Family Gateway and Affiliate

Transcription

1 Consolidated Financial Statements with Supplementary Schedule and Compliance Reports December 31, 2016

2 Contents Independent Auditors Report 1 Consolidated Financial Statements: Consolidated Statement of Financial Position 3 Consolidated Statement of Activities 4 Consolidated Statement of Functional Expenses 5 Consolidated Statement of Cash Flows 6 Notes to Consolidated Financial Statements 7

3 Independent Auditors Report To the Board of Directors of Family Gateway and Affiliate Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Family Gateway and Affiliate, which comprise the consolidated statement of financial position as of December 31, 2016, and the related consolidated statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Consolidated financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated 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 consolidated financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The financial statements of the Affiliate were not audited in accordance with Government Auditing Standards. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Sutton Frost Cary LLP Certified Public Accountants and Consultants Phone Six Flags Drive, Suite 600 Arlington, Texas Fax

4 Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Family Gateway and Affiliate as of December 31, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with U.S. generally accepted accounting principles. Arlington, Texas July 6, 2017 A Limited Liability Partnership

5 Consolidated Statement of Financial Position December 31, 2016 Assets Current assets: Cash $ 1,635,270 Investments 548,195 Accounts receivable 94,319 Pledges receivable 63,520 Prepaid expenses and deposits 33,511 Total current assets 2,374,815 Property and equipment, net 1,013,000 Total assets $ 3,387,815 Liabilities and Net Assets Current liabilities: Accounts payable and accrued expenses $ 63,333 Deferred developer fee 41,268 Total current liabilities 104,601 Net assets: Unrestricted: Board designated 98,000 Undesignated 2,134,084 Total unrestricted net assets 2,232,084 Temporarily restricted 1,041,130 Permanently restricted 10,000 Total net assets 3,283,214 Total liabilities and net assets $ 3,387,815 See notes to consolidated financial statements. 3

6 Consolidated Statement of Activities Year Ended December 31, 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Revenue and support: Contributions $ 1,372,995 $ 22,240 $ - $ 1,395,235 Government grants 1,001, ,001,513 Special events (net of direct costs of $73,223) 547, ,327 Rental income 203, ,309 Thrift store sales 5, ,125 Investment income 22, ,843 Developer fees 97, ,500 Net assets released from restrictions 238,055 (238,055) - - Total revenue and support 3,488,667 (215,815) - 3,272,852 Expenses: Program services 2,841, ,841,686 Management and general 397, ,902 Fundraising 214, ,858 Total expenses 3,454, ,454,446 Loss on disposal of property and equipment 21, ,510 Total expenses and losses 3,475, ,475,956 Change in net assets 12,711 (215,815) - (203,104) Net assets at beginning of year 2,219,373 1,256,945 10,000 3,486,318 Net assets at end of year $ 2,232,084 $ 1,041,130 $ 10,000 $ 3,283,214 See notes to consolidated financial statements. 4

7 Consolidated Statement of Functional Expenses Year Ended December 31, 2016 Program Management services and general Fundraising Total Salary and wages $ 865,869 $ 234,524 $ 82,221 $ 1,182,614 Payroll taxes and fringe benefits 262,627 61,318 19, ,833 Total compensation and related costs 1,128, , ,109 1,526,447 Client rent and utility assistance 691, ,902 Occupancy 288,876 43,609 7, ,428 Insurance 32,698 7,191-39,889 Repairs and maintenance 56,316 1,580-57,896 Security services 104, ,730 Educational supplies and activities 21, ,367 25,922 Meal preparation and service 13, ,699 Transportation 11, ,006 Office supplies 8,916 2,763 11,690 23,369 Client assistance 140, ,575 Contract services 182,954 35,280 57, ,091 Other 18,879 9,436 28,971 57,286 Information technology 15,699 1,394 1,394 18,487 Depreciation 124, ,719 Total expenses $ 2,841,686 $ 397,902 $ 214,858 $ 3,454,446 See notes to consolidated financial statements. 5

8 Consolidated Statement of Cash Flows Year Ended December 31, 2016 Cash flows from operating activities: Change in net assets $ (203,104) Adjustments to reconcile change in net assets to net cash used by operating activities: Depreciation 124,719 Donated property and equipment (6,398) Net realized and unrealized gains on investments (1,737) Loss on disposal of property and equipment 21,510 Changes in assets and liabilities: Accounts receivable (79,926) Pledges receivable 1,911 Prepaid expenses and deposits (19,572) Accounts payable and accrued expenses (6,175) Deferred developer fee 41,268 Net cash used by operating activities (127,504) Cash flows from investing activities: Purchases of property and equipment (15,004) Proceeds from sale of property and equipment 98,000 Proceeds from sales of investments 300,000 Purchases of investments (20,190) Net cash provided by investing activities 362,806 Increase in cash 235,302 Cash at beginning of year 1,399,968 Cash at end of year $ 1,635,270 Noncash investing activities: During 2016, the Organization received donated property and equipment with a fair value of $6,398. See notes to consolidated financial statements. 6

9 Notes to Consolidated Financial Statements 1. Organization Family Gateway is a 501(c)(3) not-for-profit organization that provides supportive housing and services to homeless families with children age 18 and under. These comprehensive services include: temporary and transitional living facilities; food; job training, search and placement assistance; life skills classes; children s programming and community transition services. The programs offered by the Organization are designed to restore dignity, stability and selfsufficiency to the family unit. The Organization is primarily supported through contributions and government grants. In 2005 Family Gateway formed Family Gateway Affordable Housing Inc. (FGAH), a Texas not-forprofit corporation, for the purposes of building and operating housing units available to lowincome tenants and to clients of Family Gateway on a subsidized basis. FGAH is a Community Housing Development Organization as defined by 42 U.S.C FGAH is operated, supervised and controlled by Family Gateway. 2. Summary of Significant Accounting Policies Consolidated Financial Statements The consolidated financial statements include the accounts and transactions of Family Gateway and FGAH (collectively, the Organization). All significant intercompany accounts and transactions have been eliminated. Basis of Accounting The Organization prepares the consolidated financial statements on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP). Financial Statement Presentation Net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets and changes therein are classified as follows: Unrestricted net assets - Net assets not subject to donor-imposed stipulations. Temporarily restricted net assets - Net assets subject to donor stipulations that will be met by actions of the Organization and/or the passage of time. 7

10 Notes to Consolidated Financial Statements Permanently restricted net assets - Net assets subject to donor-imposed stipulations that will never lapse, thus requiring the funds to be maintained permanently by the Organization. Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets. Financial Instruments and Credit and Market Risk Concentrations Financial instruments, which are potentially subject to concentrations of credit and market risk, consist principally of cash, investments in marketable securities and accounts and pledges receivable. Cash is placed with high credit quality financial institutions to minimize risk. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. As of December 31, 2016, the Organization s uninsured bank balances totaled $1,257,529. The Organization has not experienced any losses on such assets. Accounts receivable are unsecured and are due mainly from government grantor agencies. Pledges receivable are unsecured and are due from various donors. The Organization evaluates the collectability of accounts and pledges receivable and maintains an allowance for potential losses, if considered necessary. Marketable securities are subject to various risks, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with investment securities, it is at least reasonably possible that the values of the investments will change in the near term and that such changes could materially affect the investment balance reported in the consolidated statements of financial position. Investments The Organization s investments in marketable securities consists of a long term bond mutual fund and is stated at fair value in the consolidated statement of financial position. Interest, dividends and realized and unrealized gains and losses are reported in the consolidated statement of activities as increases or decreases in unrestricted net assets unless their use is temporarily or permanently restricted by explicit donor stipulations or by law. 8

11 Property and Equipment Family Gateway and Affiliate Notes to Consolidated Financial Statements Property and equipment purchased by the Organization are recorded at cost or if acquired by gift, at fair market value at the date of the gift. The Organization follows the practice of capitalizing all expenditures for property and equipment in excess of $2,500; the fair value of donated fixed assets is capitalized. Depreciation is calculated using the straight-line method based upon the estimated useful lives of the assets. Revenue Recognition Contributions are generally recorded only upon receipt, unless evidence of an unconditional promise to give (pledge) has been received. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of the amounts expected to be collected. Government grants are recognized as contract terms are fulfilled. Cost reimbursement contracts are recognized as contributions when the allowable costs are incurred. Fees for contract services are recognized as revenue when the contracted services are performed. Donated goods are reflected as contributions at their estimated fair value at date of receipt. Donated use of facilities is reflected as a contribution at the estimated fair value of the rent. The Organization recognizes contribution revenue for certain services received at the fair value of those services, provided those services create or enhance non-financial assets or require specialized skills which are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. Special event revenue is recognized at the time of the event. Developer fee income is recognized during the construction period based on percentage of construction completed. Developer fees received in advance are reported as deferred developer fee. Grants and Contracts The Organization receives grants and contracts from government agencies, as well as private organizations, to be used for specific programs. For government grants and contracts, the excess of reimbursable expenditures over cash receipts is included in accounts receivable. The Organization s costs incurred under its government grants and contracts are subject to audit by government agencies. Management believes that disallowance of costs, if any, would not be material to the financial position or changes in net assets of the Organization. 9

12 Allocation of Functional Expenses Family Gateway and Affiliate Notes to Consolidated Financial Statements The costs of providing the various program services and supporting activities have been summarized on a functional basis in the consolidated statement of activities. Accordingly, certain costs have been allocated among the various functions. Concentration The Organization was owed funding from one government agency as of December 31, 2016 totaling approximately 22% of total receivables. The Organization received funding from one government agency during the year ended December 31, 2016 totaling approximately 30% of total revenue and support. Federal Income Taxes Family Gateway and FGAH are nonprofit publicly supported organizations, as defined in Section 501(c)(3) of the Internal Revenue Code (Code) that is exempt from federal income taxes under Section 509(a) of the Code. For the year ended December 31, 2016 the Organization did not conduct any unrelated business activities that would be subject to federal income taxes and had no uncertain tax positions. Therefore, no tax provision or liability has been reported in the accompanying consolidated financial statements. GAAP requires the evaluation of tax positions taken in the course of preparing the Organization s tax return and recognition of a tax liability (or asset) if the Organization has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. Management has analyzed the tax positions taken by the Organization, and has concluded that as of December 31, 2016 there are no uncertain tax positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the consolidated financial statements. Estimates and Assumptions The preparation of consolidated financial statements in conformity with GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated. 10

13 Notes to Consolidated Financial Statements 3. Investments Under the Fair Value Measurements and Disclosures topic of the Codification, ASC 820, disclosures are required about how fair value is determined for assets and liabilities and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs as follows: Level 1 Level 2 Level 3 Inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date; Inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value can be determined through the use of models or other valuation methodologies; Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability and the reporting entity makes estimates or assumptions related to the pricing of the asset or liability including assumptions regarding risk. A financial instrument s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Investments consist of a long term bond mutual fund totaling $548,195 at December 31, This investment is a public investment vehicle valued using the net asset value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market. This investment is valued using Level 1 inputs. Investment income consists of the following at December 31, 2016: Interest and dividends $ 21,106 Realized losses (1,634) Unrealized gains 3,371 $ 22,843 11

14 4. Property and Equipment Family Gateway and Affiliate Notes to Consolidated Financial Statements Property and equipment consists of the following at December 31, 2016: Building and improvements $ 1,146,741 Furniture and equipment 146,666 Accumulated depreciation (280,407) 1,013,000 Depreciation expense totaled $124,719 for the year ended December 31, Temporarily Restricted Net Assets Temporarily restricted net assets were available for the following purposes as of December 31, 2016: $ Capital expansion $ 1,000,000 Education program 29,656 Mental health 10,234 Scholarship 1, Permanently Restricted Net Assets $ 1,041,130 Permanently restricted net assets at December 31, 2016 relate to the Kids Helping Kids Endowment Fund, which was established to support education programs of the Organization from revenues earned by the fund. This fund was established on September 6, 2015 through a contribution of $10, Commitments The Organization leases its administrative offices pursuant to a lease agreement which began September 1, 2014 and expires August 31, The Organization also leases a copier pursuant to a lease agreement which expires on November 30, Future minimum lease payments required under these leases total $27,390 for the year ending December 31, Rent expense totaled $334,681 for the year ended December 31, 2016, and includes donated use of facilities of $270,000 (See Note 8). 12

15 Notes to Consolidated Financial Statements 8. In-Kind Contributions and Related Party Transaction Significant services, materials and use of facilities are donated to the Organization by various individuals and entities. The Organization leases its downtown facility from the City of Dallas for $1 per year. The Organization renewed this lease with the City of Dallas for an additional 10 years on September 27, The estimated fair value of the in-kind rent totaled $270,000 and is included in contributions and occupancy expense in the accompanying consolidated financial statements. Donated materials amounted to $140,575 for the year ended December 31, 2016, were recorded at fair value at the date of donation, and have been included in contributions and client assistance expense in the accompanying consolidated financial statements. The Organization received additional donated services from individuals interested in the Organization s programs that were not recognized in the consolidated financial statements because they did not meet the criteria for recognition. 9. Subsequent Events The Organization evaluated subsequent events after the consolidated statement of financial position date of December 31, 2016 through July 6, 2017, which was the date the consolidated financial statements were available to be issued, and concluded that no additional disclosures are required. 13