MICROFINANCE INFORMATION EXCHANGE, INC. JUNE 30, 2013 AND 2012

Transcription

1 MICROFINANCE INFORMATION EXCHANGE, INC. JUNE 30, 2013 AND 2012

2 TABLE OF CONTENTS Page Independent Auditors Report 1-2 Financial Statements: Statements of Financial Position 3 Statements of Activities 4 Statements of Functional Expenses 5 Statements of Cash Flows 6 Notes to Financial Statements 7-11

3 SQUIRE, LEMKIN + COMPANY LLP CERTIFIED PUBLIC ACCOUNTANTS 111 ROCKVILLE PIKE JOHN T SQUIRE CPA SUSAN A LEMKIN CPA CHRISTOPHER J MATHEWS CPA BART J LANMAN CPA CFP CLINTON L LEHMAN CPA CMA CFM ROBERT J KOPERA CPA SUITE 475 ROCKVILLE MARYLAND TELEPHONE FACSIMILE SUPPORT@MYCPAS.COM NANCY C JOHNSON CPA Board of Directors Microfinance Information Exchange, Inc. Washington, DC INDEPENDENT AUDITORS REPORT We have audited the accompanying financial statements of Microfinance Information Exchange, Inc. (MIX), which comprise the statements 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of 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 auditors consider 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 MIX 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.

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Microfinance Information Exchange, Inc. as of June 30, 2013 and 2012, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. November 13,

5 STATEMENTS OF FINANCIAL POSITION ASSETS JUNE 30, ASSETS Cash and cash equivalents $ 2,600,348 $ 1,686,261 Accounts receivable 3,309 9,352 Grants and contributions receivable 985,934 2,025,597 Prepaid expenses 16,342 18,774 Property and equipment, net 808,003 1,136,332 Deposits 10,879 10,879 TOTAL ASSETS $ 4,424,815 $ 4,887,195 LIABILITIES AND NET ASSETS LIABILITIES: Accounts payable $ 182,146 $ 137,971 Accrued vacation 106,160 75,845 Deferred revenue 1,409, ,596 TOTAL LIABILITIES $ 1,697,747 $ 527,412 NET ASSETS: Unrestricted $ 1,121,816 $ 1,312,911 Temporarily restricted 1,605,252 3,046,872 TOTAL NET ASSETS $ 2,727,068 $ 4,359,783 TOTAL LIABILITIES AND NET ASSETS $ 4,424,815 $ 4,887,195 The accompanying notes are an integral part of these financial statements. 3

6 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED JUNE 30, Temporarily Temporarily Unrestricted Restricted Totals Unrestricted Restricted Totals REVENUE AND SUPPORT: Grants and contracts $ 1,230,722 $ 1,238,000 $ 2,468,722 $ 1,097,797 $ 2,759,000 $ 3,856,797 Consulting income 528, , , ,876 In-kind contributions 129, , , ,715 Contributions Investment income 2,835-2,835 3,044-3,044 Loss on disposal of fixed assets (45,373) - (45,373) Net assets released from restrictions 2,679,620 (2,679,620) - 3,112,190 (3,112,190) - TOTAL REVENUE AND SUPPORT $ 4,525,097 $ (1,441,620) $ 3,083,477 $ 4,777,652 $ (353,190) $ 4,424,462 EXPENSES: Program services $ 4,332,547 $ - $ 4,332,547 $ 4,233,736 $ - $ 4,233,736 Supporting services: Management and general $ 266,518 $ - $ 266,518 $ 347,481 $ - $ 347,481 Fundraising/grant development 117, , , ,671 Total supporting services $ 383,645 $ - $ 383,645 $ 458,152 $ - $ 458,152 TOTAL EXPENSES $ 4,716,192 $ - $ 4,716,192 $ 4,691,888 $ - $ 4,691,888 CHANGE IN NET ASSETS $ (191,095) $ (1,441,620) $ (1,632,715) $ 85,764 $ (353,190) $ (267,426) NET ASSETS, BEGINNING OF YEAR 1,312,911 3,046,872 4,359,783 1,227,147 3,400,062 4,627,209 NET ASSETS, END OF YEAR $ 1,121,816 $ 1,605,252 $ 2,727,068 $ 1,312,911 $ 3,046,872 $ 4,359,783 The accompanying notes are an integral part of these financial statements. 4

7 STATEMENTS OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED JUNE 30, Fundraising/ Fundraising/ Program Management Grant Program Management Grant Services and General Development Total Services and General Development Total Salaries $ 1,382,810 $ 185,941 $ 101,500 $ 1,670,251 $ 1,443,820 $ 220,312 $ 94,500 $ 1,758,632 Payroll taxes and benefits 281,920 39,081 14, , ,146 33,784 14, ,298 Total personnel $ 1,664,730 $ 225,022 $ 115,974 $ 2,005,726 $ 1,728,966 $ 254,096 $ 108,868 $ 2,091,930 Consultants 993, , ,639-1, ,777 Depreciation expense 764, , , ,736 Equipment rental and service 21,991 1,102-23,093 22,507 10,270-32,777 In-kind expense 129, , , ,715 Insurance 3,773 6,638-10,411-9,263-9,263 IT Technology Infrastructure 191, , , ,687 Memberships, dues and subscriptions 48, ,450 65,268 2, ,847 Miscellaneous 20,294 5,403-25,697 12,323 8, ,458 Occupancy 116,699 9, , ,140 25, ,698 Office supplies 22, ,709 15,782 9, ,422 Postage and delivery 2, ,169 5,654 1,440-7,094 Printing and reproduction 4, ,300 6, ,566 Professional fees 102,798 17, , ,284 13, ,301 Telecommunications 29, ,746 42, ,208 Travel and subsistence 215, , ,537 12, ,409 TOTALS $ 4,332,547 $ 266,518 $ 117,127 $ 4,716,192 $ 4,233,736 $ 347,481 $ 110,671 $ 4,691,888 The accompanying notes are an integral part of these financial statements. 5

8 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ (1,632,715) $ (267,426) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 764, ,736 Loss on disposal of fixed assets 45,373 Changes in assets and liabilities: Accounts receivable 6,043 (2,330) Grants and contributions receivable 1,039,663 99,884 Prepaid expenses 2,432 9,865 Accounts payable 44,175 89,853 Accrued vacation 30,315 1,804 Deferred revenue 1,095,845 (224,731) NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,395,620 $ 564,655 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (481,533) (728,802) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS $ 914,087 $ (164,147) CASH AND EQUIVALENTS, BEGINNING OF YEAR 1,686,261 1,850,408 CASH AND EQUIVALENTS, END OF YEAR $ 2,600,348 $ 1,686,261 The accompanying notes are an integral part of these financial statements. 6

9 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 1. Organization and Significant Accounting Policies Organization - Microfinance Information Exchange, Inc. (MIX) is a global, professional information service for the microfinance industry. Its mission is to help build the microfinance market infrastructure by offering data sourcing, benchmarking, and monitoring tools, as well as specialized information services on and for the various institutional actors who make up the microfinance industry. Accounting Method - MIX uses the accrual basis of accounting, whereby revenue is recognized when earned and expenses are recognized when incurred. Basis of Presentation - MIX presents its financial statements in accordance with the disclosure and display requirements of the Financial Statements for Not-For- Profit Organizations topic of the FASB Accounting Standards Codification. Accordingly, the net assets of MIX are reported in each of the following three classes: (a) unrestricted net assets, (b) temporarily restricted net assets, and (c) permanently restricted net assets. Net assets of the two restricted classes are created only by donor-imposed restrictions on their use. All other net assets are reported as part of the unrestricted class. Under these provisions, net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets are classified and reported as follows: Unrestricted net assets - Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets - Net assets from grants and contributions subject to donor-imposed stipulations that may or will be met either by actions of MIX and/or the passage of time. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. Permanently restricted net assets - Net assets from contributions subject to donor imposed stipulations which are permanent in nature, prohibiting expenditure of the assets pledged or donated. Typically, the income earned on invested balances of permanently restricted net assets is reported as part of unrestricted net assets unless the donor specifically limits the use of such income. There were no permanently restricted net assets as of June 30, 2013 and Revenue Recognition - Funds received in relation to exchange transactions for which MIX has not yet performed the contracted services are deferred and recognized as unrestricted revenue when earned. 7

10 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 1. Organization and Significant Accounting Policies (Continued) MIX conforms with FASB Accounting Standards Codification topic Accounting for Contributions Received and Contributions Made. As such, contributions are recognized as revenue when they are received or unconditionally pledged. MIX reports in-kind gifts as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Cash and Cash Equivalents - For purposes of the statements of cash flows, MIX considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Accounts Receivable - Accounts receivable reflects amounts earned but not yet received by MIX under exchange transactions. Accounts receivable are carried at original invoice amounts. Such amounts are considered delinquent when they have not been collected in 30 days. Amounts greater than 120 days old are reviewed by management to determine collectability, based on past experience. At June 30, 2013 and 2012, there is no provision for doubtful accounts, based on management s evaluation of the collectability of receivables. Grants and Contributions Receivable - Grants receivable consists of amounts awarded by grantors, but not yet paid. Grants receivable for exchange transactions consist of amounts earned but not yet paid. Management considers all grants and contributions receivable to be fully collectible. Property and Equipment - Property and equipment with a useful life greater than one year and a cost basis of greater than $1,000 is recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets, which is generally two to ten years. Property and equipment includes data sets which are deemed to have a ten year life with a 10% residual salvage value. Leasehold improvements are amortized over the lesser of the useful life or the lease term Donations of property and equipment are recorded as gifts in-kind in revenue at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Use of Estimates - The preparation 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 the reported amounts of certain assets and liabilities, revenue and expenses. Accordingly, actual results could differ from those estimates. Fair Value of Measurements - MIX measures fair values and has disclosed such information regarding its assets and liabilities as required by the Fair Value Measurements topic of the FASB Accounting Standards Codification. This standard defines fair value, the methods used to measure fair value, and expands the disclosures about fair value measurements. 8

11 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 1. Organization and Significant Accounting Policies (Continued) Accounting for Uncertain Tax Provisions - Income Taxes - MIX complies with the provisions of the FASB Accounting Standards Codification topic Accounting for Uncertainty in Income Taxes. For the years ended June 30, 2013 and 2012, no unrecognized tax provision or benefit exists. The Form 990, Return of Organization Exempt from Income Tax, for the fiscal years ending 2010 through 2012 are subject to review and examination by the Internal Revenue Service (IRS). Subsequent Events - MIX evaluated subsequent events for potential required disclosure through November 13, 2013, which is the date financial statements were available to be issued. Note 2. Grants and Contributions Receivable - Grants and contributions receivable at June 30, 2013 are expected to be received as follows: Less than one year $ 834,158 Two years 151,776 Total $ 985,934 Note 3. Property and Equipment - MIX s property and equipment at June 30, 2013 and 2012, consisted of the following: IT software development $ 2,630,971 $ 2,382,683 Purchased data sets 409, ,500 Web design 4,354 4,354 Computer equipment 83,436 68,389 Furniture and fixtures 15,621 15,621 Telephone system 10,764 10,764 Software 4,413 4,413 Leasehold improvements 5,345 5,345 Total property and equipment $ 3,164,404 $ 2,901,069 Less, Accumulated depreciation and amortization (2,529,226) (1,764,737) Net property and equipment $ 808,003 $ 1,136,332 Depreciation expense for MIX was $764,489 and $857,736 for the years ended June 30, 2013 and 2012, respectively. 9

12 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 4. Temporarily Restricted Net Assets - Temporarily restricted net assets represent grants received as of the end of the fiscal year but not yet expended for their intended purpose or with time restrictions which have not yet expired. Summarized below is the balance of temporarily restricted net assets at June 30: Time restricted: Consultative Group to Assist the Poor $ -- $ 365,180 Bill and Melinda Gates Foundation 262,555 99,433 Purpose restricted: Cisco Foundation 210,602 6,643 International Fund for Agricultural Development 555, ,260 Omidyar Network Fund, Inc. (RevGen) 7, ,474 The Ford Foundation 182, ,561 Michael and Susan Dell Foundation 24, ,126 Rockefeller Foundation -- 47,724 The McGraw-Hill Companies 163,793 91,444 Citi Foundation 172, ,027 Deutsche Bank 10, West Foundation 15, Total temporarily restricted net assets $ 1,605,252 $ 3,046,872 Note 5. Concentration of Credit and Support Risk - During the years ending June 30, 2013 and 2012, the revenue from the MasterCard Foundation represented 49% and 23% of total revenue and support, respectively. Financial instruments which potentially subject MIX to concentrations of credit risk include cash deposits with commercial banks. MIX s cash management policies limit its exposure to concentrations of credit risk by maintaining cash accounts at financial institutions whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Cash deposits may, however, exceed the FDIC insurable limits at times throughout the year. Management has taken steps to minimize this risk. Note 6. Income Taxes - Under Section 501(c)(3) of the Internal Revenue Code, MIX is exempt from the payment of taxes on income other than net unrelated business income. No provision for income taxes is required for the years ended June 30, 2013 and 2012, as MIX had no net unrelated business income. 10

13 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012 Note 7. Lease Commitment - MIX entered into a lease for office space at 1901 Pennsylvania Avenue, N.W. on March 1, 2010, for a period of two years, expiring on February 28, The lease was renegotiated on December 13, 2011 to include less space. The new lease is for an additional 3 years and 10 months, expiring on December 31, The lease contains a provision for an annual 2.5% increase in rent expense and a proportionate share of lessor expenses. Total rent expense for the years ended June 30, 2013 and 2012, equaled $96,966 and $107,634, respectively. The future minimum lease payments for the fiscal years ended June 30 are due as follows: Year Amount 2014 $ 99, , ,774 Total $ 253,030 Note 8. Retirement Plan - MIX implemented a defined contribution retirement plan for all eligible employees meeting the age and service requirements. The plan s effective date is June 2, Eligible employees can contribute through a salary reduction agreement to make an elective deferral to the plan. Annual contributions may be made at the discretion of the MIX s board of directors. For the years ended June 30, 2013 and 2012, MIX s contribution totaled $42,460 and $51,311, respectively. The retirement plan expense is reported in payroll taxes and benefits on the accompanying statements of functional expenses. 11