Barrett & Scibelli, LLC

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1 R GRAPHIC COMMUNICATIONS CONFERENCE INTERNATIONAL BROTHERHOOD of TEAMSTERS AMERICA SCORES NEW ENGLAND, INCORPORATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT AUGUST 31, 2013 AND 2012 B & S Barrett & Scibelli, LLC Certified Public Accountants UNION GCC/IBT LABEL 56

2 FINANCIAL STATEMENTS AUGUST 31, 2013 AND 2012 TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS Statements of Financial Position...3 Statements of Activities...4 Statements of Functional Expenses Statements of Cash Flows...7 NOTES TO FINANCIAL STATEMENTS

3 R B & S Barrett & Scibelli, LLC Certified Public Accountants INDEPENDENT AUDITORS' REPORT To the Trustees of America Scores New England, Incorporated Jamaica Plain, Massachusetts We have audited the accompanying statements of financial position of America Scores New England, Incorporated (a Massachusetts nonprofit organization), as of August 31, 2013, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements. The financial statements as of and for the year ended August 31, 2012 were audited by other auditors whose report dated February 9, 2013, expressed an unqualified opinion on those 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. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we 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 auditors' 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, we 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 8 Winchester Place, Suite 201, Winchester, MA T F UNION GCC/IBT GRAPHIC COMMUN ICA TIONS INTERNATIONALB R OTHER CE FEREN CON LABEL HOO D of TEAM STERS 56

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of America Scores New England, Incorporated, as of August 31, 2013, 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. Barrett & Scibelli, LLC Winchester, Massachusetts March 17,

5 STATEMENTS OF FINANCIAL POSITION AUGUST 31, 2013 AND 2012 ASSETS Assets Cash $ 127,189 $ 18,553 Grants and contributions receivable 38, ,249 Pledges receivable 33,750 - Prepaid expenses and other assets 16,683 28,408 Property and equipment, net 19,695 28,795 Total assets $ 235,611 $ 423,005 LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 25,413 $ 18,988 Security deposit 4,000 4,000 Total liabilities 29,413 22,988 Net assets Unrestricted 139, ,017 Temporarily restricted 66,350 72,000 Total net assets 206, ,017 Total liabilities and net assets $ 235,611 $ 423,005 The accompanying notes are an integral part of the financial statements. 3

6 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED AUGUST 31, 2013 AND Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Revenue and support Corporation and foundation contributions $ 174,846 $ 37,000 $ 211,846 $ 257,093 $ 64,500 $ 321,593 Individual contributions 202, , , ,925 Registration fees 34,268 1,000 35,268 31,574-31,574 Special events, net 262,227 28, , , ,852 Donated goods and services 49,689-49,689 44,541-44,541 Government contracts 35,228-35,228 62,259-62,259 Interest income ,063-1,063 Other income ,318-3,318 Net assets released from restrictions 72,000 (72,000) - 77,333 (77,333) - Total support and revenue 830,827 (5,650) 825, ,958 (12,833) 958,125 Expenses Program services Soccer program 233, , , ,983 Writing program 160, , , ,970 Other programs 141, , , ,439 Middle school program 341, ,893 99,993-99,993 Total program services 877, , , ,385 Supporting services Fundraising support 78,697-78,697 87,388-87,388 General and administrative 63,029-63,029 63,535-63,535 Total supporting services 141, , , ,923 Total expenses 1,018,996-1,018, , ,308 Change in net assets (188,169) (5,650) (193,819) 13,650 (12,833) 817 Net assets, beginning of year 328,017 72, , ,367 84, ,200 Net assets, end of year $ 139,848 $ 66,350 $ 206,198 $ 328,017 $ 72,000 $ 400,017 The accompanying notes are an integral part of the financial statements. 4

7 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED AUGUST 31, 2013 Program Services Supporting Services Total Soccer Writing Other Middle School Program General and Program Program Programs Program Services Fundraising Administrative Total Salaries and wages $ 122,079 $ 96,684 $ 83,379 $ 187,881 $ 490,023 $ 48,511 $ 21,078 $ 559,612 Payroll taxes and benefits 31,209 24,578 23,668 49, ,534 13,504 4, ,926 Accounting fees ,650 12,650 Advertising Affiliate fees 2,379 1,969 2,082 3,870 10,300 1, ,850 Bad debt expense ,550 1,870 3,420 Bank charges ,842 2,296 Board expenses Conference and meetings ,153 Consultants , , ,638 Depreciation 2,345 1,941 2,052 3,814 10,152 1, ,679 Dues and publications ,138 2, ,428 Equipment rental and maintenance 1,583 1,311 1,412 2,611 6, ,085 Insurance , ,437 Office supplies , ,805 Payroll service fees 1, ,709 4, ,207 Postage and delivery ,029 Printing and reproduction 13 1, , ,789 Program expenses 42,101 6,619 1,182 53, ,979 2,083 15, ,394 Rent, utilities and maintenance 3,801 3,204 3,391 6,286 16,682 1, ,323 Teacher and coach stipends 23,344 18, ,937 69, ,737 Telecommunications 1,273 1,013 1,155 2,224 5, ,838 Travel and meals ,521 1,448 10, ,714 Total expenses $ 233,526 $ 160,721 $ 141,130 $ 341,893 $ 877,270 $ 78,697 $ 63,029 $ 1,018,996 The accompanying notes are an integral part of the financial statements. 5

8 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED AUGUST 31, 2012 Program Services Supporting Services Total Soccer Writing Middle School Other Program General and Program Program Program Programs Services Fundraising Administrative Total Salaries and wages $ 73,726 $ 75,126 $ 151,956 $ 59,600 $ 360,408 $ 43,187 $ 28,881 $ 432,476 Payroll taxes and benefits 19,223 19,252 36,429 20,632 95,536 8,543 3, ,307 Accounting fees ,000 3,000 Advertising Affiliate fees 1,908 1,908 3,626 1,991 9, ,319 25,600 Bad debt expense ,200 1,200 Bank charges , ,778 Board expenses ,063 Conference and meetings Consultants 3, ,058 4,428 15,286 15, ,276 Depreciation 1,211 1,234 2, , ,104 Dues and publications , ,309 Equipment rental and maintenance 1,295 1,214 2,372 1,287 6, ,654 Insurance , ,562 Office supplies ,219 2,169 Payroll service fees 1,834 1,834 3,481 2,505 9, ,346 Postage and delivery ,930 Printing and reproduction 65 1, ,202 1, ,137 Program expenses 64,682 7,541 35,041 1, , , ,689 Rent, utilities and maintenance 3,540 3,516 6,644 3,465 17,165 6,347 1,398 24,910 Teacher and coach stipends 54,185 38,451 68, , ,827 Telecommunications , , ,640 6,688 Travel and meals 1, , ,803 2, ,218 Total expenses $ 228,983 $ 154,970 $ 322,439 $ 99,993 $ 806,385 $ 87,388 $ 63,535 $ 957,308 The accompanying notes are an integral part of the financial statements. 6

9 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED AUGUST 31, 2013 AND Cash flows from operating activities Change in net assets $ (193,819) $ 817 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 11,679 7,104 Changes in: Grants and contributions receivable 308,955 1,298 Pledges receivable (33,750) - Prepaid expenses and other assets 11,725 (7,109) Accounts payable and accrued expenses 6,425 5,420 Net cash provided by operating activities 111,215 7,530 Cash flows from investing activities Purchase of property and equipment (2,579) (14,568) Net cash used by investing activities (2,579) (14,568) Net increase (decrease) in cash 108,636 (7,038) Cash, beginning of year 18,553 25,591 Cash, end of year $ 127,189 $ 18,553 The accompanying notes are an integral part of the financial statements. 7

10 AMERICAN SCORES NEW ENGLAND, INCORPORATED NOTE A - ORGANIZATION NOTES TO FINANCIAL STATEMENTS America SCORES New England, Incorporated (the Organization ) is a Massachusetts nonprofit organization which incorporated in The Organization's mission is to inspire and empower urban youth to lead healthy lives, be engaged students and have the confidence and character to make a difference in the world. The Organization partners with the Boston public schools to provide high-quality, team-based after-school programs that integrate soccer, academics and the arts. Prior to May 17, 2013, the Organization was controlled by America SCORES. The Organization's financial results for the year ended August 31, 2012, were included in the consolidated financial statements of America SCORES and Affiliates. Under an affiliate agreement with America SCORES, the Organization has the right to use service marks and program materials and to participate in all America SCORES national program activities, tournaments, publications and events (See Note H). NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Estimates The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Grants, Contributions and Pledges Receivable Unconditional promises to give are included in the financial statements as pledges receivable, subject to a discount, if applicable, and recorded in the appropriate net asset category, at the time a donor makes a promise that is, in substance, unconditional. The Organization evaluates its grants, contributions and pledges receivable for collectability on a periodic basis and establishes an allowance based on prior experience of write-offs and collections and current credit conditions. As of August 31, 2013 and 2012, the Organization considered its grants, contributions and pledges receivable to be fully collectible. Accordingly, no allowance for uncollectible amounts has been recorded. 8

11 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Property and Equipment, Net Property and equipment is recorded at cost if purchased or at estimated fair value at the date of gift, if donated, net of accumulated depreciation. Major additions and improvements are capitalized while maintenance and repairs, which do not extend the lives of the respective assets, are expensed in the year incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statement of activities for the respective period. Depreciation is computed using the straightline method over the estimated useful life of the related asset. Net Assets The Organization reports information regarding its financial position and activities according to the following three classes of net assets based on the existence or absence of donor-imposed restrictions: Unrestricted Net Assets Unrestricted net assets are resources that are not restricted by donors. Temporarily Restricted Net Assets Temporarily restricted net assets represent those resources that have been restricted by donors for specific purposes or for specific time periods. Net assets released from restrictions represent the satisfaction of the donor restricted purposes or the passage of time restriction. Permanently Restricted Net Assets Permanently restricted net assets represent resources subject to donor-imposed restrictions that they be maintained permanently by the Organization. As of August 31, 2013 and 2012, there were no permanently restricted net assets. Revenue and Support The Organization receives revenues and support from contributions, grants, special events and government contracts. Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and or the nature of any donor restrictions. Unrestricted contributions, including unconditional promises to give, are recognized as support in the period received or unconditionally pledged. Conditional promises to give are recognized as contributions when substantially all conditions are met. Contributions of noncash assets are reported at their estimated fair value. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Contributions restricted by the donor are reported as increases in unrestricted net assets if the restrictions are satisfied or expire in the same year in which the contributions are recognized. Special event revenue is recognized when the event has taken place. 9

12 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Revenue and Support - Continued Contributions of donated services that create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair value in the period in which the services are provided. Revenue from cost-reimbursement grants is recognized when the Organization has expended the program costs in accordance with the grant agreements. Revenue from this source is subject to audit and possible adjustments by the funding agencies. The effects of any such adjustments are recorded when reasonably determinable. Management believes that the effect of possible audit adjustments, if any, will not have a material effect on the accompanying financial statements. Income Taxes The Organization is exempt from federal income taxes as provided under Internal Revenue Code (IRC) Section 501(c)(3), and is not classified as a private foundation. Contributions made to the Organization are deductible by donors as provided in IRC Section 170. Accounting principles generally accepted in the United States of America prescribe the threshold a tax position is required to meet before being recognized in the financial statements. A liability for uncertain tax positions is recognized and recorded as a component of current income tax expense for differences between financial and income tax reporting positions which do not meet this threshold. Any interest and penalties related to uncertain tax positions are recorded as a component of income tax expense. The Organization has reviewed its tax positions that remain subject to examination by tax authorities and has not identified any material uncertain tax positions and thus has not recorded any liability at August 31, 2013 or The Organization's federal and state tax returns are subject to possible examination by taxing authorities until the expiration of the related returns statutes. In general, the federal and state tax returns have a three-year statute of limitation from the date the tax returns were due or filed, whichever is later. The Organization is no longer subject to examinations by tax authorities for years prior to 2009, and has no open examinations as of the date of these financial statements. Functional Allocation of Expenses The costs of providing for various programs and supporting services have been summarized on a functional basis in the statements of activities and the statements of functional expenses. Accordingly, certain costs have been allocated by management among the programs and supporting services benefited. Advertising The Organization expenses advertising costs as they are incurred. Advertising costs were $760 and $360 for the years ended August 31, 2013 and 2012, respectively. 10

13 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE C PLEDGES RECEIVABLE Pledges receivable consisted of the following at August 31, 2013: Due in one year $ 20,250 Due in two years 13,500 $ 33,750 NOTE D PROPERTY AND EQUIPMENT, NET Property and equipment, net, consisted of the following at August 31: Furniture and fixtures $ 34,976 $ 32,397 Leasehold improvements 15,000 15,000 49,976 47,397 Less accumulated depreciation 30,281 18,602 $ 19,695 $ 28,795 NOTE E TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consisted of the following at August 31: Soccer program $ 6,000 $ 15,000 Writing program 6,000 19,500 Middle school program 25,000 5,000 Other 1,000 32,500 Time restricted 28,350 - $ 66,350 $ 72,000 During the year ended August 31, 2013, temporarily restricted net assets of $72,000, as presented above at August 31, 2012, were released from restrictions by incurring expenses satisfying the purpose specified by the donors. NOTE F LEASE COMMITMENTS The Organization leases office facilities in Jamaica Plain, Massachusetts under a non-cancellable operating lease expiring in July In addition to the base rent, the lease requires additional rent for the Organization's proportionate share of the real estate taxes and operating expenses. 11

14 AMERICAN SCORES NEW ENGLAND, INCORPORATED NOTES TO FINANCIAL STATEMENTS NOTE F LEASE COMMITMENTS - CONTINUED The Organization sublets a portion of its office facility to a tenant under a sublease agreement which expires in July The tenant is responsible for a fixed rent including 40% of certain operating expenses. For the years ended August 31, 2013 and 2012, sublease rental income, including operating expenses, totaled $35,205 and $30,119, respectively. Rent expense, utilities and maintenance, presented net of sublease rental income in the accompanying financial statements, was $19,323 and $24,910 for the years ended August 31, 2013 and 2012, respectively. Additionally, the Organization leases office equipment under a non-cancellable operating lease expiring in August, 2015 at $432 per month. The expense is included in equipment rental and maintenance in the accompanying financial statements. Future minimum lease rentals for the years ending August 31 are as follows: Minimum Lease Net Lease Year Commitment Sublease Income Commitment 2014 $ 50,370 $ 31,200 $ 19, ,744 31,200 20, ,649 28,600 16,049 $ 146,763 $ 91,000 $ 55,763 NOTE G DONATED GOODS AND SERVICES The value of donated goods and services are reported in the accompanying financial statements as donated goods and services revenue with offsetting expenses included in program expenses. For the years ended August 31, 2013 and 2012, donated goods and services are as follows: Soccer equipment $ 31,793 $ 37,597 Legal services 15,617 - Support services 2,279 2,144 Rent - 4,800 $ 49,689 $ 44,541 12

15 AMERICAN SCORES NEW ENGLAND, INCORPORATED NOTES TO FINANCIAL STATEMENTS NOTE H - RELATED PARTY TRANSACTIONS The Organization is charged an annual license fee by America SCORES (see Note A), currently based on the number of students served. Additionally, the Organization was charged a monthly financial services fee through September 30, Total fees to America SCORES was $11,850 and $25,600 for the years ended August 31, 2013 and 2012, respectively. During the years ended August 31, 2013 and 2012, the Organization received contributions of $172,695 and $123,050, respectively from members of the Board of Directors. NOTE I - CONCENTRATIONS The Organization maintains its cash in accounts that are federally insured. At times, the balances in the insured accounts may exceed federal limits. The Organization has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risks. NOTE J - CONTINGENCIES Periodically, the Organization may be involved in various claims and legal actions arising in the normal course of operations. In the opinion of Management, based upon current facts and circumstances and on consultation with legal counsel, losses, if any, from those matters, are covered by insurance or are immaterial to the financial position of the Organization. NOTE K - SUBSEQUENT EVENTS Management has evaluated subsequent events through March 17, 2014, the date the financial statements were approved and authorized for issuance by management, and determined that, other than as disclosed herein, there are no subsequent events that would require recognition or disclosure in the notes to the financial statements. 13