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Municipal Securities

Rulemaking Board

Financial Statements as of and for the
Years Ended
September 30, 2023 and 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Municipal Securities Rulemaking Board

TABLE OF CONTENTS

 

 

Page

REPORT OF INDEPENDENT AUDITORS

 

1

FINANCIAL STATEMENTS AS OF AND FOR THE
YEARS ENDED SEPTEMBER 30, 2023 AND 2022:

 

 

Statements of Financial Position

 

3

Statements of Activities

 

4

Statements of Functional Expenses

 

5

Statements of Cash Flows

 

6

Notes to Financial Statements

 

7-17

 

 

 

 

 


img32572732_0_3.jpg 

 

Report of Independent Auditors

 

To the Board of Directors of The Municipal Securities Rulemaking Board

 

Opinion

 

We have audited the accompanying financial statements of The Municipal Securities Rulemaking Board (the "MSRB"), which comprise the statements of financial position as of September 30, 2023 and 2022, and the related statements of activities, functional expenses and of cash flows for the years then ended, including the related notes (collectively referred to as the "financial statements").

 

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the MSRB as of September 30, 2023 and 2022, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the MSRB and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Emphasis of Matter

 

As discussed in Note 2 to the financial statements, the MSRB changed the manner in which it accounts for leases in 2023. Our opinion is not modified with respect to this matter.

 

Responsibilities of Management for the Financial Statements

 

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the MSRB's ability to continue as a going concern for one year after the date the financial statements are available to be issued.

 

Auditors' Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of

 

PricewaterhouseCoopers LLP, 655 New York Ave NW, Suite 1100, Washington, District Of Columbia 20001

T: (202) 414 1000, www.pwc.com/us


img32572732_0_3.jpg 

 

internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

 

In performing an audit in accordance with US GAAS, we:

 

Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the MSRB's internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the MSRB's ability to continue as a going concern for a reasonable period of time.

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

 

img32572732_1_3.jpg 

Washington, District of Columbia December 21, 2023

 

 

PricewaterhouseCoopers LLP, 655 New York Ave NW, Suite 1100, Washington, District Of Columbia 20001

T: (202) 414 1000, www.pwc.com/us


 

 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF FINANCIAL POSITION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2023 and 2022

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,494,056

 

 

$

3,874,774

 

 

 

Accounts receivable, net

 

 

6,716,651

 

 

 

4,095,489

 

 

 

Prepaid and other assets

 

 

2,063,241

 

 

 

1,773,604

 

 

 

Accrued interest receivable

 

 

229,576

 

 

 

143,608

 

 

 

Investments

 

 

39,476,522

 

 

 

43,210,869

 

 

 

Operating lease right-of-use asset

 

 

7,108,454

 

 

 

-

 

 

 

Fixed assets, net

 

 

17,133,695

 

 

 

14,984,637

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

76,222,195

 

 

$

68,082,981

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND NET ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

4,028,668

 

 

$

4,806,635

 

 

 

Accrued vacation payable

 

 

1,195,938

 

 

 

1,145,548

 

 

 

Data subscription contract liabilities

 

 

359,508

 

 

 

290,847

 

 

 

Capital lease liability

 

 

2,151

 

 

 

2,988

 

 

 

Deferred rent

 

 

-

 

 

 

5,324,946

 

 

 

Operating lease liability

 

 

11,929,529

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

17,515,794

 

 

 

11,570,964

 

 

 

 

 

 

 

 

 

 

 

 

Undesignated net assets

 

 

51,870,550

 

 

 

47,388,732

 

 

 

 

 

 

 

 

 

 

 

 

Board designated, systems modernization fund

 

 

6,835,851

 

 

 

9,123,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets — without restrictions

 

 

58,706,401

 

 

 

56,512,017

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND NET ASSETS

 

$

76,222,195

 

 

$

68,082,981

 

 

The accompanying notes are an integral part of these financial statements.

 

3


 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the years ended September 30, 2023 and 2022

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting fees

 

$

10,886,294

 

 

$

7,439,316

 

 

 

Transaction fees

 

 

17,714,887

 

 

 

9,942,109

 

 

 

Trade count fees

 

 

10,507,502

 

 

 

4,777,373

 

 

 

Annual and initial fees

 

 

1,494,000

 

 

 

1,531,000

 

 

 

Data subscriber fees

 

 

2,386,429

 

 

 

2,440,175

 

 

 

Municipal advisor professional fees

 

 

3,030,360

 

 

 

2,937,000

 

 

 

529 plan underwriting fees

 

 

1,269,753

 

 

 

1,497,483

 

 

 

Rule violation fine revenue

 

 

153,694

 

 

 

761,500

 

 

 

Other income (loss)

 

 

1,631,452

 

 

 

(849,892

)

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

 

49,074,371

 

 

 

30,476,064

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Regulation

 

 

5,162,194

 

 

 

4,284,828

 

 

 

Market Transparency and Technology

 

 

24,371,657

 

 

 

20,985,107

 

 

 

Market Structure and Data

 

 

5,103,321

 

 

 

4,304,822

 

 

 

External Relations

 

 

2,588,139

 

 

 

2,859,448

 

 

 

Governance and Leadership

 

 

4,991,823

 

 

 

4,865,925

 

 

 

Finance, Human Resources and Administration

 

 

4,662,853

 

 

 

4,258,820

 

 

 

 

 

 

 

 

 

 

 

 

Total Expenses

 

 

46,879,987

 

 

 

41,558,950

 

 

 

 

 

 

 

 

 

 

 

 

CHANGE IN NET ASSETS

 

 

2,194,384

 

 

 

(11,082,886

)

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS — Beginning of year

 

 

56,512,017

 

 

 

67,594,903

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS — End of year

 

$

58,706,401

 

 

$

56,512,017

 

 

 

The accompanying notes are an integral part of these financial statements.

4


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF FUNCTIONAL EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Program Activities

 

 

Supporting Activities

 

 

 

 

 

 

Market
Regulation

 

 

Market Transparency and Technology

 

 

Market Structure and Data

 

 

External
Relations

 

 

Program
Totals

 

 

Governance and Leadership

 

 

Finance, Human Resources and Administration

 

 

Total
Expenses

 

Compensation of current officers, directors, other salaries and employee benefits

 

$

4,037,063

 

 

$

9,448,276

 

 

$

3,672,352

 

 

$

1,420,374

 

 

$

18,578,065

 

 

$

3,576,248

 

 

$

3,259,582

 

 

$

25,413,895

 

Fees for services

 

 

177,876

 

 

 

2,668,205

 

 

 

644,253

 

 

 

606,314

 

 

 

4,096,648

 

 

 

492,196

 

 

 

428,620

 

 

 

5,017,464

 

Information technology

 

 

106,596

 

 

 

5,455,016

 

 

 

137,424

 

 

 

164,154

 

 

 

5,863,190

 

 

 

97,630

 

 

 

180,420

 

 

 

6,141,240

 

Occupancy

 

 

355,426

 

 

 

981,331

 

 

 

340,759

 

 

 

126,203

 

 

 

1,803,719

 

 

 

242,112

 

 

 

279,596

 

 

 

2,325,427

 

Travel and meetings

 

 

270,531

 

 

 

9,756

 

 

 

3,137

 

 

 

48,363

 

 

 

331,787

 

 

 

244,647

 

 

 

88,670

 

 

 

665,104

 

Depreciation and amortization

 

 

81,600

 

 

 

3,980,833

 

 

 

78,233

 

 

 

28,974

 

 

 

4,169,640

 

 

 

55,583

 

 

 

64,191

 

 

 

4,289,414

 

Insurance

 

 

32,578

 

 

 

87,253

 

 

 

31,234

 

 

 

11,568

 

 

 

162,633

 

 

 

177,135

 

 

 

25,628

 

 

 

365,396

 

Data and information services

 

 

29,141

 

 

 

1,174,706

 

 

 

59,003

 

 

 

7,689

 

 

 

1,270,539

 

 

 

 

 

 

 

 

 

1,270,539

 

Dues, registration and training

 

 

10,169

 

 

 

45,147

 

 

 

12,207

 

 

 

3,785

 

 

 

71,308

 

 

 

32,139

 

 

 

61,650

 

 

 

165,097

 

Property and other taxes

 

 

10,475

 

 

 

351,846

 

 

 

63,831

 

 

 

76,868

 

 

 

503,020

 

 

 

8,781

 

 

 

21,099

 

 

 

532,900

 

Office and other expenses

 

 

50,739

 

 

 

169,288

 

 

 

60,888

 

 

 

93,847

 

 

 

374,762

 

 

 

65,352

 

 

 

253,397

 

 

 

693,511

 

Total Expenses

 

$

5,162,194

 

 

$

24,371,657

 

 

$

5,103,321

 

 

$

2,588,139

 

 

$

37,225,311

 

 

$

4,991,823

 

 

$

4,662,853

 

 

$

46,879,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF FUNCTIONAL EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Program Activities

 

 

Supporting Activities

 

 

 

 

 

 

Market
Regulation

 

 

Market Transparency and Technology

 

 

Market Structure and Data

 

 

External
Relations

 

 

Program
Totals

 

 

Governance and Leadership

 

 

Finance, Human Resources and Administration

 

 

Total
Expenses

 

Compensation of current officers, directors, other salaries and employee benefits

 

$

3,491,985

 

 

$

8,696,963

 

 

$

3,307,397

 

 

$

1,444,906

 

 

$

16,941,251

 

 

$

3,584,533

 

 

$

2,965,776

 

 

$

23,491,560

 

Fees for services

 

 

72,703

 

 

 

2,352,130

 

 

 

297,383

 

 

 

837,636

 

 

 

3,559,852

 

 

 

425,986

 

 

 

428,699

 

 

 

4,414,537

 

Information technology

 

 

94,881

 

 

 

3,743,931

 

 

 

110,016

 

 

 

214,172

 

 

 

4,163,000

 

 

 

97,456

 

 

 

168,243

 

 

 

4,428,699

 

Occupancy

 

 

333,151

 

 

 

939,189

 

 

 

325,067

 

 

 

133,614

 

 

 

1,731,021

 

 

 

253,708

 

 

 

276,764

 

 

 

2,261,493

 

Travel and meetings

 

 

66,101

 

 

 

10,798

 

 

 

2,813

 

 

 

26,447

 

 

 

106,159

 

 

 

177,088

 

 

 

49,463

 

 

 

332,710

 

Depreciation and amortization

 

 

69,825

 

 

 

3,405,795

 

 

 

68,131

 

 

 

28,004

 

 

 

3,571,755

 

 

 

53,175

 

 

 

58,007

 

 

 

3,682,937

 

Insurance

 

 

30,581

 

 

 

84,368

 

 

 

29,839

 

 

 

12,265

 

 

 

157,053

 

 

 

176,335

 

 

 

25,405

 

 

 

358,793

 

Data and information services

 

 

28,347

 

 

 

1,173,884

 

 

 

40,159

 

 

 

6,583

 

 

 

1,248,973

 

 

 

 

 

 

 

 

 

1,248,973

 

Dues, registration and training

 

 

13,316

 

 

 

45,362

 

 

 

18,092

 

 

 

1,320

 

 

 

78,090

 

 

 

6,179

 

 

 

44,230

 

 

 

128,499

 

Property and other taxes

 

 

11,799

 

 

 

321,901

 

 

 

38,978

 

 

 

60,930

 

 

 

433,608

 

 

 

11,215

 

 

 

17,759

 

 

 

462,582

 

Office and other expenses

 

 

72,139

 

 

 

210,786

 

 

 

66,947

 

 

 

93,571

 

 

 

443,443

 

 

 

80,250

 

 

 

224,474

 

 

 

748,167

 

Total Expenses

 

$

4,284,828

 

 

$

20,985,107

 

 

$

4,304,822

 

 

$

2,859,448

 

 

$

32,434,205

 

 

$

4,865,925

 

 

$

4,258,820

 

 

$

41,558,950

 

 

5


 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the years ended September 30, 2023 and 2022

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in net assets

 

$

2,194,384

 

 

$

(11,082,886

)

 

Adjustments to reconcile change in net assets to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,289,414

 

 

 

3,682,937

 

 

 

Net loss on disposal of long-lived assets

 

 

7,864

 

 

 

53,485

 

 

 

Unrealized (gains) losses on investments

 

 

(492,866

)

 

 

1,909,054

 

 

 

Realized (gains) losses on investments

 

 

(30,105

)

 

 

15,605

 

 

 

Bad debt expense

 

 

25,744

 

 

 

8,360

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(2,646,906

)

 

 

(255,055

)

 

Prepaid and other assets

 

 

(273,637

)

 

 

(200,695

)

 

 

Accrued interest receivable

 

 

(85,968

)

 

 

48,070

 

 

 

Operating lease activity

 

 

(503,871

)

 

 

-

 

 

 

Accounts payable and accrued liabilities

 

 

(945,848

)

 

 

834,780

 

 

 

Accrued vacation payable

 

 

50,390

 

 

 

(21,366

)

 

 

Data subscription contract liabilities

 

 

68,661

 

 

 

76,147

 

 

 

Deferred rent

 

 

-

 

 

 

(401,891

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided (used) by operating activities

 

 

1,657,256

 

 

 

(5,333,455

)

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of long-lived assets

 

 

(6,294,438

)

 

 

(7,892,994

)

 

 

Purchases of investments

 

 

(13,682,057

)

 

 

(14,544,358

)

 

 

Maturities of investments

 

 

17,939,375

 

 

 

26,800,000

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used) provided in investing activities

 

 

(2,037,120

)

 

 

4,362,648

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments of lease obligation

 

 

(854

)

 

 

(763

)

 

 

 

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

 

(854

)

 

 

(763

)

 

 

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(380,718

)

 

 

(971,570

)

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, Beginning of year

 

 

3,874,774

 

 

 

4,846,344

 

 

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, End of year

 

$

3,494,056

 

 

$

3,874,774

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE OF NONCASH INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Accrual of long-lived assets

 

$

319,238

 

 

$

151,339

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

6


 

NOTES TO FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED September 30, 2023 AND 2022

 

1.
NATURE OF OPERATIONS

 

The Municipal Securities Rulemaking Board (MSRB) was created by Congress under the 1975 Amendments to the Securities Exchange Act of 1934, and the authority of the MSRB was expanded by further amendments to the Exchange Act under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (as amended, the Exchange Act). The MSRB is incorporated as a not-for-profit, non-stock corporation pursuant to the laws of the Commonwealth of Virginia. Under the Exchange Act, the MSRB is a self-regulatory organization (SRO) with authority to adopt rules regulating the municipal securities activities of brokers, dealers and municipal securities dealers, and the municipal advisory activities of municipal advisors (collectively referred to as “regulated entities”), to promote fair and efficient markets and to protect investors, municipal entities, obligated persons and the public interest. The MSRB collects and disseminates market information, operates the Electronic Municipal Market Access (EMMA®) website to promote transparency and widespread access to information, and also engages with stakeholders on a variety of topics.

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

 

Basis of Accounting and Presentation — The MSRB’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and are presented pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 958, Not-for-Profit Entities (ASC 958). The MSRB is required to report the following net asset classifications:

Net assets without restrictions: Net assets that are not subject to donor-imposed restrictions and may be expended for any purpose in performing the primary objectives of the MSRB. These net assets may be used at the discretion of MSRB’s management and the Board.
Net assets with restrictions: Net assets subject to stipulations imposed by donors and grantors. The MSRB does not have donor restricted net assets.

 

Recently Adopted Accounting Standards — In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). This Standard was introduced to enhance transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on their financial statements. It also mandates the disclosure of essential information about leasing arrangements. Under this update, lessees are now obligated to include in their financial statements a liability for lease payments and a right-of-use asset (ROU) representing their right to use the leased asset, whether it's an operating or finance lease. Additionally, the statement of activities should now reflect lease expenses for operating leases and amortization plus interest expenses for financing leases.

 

In 2018, FASB issued ASU 2018-11, Targeted Improvements, which introduced an optional transition method. This method allows entities to adopt ASC 842 retrospectively at the start of the adoption period. The MSRB chose this transition method when adopting the standard on October 1, 2022. This adoption did not result in a cumulative-effect adjustment to the net assets without restrictions. Under this approach, comparative prior periods remain unaltered, in line with the MSRB's historical accounting policy.

 

As of October 1, 2022, the MSRB recognized an operating lease ROU asset of $7.6 million, inclusive of a $5.3 million deferred rent adjustment, and an operating lease liability of $12.9 million. As of September 30, 2023, the amortized balances of the operating lease ROU asset and the operating lease liability were $7.1 million and $11.9 million, respectively.

 

The MSRB elected certain practical expedients when implementing the standard. These expedients allow the MSRB to avoid reassessing whether expired or existing contracts constitute leases, the lease classification of such leases, and the initial direct costs of existing leases as of the effective date. The MSRB also elected to combine lease and related non-lease components and to exclude a ROU asset or liability for short-term contracts, defined as those with a term of twelve months or less.

 

The MSRB has adopted Accounting Standards Update (ASU) 2018-15 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 250-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The MSRB adopted the standard on October 1, 2021, using the prospective transition approach, under which we apply the guidance to all eligible costs incurred subsequent to adoption and therefore no changes to the previously issued audited financial statements were required.

 

Fair Value Measurement — The MSRB measures fair value in accordance with the provisions of Financial Accounting Standards Board (FASB) ASC 820, Fair Value Measurement, which provides a common definition of fair value for GAAP, establishes a framework for measuring fair value, provides a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements.

7


 

 

Cash Equivalents — Highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. Included in cash equivalents are short term money market mutual funds fully invested in securities backed by the full faith and credit of the United States (U.S.) Government with a total fair market value of approximately $2.6 million and $2.1 million at September 30, 2023 and 2022, respectively.

 

Investments — Investments are stated at fair value. Investments consist of U.S. Treasury notes, obligations of U.S. government sponsored enterprises that are fully guaranteed by the U.S. Government, and certificates of deposit that are FDIC insured.

 

Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable are recorded at invoiced amounts and do not bear interest. Accounts receivable are reported net of an allowance for doubtful accounts in the statements of financial position. Management’s estimate of the allowance for doubtful accounts is based on historical collection experience and ongoing account reviews. Account balances are written off against the allowance once the potential for recovery is considered remote.

 

Concentration of Credit Risk — Financial instruments that potentially subject the MSRB to a concentration of credit risk consist principally of cash, cash equivalents, accounts receivable and investments. The MSRB maintains cash primarily in non-interest-bearing accounts with FDIC insurance up to $250,000 with balances at one financial institution exceeding the FDIC limit by approximately $647,000 and $1,525,000 at September 30, 2023 and 2022, respectively. MSRB investments are backed by the full faith and credit of the U.S. Government, or its fully guaranteed government sponsored enterprises. Accounts receivable consist of fees due from regulated entities and data subscribers. At times, there are certain significant balances due from regulated entities but the MSRB does not believe it is exposed to any significant credit risk on these balances. Eight regulated entities accounted for approximately one-third of total fee revenue in fiscal years 2023 and 2022.

 

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used in accounting for, among other things, realization of accounts receivable, the carrying value of investments, the impairment of long-lived assets, and the capitalization of internally developed software costs. Actual results could differ from those estimates.

 

Fixed Assets — Computer and office equipment, as well as furniture and fixtures, are recorded at cost and are depreciated using the straight-line method over three years and five years, respectively. Acquisition costs include all expenses necessary to prepare the asset for its intended purpose including direct labor related costs. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease period or the estimated useful life of the improvement. Improvements and replacements of fixed assets are capitalized. Maintenance and repairs that do not improve or extend the lives of fixed assets are charged to expense as incurred.

 

When assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts, and any gain or loss is recognized in the statements of activities.

 

Capitalized Software Costs — The MSRB capitalizes certain costs associated with computer software developed or obtained for internal use as part of the MSRB information systems. The MSRB’s policy provides for the capitalization of external direct costs of materials and services and direct payroll-related costs incurred during the application development stage as well as costs related to upgrades and enhancements to this software provided it is probable that these expenditures will result in additional functionality. Costs associated with preliminary project stage activities, training, maintenance and post implementation stage activities are expensed as incurred.

 

After all substantial testing and deployments are completed and the software is ready for its intended use, internally developed software costs are amortized using the straight-line method over three or five years, depending upon the expected useful life.

 

Software as a Service Implementations— As we continue to modernize systems and advance our Strategic Plan goals of Market Data and Market Transparency, we incur costs to implement software licensed or hosted by a third-party vendor in cloud computing environments offered as a service. Implementation costs incurred during the onboarding or customization stage are generally capitalized and amortized over the term of the software service or hosting arrangement on a straight-line basis. For the year ended September 30, 2023 and 2022, we capitalized $3,180 and $65,000, respectively, of costs incurred to implement software as a service arrangement. These costs were primarily related to the implementation of a data extraction and transformation software service for PDF documents and a platform hosting service for the MSRB’s website hosting software. Amortization expense of capitalized implementation costs for cloud computing arrangements totaled approximately $19,200 and $16,000 for the years ended September 30, 2023 and 2022, respectively, which is included in computer licenses, maintenance and supplies, consulting expenses and professional services within the statement of functional expenses. The net deferred cloud implementation costs of approximately $32,700 and $49,000 are included on the statements of financial position within prepaid expenses and other assets at September 30, 2023 and 2022, respectively, and will be expensed over the term of the related cloud computing arrangements.

 

Impairment of Long-Lived Assets — The MSRB’s policy is to review its long-lived assets, such as fixed assets and capitalized software costs, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may

8


 

not be recoverable. Impairment, if any, is recognized in the period of identification to the extent the carrying amount of an asset exceeds the fair value of such asset.

 

Leases — The MSRB determines whether an arrangement constitutes a lease at the inception of the contract. This determination aligns with the guidelines specified in ASC 842 and involves evaluating various factors. Key considerations include assessing our ability to control and direct the use of the asset and determining whether the counterparty holds a substantive substitution right.

 

The MSRB leases office space under a non-cancelable operating lease which includes options that permit renewals for additional periods as well as a one-time option to terminate with a significant termination penalty. The lease agreement does not contain any material residual value guarantee, restrictive covenant, or variable lease payments that would be included in the operating lease liability.

 

Under ASC 842, ROU assets represent the MSRB's entitlement to utilize underlying assets for the lease term, while lease liabilities represent our commitment to make lease payments throughout the lease period. The recognition of ROU assets and lease liabilities occurs on the lease's commencement date, based on the present value of lease payments over the agreed-upon lease term. The MSRB employs the implicit rate when it is readily determinable to discount lease cash flows. In cases where the implicit rate cannot be determined, the MSRB uses its collateralized interest rate.

 

ROU assets and lease liabilities resulting from operating leases are disclosed on the statement of financial position. The MSRB has one finance lease and it is included in fixed assets, and capital lease liabilities in the statements of financial position.

 

Deferred Rent — Upon transition to ASC 842, deferred rent was recorded as an adjustment to the operating lease ROU assets for the office lease. Prior to the adoption of ASC 842 and for fiscal year 2022, rent was recognized on a straight-line basis over the term of the lease. The difference between rent expense recognized and rental payments made, as stipulated in the lease, was recognized as increases or decreases to deferred rent.

 

In addition, lease incentives were recorded as deferred rent when control of the office space was obtained. Deferred rent related to lease incentives was amortized on a straight-line basis over the lease term.

 

Data Subscription Contract Liabilities — Data subscription contract liabilities relates to payments received in advance of the satisfaction of performance under the data subscription contract which is the delivery of the data feeds. We receive payments from data subscribers based upon the terms established in our contracts.

 

Functional Allocation of Expenses — The costs of providing the various organizational activities and programs have been summarized on a functional basis in the statements of activities. Certain categories of expenses are attributable to more than one program or supporting function. Therefore, these expenses require allocation determined by management on a reasonable basis that is consistently applied. The expenses that are allocated include depreciation and amortization, occupancy, internal information technology, office expenses, general insurance, and personal property taxes, which are allocated based upon a percentage of total salaries. Certain salaries were allocated based upon estimated efforts.

 

Functional Descriptions:

 

Market Regulation — This group is responsible for developing and maintaining the MSRB rules that establish responsibilities and standards for brokers, dealers, and municipal securities dealers affecting municipal securities transactions and for municipal advisors that engage in municipal advisory activities. These staff also maintain the MSRB’s professional qualifications program, create compliance and educational resources for regulated entities and provide assistance to other securities regulators that examine for compliance with and enforce MSRB rules.

 

Market Transparency and Technology — These groups are responsible for developing and operating the MSRB's market transparency and information systems that receive, process and disseminate data and documents relied on by the municipal securities market, supporting business operations and optimizing the business experience. Cybersecurity prevention, detection and incident response are also the responsibility of these staff.

 

Market Structure and Data — These groups are responsible for initiatives that provide insight into the municipal market through data, research and analysis. This includes a focus on the governance, quality and analysis of data collected by the MSRB's market transparency systems and providing economic analysis and research relating to regulatory and transparency projects. Economic analysis informs the regulatory approach to addressing an identified need for rulemaking and evaluates the cost of the regulation against the benefit to the market. Working with market transparency and technology, these groups also guide strategic development and ongoing improvements of MSRB's market transparency systems including the EMMA(R) website.

External Relations — This group is responsible for managing and supporting efforts to engage and communicate with external stakeholders, including investors, issuers, regulated entities, fellow regulators and policy makers responsible for oversight of the MSRB. The MSRB’s external relations staff oversee MSRB corporate communications, government relations events, education programs and related activities.

9


 

Governance and Leadership — This group consists of the members of the Board of Directors and certain staff, including executive leadership and internal legal and governance staff in supporting roles. The Board of Directors consists of a of majority public members, including issuers and investors, as well as members representing regulated entities, including municipal advisors, broker-dealers and banks. The Board exercises oversight of the operation and administration of the organization, makes policy decisions and authorizes rulemaking and market transparency initiatives.

 

Finance, Human Resources and Administration — These groups are responsible for the day-to-day financial, risk, people and facilities management at the MSRB ensuring appropriate spending, staffing and application of internal controls while supporting operations. These groups include accounting, administrative services, human resources, finance and risk management.

 

Reciprocal Transactions — The MSRB receives municipal credit ratings data for municipal securities in exchange for its data subscription service feeds. The revenue and expenses are recognized in the statement of activities at the same data subscription fee rate that other data subscribers pay for similar services. Revenue and expenses recognized totaled $137,500 for the years ended September 30, 2023 and 2022.

 

Revenue Recognition:

 

As the self-regulatory organization for the municipal market, the MSRB's performance obligations under the Exchange Act include the adoption of rules regulating the municipal securities activities of brokers, dealers and municipal securities dealers, and the municipal advisory activities of municipal advisors, collecting and disseminating market information, and operating the Electronic Municipal Market Access (EMMA®) website. In addition, the MSRB engages in outreach and provides education to stakeholders and provides enforcement support to other regulators who enforce MSRB rules. Circumstances may exist where such revenue could be variable, the estimate of variable consideration is not typically constrained, as any effects of such variable consideration are known to the MSRB at year end.

 

Underwriting Fees — The underwriting fee on municipal securities dealers acting as underwriters is required to be paid per Rule A-13 and is equal to $0.0297 per $1,000 of the par value of municipal securities purchased by underwriters from an issuer as part of a new issue. Consistent with the Board’s stated approach to monitor and manage organizational reserve levels, the Board temporarily reduced the rate of assessment for municipal securities dealers’ underwriting during the third and fourth quarters of fiscal year 2021 extending until September 30, 2022 to $.0165 per $1,000 of the par value of municipal securities purchased by underwriters from an issuer as part of a new issue.

 

The performance obligation associated with underwriting fees is satisfied in the month the underwriter files the offering document with the MSRB at which time revenue is recognized.

 

Transaction Fees — The transaction fee on municipal securities dealers is required to be paid per Rule A-13 and is $0.0107 per $1,000 par value of bonds sold and is levied on both customer and interdealer transactions as specified in Rule A-13. As described in this rule, certain transactions are exempt from this fee. Consistent with the Board’s stated approach to monitor and manage organizational reserve levels, the Board temporarily reduced the rate of assessment for municipal securities dealers’ transaction fees related to market activity during the third and fourth quarters of fiscal year 2021 extending until September 30, 2022 to $.0060 per $1,000 of the par value of bonds sold.

 

The performance obligation associated with transaction fees is satisfied as transactions are settled at which time revenue is recognized.

 

Trade Count Fees — The trade count fee on municipal securities dealers is required to be paid per Rule A-13 and is $1.10 per municipal security trade for all customer and interdealer sales transactions. Consistent with the Board’s stated approach to monitor and manage organizational reserve levels, the Board temporarily reduced the rate of assessment for municipal securities dealers’ trade count fees related to market activity during the third and fourth quarters of fiscal year 2021 extending until September 30, 2022 to $0.60 per municipal security trade. Trade count fees were formerly named technology fees.

 

The performance obligation associated with trade count fees is satisfied as sales transactions are settled at which time revenue is recognized.

 

Data Subscriber Fees — For a fee, the MSRB provides access to MSRB subscription services that collect, store and provide information pertaining to the municipal securities market. The MSRB Primary Market Disclosure subscription service includes official statements, advance refunding documents and related data. The MSRB Continuing Disclosure subscription service includes continuing disclosure documents and related data from municipal securities issuers, obligated persons and their agents. The Real Time Transaction Reporting subscription service covers data on all municipal securities transactions for purposes of price transparency and surveillance. Finally, the Short-term Obligation Rate Transparency subscription service covers short-term obligation rate reset data and related documents.

 

Information processed by these systems is sold to subscribers on an annual basis and the performance obligations associated with these data subscriptions are satisfied over-time as services are rendered with revenue recognized straight-line over the period of service. In addition, the MSRB sells annual historical data sets from these systems, with the fee billed and recognized at the time of purchase.

10


 

 

Municipal Advisor Professional Fees — Each municipal advisor that is registered with both the SEC and the MSRB is required to pay an annual per professional fee of $1,060 for fiscal year 2023 and $1,000 for fiscal year 2022 per Rule A-11.

 

The performance obligation associated with municipal advisor professional fees is satisfied when the number of associated persons for whom the firm has filed a Form MA-1 with the Securities and Exchange Commission (SEC) as of January 31 is confirmed and billed in April at which time revenue is recognized.

 

529 Plan Underwriting Fees — Underwriters to 529 savings plans must pay an annual fee of $.005 per $1,000 of the total aggregate plan assets as of December 31 of each year as reported on MSRB Form G-45, and as required to be paid per Rule A-13.

 

The performance obligation associated with 529 plan underwriting fees is satisfied when the total aggregate plan assets as of December each year are reported on MSRB Form G-45 are processed and billed in May at which time revenue is recognized.

 

Annual and Initial Fees — With respect to each fiscal year of the MSRB in which a regulated entity conducts business, the regulated entity is required to pay an annual fee of $1,000 per Rule A-12. Revenue is recognized when regulated entities are billed annually in October, or when received upon initial registration with the MSRB to conduct business. The initial fee is a one-time fee of $1,000 which is to be paid by every regulated entity upon registration with the MSRB under Rule A-12. Initial fee revenue is recognized when received.

 

Rule Violation Fine Revenue — The Dodd-Frank Act provides that fines collected by the SEC for violations of the rules of the MSRB shall be equally divided between the SEC and the MSRB, and that one-third of fines collected by the Financial Industry Regulatory Authority (FINRA) allocable to violations of the rules of the MSRB will be paid to the MSRB, although the portion of such fines payable to the MSRB may be modified at the direction of the SEC upon agreement between the MSRB and FINRA. The performance obligation associated with fine revenue is satisfied when the fines are paid to the SEC or FINRA at which time MSRB's allocable portion is recognized as revenue.

 

Professional Qualification Examination Fees — Rule A-16 establishes the examination fee on persons taking certain qualification examinations of $150 per exam. These examinations include the Series 50 (Municipal Advisor Representative Qualification Examination), Series 51 (Municipal Fund Securities Limited Principal Qualification Examination), Series 52 (Municipal Securities Representative Qualification Examination), Series 53 (Municipal Securities Principal Qualification Examination) and Series 54 (Municipal Advisor Principal Qualification Examination).

 

Professional qualification examination fees are recognized in the month the exams are administered and totaled $281,700 and $348,300 for the years ended September 30, 2023 and 2022, respectively. Professional qualification examination fees are included in other income in the accompanying statements of activities.

 

 

3.
INVESTMENTS

 

Investments as of September 30, 2023 and 2022, consist of the following:

 

 

 

2023

 

 

2022

 

U.S. Treasury notes

 

$

31,531,428

 

 

$

33,349,227

 

Certificates of deposit

 

 

7,451,270

 

 

 

9,861,642

 

Government-guaranteed agency securities

 

 

493,824

 

 

 

 

Total investments

 

$

39,476,522

 

 

$

43,210,869

 

 

Government-guaranteed agency securities include Federal National Mortgage Association and Federal Home Loan Mortgage Corporation bonds, government sponsored enterprises fully guaranteed by the U.S. Government.

 

In September 2014, a letter of credit in the amount of $130,000 was accepted as a security deposit by the landlord under the terms of the new office lease in Washington, D.C. The MSRB purchased a certificate of deposit for the same amount to collateralize the letter of credit. This holding is included in certificates of deposit and is valued at $139,403 and $139,375 as of September 30, 2023 and 2022, respectively.

 

Net investment returns disclosed net of internal direct investment expenses of approximately $12,548 and $10,400 in 2023 and 2022, respectively are included in other income in the accompanying statements of activities for the fiscal years ended September 30, 2023 and 2022 and consists of the following:

 

11


 

 

 

2023

 

 

2022

 

Interest and dividends

 

$

647,066

 

 

$

658,836

 

Unrealized gain (loss)

 

 

492,866

 

 

 

(1,909,054

)

Realized gain (loss)

 

 

30,105

 

 

 

(15,604

)

Total net investment return (loss)

 

$

1,170,037

 

 

$

(1,265,822

)

 

4.
FAIR VALUE MEASUREMENTS

The carrying amounts of financial instruments, including cash and cash equivalents not subject to fair value measurements, receivables, accounts payable and accrued expenses, approximate fair value as of September 30, 2023 and 2022 because of the relatively short duration of these instruments.

The MSRB carries certain financial instruments at fair value which we define as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The MSRB is responsible for the determination of the value of the investments carried at fair value and the supporting methodologies and assumptions.

The degree of judgment used in measuring the fair value of financial instruments generally inversely correlates with the level of observable valuation inputs. The MSRB maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Financial instruments with quoted prices in active markets generally have more pricing observability, and less judgment is used in measuring fair value. Conversely, financial instruments for which no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment. Pricing observability is affected by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, and the characteristics specific to the transaction, liquidity and general market conditions.

The MSRB’s policy uses the GAAP framework for measuring fair value, which provides a fair value hierarchy based on observable inputs. The hierarchy reflects three levels based on the transparency of inputs as follows:

Level 1 — Fair value measurements that are based on quoted prices (unadjusted) in active markets that the MSRB has the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.

Level 2 — Fair value measurements based on inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 — Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, the MSRB would make assumptions about the inputs a hypothetical market participant would use to value that asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The MSRB considers observable market data to be readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the entity’s perceived risk of that instrument.

The MSRB’s Level 2 investments include U.S. Treasury notes, obligations of U.S. government sponsored enterprises fully guaranteed by the U.S. Government and certificates of deposit.

The MSRB bases the fair value on pricing obtained from the MSRB’s investment brokers. The MSRB does not adjust for or apply any additional assumptions or estimates to the pricing information it receives from its brokers. The brokers’ pricing is compared to industry standard data providers or current yields available on comparable securities for reasonableness. The MSRB considers this the most reliable information available for the valuation of investments.

Investments were recorded at fair value as of September 30, 2023 and 2022, based on the following levels of hierarchy:

 

2023

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

U.S. Treasury notes

 

$

-

 

 

$

31,531,428

 

 

$

-

 

 

$

31,531,428

 

Certificates of deposit

 

 

-

 

 

 

7,451,270

 

 

 

-

 

 

 

7,451,270

 

Government-guaranteed agency securities

 

 

-

 

 

 

493,824

 

 

 

 

 

 

493,824

 

Total investments

 

$

-

 

 

$

39,476,522

 

 

$

-

 

 

$

39,476,522

 

 

12


 

 

2022

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

U.S. Treasury notes

 

$

-

 

 

$

33,349,227

 

 

$

-

 

 

$

33,349,227

 

Certificates of deposit

 

 

-

 

 

 

9,861,642

 

 

 

-

 

 

 

9,861,642

 

Government-guaranteed agency securities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total investments

 

$

-

 

 

$

43,210,869

 

 

$

-

 

 

$

43,210,869

 

 

 

5.
ACCOUNTS RECEIVABLE

 

Accounts receivable as of September 30, 2023 and 2022 consist of the following:

 

 

 

2023

 

 

2022

 

Billed accounts receivable

 

$

4,404,335

 

 

$

2,651,605

 

Unbilled accounts receivable

 

 

2,470,892

 

 

 

1,593,601

 

 

 

 

6,875,227

 

 

 

4,245,206

 

Less allowance for doubtful accounts

 

 

(158,576

)

 

 

(149,717

)

Total accounts receivable — net

 

$

6,716,651

 

 

$

4,095,489

 

 

Unbilled receivables at September 30, 2023 and 2022 consist primarily of September transaction and trade count fees (formerly technology fees) billed in early November. Refer to the "Revenue Recognition" section of note 2 for a discussion of the 2022 Board temporary fee reduction.

 

6.
PREPAID AND OTHER ASSETS

 

Prepaid and other assets as of September 30, 2023 and 2022 consist of the following:

 

 

 

2023

 

 

2022

 

Prepaid assets

 

$

2,040,358

 

 

$

1,691,866

 

Deposits

 

 

22,883

 

 

 

81,738

 

Total prepaid and other assets

 

$

2,063,241

 

 

$

1,773,604

 

 

7.
FIXED ASSETS

 

Fixed assets as of September 30, 2023 and 2022 consist of the following:

 

 

 

2023

 

 

2022

 

Capitalized software costs

 

$

49,687,576

 

 

$

44,346,607

 

Leasehold improvements

 

 

4,397,760

 

 

 

4,384,685

 

Computer and office equipment

 

 

1,777,866

 

 

 

2,146,808

 

Furniture and fixtures

 

 

1,729,884

 

 

 

1,705,229

 

Total fixed asset acquisition costs

 

 

57,593,086

 

 

 

52,583,329

 

Less accumulated depreciation and amortization:

 

 

 

 

 

 

Capitalized software costs

 

 

(35,148,993

)

 

 

(32,345,860

)

Leasehold improvements

 

 

(2,269,682

)

 

 

(1,969,320

)

Computer and office equipment

 

 

(1,489,283

)

 

 

(1,773,965

)

Furniture and fixtures

 

 

(1,551,433

)

 

 

(1,509,547

)

Total fixed asset accumulated depreciation and amortization

 

 

(40,459,391

)

 

 

(37,598,692

)

Total fixed assets - net

 

$

17,133,695

 

 

$

14,984,637

 

 

Depreciation expense and amortization expense during fiscal years 2023 and 2022 are as follows:

 

 

 

2023

 

 

2022

 

Depreciation expense

 

$

226,766

 

 

$

162,264

 

Amortization expense for capitalized software cost and leasehold improvements

 

 

4,062,648

 

 

 

3,520,673

 

Total depreciation and amortization expense

 

$

4,289,414

 

 

$

3,682,937

 

 

Impairment of long-lived assets Through regular review of long-lived assets, in fiscal years 2023 and 2022 no estimated impairment loss was recognized.

13


 

Leasehold improvements In conjunction with the Washington, D.C. office lease, the landlord provided up to $4.4 million in landlord incentives, of which $4.03 million funded leasehold improvements and $323,000 offset future rent payments. Included in fiscal year ended September 30, 2023 and 2022 leasehold improvements, is $0 and $42,000, respectively, of work-in-process costs for improvements not yet implemented.

Capitalized software costs For the fiscal years ended September 30, 2023 and 2022, $5.4 million and $6.2 million, respectively, of internally developed work-in-process costs for software not yet implemented are included in capitalized software costs.

8.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities as of September 30, 2023 and 2022 consist of the following:

 

 

 

2023

 

 

2022

 

Accounts payable and accrued expenses

 

$

1,710,593

 

 

$

2,626,301

 

Salaries, taxes and benefits payable

 

 

2,318,075

 

 

 

2,180,334

 

Total accounts payable and accrued liabilities

 

$

4,028,668

 

 

$

4,806,635

 

 

9.
LEASES

Operating Leases — The MSRB leases office space under operating lease arrangements. The MSRB moved to new office space in Washington, D.C. in December 2015 and the lease will expire in fiscal year 2031. Maturities of operating lease liabilities are as follows:

 

Years Ending September 30

 

 

 

2024

 

$

1,871,346

 

2025

 

 

1,918,188

 

2026

 

 

1,966,188

 

2027

 

 

2,015,352

 

2028

 

 

2,065,692

 

2029 and beyond

 

 

5,386,458

 

Total operating lease payments

 

$

15,223,224