING & DISTRIBUTION 25 MORTGAGE BANKING

27 NOT-FOR-PROFIT 29 PUBLIC SECTOR 33 REAL ESTATE

INFORMATION Editor: Eric Gutberlet Graphic Design: Millennium Communications Marketing Assistant: Laura Garanzini

Horizons, a publication of RubinBrown LLP, is designed to provide general information regarding the subject matters covered. Although prepared by professionals, its contents should not be construed as the rendering of advice regarding specific situations. If accounting, legal or other expert assistance is needed, consult with your professional business advisor. Please call RubinBrown with any questions. Located in Kansas City and St. Louis, RubinBrown has become one of the largest accounting and business consulting firms in the Midwest. www.rubinbrown.com

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

John Herber, CPA Managing Partner

Welcome

Commitment. It is a word that everyone in business likes to use but a concept that can often be elusive. At the core of commitment is a “heart” for client or customer service and a belief that, no matter whom you are relating to at the time - executive or administrative professional, retiree or intern, customer or vendor, family member or associate - you provide a “service” every day. That service, repeated over time, is a commitment that, again in time, bears fruit as a strong and growing relationship. Commitment also embodies a significant amount of trust and dedication - trust that everyone has your best interests or best outcome at heart and dedication to making the relationship work. That’s how businesses build loyal customers, not-for-profits attract volunteers and stakeholders, and organizations retain skilled professionals. In this issue, we explore the various levels of commitment to customers, to associates and to the community. Mark Lamping shares the St. Louis Cardinals’ commitment to their fans and the community. Kansas City Steak has grown based on its commitment to quality products and great customer service. RubinBrown has long pursued excellence with our number one core value of superior quality and service, but also in the commitment to develop our team members to achieve both professional and personal growth, and that “heart” for service. I invite you to read this publication and offer us your feedback. Our goal is always to satisfy you, our clients and friends. We hope to hear from you – john.herber@rubinbrown.com. Pleasant reading.

St. Louis office RubinBrown

One North Brentwood St. Louis, MO 63105

Kansas City office RubinBrown 9300 West 110 th St. Ste. 600 Overland Park, KS 66210

RubinBrown New Hires & Promotions

NEW PARTNER Anna Aydt Doyle

PROMOTED TO MANAGER Peter Aje , CPA

Joined RubinBrown in April as a partner. In her new position, Anna focuses on strategic client development and new business. She has more than 19 years of experience in professional services. Before coming to RubinBrown, Anna

Promoted to manager in the Tax Services Group. In his new position, Peter reviews real estate partnerships, supervises staff and conducts internal continuing education classes. He has more than nine years of accounting experience.

previously worked for Deloitte and Ernst & Young. Doyle holds a master’s degree in business administration from Washington University in St. Louis and a bachelor’s degree from the University of Missouri-Columbia. Locally, she volunteers for St. Patrick Center and Washington University.

Prior to joining RubinBrown in 2004, Peter worked for another St. Louis accounting firm. He is a member of the Missouri Society of Certified Public Accountants and the National Association of Black Accountants. Peter holds a bachelor’s degree in accounting and finance from South Bank University in London.

Jim Schwartz , CPA Joined RubinBrown in June as a partner in the Tax Consulting Group, specializing in real estate. Jim brings to RubinBrown more than 25 years tax consulting and compliance experience, specializing in partnerships, limited liability companies, S corporations and high wealth

Amy Altholz , CPA Promoted to manager in the Assurance Services Group. In her new position, Amy manages audit, review and other attest engagements as well as reviews tax returns and other filings for small to mid-market real estate and not-for- profit clients. She joined RubinBrown in 2003.

individuals. Prior to joining RubinBrown, he was the practice leader for another St. Louis accounting firm. Jim is a member of the Missouri Society of Certified Public Accountants and the American Institute of Certified Public Accountants. He holds a bachelor’s degree in accounting from the University of Missouri-St. Louis.

Amy is a member of the Missouri Society of Certified Public Accountants and the American Institute of Certified Public Accountants. While working for RubinBrown, she participated in the Baker Tilly International Exchange Program, working for Sofideec Baker Tilly in Paris, France. Amy holds a master’s degree in accounting and a bachelor’s degree in accounting, finance and management from Washington University.

PROMOTED TO PARTNER Richard Feldt , CPA Promoted to partner in the Internal Audit

Mark Conrad , CPA Promoted to manager in the Assurance Services Group. In his new position, Mark will primarily manage audit engagements for clients in the manufacturing and distribution industries. He joined RubinBrown in 2003 and has remained active in RubinBrown’s team member

Services Group. As a partner, Rick completes internal audit and Sarbanes-Oxley engagements and consulting projects for clients in a variety of industries. During his 23 years in sales,

operations and accounting, he has developed an expertise in the food, consumer products, and manufacturing and distribution industries. Prior to joining RubinBrown in 2005, he worked for Arthur Young, Anheuser- Busch, Earthgrains and Sara Lee. Rick is a member of the Association for Corporate Growth, Missouri Venture Forum and the Institute for Independent Business. He holds a bachelor’s degree in accounting from the University of Missouri-St. Louis.

recruiting program. In addition, he is a participant in the firm’s leadership, education and development program. A member of the American Institute of Certified Public Accountants and the Missouri Society of Certified Public Accountants, Mark received his undergraduate degree in accounting from Maryville University in 2002.

Nathan Croll , CPA Promoted to manager in the Internal Audit Services Group. With nine years of experience, Nathan serves clients in the manufacturing and distribution, construction and hospitality industries. Prior to joining RubinBrown in 2003, he worked for Arthur Andersen LLP and Hardin

Linda Paradis , CPA Promoted to partner in the Manufacturing and Distribution Industry Group and SEC Services Group. Linda has 18 years of accounting experience, specializing in federal, corporation and business taxation, including SEC reporting. She joined RubinBrown in 2003 after working

Construction. A member of the Institute of Internal Auditors, Nathan graduated from The Citadel with a bachelor’s degree in accounting.

for another St. Louis accounting firm and Venture Stores Inc. Linda is a member of St. Louis Volunteer Lawyers and Accountants for the Arts and the St. Louis chapter of the American Society of Women Accountants. She holds a master’s degree in accounting from the University of Missouri- St. Louis and a bachelor’s degree in social work from Southern Illinois University-Edwardsville.

1 u summer 2007 issue

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Maggie Glenney , CPA Promoted to manager in the Wealth

member of the Institute of Internal Auditors, the Information Systems Audit and Control Association and the American Institute of Certified Public Accountants. He is a participant in the firm’s leadership, education and development program. Brandon also is on the Junior Board of Angel’s Arms. A Certified Public Accountant and Certified Information Systems Auditor, he holds bachelor ’s degrees in accounting information systems and accountancy from Maryville University. and Forensic Services Group. In his new position, he manages litigation, forensic and intellectual property projects and provides business valuations. Before joining RubinBrown in 2004, Kevin worked for Gargantuan Financial and Enterprise Rent-A-Car. He received his undergraduate degree in finance and management from Washington University in 2002. Kevin is a member of the CFA Institute and CFA Society of St. Louis and volunteers for St. Patrick Center. Kevin Marvin , CFA Promoted to manager in the Corporate Finance

Management Services Group. Maggie, who joined RubinBrown in 2002, manages financial affairs for individuals through her role as a manager in RubinBrown’s Family Office Services Group and specializes in trusts and

estate planning. She previously provided assurance services and financial planning at another St. Louis accounting firm. Maggie is a member of the American Institute of Certified Public Accountants and the Missouri Society of Certified Public Accountants. She graduated from Truman State University with a bachelor’s degree in accounting.

Leanne Halemeyer, CPA Promoted to manager in the Assurance Services Group. In her new position, Leanne is responsible for the management of audits, reviews and other attest services for various local and regional-based construction, not- for-profit and manufacturing clients. She

joined RubinBrown in 2002. As a member of RubinBrown, she participated in the Baker Tilly International Exchange Program, working for a partner firm in Auckland, New Zealand. Leanne is a member of the Missouri Society of Certified Public Accountants and the American Institute of Certified Public Accountants. She holds a master’s degree and a bachelor’s degree in accountancy from Southern Illinois University- Edwardsville.

Thomas Tobin Promoted to manager in the Information Technology Group. Tom has more than 15 years of experience in IT consulting, project management, needs analysis, implementation and system support. He provides specialized consulting experience in Microsoft Dynamics

and Sage Software’s ERP, CRM and Retail Management business solutions. These solutions include Dynamics GP, Dynamics SL, Dynamics CRM, Dynamics Retail Management, Small Business Financials and MAS90/200. In his new position, he has management responsibilities for the growth and development of the IT Group. Prior to joining RubinBrown in 1999, Tom was president of Schowalter and Jabouri Computer Solutions Inc. He has been involved in the Information Technology Committee for the Salvation Army and is a former honorary member of the St. Louis Ambassadors. He holds a bachelor’s degree in business administration from Lindenwood University and an associate degree in business administration from St. Louis Community College.

Craig Hendren , CPA Promoted to manager in the Internal Audit Services Group, providing services to clients in the manufacturing, distribution, high technology, food service and hospitality industries. Craig has more than 15 years of accounting experience, specializing in internal audit, Sarbanes-

Oxley compliance, risk assessments and business process analysis. Prior to joining RubinBrown in 2004, he worked as a controller for Laidlaw and idX Corp. Craig is a member of the Missouri Society of Certified Public Accountants, the American Institute of Certified Public Accountants and the Institute of Internal Auditors. He holds a bachelor’s degree in business administration with an accounting emphasis from the University of Missouri-St. Louis.

Lisa Wigington , CPA Promoted to manager in the Assurance

Services Group, focusing on manufacturing and distribution clients. Lisa’s areas of specialty include inventory valuation, LIFO inventory and self-insurance. She joined RubinBrown in 1996. Her 20 years of experience include work

Brandon Loeschner , CPA, CISA Promoted to manager in the Internal Audit Services Group. With RubinBrown since 2001, Brandon specializes in assessing and strengthening information technology and general computer controls for large and small corporations throughout the world. He also has

for Edison Brothers Stores Inc., Kasco Corp. and another St. Louis accounting firm. Lisa is a member of the American Institute of Certified Accountants, Missouri Society of Certified Public Accountants and the Junior League of St. Louis. She received her undergraduate degree in accounting from Southern Illinois University.

performed specialty consulting in RubinBrown’s Corporate Finance and Forensics Group for litigation, business valuation, due diligence and forensic accounting engagements involving complex cost recovery and insurance claims. Brandon is a

2 u summer 2007 issue

ASK RubinBrown ASK RubinBrown

so we believe that this percentage has seen a significant increase since 2005.

Committed to Saving Many employers are concerned that their employees are not saving for retirement. Yet despite their best efforts to provide a good 401(k) or similar retirement program, many employees simply won’t save.

Not all companies can afford the McDonald’s match. What is the most common match formula used as an incentive to get employees to contribute to their 401(k) plan? According to the PSCA survey, the most common formula is 50 percent of the first 6 percent contributed from pay. The second most common formula was dollar-for-dollar on the first 4 percent deferred. The first formula should provide an incentive for employees to reach for that 6 percent deferral level so that no match dollars are left on the table. Even with a match, some employees don’t contribute. Some don’t seem to understand the match. What can an employer do? Some employees won’t contribute, period. However, we recommend illustrating the match through examples. Consider using play money at employee meetings. On the dollar not contributed to the plan, tear off 40 percent for taxes and hand back the remainder. On the dollar contributed to the plan, pull another dollar from the employer’s pocket, add it to the employee’s dollar and then discuss what those two dollars might be worth in 20-30 years. Compare the match to using a soft drink machine. How many people wouldn’t feed a machine 50 cents if they thought the machine would dispense a dollar back? With any employee meeting, it also helps if owners or management participate. That demonstrates that saving for retirement is a serious business and also demonstrates the company’s commitment to the plan.

What have companies tried to increase savings behavior? Let’s start by looking at Big Mac land. Mc Donald’s 401(k) plan has an automatic enrollment feature. Eligible employees who fail to complete enrollment forms are automatically enrolled at a default rate, with their account invested in a default investment option. According to an article on Plansponsor.com, the company has initiated a comprehensive campaign to educate workers about retirement and financial issues. The company subsidizes one-on-one investment advice for some employees. It educates workers through meetings, webcasts, newsletters and electronic compensation statements. McDonald’s also offers a 300 percent match for the first 1 percent of earnings that workers put in their 401(k). It provides a 100 percent match for the next 4 percent of earnings. The company is considering the addition of an automatic escalation feature for salary deferral contributions. With an escalation feature, the default rate for salary deferrals would increase over time. How many companies sponsor automatic enrollment plans? According to the Profit Sharing Council of America’s 49th Annual Survey, approximately 17 percent of survey respondents had automatic enrollment in 2005. The Pension Protection Act of 2006 included a number of provisions designed to encourage automatic enrollment,

What about scare tactics?

There are more than enough scary statistics to go around concerning inadequate retirement savings. However, the statistics themselves don’t seem to provide incentive for saving. Those spouting statistics on the need to save may assume that people behave rationally and make good financial decisions based on what is best for them.

3 u summer 2007 issue

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Some plan sponsors have tried to make it harder for participants to say “no” on their deferral election forms by adding warning language to an opt-out election, such as “STOP AND BE SURE ABOUT THIS DECISION; you are choosing not to save for your retirement through your employer’s plan.” Those employers who sponsor safe harbor 401(k) plans may be less concerned about savings behavior. If employees don’t contribute to their plan, the owners can still maximize their own salary deferrals. Is there anything new these sponsors should consider? They should consider a qualified automatic contribution arrangement, or QACA. This plan design will be available in 2008. It combines automatic enrollment with an employer safe harbor contribution that vests over two years. The automatic deferral rate can start out as low as 3 percent and then gradually escalate to 6 percent of pay. The employer safe harbor contribution is either 3 percent of pay or a match that is at least 100 percent of the first 1 percent deferred from pay, plus 50 percent of deferrals between 1 percent and 6 percent. The maximum match is 3.5 percent of pay. This match formula, together with two-year vesting, is less costly than current safe harbor match formulas. It sounds complicated, but it doesn’t have to be. For example, an employer could ignore the gradual escalation factor by setting the default rate of deferral at 6 percent. Those employees who don’t want to contribute 6 percent of pay could make an election to contribute a different amount. Those interested in the QACA should consult a RubinBrown benefits specialist.

This mindset is called rational self-interest.However, studies in behavioral finance dispute the idea that we make financial decisions rationally. People tend to be overconfident about their future retirement and their ability to continue to work if necessary during their senior years. People also tend to choose instant gratification over future gratification. The person who struggles to come up with $5 per week for the 401(k) plan may spend $5 for a mocha latte or $7.50 for a cold brew at Busch Stadium. What employees say they want is a simpler process for enrollment and tools for calculating how much to save. One of the reasons that automatic enrollment often works well is that it eliminates the deferral rate and investment decisions. However, the enrollment process can be simplified through other means, including the use of risk questionnaires that lead an employee to a suggested asset allocation fund based on their risk tolerance. Many plans now offer either asset allocation funds or lifestyle funds with automatic rebalance features that allow investing to go on autopilot once the initial selection is made. There are numerous articles on the subject of saving. Some state that money from retirement savings plus Social Security should replace 80 percent or more of your pre-retirement income. However, a study by Fidelity says that only 15 percent of households will be likely to have the resources that will replace 85 percent of pre-retirement income. Jack VanDerhei, a researcher for the Employee Benefit Research Institute, has some educated guesses concerning what individuals should save for retirement, assuming they have nothing but Social Security and 401(k) accounts, retire at age 65, and want to replace 80 percent of their pre-retirement income. Under those assumptions, Van Derhei says a male would need to save 6.3 times pre-retirement income and a female about 6.7 times pre-retirement income. For some employees, those are scary numbers.

Questions? Contact:

Dolores Lawrence, CPA, QKA Manager RubinBrown Benefits Group 314.290.3224 dolores.lawrence@rubinbrown.com

Any other ideas to promote savings behavior?

We’ve tried targeted enrollment meetings for the non- saver group. With the assistance of plan sponsors, we have also tried mandatory enrollment meetings.

4 u summer 2007 issue

FOR YOUR MONEY

Commitment To Your Financial Plan Some people spend more time planning their annual vacations than they doplanning for retirement. Developing a sound retirement or financial plan, however, should not be an unduly burdensome task for those who are committed to the process. • Commitment to starting the planning process • Commitment to sticking with the plan • Commitment to reviewing and revising the plan when necessary The first and obvious step to getting ahead financially is to get started. The planning process generally begins with getting a handle on your goals and objectives. When do you want to retire? How much do you need to retire? What are your spending patterns? Do you have education expenses you will need to fund for children? These and other questions need to be asked and analyzed in order to integrate your personal life into your financial life. Engaging a professional advisor on the front side of the planning process is generally a good idea. A professional advisor can help you identify your goals and objectives as well as assist you in avoiding inefficient strategies and emotions that could lead to poor decisions. Once you commit to start the process and analyze your goals and objectives, you must develop a plan and be committed to sticking with it. Assets are merely a means to an end. Part of this planning process involves determining how to invest your assets to achieve your goals and objectives. Determining how to invest your assets is sometimes referred to as “asset allocation.” Commitment to implementing a financial plan falls into three main areas:

Asset allocation involves dividing your assets among different categories, such as stocks, bonds and cash. The process of determining which asset mix to hold in your portfolio is a personal one. It is also likely you will have multiple portfolios for your various goals and objectives. The asset allocation that works best for you will largely depend on your investment time horizon, financial condition and ability to tolerate risk. • Your investment time horizon is the expected number of months, years or decades you will be investing to achieve a particular financial goal. An investor with a longer time horizon may be willing to undertake a more aggressive investment strategy because he or she has time to recover from any losses incurred during poor economic periods. • Risk tolerance is your ability and willingness to lose some or all of your original investment in exchange for greater potential returns. Conservative investors like “a bird in the hand,” while aggressive investors seek the “two in the bush.” Although there is some degree of risk in any financial plan, a well thought out plan should attempt to mitigate unnecessary risk. One way to mitigate unnecessary risk is through diversification. Diversification is achieved through asset allocation, or how your investments are divided between stocks, bonds and cash. Choosing a sensible asset allocation strategy and having the discipline to maintain that allocation are the real keys to achieving successful long-term financial results. Once a financial plan has been put it place, it needs to be reviewed and monitored. At times, it could make sound financial sense to change your asset allocation. One of the more common reasons to change your asset allocation is because your investing time horizon has changed. As you get closer to retirement, you may not need to take as much risk as you have in the past. Therefore, your asset allocation may invest more heavily in bonds and cash equivalents as opposed to stocks. An asset allocation may also need to be changed because your financial situation has changed or your personal goals have changed.

5 u summer 2007 issue

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Prudent investors, however, do not change their strategic asset allocation based on the relative short- term performance of each category of assets in their allocation. In other words, they do not necessarily buy more stocks when stocks are hot. A sound investment plan tries to obtain consistency of returns at a risk level the investor can tolerate. One key activity prudent investors do to manage risks is periodically rebalance their portfolio. Rebalancing brings a portfolio back to its original asset allocation mix and is necessary because over time some assets go up in value and others go down. This fluctuation changes your allocation even if you did not buy or sell anything. By rebalancing, you are more likely to achieve the risk and return objectives you originally established. Financial planning should be a lifelong process. You are running a marathon, not a sprint. It is important to stay disciplined and committed to your long-term plan. Only then may you realize your financial goals and objectives.

Questions? Contact:

Mike Ferman, CPA Partner RubinBrown Advisors 314.290.3211 mike.ferman@rubinbrown.com

RubinBrown Advisors may only transact business in any state if we are first registered, excluded or exempted from the applicable registration requirements. Follow-up, individual responses or rendering of personalized investment advice for compensation will not be made without compliance with applicable state registration requirements or an applicable exemption or exclusion.

6 u summer 2007 issue

INTERNATIONAL NEWS Baker Tilly International USA

North America Meets in Santa Fe The independent firms that comprise Baker Tilly USA held their North American Conference this past June in Santa Fe. Member firms from North America gathered to discuss a number of issues, not the least of which included thedevelopment of an optional international audit methodology, as well as the new IFAC independence rules and procedures to be put in place across the network. A record number of delegates were in attendance. More than 100 attended, with 20 from outside the continent and approximately 50 guests. Guest speakers at the conference included U.S. Congressman John Linder; John Bachmann, senior partner from Edward Jones; Todd Buchholz, White House advisor on economic policy; and Patrick Barron, vice president, Atlanta region of the Federal Reserve. Linder shared the House Ways & Means Committee’s tax ideas to address the change in the American taxpayer from worker to retiree. He believes repealing the income tax code and replacing it with a Federal sales tax could better support a population with a declining workforce.

Bachmann addressed the regulation of capital markets in the 21st century. The United States continues to lose leadership as the financial center to London and other emerging markets like Shanghai because of the enabling effect of technology and the impact Sarbanes-Oxley legislation has had on the cost of capital for U.S. firms (see article “An Insiders View…” by speaker Barry Melancon, president and CEO, AICPA). Buchholz offered up his observations on the U.S. economy from the White House’s point of view. Changes are occurring, driven by today’s consumer. Buchholz describes the “scissors economy,” inwhich themiddleman is being driven out by purchasers, who are demanding complete solutions – one-stopshopping fromproducers. In addition, the economy is experiencing the transformation from a “brawn” system of manufacturing to a “brains” system of leadership in innovation and creativity, which is the current driving force behind our economic success. And, in turn, it is the reason U.S. wages continue to grow despite the decline in manufacturing employment. From the Federal Reserve, Barron offered a similar assessment of the U.S. economy. Trends over the past few quarters continue to indicate that although manufacturing employment has decreased all over the world due to increases in productivity, U.S. salaries have risen significantly. The biggest potential impact on the economy today is the cost of energy. Increasing demand from China and India will keep prices for oil high and will have an impact on both disposable household income from increases in energy costs and distribution costs as a percentage of the price of goods to consumers.

7 u summer 2007 issue

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Other business of note… Rich Caturano was introduced as the new president of Baker Tilly USA and he provided the assembly with a presentation of the U.S. strategic plan. John Herber (RubinBrown) and Mike Wolff (Eisner) presented different strategies on how firms can build a more diverse workforce of women and other minorities. Finally, Ida Abbott, with expertise in work/life issues, offered thoughts on addressing increased demand for work flexibility at all levels within accounting firms today. To date, Baker Tilly International is the eighth largest accounting and consulting network in the world, with 126 firms representing 93 nations and annual billings exceeding $2.3 billion. New members to Baker Tilly International include Accuity LLP, based in Hawaii.

Questions? Contact:

Jim Castellano, CPA Chairman RubinBrown 314-290-3300 james.castellano@rubinbrown.com

...it is the reason US wages continue to grow despite

the decline in manufacturing employment...

8 u summer 2007 issue

GENERAL TOPICS

Commitment to Community Service One of the key elements of a successful business is commitment. Commitment to the business, the business’ clients, and to the professional and personal needs of its team members are all critical to achieving success and maintaining survival in today’s high-performance environment. A community also requires the highest level of commitment from businesses to citizens and other stakeholders within that community to obtain some level of success. At RubinBrown, we understand the importance of commitment to the community, so it is no surprise that “Devotion to our Community” is one of our nine core values. To emphasize the importance of devotion to the community and our other core values, they are posted in every workstation, office and conference room within our firm. Placing this type of emphasis and awareness on serving the community can really inspire an individual to get involved. Serving the community is a very rewarding experience – it makes one feel good to know they are serving others. Whether it is working with children or the less fortunate, there is absolutely no feeling better than having a positive effect on another person’s life. So many of the things we take for granted in our day-to-day living can be the highlight of someone else’s day. The RubinBrown devotion to community service starts at the top. The firm truly encourages and supports team members who want to become involved in community activities and has provided many team members with a strong foundation, desire and opportunity to serve. The firm supports team members in whatever role they take in a community organization because it understands the importance of community involvement and a strong passion to serve. Since 1997, RubinBrown has honored at least one team member that has demonstrated

9 u summer 2007 issue

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

outstanding service to the community with the annual Community Service Award. The firm recognizes the team member during the year and also contributes a donation to a charitable organization of the honoree’s choice in the individual’s name. RubinBrown also provides numerous opportunities for team members to work together to impact our community. In previous years, the firm hosted events such as fundraisers and charitable softball games that allowed team members to participate in a collective effort to do something good for the community. This effort has now evolved into an annual event allowing RubinBrown to leave its mark on the community. Every October, the firm sponsors an annual Community Service Day that provides teammembers with an opportunity for fellowship with each other while working in a joint effort to serve the community. RubinBrown’s Community Service Day has included such programs as restoration and cleaning activities, spending time with youth and the elderly, and other charitable activities. Looking into the future, RubinBrown will continue to find new and innovative ways to enhance our impact on the community. This strategic thinking was the catalyst for the creation of the RubinBrown Charitable Foundation in 2002. With the generous contributions of RubinBrown team members and other community leaders, the foundation is building an endowment to support local charities and educational programs and to perpetuate the good will of RubinBrown in the St. Louis and Kansas City communities. The objectives of the foundation are to: – Improve public education by supporting programs that further public education in the St. Louis and Kansas City regions. – Support organizations that improve the infrastructure of the St. Louis and Kansas City regions. – Provide support to programs encouraging minorities to enter the public accounting profession. – Support entrepreneurism in the St. Louis and Kansas City regions.

Since our existence, RubinBrown has continued to demonstrate its devotion and commitment to the community through many different endeavors. Providing this level of commitment takes the efforts of the entire team. In many ways, we take the same approach in serving the community as we do in serving our clients – “One Firm and One Community.”

Questions? Contact:

Fred Kostecki, CPA Partner-in-Charge Assurance Services Group 314-290-3398 fred.kostecki@rubinbrown.com or Steven Harris, CPA Manager Assurance Services Group 314.290.3265 steven.harris@rubinbrown.com

RubinBrown will continue to find new and innovative ways to enhance our impact on the community

10 u summer 2007 issue

GENERAL TOPICS

Audit Committee Interaction with Internal Audit Commitment + Communication = Effective Corporate Governance

In recent years, the time and energy commitment required from audit committee members has significantly increased. They spend their time and effort and many sleepless nights focused on the accuracy of a company’s financial statements, effective risk management, assessment of internal control processes (including fraud detection), effective use of internal audit resources, and provide oversight of the external auditors. Audit committees are more proactive, informed, investigative and accountable. Responsibility for corporate governance is spread among the audit committee, executive management, internal auditors and external auditors. These four groups provide the cornerstones of corporate governance within an organization. In order to be effective in their expanded oversight and corporate governance role, there must be a strong commitment to communication between the audit committee and the internal auditor. “Today more than ever, audit committees need to work closely with internal auditors to ensure strong internal controls, accurate financial reporting, and adequate risk management in every company they serve. To work effectively with internal auditors, audit committee members need to know best practices for this vital function. By understanding internal audit standards, audit committees can strengthen their own work of oversight.” Roger Raber, CEO National Association of Corporate Directors Internal auditors provide independent assurance that internal controls are in place and effective, that governance processes are adequate, and that organizational goals and objectives are met. The audit

committee and the internal auditors are interdependent and should be accessible to one another. The following chart highlights the relationship and required commitment to communication.

AUDIT COMMITTEE INTERNAL AUDITORS

Ensure internal audit function is independent and adequately staffed. Ensure internal audit is properly placed within the organization to provide for an effective oversight of management. Review risk assessment results and the internal audit plan. Obtain periodic updates from internal audit on progress of internal audit plan. Evaluate whether internal audit department follows a continuous improvement plan.

Ensure more frequent com- munication than quarterly meetings. Provide advice, counsel and training to the audit committee. Periodically evaluate audit committee performance.

Solicit input from audit committee when conducting risk assessment.

Responsibility to monitor and oversee management activities.

Report internal audit findings, recommendations and follow-up actions to management and the audit committee.

ONGOING COMMUNICATION

11 u summer 2007 issue

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Themost appropriateorganizational reporting relationship has internal audit reporting directly to the audit committee, both for oversight and to provide internal audit with the appropriate level of independence and authority to meet their objectives. For day-to-day administration, the internal audit department reports to the CEO or CFO. The audit committee has the responsibility to ensure internal audit is properly staffed, independent and placed high enough in the organization to leverage their knowledge and efforts. The audit committee should share the company’s strategic direction and provide input into the risk assessment performed by the internal auditors. Internal audit shouldpresent a summary of findings from its internal audits and communicate management’s actions to remediate any identified issues. This commitment to ongoing communication between the audit committee and internal audit will lead to more effective corporate governance within any organization.

Questions? Contact:

Cathy Behnen, CPA, CIA Partner Internal Audit Services Group 314.290.3204 cathy.behnen@rubinbrown.com or Mike Ramirez, CPA Manager Internal Audit Services Group 314.290.3455 mike.ramirez@rubinbrown.com

12 u summer 2007 issue

AN INTERVIEW WITH Mark Lamping – St. Louis Cardinals

ST. LOUIS CARDINALS: A Case for Civic Commitment A few weeks ago, the HORIZONS editorial staff had the privilege of sitting down with Mark Lamping, president of the St. Louis Cardinals, to discuss commitment. Overlooking the new Busch Stadium, where fans were streaming toward the Cardinals’ new $400 million ballpark, one is struck by the economic impact and vibrancy of the Cardinals’ new flagship stadium. Our $400 million new ballpark, combined with the planned $650 million Ballpark Village development, represents more than $1 billionwewill invest into downtown St. Louis. We believe our investment has provided the momentum for additional downtown redevelopment, especially in the southeast quadrant of downtown. Busch Stadium and Ballpark Village serve as a great bridge from the south part of downtown to the Old Post Office and Washington Avenue districts. Now we’re seeing extensive development going on at Cupples Station with lofts, apartments, offices and retail. It’s really starting to gel. What’s the status of the Ballpark Village development? It’s moving along as expected. Something this big takes considerable time to develop. It just doesn’t happen overnight. Our fans travel from throughout the Midwest to attend Cardinal games and are always looking for things to do before and after the game. We believe a great opportunity exists for redeveloping the old Busch Stadium site. The elevation is such that buildings in Ballpark Village will have great views into the new ballpark. It’s also close to St. Louis’ central business district, so it’s absolutely the best location for this type of mixed-use development. Our goal is to create a new neighborhood to support the millions of Cardinals fans who visit the ballpark each year. At the same time, we want to provide something special for the people who live and work downtown. It’s a multi-use destination development, with a great mix of entertainment, retail, office and residential spaces – contained in more than 450,000 square feet of new development covering six city blocks. How would you rank Busch stadium and St. Louis fans? Our ballpark is the finest in the world because it is filled with the best fans in baseball. It’s an unbelievable combination. Frankly, we would not have received the 2009 All-Star bid without our new stadium. Editor’s note: The coveted annual 2009 All-Star Game will be played in St. Louis at Busch Stadium on July 7, 2009. How much have the St. Louis Cardinals invested in downtown St. Louis?

What’s the economic impact of the Cardinals on the St. Louis economy? Without question, it’s huge. During the summer, almost 40 percent of our fans travel more than 100 miles to see a game. That draw has a tremendous impact on area restaurants, hotels and tourist attractions. A number of area businesses are solely dependent on the Cardinals for their continued success. More than 1,000 employees in nearby businesses are directly impacted by our operations. There are various estimates of our financial impact on the city out there, but the RCGA tells us our economic impact is well in excess of $200 million annually. Can you talk a little more about the financing of the ballpark? The financing of our new ballpark was very unique. Unlike most new ballparks across the country, which are publicly owned and financed, our new ballpark is privately owned and privately financed. To be able to privately finance a ballpark in a market the size of St. Louis is a real tribute to our fans and the commitment of Cardinals ownership. Giving back to St. Louis and being part of this community is fundamental to the St. Louis Cardinals. Last year, we celebrated the 10th anniversary of Cardinals Care, the team’s charitable foundation. Founded in 1997, Cardinals Care is designed to help children in the St. Louis area through a variety of partnerships, programs and funding to groups that support kids. While recognizing our 10th anniversary in 2006, Cardinals Care donated nearly $2 million to local organizations, bringing the total it has given since its founding to more than $10 million. Let’s talk more about commitment. How does that play out for the Cardinals?

13 u summer 2007 issue

Recently, your organization also has expanded its commitment to Missouri. Can you talk a little more about that? From a national perspective, we operate in one of the smaller media markets. So, we are constantly looking for ways to continue to attract fans and opportunities to grow our brand. The Springfield Cardinals presented such an opportunity. We purchased a franchise in the AA Texas League and relocated it to Springfield, Mo., in April 2005. It’s been a win-win for everyone. The response from Cardinals fans in Springfield and throughout the Ozarks has been awesome. I think our Redbird Rookies ™ program is perhaps the best example of how our community commitment works. What’s the team’s commitment to the role baseball plays internationally? There’s been a significant increase in our efforts to identify baseball talent both inside and outside the U.S. We have opened a new academy in the Dominican Republic and have an ongoing presence in Mexico and throughout the Caribbean. How does commitment apply to baseball? The great thing about baseball is that it’s an inexact science. It is a team game in which success is the result of individual performance. To win, you must be committed to winning in everything that you do. But you also need your players to stay healthy and to get your share of good luck. In baseball, even the worst teams win one-third of the time, while the best lose one- third of the time. It’s what happens with that other one-third that makes the difference. This has been a tough season for the Cardinals. Are they committed to winning? The Cardinals have won more World Series championships than any team other than the New York Yankees. The 2006 World Championship was the 10th in franchise history. We have been one of the most successful franchises in all of baseball the past 10 years, and our commitment to winning remains unchanged. What part do your fans play in your commitment to excellence? Fans play an essential role in this process. Most teams envy our dedicated, loyal fans. The on-field performance over the past decade by the St. Louis Cardinals was made possible by the outstanding support from our fans. Can you talk more about community commitment?

We feel we have a responsibility to give back to the St. Louis community and we take that commitment very seriously. I think our Redbird Rookies™ program is perhaps the best example of how our community commitment works. The Redbird Rookies baseball and neighborhood support program for children not only provides fun for kids on the baseball diamond, but also supplies a meaningful, life-changing experience. By incorporating some innovative on-field coaching techniques, and by supporting kids off the field in many ways, the Redbird Rookies experience aims to be positive and beneficial for every child. In doing so, we try to provide the opportunities to develop as positive future members of the community. So far, we’ve built 12 new neighborhood ballparks. Keeping score and winning are secondary to the life lessons that are learned as part of a team on the ball field. Redbird Rookies works to instill values of teamwork, integrity, self-esteem and leadership in the “classroom” of a baseball setting. With the help of the Positive Coaching Alliance, Cardinals Care seeks to provide coaches and parents with techniques to make the experience very positive for each child. With the help of our community partners, we also are able to provide health screenings for hearing, vision and asthma, free bike helmets and fittings, health and nutrition information, scholarships, mentoring and family activities. Last year, we also added the Redbird Rookies Readers program, encouraging baseball players to read as a team, just as they work together as a team on the field. It’s all about building better kids and better neighborhoods. When it comes right down to it, that’swhat community commitment is all about.

14 u summer 2007 issue

Client Spotlight

restaurants around Kansas City. Scavuzzo had worked at the family business his entire life but never expected to make it his career. However, when other opportunities didn’t present themselves upon graduation, he accepted a job at the family company in 1984. “On my first day in the office, I asked my dad what to do, and he said to stay out of the way,” said Scavuzzo. As a result, Scavuzzo directed his attention to a new venture for the company – catalogue orders. Capitalizing on Kansas City’s reputation for great steaks, he called the mail order portion of the business Kansas City Steak Co. As the 1980s progressed, the catalogue portion grew but only accounted for 8-10 percent of the company’s revenues. In 1995, Kansas City Steak signed a deal with QVC and became the No. 1 selling food product, catapulting the company to a national marketplace. 2007 is a record year for Kansas City Steak, despite market conditions such as the most difficult raw material pricing and availability ever. Kansas City Steak is very strict about the quality of the product and prides itself on using all western Kansas corn-fed beef. “Our philosophy is that you will pay more for our product than what you buy in a grocery store, but that product will compare to what you can get in a steakhouse at a fraction of the cost,” said Scavuzzo. This commitment to quality has made the mail order side of the business very successful. The company ships up to 70,000 packages a week and has a strong following in the Northeast, where QVC is based. The company briefly ventured into Japan in the late ’80s and is exploring other international opportunities, but its primary targets are domestic. The Internet has had a huge impact on the company’s growth. “The Internet levels the playing field with our competition. It enables us to go up against companies 10 or even 20 times our size,” said Scavuzzo. Kansas City Steak is finding new ways to use the Internet. In addition to its company Web site, it currently is developing a site for steak enthusiasts and another more general site that includes blogs, recipes and links to www.kansascitysteaks. com. Aside from the Internet and QVC, Kansas City Steak also mails out catalogues to frequent buyers. On the foodservice side, Kansas City Steak supplies steaks for many well-known restaurant chains throughout the country. Scavuzzo said that the company looks for customers

A Commitment to Quality What began in 1932 as a small Kansas City meat market has grown into a foodservice and mail order dynasty 75 years later. Current president Edward Scavuzzo’s great-grandfa- ther started a retail store during the Great Depression. That store has evolved into the Kansas City Steak Co. Today, the company distributes a wide variety of meat products to restaurants across the Midwest and delivers packaged gourmet products nationwide. The retail store existed for nearly 50 years – in 1980, Scavuzzo’s father, uncle and grandfather decided to focus entirely on foodservice, delivering meat to hotels and

15 u summer 2007 issue

Made with FlippingBook Online newsletter