Salaries and wages at the theater were reduced from a total of $139,696 as of June 30, 1996, to $31,718 as of Dec. 31, 1996, according to the audit.
The theater hasn't had an executive director on staff since June 1996 when the board dismissed Kelley Gilbert from the position. Three office employees quit between October and December.
The theater finished last year with an excess even after making a $40,000 mortgage payment in December, Wolford said.
A final balloon payment of $130,000 was due on the mortgage in May. In March, the theater took out a six month loan from Bulldog Federal Credit Union, at 9 percent interest, to make the payment.
Smith Elliott conducted two audits, at a total cost of $8,600, for the theater - one for the budget year ending June 30, 1996, and one for the last six months of 1996, Wolford said.
The six-month audit was done because the theater has switched from a fiscal year to a calendar year, Buchanan said.
The theater's net assets increased by $266,637 from $120,796 on June 30, 1995, to $387,433 on Dec. 31, 1996, according to the audits.
But the amount of money the theater had in the bank declined over the course of the 18 months covered by the audits: from $202,346 on June 30, 1995, to $45,284 on Dec. 31, 1996.
Wolford said the $202,346 figure reflects the remains of a $250,000 mortgage taken out in 1994 when the theater was in a financial crisis.
The money, which included advance ticket revenues, was used to pay show expenses, reduce the theater's debt, buy equipment and property and cover general operating expenses, Buchanan said.
Contributions to the theater increased from $90,000 for budget year 1995 to $396,730 for budget year 1996, but the 1996 figure included the donation of an organ valued at about $300,000, Buchanan said.
Without that donation the theater would have registered a deficit of about $55,000 on June 30, 1996, he said.
The 1927 Wurlitzer organ was donated in 1992 but wasn't recorded as an asset of the theater until the 1996 budget year.
It's not unusual to wait to record a contribution like that until it is placed in service and appraised, Buchanan said.
Wolford said the organ wasn't "playable" until after a group of M.P. Moller retirees spent several years restoring it and it was just recently appraised.
In the last six months of 1996, the theater received $77,787 in contributions, according to the audit.
In the first five months of 1997 the theater has raised $43,000 in individual pledges, of which $38,000 has been received, Wolford said.
The theater's total expenses for budget year 1995 were $594,645. That figure includes expenses for program services, production costs, operating expenses, supporting services, general and administrative costs and fund-raising expenses.
Expenses rose to $922,541 in the budget year ending June 30, 1996. In the last six months of 1996, total expenses were $336,094.
A management letter from Smith Elliott with recommendations about "how to improve internal control" over some of the theater's accounting practices accompanied the audit, Buchanan said.
The theater management will respond to that letter, he said.
Wolford said the recommendations pertained only to the 18 months covered by the audits.
She said the letter was an "interim statement" and she would release the official management letter when it comes out in a few weeks.
She described the theater's financial condition as "stable," and said there is about $35,000 in the bank.
The current board, which took over control of the theater in June 1996, is following a fiscally conservative course, she said.
"We do not commit ourselves to do any capital projects until we have the money," Wolford said.
The theater building has been appraised at a value of about $1 million, she said.