Music Teachers National Association, Inc.: consolidated statement of financial position: June 30, 2002: independent auditor's report - MTNA

American Music Teacher, Feb-March, 2003

Cash and cash equivalents: For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Allowance for doubtful accounts: The Association extends credit to various customers for use of mailing lists and advertising. All accounts receivable are deemed fully collectible by management. Therefore, no allowance for doubtful accounts is necessary.

Investments: Investments in marketable securities with readily determinable fair values and all investments in debt securities are valued at their fair values in the statement of financial position. Unrealized gains and losses are included in the statement of activities.

Inventory: Inventory, consisting principally of merchandise for resale to members and the general public, is stated at cost.

Property and depreciation: Property and equipment is recorded at cost. Depreciation is provided on the straight-line method over the estimated useful lives of the assets.

Deferred revenue: Membership dues that have been collected for future periods have been recorded as deferred revenue.

Due to affiliates: Amounts due to affiliates represent membership dues collected by the Association on behalf of its 51 state and over 500 local affiliates,

Concentration of credit risk: The Association maintains its cash in deposit accounts, which, at times, may exceed federally insured limits. The Association has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Note 2--Investments: The Association's investments
consisted of the following at June 30, 2002:

                               Cost         Fair Value
Money market investments      $38,912           38,912
Mutual funds                   29,415           31,142
Bonds                         178,958          194,774
Equities                      290,687          727,819
                             $537,972          542,647

Note 3--Property and Equipment: Property and
equipment at June 30, 2002, is summarized as follows:

Furniture and fixtures                        $416,895
Less accumulated depreciation                (268.079)
                                              $148,816

Note 4--Retirement Plan: The Association offers a
voluntary participation 401(k) retirement plan to its
employees. All employees of the Association are eligible
to participate in the plan upon meeting certain eligibility
requirements. The Association matches a certain percentage
of the employee contributions. Total matching
retirement contributions were 514,604 for the year
ended June 30, 2002.

Note 5--Leases: The Association is under agreement to
lease certain office space through July 2003. Total rent
expense including common area maintenance and utilities
charges for the year ended June 30, 2002, was
$109,241. The future minimum lease payments for the
office lease are as follows:

        2003                                   $95,946
        2004                                     8,037
                                              $103,983

The Association began leasing certain office equipment
during the year ended June 30, 2002, under an operating
lease that expires in April 2007. Total lease expense
include in operations for the year ended June 30, 2002,
was $1,047. Future minimum lease payments for the
office equipment under this lease are as follows:

        2003                                    54,188
        2004                                     4,188
        2005                                     4,188
        2006                                     4,188
        2007                                     3.141
                                               $19,893