Baltimore Symphony Orchestra Audit Opinion Expresses Substantial Uncertainty Regarding the BSO’s Ability to Continue as a Going Concern
Audit Opinion Reemphasizes Financial Issues, Urgent Need to Reach New Contract Agreement
Baltimore, MD – Monday, July 15, 2019 – The Baltimore Symphony Orchestra Inc. (BSO) today announced that the audit report on the BSO’s financial statements for the year ended August 31, 2018 notes that there is substantial uncertainty about the BSO’s ability to continue as a going concern. The audit opinion clearly confirms that the financial issues the BSO is facing are serious and serves as a stark reminder as to why the BSO management and board are doing everything possible to encourage productive contract negotiations with the musicians.
Guidelines from the Financial Accounting Standards Board require management and auditors to assess an organization’s ability to continue operating for a one-year period after the financial statements are issued, with the evaluation based on applicable conditions and events that are “known and reasonably knowable” at the date of issuance of the financial statements. Although the auditor’s report states that the financial statements have been accurately prepared in accordance with generally accepted accounting principles, the report highlights the substantial uncertainty regarding the BSO’s ability to continue as a going concern based in part upon concerns that the BSO will be unable to meet its contributed revenue and earned revenue forecasts while efforts continue to reach agreement on a new collective bargaining agreement.
“The audit opinion underscores the continued urgency that we reach an agreement with our musicians as soon as possible. Unfortunately, there has been no meaningful counterproposal from our musicians that addresses the financial issues our organization is facing,” said BSO President and CEO Peter Kjome. “This announcement makes it more clear than ever that we must ensure a sustainable business model that helps control costs while expanding revenues. It is vital that we move forward together toward a stable future. This will help support efforts such as enriching our community by reaching more diverse audiences and forging more meaningful connections to our communities in Baltimore, in Montgomery County and across the state.”
The BSO and Musicians’ Association of Metropolitan Baltimore, Local 40-543 will meet for a collective bargaining session on July 17, 2019 together with Federal Mediators from the Federal Mediation and Conciliation Service. At this point, the BSO awaits a response to management’s request for future bargaining dates beyond the week of July 15.
The collective bargaining proposal by the BSO in October 2018 includes a reduction from 9 weeks to 4 weeks of paid vacation for musicians while upholding a comprehensive 52-week benefits schedule for the orchestra. The proposed changes would have minimal impact on audiences due to the fact that reductions are primarily in the summer weeks when the Baltimore Symphony traditionally presents few performances.
The BSO’s audited financial statements show that the financial results for FY18 have improved versus the prior three years. While going concern uncertainty is not necessarily an indication of the future of an organization, when uncertainty about an organization’s ability to continue as a going concern exists, this must be disclosed in the financial statements. The audit report reinforces the critical importance of the work underway to move the BSO to a sustainable business model and ensure that the community continues to be home to an exceptional orchestra for years to come.
About the Baltimore Symphony Orchestra
For over a century, the Baltimore Symphony Orchestra (BSO) has been recognized as one of America’s leading orchestras and one of Maryland’s most significant cultural institutions. Under the direction of Music Director Marin Alsop, the orchestra is internationally renowned and locally admired for its innovation, performances, recordings and educational outreach initiatives including OrchKids.
The Baltimore Symphony Orchestra performs annually for more than 350,000 people throughout the State of Maryland. Since 1982, the BSO has performed at the Joseph Meyerhoff Symphony Hall in Baltimore, and since 2005, with the opening of The Music Center at Strathmore in North Bethesda, MD, the BSO became the nation’s first orchestra performing its full season of classical and pops concerts in two metropolitan areas. More information about the BSO can be found at BSOmusic.org.