Nov. 3, 2006

National Scholastic Press Association ("NSPA") is a Minnesota nonprofit corporation. NSPA is registered with the Minnesota Attorney General's Office as a charitable trust under Chapter 501B of the Minnesota Statutes. NSPA is exempt from federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code.

Memberships for middle school, junior high school and high school student media are organized under the National Scholastic Press Association division of NSPA. Memberships for college, university and professional and technical school student media are organized under the Associated Collegiate Press division of NSPA. Middle school, junior high school and high school student media in Minnesota are organized under the Minnesota High School Press Association division of NSPA. Memberships are open to all student media at public and private schools at an annual membership fee.

Each division of NSPA provides journalism education training programs, publishes journalism education materials, provides media critique and recognition programs for members, provides information on developments in journalism and student media and provides a forum for members to communicate with others and share their work. NSPA and its divisions cooperate with other student media associations and other non-student groups and businesses that share its mission to educate and recognize the work of student journalists, to improve the quality of student media and to foster careers in media.

In the interest of public accountability the Board of Directors of the organization has prepared this statement to summarize steps taken to identify and correct deficiencies and to bring NSPA into compliance with best practices and appropriate board governance for nonprofit organizations.

In the late summer and autumn of 2005, through several requests for information made by the Board chair to the executive director of NSPA, a newly re-constituted Board of Directors of NSPA became concerned that the organization had failed to maintain important records including board minutes; annual reports; written financial procedures to monitor major operating expenses, including compensation, travel, investments, expense accounts, contracts, consultants and leases; and could not provide supporting documentation or an accountable expense plan for travel and entertainment expenses.

In October of 2005, the Board retained legal counsel. In November of 2005, the organization's legal counsel retained a Minnesota certified public accounting firm to audit NSPA's financial records. In December of 2005, the Board adopted a policy that appropriately restricted the use of the organization's credit cards, limited all travel and entertainment expenses to those which are reasonable and clearly support NSPA's mission, and required strict substantiation for all employee expense reimbursement.

In February of 2006, the Board received an audit report from its accounting firm for the year ending December 31, 2004. In that report, the accounting firm identified several significant deficiencies in the organization's recordkeeping and accounting practices and made several recommendations to the organization regarding the same. In February of 2006, the Board requested the executive director and associate director to review the organization's credit card statements for 2004 and 2005 and provide written documentation of the relationship of charges to the business and mission of the organization. During the period between October, 2005 and May, 2006 the executive director voluntarily reimbursed NSPA approximately $25,905. These reimbursements were for 2004 and 2005 credit card charges for which receipts and/or business purposes could not be established. In June of 2006, NSPA dismissed its executive director and associate director.

In July of 2006, the organization retained its accounting firm to perform a full independent review of NSPA's 2004 and 2005 credit card expenses. On the advice of legal counsel and NSPA's accounting firm, in October of 2006, the Board resolved to perform a review of NSPA's 2003 and 2002 credit card expenses. These reviews remain underway.

The Board recently received an audit report from NSPA's accounting firm for the year ending December 31, 2005. In that report, the accounting firm identified several significant deficiencies that existed in the organization's recordkeeping and accounting practices into 2005 and acknowledged improvements made by NSPA with respect to recordkeeping and accounting practices since the end of 2005.

According to Board President, Dr. Albert R. Tims, NSPA's financial condition is strong, as evidenced by the audit reports for 2004 and 2005. Moreover, the association is now operating with governance by an independent nine member board of directors, has retained ongoing legal counsel, has developed new operating policies, has appropriately addressed all of the financial control issues identified by the most recent audit and is conducting a national search for a new executive director.

NSPA's Board and staff remain committed to meeting all of NSPA's existing and anticipated obligations to its partners, members and the public.

The following audit reports, which are referred to above in the text of this Public Report, can be found at the NSPA Web site at http://www.studentpress.org/statement-11-14-06.html.

• 2004 Audit Financial Statements
• 2004 Audit Management Letter
• 2005 Audit Financial Statements
• 2005 Audit Management Letter
• Memo to NSPA Board of Directors concerning Auditor Recommendations in 2005 Audit