Robert G. Gillette, CPA

Transcription

1 Robert G. Gillette, CPA Nonprofit Clients Only INDEPENDENT AUDITOR'S REPORT To the Board of Directors of Central Ohio Youth for Christ, Inc. and Affiliates: I have audited the accompanying financial statements of Central Ohio Youth for Christ, Inc. and Affiliates (a nonprofit organization), which comprise the statement of financial position as of June 30, 2013 and 2012 and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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. Auditor's Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. Accordingly, I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Central Ohio Youth for Christ, Inc. and Affiliates as of June 30, 2013 and 2012, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. December Columbus, Ohio P.O. Box Columbus, Ohio Telephone (614) rggcpa@sbcglobal.net

2 CENTRAL OHIO YOUTH FOR CHRIST, INC STATEMENT OF FINANCIAL POSITION JUNE 30, 2013 AND 2012 ASSETS Current Assets: Cash and cash equivalents - Note 5 Cash and cash equivalents - restricted Accounts receivable, net Vehicle inventory $217,553 $55, , , , ,462 29,000 23,500 Total current assets Fixed Assets Fixed assets, net - Note 6 TOTAL ASSETS 525, ,397 2,717,567 2,138,102 $3,242,968 $2,564,499 LIABILITIES Current liabilities Accounts payable Demand notes payable Current portion of notes and leases payable - Note 8 $206, ,000 1,006,985 $195, ,000 1,036,314 Total current liabilities Leases payable (Note 9) TOTAL LIABILITIES NET ASSETS Unrestricted net assets Restricted net assets TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS 1,423,770 1,336,772 15,699 40,915 1,439,469 1,377,687 1,684, , , ,258 1, ,812 $3,242,968 $2,564,499 The accompanying notes are an integral part of the financial statements 2

3 CENTRAL OHIO YOUTH FOR CHRIST, INC. STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2013 SUPPORT AND REVENUE Unrestricted Restricted Total Contributions $1,765,359 $1,765,359 Events Event revenue Event expenses $76,229 (15,649) 60,580 60,580 Grants 99,943 99,943 Program service fees 437, ,220 Counseling 646, ,522 Released from restrictions 108,627 (108,627) 0 Total support and revenue 3,118,251 (108,627) 3,009,624 EXPENSES Program services 1,782,356 1,782,356 Administration 456, ,872 Fundraising 153, ,709 Total expenses 2,392, ,392,937 Increase in net assets 725,314 (108,627) 616,687 Net Assets - Beginning of year 959, ,258 1,186,812 Net Assets - End of year $1,684,868 $118,631 SI.803, ,631 The accompanying notes are an integral part of the financial statements 3

4 CENTRAL OHIO YOUTH FOR CHRIST, INC. STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2012 SUPPORT AND REVENUE Unrestricted Restricted Total Contributions $1,281,043 $311,485 $1,592,528 Events Event revenue Event expenses $54,855 (18.254) 36,601 36,601 Grants 150, ,520 Program service fees 200, ,875 Counseling 656, ,091 Released from restrictions 84,227 (84,227) Total support and revenue 2,409, ,258 2,636,615 EXPENSES Program services 1,847,457 1,847,457 Administration 415, ,670 Fundraising 144, ,907 Total expenses 2,408, ,408,034 Increase in net assets 1, , ,581 Net Assets - Beginning of year 958, ,231 Net Assets-End of year $959,554 $227,258 $1,186,812 The accompanying notes are an integral part of the financial statements 4

5 CENTRAL OHIO YOUTH FOR CHRIST, INC. STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2013 Program Service Administration Fundraising Total Personnel Supplies Utilities Rent Postage and printing Camps and retreats Insurance Professional services Interest & finance charges Dues and fees Depreciation Advertising Repairs and maintenance Taxes and titles Meetings and meals $1,251,649 92,002 56,315 54,000 23,800 20,433 17,647 69,612 9, ,236 14,688 31,868 21,257 16,259 $251,419 13,886 7,891 12,909 46,342 52,664 21,972 23,296 7,396 4,075 15,022 $106,458 5,725 20,081 21,445 $1,609, ,888 64,206 54,000 18,634 23,800 66,775 90,392 91,584 32, ,632 14,688 35,943 36,279 37,704 $1,782,356 $456,872 $153,709 $2,392,937 The accompanying notes are an integral part of the financial statements 5

6 CENTRAL OHIO YOUTH FOR CHRIST, INC. STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2012 Program Service Administration Fundraising Total Personnel $1,195,060 $267,419 $93,975 $1,556,454 Supplies 98,654 9,842 2, ,586 Utilities 57,023 7,496 64,519 Rent 54,000 54,000 Postage and printing 1,099 10,733 6,132 17,964 Camps and retreats 41,544 41,544 Insurance 47,107 10,959 58,066 Professional services 44,013 17,034 42, ,757 Interest & finance charges 55,913 26,404 82,317 Dues and fees 32,317 32,317 Depreciation 70,675 35, ,013 Advertising 15,409 15,409 Repairs and maintenance 29,972 6,283 36,255 Taxes and titles 20,251 24,162 44,413 Scholarships and support 80,500 80,500 Loss on disposal of subsidiary 3,920 3,920 $1,847,457 $415,670 $144,907 $2,408,034 The accompanying notes are an integral part of the financial statements 6

7 CENTRAL OHIO YOUTH FOR CHRIST, INC. STATEMENT OF CASH FLOWS YEARS ENDED JUNE 30, 2012 AND 2011 CASH FLOWS FROM OPERATPNG ACTIVITIES Increase in Net Assets $616,687 $228,581 Adjustments to reconcile increase in net assets to cash provided by operating activities: Accounts receivable (39,755) (98,446) Vehicle inventory (5,500) (11,100) Depreciation 110, ,013 Accounts payable 11, ,642 Agency funds held for others (Note 7) (13,209) Net Cash Provided by Operations 693, ,481 CASH FLOWS TO INVESTMENT ACTIVITIES Disposal of equipment (11,214) Purchase of equipment (60,868) Construction in progress (690,097) (63,235) Net Cash Used by Investment Activities (690,097) (135,317) CASH FLOWS TO FINANCING ACTIVITIES Disposal of subsidiary 3,920 Borrowing 50,455 (1,065) Net Cash Provided by Financing Activities 50,455 2,855 Increase in Cash 53, ,019 CASH BEGINNING OF YEAR 282,435 73,416 CASH END OF YEAR $336,184 $282,435 The accompanying notes are an integral part of the financial statements 7

8 Central Ohio Youth for Christ, Inc. and Affiliates June 30, 2013 and 2012 Notes to Financial Statements NOTE 1 - PURPOSE OF CENTRAL OHIO YOUTH FOR CHRIST, INC. Central Ohio Youth for Christ, Inc. (Organization) was organized in 1981 as an Ohio not-for- profit corporation to participate in the body of Christ in responsible evangelism of youth. The goal of the Organization is to present youths with the person, work and teachings of Christ, disciple them into the church, and provide meaningful and well supervised activities for young people. The Organization is a chartered affiliate of Youth for Christ, USA, with all the rights and privileges incident to that affiliation, including the receipt of tax deductible contributions as provided under Section 501 (c) (3) of the Internal Revenue Code of Youth and families are from a variety of ethnic and socio-economic backgrounds in seven Central Ohio counties. The primary focus of the Organization is Columbus urban youth between the ages of 12 and 19. The Organization's personnel conduct the following programs and ministries in response to the Organization's goal: 1. Campus Life/Campus: Life JV-Campus life is a high school/middle school program designed to reach out to mainstream students. Programs include a weekly club meeting, camps, trips, retreats and mentoring programs. 2. Juvenile Justice Ministry: Juvenile Justice Ministry is an outreach program that targets atrisk teens who are incarcerated or who are in a follow-up phase from incarceration. Programs include chaplaincy, aftercare programs, mentoring, facility based groups and oneon-one meetings. 3. City Life: City Life is the urban ministry outreach of YFC designed to engage urban students with life changing holistic programming to address the extra challenges they face. These programs include job skills, tutoring, life skills, computer labs, sports, Bible studies, retreats, camps, and mentoring programs. 4. WellSpring Counseling: WellSpring Counseling is a professional counseling ministry assisting children, teens, adults, couples and families to face and overcome difficult life issues. WellSpring counselors provide counseling consistent with Biblical core values into real life solutions. Part of the WellSpring vision is to provide this service in strategically accessible areas of our community where Christian counseling is often inaccessible, with scholarship funding for those who typically could not pay. 8

9 NOTE 1 - PURPOSE OF CENTRAL OHIO YOUTH FOR CHRIST, INC. - Continued 5. YFC Wheels: YFC Wheels is a job skills program designed to teach automotive skills in general and job related soft skills. Students will also learn and practice life skills of customer relations, work place ethics, money management and conflict resolution. 6. YFC Promotions: YFC Promotions is a job skills training programs that also offers entry level employment for urban youth. Promotional items are produced and sold. Students will also learn and practice life skills of customer relations, work place ethics, money management and conflict resolution. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Basis of Reporting And Presentation The financial statements of the Organization have been prepared on the accrual basis. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The significant accounting policies followed are described below to enhance the usefulness of the statements to the reader. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported mounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents and Credit Risks Cash and cash equivalents include cash on hand, bank checking accounts, and savings accounts. While the Organization's cash and cash equivalents, at times, may exceed federally insured limits, the Organization has not experienced any losses in such accounts. The Organization believes it is not exposed to any significant credit risk on these accounts. Property, Equipment, and Depreciation Property and equipment purchased by the Organization are carried at cost or, if donated, at fair market value on the date of donation. The Organization follows the practice of capitalizing all expenditures for property and equipment over $2,500 with a useful life in excess of one year. Property and equipment are depreciated using the straight-line method. All office furniture and equipment have been estimated to have a remaining useful life of three to five years. All buildings have been estimated to have useful lives of thirty years. Expenditures for maintenance and repairs are charged to expense as incurred. 9

10 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued Net Assets Financial statements report amounts separately by class of net assets: Unrestricted net assets represent resources over which the Board of Directors has discretionary control and are used to carry out the Organization's operations in accordance with its bylaws and exempt purposes. Temporarily restricted net assets represent funds stipulated for specific operating purposes and those not currently available for use until commitments regarding their use have been fulfilled Permanently restricted net assets would be those contributed with donor restrictions requiring they be held in perpetuity. Support. Revenue, and Reclassifications Revenue is recognized when earned and support when contributions are made, which may be when cash is received, unconditional promises are made, or ownership of other assets is transferred to the Organization. The Organization reports funds as restricted if they are received with stipulations that limit the use of the funds. When a stipulated time restriction ends or purpose restriction is satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as satisfaction of purpose restrictions. Concentration of Revenue Risk The Organization receives a substantial amount of its revenue from various federal programs. A significant reduction in the level of this revenue, if this were to occur, would have an effect on the Organization's programs and activities. Expenses Expenses are reported when costs are incurred. The cost of providing the various program services and supporting activities has been presented on a functional basis. Accordingly, certain costs have been allocated among the program services and supporting activities benefited. Expenses are generally charged to functional departments as incurred for the various activities. Uncertain Tax Positions The Organization follows the provisions of the Income Tax topic of the FASB ASC. These provisions clarify the accounting for uncertainty in income tax positions and prescribe guidance related to the combined financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return The tax benefit from an uncertain tax position is only recognized in the statements of financial position if the tax position is more likely than not to be sustained upon an examination, based on the technical merits of the position. 10

11 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued Uncertain Tax Positions - continued Interest and penalties, if any, are included in expenses in the statements of activities. As of June 30, 2013, the Organization had no uncertain tax positions that qualify for recognition or disclosure in the financial statements. The Organization has evaluated its tax position for all open tax years. Currently the tax years open and subject to examination by the Internal Revenue Service are the 2009, 2010 and 2011 tax years. However the Organization is not currently under audit nor has the Organization been contacted by any jurisdiction. Based on the evaluation of the Organization's tax positions, management believes all tax positions taken would be upheld under an examination. Therefore no provision for the effects of uncertain tax positions have been recorded for the fiscal year ended June 30, The Organization is a tax-exempt Organization under Section 501 (c) (3) of the Internal Revenue Code. Accordingly, no provision for income taxes has been made in the financial statements. Reclassifications Certain amounts have been classified to conform to current year presentation. NOTE 3 - AFFILIATED ORGANIZATIONS Youth and Family Impact, Inc. (Affiliate) is a 501 (c) (3) tax exempt Organization incorporated on June 30, The Affiliate's purpose is to help urban teens earn their high school diploma / GED, prepare for college and learn employment skills through automotive repair training. These students will also learn and practice life skills of customer relations, work place ethics, money management and conflict resolution. In addition, having Youth and Family Impact, Inc. as an affiliate of Central Ohio Youth for Christ, Inc. will allow segregation of support for religious purposes from that of corporate and government funded programs. Central Ohio Youth for Christ, Inc. has controlling interest in Youth and Family Impact, Inc., since the by laws of the Affiliate require that a majority of the Board of Directors of the Affiliate must also be active members of the Board of Directors of Central Ohio Youth for Christ, Inc. The accounts of Youth and Family Impact, Inc. are consolidated with Centra! Ohio Youth for Christ, Inc. as required by generally accepted accounting principles. NOTE 4 - CASH AND CASH EQUIVALENTS Cash consists of the amounts on deposit in the following accounts: Checking accounts - unrestricted $205,702 $53,469 Checking accounts - restricted Savings and money market accounts 118, ,258 1,648 $ $ i :

12 NOTE 5 - PROPERTY AND EQUIPMENT Property and equipment are carried on the books at historical cost for items purchased or assigned cost for donated items, with the appropriate accumulated depreciation. The depreciation charged against net assets consists of the amount required to write down the original cost of fixed assets to a residual value over their estimated useful lives. It is the Organization's policy to capitalize property and equipment of $2,500 or higher. Lesser amounts are expensed as period costs. The straight-line depreciation method is used by the Organization with useful lives of buildings at 30 years and fixtures, furniture and equipment ranging from 3 to 10 years. Fixed assets consist of the following: Land $213,076 $213,076 Buildings 2,133,350 2,104,800 Fixtures, furniture. & equipment 389, Subtotal 2,735,466 2,699,556 Less: accumulated depreciation (746,670) ( ) Subtotal 1,988,796 2,063,517 Construction in progress 728,771 74,858 Net $2,717,567 $2,138,102 Depreciation expenses for the years ending December 31, 2013 and 2012 were $110,632 and $106,013 respectively. NOTE 6 - LOANS AND CREDIT CARDS PAYABLE The Organization has the following loans and credit cards payable: 2013 Principal Line of Stated Balance Credit Rate Term Collateral Term note $770,096 N/A 6.50% 1 year All assets Term note 219,892 N/A 6.73% 5 years Real estate Term note 100,000 N/A 2.00% 18 months Real estate Demand note 95,000 N/A 0% Demand Real estate Demand note 10,000 N/A 0% Demand Unsecured Demand note 5,000 N/A 0% Demand Unsecured Credit cards 10,213 66,500 Various Revolve Unsecured $

13 NOTE 6 - LOANS AND CREDIT CARDS PAYABLE - continued Term note Term note Demand note Demand note Credit cards Principal Balance $803, ,134 95,000 10,000 11,796 Line of Credit N/A N/A N/A N/A 67, Stated Rate Term 6.50% 1 year 6.73% 5 years 0% Demand 0% Various Demand Revolve Collateral All assets Real estate Real estate Unsecured Unsecured $ On April 1, 201 la loan in the amount of $846,541 with Fifth Third Bank was refinanced for six months at a fixed interest rate of 6.50%. It was secured by a first lien on real estate owned by the Organization, located on Chicago Avenue in Columbus, Ohio, and on all other business assets was refinanced for an additional six months. The agreement required five monthly payments, beginning May 1, 2011, of principal and interest of $7,802 due each month until maturity. The entire remaining balance and any accrued interest were due at maturity on October 1, The maturity date of the loan was then extended for another year at substantially the same terms with a new maturity date of October 1, 2012 and extended once again for a new maturity date of January 6, On December 13, 2007 the Organization established a term note with Fifth Third Bank in the amount of $260,000. Interest on the outstanding balance accrues at 6.73%. The note is payable in 60 monthly installments of $ 1,974. The note matures with a balloon payment on December 31,2012 and is secured by a first lien on real estate owned by the Organization, located on North High Street in Columbus, Ohio. At maturity the date of the loan was then extended for another year at substantially the same terms with a new maturity date of January 6, As of June 30, 2013 and 2012 Central Ohio Youth for Christ had a non interest bearing demand note payable to a friend of the Organization in the amount of $10,000. Interest imputed at a rate of 7% was approximately $700 a year. On January 7, 2011 Central Ohio Youth for Christ executed a demand loan payable to a friend of the Organization in the amount of $145,000. The stated interest rate was nominal. The balance on this note was $95,000 at both June 30, 2013 and Interest is imputed at a rate of 7% was approximately $6,650 for both the years ending June 30, 2013 and 2012.

14 NOTE 6 - LOANS AND CREDIT CARDS PAYABLE - continued On June 21, 2013 Central Ohio Youth for Christ executed a demand note payable to a member of the Organization's Board of Directors in the amount of $100,000. The stated interest rate was 2.00%. The balance on this note was $100,000 at June 30, Interest is imputed at a rate of 7% was approximately $173 for the year ending June 30, On July 17, 2012 Central Ohio Youth for Christ executed a noninterest bearing demand loan payable to an officer of the Organization in the amount of $10,000. The balance on this loan was $5,000 at June 30, Interest is imputed at a rate of 7% was approximately $, for the year ending June 30, The Organization has five credit cards with interest rates ranging from 10.99% to 29.99%. Total interest expense and finance charges for the years ending June 30, 2013 and 2012 were $91,058 and $82,317 respectively. NOTE 7 - LEASES The Organization currently leases equipment with bargain purchases at the end of the terms: Telephone system Embroider machine Photocopier Principal Balance $25,343 4,677 2,676 $ Monthly Payments $1, Maturity October 10, 2015 June 9,2015 January 1, 2015 At June 30, 2013, minimum lease payments for each of the three succeeding fiscal years is as follows: Fiscal year Amount , , Total future lease payments $32, : Principal Monthly Balance Payments Maturity Telephone system $35,148 $1,035 October 10,2015 Embroider machine 8, June 9,2015 Photocopier 4, January 1, 2015 $48,516 14

15 NOTE 7 - LEASES - Continued At June 30, 2012, minimum lease payments for each of the three succeeding fiscal years is as follows: Fiscal year Amount $15,617 16,997 12, Total future lease payments $ NOTE 8 - NET ASSETS Temporarily restricted net assets of $118,631 and $227,258 at June 30, 2013 and 2012 respectively consisted of donations, less expenditures, used to improve the Organization's Chicago Avenue facility. NOTE 9 - RELATED PARTY TRANSACTIONS The Organization is affiliated with Youth for Christ, USA. As such, it receives support and advice from Youth for Christ, USA and avails itself of some of its programs. In addition, liability insurance is purchased through Youth for Christ, USA. In return the Organization must remit a predetermined fee to Youth for Christ, USA. Expenses for the years ending June 30, 2013 were $30,825 for insurance and $23,296 for dues; and $26,278 for insurance and $27,500 for dues for the year ending June A member of the Board of Directors of Central Ohio Youth for Christ is the owner of Lithik Systems, Inc. Central Ohio Youth for Christ had a consulting contract with Lithik Systems, Inc. and paid them $2,420 and $1,450 respectively during the years ending June 30, 2013 and June 30, NOTE 10 - CONCENTRATION OF CREDIT RISK The Organization places some of its temporary cash and money market accounts with creditworthy, high-quality financial institutions. Accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. NOTE 11 - DONATED SERVICES AND IN-KIND REVENUE The Organization receives volunteer services that are not recordable under generally accepted accounting principles. A substantial number of volunteers have donated a significant amount of time in the Organization's program services. The value of volunteer services is not disclosed as no objective basis is available to measure the value of such services. As part of its ongoing construction the Organization received some building supplies at the contractors' cost. No value was available for these discounts. 15

16 NOTE 12 - SUBSEQUENT EVENTS Subsequent events have been evaluated through December 10, 2013 which is the date the financial statements were available for issue. Events occurring after that date have not been evaluated to determine whether a change in the financial statements would be required. During August 2013 the Organization began to significantly restructured its debt related to its land, buildings and construction in process. Included in the restructure were two loans from foundations each for $375,000 and loans from members of the Board of Directors totaling $250,000. Final terms of the restructure of new and existing debt with the Organization's bank have not been determined as of December 10, New proceeds from these loans will be used to fund construction. 16