BIG RIVER PUBLIC BROADCASTING CORPORATION. Financial Statements (With Independent Auditor s Report Thereon) Years Ended June 30, 2017 and 2016

Transcription

1 Financial Statements (With Independent Auditor s Report Thereon) Years Ended June 30, 2017 and 2016

2 Financial Statements (With Independent Auditor s Report Thereon) Years Ended June 30, 2017 and 2016

3 Table of Contents Page Independent Auditor s Report 1-2 Financial Statements: Statements of Financial Position 3 Statements of Activities 4-5 Statements of Functional Expenses 6-7 Statements of Cash Flows 8 Notes to Financial Statements 9-14

4 Independent Auditor s Report Members of the Board Big River Public Broadcasting Corporation Galena, Alaska We have audited the accompanying financial statements of Big River Public Broadcasting Corporation (a nonprofit organization), which comprise the statements of financial position as of June 30, 2017 and 2016, 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 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 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, 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 G Street Suite 800 Anchorage, Alaska Phone Fax Offices in Juneau and Soldotna A Professional Corporation

5 Members of the Board Big River Public Broadcasting Corporation Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Big River Public Broadcasting Corporation as of June 30, 2017 and 2016, 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. Anchorage, AK December 12,

6 Statements of Financial Position June 30, 2017 and 2016 ASSETS Current assets: Cash and cash equivalents $ 125, ,722 Accounts receivable 3,191 - Prepaid expenses 2,747 5,000 Total current assets 131, ,722 Property and equipment, net of accumulated depreciation 198, ,068 Total assets $ 329, ,790 LIABILITIES AND NET ASSETS Current liabilities: Accounts payable 10,906 8,163 Accrued payroll liabilities 9,423 6,247 Current portion, note payable 4,053 3,848 Deferred revenue 8,061 11,209 Total current liabilities 32,443 29,467 Non-current liabilities: Note payable 14,641 18,725 Total liabilities 47,084 48,192 Unrestricted net assets 282, ,598 Total liabilities and net assets $ 329, ,790 See accompanying notes to financial statements. 3

7 Statements of Activities Year Ended June 30, 2017 and 2016 Temporarily Unrestricted Restricted 2017 Public support and revenues: State of Alaska $ 76,807-76,807 Corporation for Public Broadcasting 146,502 39, ,607 Other grants 3,148-3,148 Memberships and donations 24,361-24,361 Underwriting 4,842-4,842 Gaming revenues (net) 43,632-43,632 Other miscellaneous 1,263-1,263 Net assets released from restrictions - satisfaction of purpose restrictions 39,105 (39,105) - Total public support and revenues 339, ,660 Expenses: Program services: Programming and production 181, ,713 Broadcasting and technical 117, ,240 Support services: Fundraising and membership development 59,826-59,826 Administration 87,352-87,352 Total expenses 446, ,131 Change in net assets from operating activities (106,471) - (106,471) Non-operating activities: Interest income Change in net assets (106,393) - (106,393) Net assets, beginning of year 388, ,598 Net assets, end of year $ 282, ,205 (continued) 4

8 Statements of Activities, Continued Temporarily Unrestricted Restricted 2016 Public support and revenues: State of Alaska $ 88,993-88,993 Corporation for Public Broadcasting 152,133 38, ,028 Memberships and donations 28,126-28,126 Underwriting 2,920-2,920 Gaming revenues (net) 63,903-63,903 Other miscellaneous 4,509-4,509 Net assets released from restrictions - satisfaction of purpose restrictions 38,895 (38,895) - Total public support and revenues 379, ,479 Expenses: Program services: Programming and production 212, ,281 Broadcasting and technical 99,027-99,027 Support services: Fundraising and membership development 55,478-55,478 Administration 106, ,421 Total expenses 473, ,207 Change in net assets from operating activities (93,728) - (93,728) Non-operating activities: Interest income Change in net assets (93,586) - (93,586) Net assets, beginning of year 482, ,184 Net assets, end of year $ 388, ,598 See accompanying notes to financial statements. 5

9 Statements of Functional Expenses Years Ended June 30, 2017 and Program Services Support Services Fundraising Total Programming Broadcasting and Program and and and Membership Support Production Technical Development Administration Services Salaries and benefits $ 83,592 41,796 8,359 33, ,185 Telephone and utilities 44,492 22,246 4,449 17,797 88,984 Professional fees - 26,672-20,642 47,314 Depreciation 12,614 12, ,228 Travel and training 2,156 2,415 5,776 7,872 18,219 Sponsorships ,317-18,317 Production and program costs 17, ,657 Special events/promotions ,827-14,827 Insurance 4,437 2, ,774 8,874 Dues and subscriptions 7, ,605 Postage 1, ,212 2,408 6,613 Fuel oil and gas - 6, ,224 Repairs and maintenance 2,517 1, ,800 Merchandise and premiums - - 5,442-5,442 Supplies and equipment 4, ,432 Bank fees and interest ,744 2,744 Other labor costs ,500 Advertising Total expenses $ 181, ,240 59,826 87, ,131 (continued) 6

10 Statements of Functional Expenses Years Ended June 30, 2017 and Program Services Support Services Fundraising Total Programming Broadcasting and Program and and and Membership Support Production Technical Development Administration Services Salaries and benefits $ 79,194 39,597 7,919 31, ,387 Telephone and utilities 40,725 20,363 4,073 16,290 81,451 Production and program costs 37, ,287 Professional fees ,350 31,350 Repairs and maintenance 11,541 16, ,104 Depreciation 10,408 10, ,816 Insurance 10,090 5,045 1,009 4,036 20,180 Sponsorships ,445-17,445 Postage ,080 14,080 Travel and training - - 6,887 6,788 13,675 Other labor costs 10, ,740 Supplies and equipment 9,198 1, ,725 Merchandise and premiums - - 9,635-9,635 Special events/promotions - - 8,510-8,510 Fuel oil and gas - 5, ,524 Bank fees ,100 2,100 Dues and subscriptions 1, ,547 Line charges 1, ,504 Taxes and licenses Advertising Total expenses $ 212,281 99,027 55, , ,207 See accompanying notes to financial statements. 7

11 Statements of Cash Flows Years Ended June 30, 2017 and Cash flows provided (used) by operating activities: Change in net assets $ (106,393) (93,586) Adjustments to reconcile change in net assets to net cash flows provided (used) by operating activities: Depreciation 25,228 20,816 (Increase) decrease in current assets: Prepaid expenses 2,253 (5,000) Account receivable (3,191) - Increase (decrease) in current liabilities: Accounts payable 2,743 (678) Accrued payroll liabilities 3,176 1,649 Deferred revenue (3,148) 11,209 Net cash flows provided (used) by operating activities (79,332) (65,590) Cash flows provided (used) by investing activities: Purchase of property and equipment (4,263) (62,187) Cash flows provided (used) by financing activities: Proceeds from financing activities - 25,283 Principal payments on note payable (3,879) (2,710) Net cash provided by financing activities (3,879) 22,573 Net increase (decrease) in cash and cash equivalents (87,474) (105,204) Cash and cash equivalents, beginning of year 212, ,926 Cash and cash equivalents, end of year $ 125, ,722 Supplemental Disclosures: Cash paid for interest $ 1, See accompanying notes to financial statements. 8

12 Notes to Financial Statements June 30, 2017 and 2016 I. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Big River Public Broadcasting Corporation (the Corporation) is a nonprofit, tax exempt charitable and public service entity engaged in noncommercial radio broadcasting in Galena, Alaska. The Corporation operates as KIYU Radio. The Corporation receives a significant amount of its support from pull-tab gaming activities, the Alaska Public Broadcasting Commission, the Corporation for Public Broadcasting, and from membership revenues. Summary of Significant Accounting Policies Basis of Financial Statements The financial statements of the Corporation have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other Liabilities. Financial statement presentation follows the recommendations of the Financial Accounting Standards Board (FASB) in its Accounting Standards Codification (ASC) No and ASC establishes standards of financial accounting and reporting for contributions received and contributions made. Under ASC , the Corporation is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets temporarily restricted net assets and permanently restricted net assets. The Corporation classifies net assets and changes therein based on the existence or absence of donor-imposed restrictions, as follows: Unrestricted Net Assets net assets that are not subject to donor-imposed stipulations. Temporarily Restricted Net Assets net assets subject to donor-imposed stipulations that will be met either by actions of the Corporation and/or the passage of time. 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 restriction. Permanently Restricted Net Assets net assets subject to donor-imposed stipulations that must be maintained permanently by the Corporation. Generally, the donors of these assets permit the Corporation to use all or part of the income earned on the related investments for general or specific purposes. No permanent restricted were in place on any part of net assets by the Corporation. 9

13 Notes to Financial Statements, Continued Description of Program and Supporting Services Operating Activities Programming and Production Provides radio programming and production services to rural communities. Broadcasting and Technical Provides broadcasting services to rural communities. Fundraising and Membership Development Manage corporate, foundation, and individual giving programs. Administrative Provide supportive services for the station program services. Services including information technology, human resources, financial management, liaison to board of directors, native community, government, and other interested parties. Develops and coordinates goals and objectives, policies, and strategies. Revenue and Support Revenues are recorded in the period earned when expenses have been incurred for the purpose specified by the grant or contract. Fund receipts in excess of expenses for ongoing programs are recorded as deferred revenue. Advances (deferred revenue) from funding agencies are considered liquidated when an expense is recorded. Contributions from the general public are recognized as donations when received. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Contributions that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily or permanently restricted contributions based on the nature of the restriction. 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 statement of activities as net assets released from restrictions. Cash Equivalents Cash and cash equivalents consist of bank deposits and certificates of deposit. Prepaid Expenses Payments made to vendors for services that will benefit period beyond the June 30 year-end are recorded as prepaid expenses 10

14 Notes to Financial Statements, Continued Property and Equipment Property and equipment having an initial cost of $500 or more and with a useful life exceeding one year are recorded at cost, or in the case of donated property, at their estimated fair value at date of receipt. Depreciation is calculated by the straight-line method over the estimated useful lives of the: assets, generally 3-5 years for minor equipment, 7 years for vehicles, and years for Tower. Related improvements and buildings. Functional Expenses Expenses are charged to program and supporting services on the basis of periodic time and expense studies, and direct identification of expenses incurred. Expenses not directly chargeable are allocated based on direct labor costs and estimates of actual usage. Income Taxes The Corporation is recognized as a tax exempt organization under Section 501 (c)(3) of the Internal Revenue Code and, except for taxes pertaining to unrelated business income, is exempt from federal and state income taxes. Management believes it has no liability for unrelated business income. The Corporation applies the provisions of Topic 740 of the FASB ASC relating to accounting for uncertainty in income taxes. The Corporation annually reviews its filings and positions taken in accordance with the recognition standards. The Corporation believes that it has no uncertain tax positions taken in accordance with the recognition standards that would require disclosure or adjustment in these financial statements. Tax returns filed for 2014, 2015, and 2016 remain open to examination by taxing authorities. Estimates and Assumptions 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 assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Fair Value Measurements The Corporation measures certain items in these financial statements at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, that is, other than in a forced liquidation or distress sale. The Corporation's financial assets and liabilities carried at fair value have been classified based on a hierarchy as defined in generally accepted accounting standards and are generally measured using the market approach or the income approach. 11

15 Notes to Financial Statements, Continued II. Cash and Cash Equivalents The Corporation's cash and cash equivalents are maintained in checking accounts and certificates of deposit. The Corporation's deposits are insured by the Federal Deposit Insurance Corporation up to $250,000. The Corporation s cash and cash equivalents are fully insured as of June 30, 2017 and 2016, respectively. III. Property and Equipment A schedule of the changes in property and equipment follows: Balance Balance June 30, 2016 Additions Deletions June 30, 2017 Land $ 75, ,811 Buildings and improvements 155, ,187 Furnishings and fixtures 5, ,296 Broadcast equipment and vehicles 437,508 4, , ,802 4, ,065 Less accumulated depreciation (454,734) (25,228) (479,962) Property and Equipment, Net of accumulated depreciation $ 219,068 (20,965) - 198,103 Depreciation expense for the years ended June 30, 2017, and 2016 were $25,228 and $20,816 respectively. IV. Long-Term Debt In August 2015 Big River Public Broadcasting purchased a 2012 Chevrolet Silverado and entered into a note payable with Ally Bank for $25,283. The note has annual interest rate of 4.99% and matures in September At June 30, 2017 and 2016, respectively, the balance of the note payable was $18,694 and $22,573. Future maturities of debt are as follows: $ - 3, ,053 4, ,251 4, ,468 4, ,707 4,707 Thereafter 1,215 1,246 Total $ 18,694 22,573 12

16 Notes to Financial Statements, Continued V. Corporation for Public Broadcasting Grants The Corporation for Public Broadcasting (CPB) is a private, nonprofit grant-making organization. Responsible for funding television and radio stations. CPB distributes annual Community Service Grants (CSGs) to qualifying public telecommunications entities. CSGs are used to augment the financial resources of public broadcasting stations and thereby enhance the quality of programming and expand the scope of public broadcasting services. Of the total grant, 21.07% and 20.85% was restricted for the acquisition, production, promotion, and distribution of national programming (NPPAG) in 2017 and 2016, respectively. Each grant must be expended within two years. The Corporation uses CSG funds for purposes relating primarily to production and acquisition of programming. However, certain guidelines must be satisfied in connection with application for and use of the grants to maintain eligibility and compliance requirements. These guidelines pertain to the use of grant funds, record keeping, audits, financial reporting, and licensee status with the Federal Communications Commission. The Corporation treats NPPAG grants as temporarily restricted contributions, and reclassifies the support to unrestricted when the funds are expended in accordance with donor restrictions. VI. Gaming Activities The net revenue from gaming is comprised of the following: Gaming revenues $ 68, ,183 Pull tab prizes and supplies $ 24,767 41,654 Pull tab service charges and taxes Total expenses $ 25,350 42,280 Gaming revenues (net) $ 43,632 63,903 VII. Concentrations A significant amount of the Corporation's funding comes from operating grants awarded by the State of Alaska and the Corporation for Public Broadcasting. Both funding sources have experienced budgetary pressures in recent years. A significant decline in funding from these sources could have a material impact on the Corporation's operations. VIII. Contingencies Expenses reimbursed under grants and contracts are subject to audit by the granting agencies or their representatives. The amount, if any, of expenses which may be disallowed by the granting agencies cannot' be determined at this time although management expects such amounts, if any, to be immaterial. 13

17 Notes to Financial Statements, Continued IX. Subsequent Events The Corporation has evaluated subsequent events through December 12, 2017, the date on which the financial statements were issued. 14