SOUTHERN APPALACHIAN RONALD MCDONALD HOUSE CHARITIES, INC. Financial Statements. Years Ended December 31, 2014 and 2013

Transcription

1 SOUTHERN APPALACHIAN RONALD MCDONALD HOUSE CHARITIES, INC. Financial Statements Years Ended December 31, 2014 and 2013

2 Financial Statements Years Ended December 31, 2014 and 2013 Table of Contents Page Independent Auditors' Report 1 Financial Statements: Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 6 Statements of Functional Expenses 7 Notes to Financial Statements 9

3 Certified Public Accountants Business Advisors p: f: w: rodefermoss.com 185 Serral Drive Greeneville, TN _IA -A IR1\/1 auc= 1 ` RODEFER MOSS Sz CO, PAC- Independent Auditors' Report To the Board of Directors Southern Appalachian Ronald McDonald House Charities, Inc. We have audited the accompanying financial statements of Southern Appalachian Ronald McDonald House Charities, Inc. (a nonprofit organization), which comprise the statement of financial position as of December 31, 2014, and the related statements of activities, functional expenses, and cash flows for the year 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 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 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Southern Appalachian Ronald McDonald House Charities, Inc. as of December 31, 2014, 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. Tennessee I Kentucky I Indiana

4 Emphasis of Matter The financial statements of Southern Appalachian Ronald McDonald House Charities, Inc. as of December 31, 2013 were audited by other auditors; whose report dated May 8, 2014 expressed an unmodified opinion on those statements. AisvA Greeneville, Tennessee March 31, 2015 ea,

5 Statements of Financial Position December 31, 2014 and ASSETS Current Assets Cash $ 460,123 $ 403,961 Investments 961, ,267 Accounts receivable 11,725 43,735 Accrued interest receivable 115 Dividends receivable 494 Total current assets 1,433,768 1,390,572 Property and Equipment Property and equipment 1,679,715 1,668,595 Less accumulated depreciation (879,910) (814,263) Total property and equipment 799, ,332 Total assets $ 2,233,573 $ 2,244,904 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable 7,117 $ 14,986 Salaries and benefits payable 7,683 10,712 Capital lease 4,900 4,931 Total current liabilities 19,700 30,629 Long-Term Liabilities Capital lease 1,480 6,378 Total liabilities 21,180 37,007 Net Assets Unrestricted Board designated - Planned Program Expansion 50,500 50,500 Board designated - Capital Reserve 265, ,215 Board designated - House Operation Reserve 696, ,052 Investment in fixed assets 793, ,023 Unrestricted 375, ,332 Total unrestricted net assets 2,181,335 2,204,122 Temporarily restricted Donor Restricted - special events and activities 725 3,250 Donor Restricted - House equipment 525 Donor Restricted - family room 30,333 Total temporarily restricted net assets 31,058 3,775 Total net assets 2,212,393 2,207,897 Total liabilities and net assets $ 2,233,573 $ 2,244,904 See accompanying notes to financial statements. 3

6 Statements of Activities Years Ended December 31, 2014 and 2013 Unrestricted Revenues Contributions and donations $ 418,683 $ 34,133 $ 452,816 Donated goods and services 98,802 98,802 McDonald's donations/events 66,787 66,787 Investment income 34,651 34,651 Realized gain/loss (7,178) (7,178) Unrealized gain/loss (6,810) (6,810) Miscellaneous revenue 3,119 3, Temporarily Restricted Total Special events and activities 41,328 41,328 Less direct expenses for special events (36,843) (36,843) Net special events and activities 4,485 4,485 Net assets released from restrictions: Purpose restrictions accomplished 105,652 (105,652) Total revenues 619,389 27, ,672 Expenses Program services - House operations 364, ,456 Supporting services Management and general - financial/business 109, ,823 Fundraising - special events 142, ,930 Unallocated payments to RMHC Global 24,967 24,967 Total expenses 642, ,176 Change in net assets (22,787) 27,283 4,496 Net assets at the beginning of the year 2,204,122 3,775 2,207,897 Net assets at the end of the year $ 2,181,335 $ 31,058 $ 2,212,393 See accompanying notes to financial statements. 4

7 Statements of Activities (Continued) Unrestricted Revenues Contributions and donations $ 408,031 $ 9,301 $ 417,332 Donated goods and services 86,128 86,128 McDonald's donations/events 86,153 86,153 Investment income 24,462 24,462 Realized gain/loss 29,095 29,095 Unrealized gain/loss 58,299 58,299 Miscellaneous revenue 3,482 3, Temporarily Restricted Total Special events and activities 37,739 37,739 Less direct expenses for special events (33,030) (33,030) Net special events and activities 4,709 4,709 Net assets released from restrictions: Purpose restrictions accomplished 91,654 (91,654) Total revenues 705,885 3, ,660 Expenses Program services - House operations 327, ,925 Supporting services Management and general - financial/business 107, ,470 Fundraising - special events 174, ,389 Unallocated payments to RMHC Global 31,482 31,482 Total expenses 641, ,266 Change in net assets 64,619 3,775 68,394 Net assets at the beginning of the year 2,139,503 2,139,503 Net assets at the end of the year $ 2,204,122 $ 3,775 $ 2,207,897 See accompanying notes to financial statements. 5

8 Statements of Cash Flows Years Ended December 31, 2014 and 2013 Cash Flows From Operating Activities Increase in net assets 5 4,496 $ 68,394 Adjustments to reconcile increase in net assets to net cash flows from operating activities Depreciation expense 68,510 66,617 Unrealized (gains) losses on investments 6,810 (58,299) Donated property and equipment (17,793) Decrease (increase) in operating assets: Accounts receivable 32,010 (11,118) Realized (gains) losses on investments 7,178 (29,095) (Decrease) increase in liabilities: Accounts payable (7,869) 11,809 Accrued liabilities (3,029) (2,611) Net cash flows from operating activities 108,106 27,904 Cash Flows From Investing Activities IPurchase of property and equipment (13,983) (13,995) Interest and dividends reinvested (33,032) (22,193) Net cash flows from investing activities (47,015) (36,188) Cash Flows From Financing Activities Proceeds from capital lease 8,649 Capital lease repayments (4,929) (4,749) Net cash flows from financing activities (4,929) 3,900 Net change in cash 56,162 (4,384) ICash at the beginning of the year 403, ,345 Cash at the end of the year $ 460,123 $ 403,961 isupplemental DISCLOSURE OF CASH FLOW INFORMATION Interest expense $ 3,200 S 1,747 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES Property and equipment donations - $ 17,793 See accompanying notes to financial statements. 6

9 Statements of Functional Expenses Years Ended December 31, 2014 and 2013 Program Services Management and General Support Services Fund- Raising Total Salaries $ 102,914 $ 47,118 $ 66,432 $ 113,550 $ 216,464 Donated goods/services 98, ,802 Depreciation expense 65,769 2,740 2,740 68,509 Employee benefits 14,208 8,379 13,843 22,222 36,430 Canister expense ,717 20,717 20,717 Employee payroll taxes 7,589 4,476 7,395 11,871 19,460 Utilities 18, ,140 Insurance - Excess liability 11,236 4,816 4,816 16,052 House expenses 15,981-15,981 Professional services - 15,187-15,187 15,187 Computer expenses 3,756 7,511 3,755 11,266 15,022 Miscellaneous expense 4 14,718 14,722 14,722 Advertising 11,529 11,529 11,529 Telephone 5,223 4,178 1,044 5,222 10,445 Maintenance 9, ,281 Insurance - worker's compensation 1,598 3,728 3,728 5,326 Office supplies 2,284 1, ,523 3,807 Conference/Education 2,152 1,435 1,435 3,587 Volunteer recognition 3,200 3,200 3,200 Fire security systems 3,153-3,153 Postage 1,451 1, ,637 3,088 Travel - 2,189-2,189 2,189 Dues and subscriptions 1,839 1,839 1,839 Interest - 1,564 1,564 1,564 Licenses/taxes Internet Elevator maintenance Sprinkler system Totals $ 364,456 $ 109,823 $ 142,930 $ 252,753 $ 617, Total See accompanying notes to financial statements. 7

10 Statements of Functional Expenses (Continued) Program Services Management and General Support Services Fund- Raising Total Salaries $ 96,624 $ 39,963 $ 70,183 $ 110,146 $ 206,770 Employee benefits 19,972 11,779 19,460 31,239 51,211 Insurance - Excess liability 11,027 4,726 4,726 15,753 Insurance - worker's compensation 1,619 3,777 3,777 5,396 Travel - 1,679-1,679 1,679 Employee payroll taxes 6,349 3,744 6,187 9,931 16,280 Utilities 19, ,107 Conference/Education 6,932 4,621-4,621 11,553 Advertising ,623 33,623 33,623 Office supplies 2,759 1, ,840 4,599 Telephone 4,791 3, ,790 9,581 Acknowledgement 1,737-1,737 Maintenance supplies 16,045 16,045 Fire security systems 3,253 3,253 House expenses 14,472-14,472 Volunteer recognition - - 1,661 1,661 1,661 Computer expenses 2,346 4,692 2,346 7,038 9,384 Postage 1,222 1, ,378 2,600 Interest 1,747 1,747 1,747 Professional services 16,768 16,768 16,768 Donated goods/services 49,560-49,560 Licenses/taxes Depreciation expense 63,952 2,665 2,665 66,617 Dues and subscriptions 2,647 2,647 2,647 Elevator maintenance Sprinkler system Internet Canister expense 19,543 19,543 19,543 Miscellaneous expense 5,300 20,112 20,112 25,412 Totals $ 327,925 $ 107,470 $ 174,389 $ 281,859 $ 609, Total See accompanying notes to financial statements. 8

11 Notes to Financial Statements Years ended December 31, 2014 and 2013 NOTE 1 - ORGANIZATION Southern Appalachian Ronald McDonald House Charities, Inc. (the "Organization"), is a local, non-profit 501(c)(3) organization that provides a supportive home-like atmosphere for the families of children who are undergoing inpatient or outpatient medical treatment in any of the area hospitals. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Organization have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") as applied to non-profit organizations. The following is a summary of the more significant accounting policies: Basis of Presentation - The accompanying financial statements have been prepared on the accrual basis of accounting. The Organization is required to report information regarding its financial position and activities based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Organization and changes therein are classified and reported as follows: Unrestricted net assets are not restricted by donors or the donor-imposed restrictions have expired. Unrestricted net assets represent funds that are fully available, at the discretion of management and the board of directors, for the Organization to utilize in any of its programs or supporting services. Temporarily restricted net assets are comprised of funds that are restricted by donors for specific purposes or time periods. When donor restrictions expire, that is, when a time restriction ends, or a purpose restriction is fulfilled, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as support and revenue. Permanently restricted net assets consist of contributions that have been restricted by the donor, which stipulate the resources must be maintained in perpetuity. The related income may be expended for such purpose as determined by the Organization. Contributions - Contributions, which include unconditional promises to give, are recognized as revenues in the period received. Contributed materials, fixed assets, or investments are recorded at fair value when received. The Organization uses the allowance method to estimate uncollectible unconditional promises receivable. The allowance is based on prior years' experience and management's analysis of promises made. Restricted Revenue and Support - Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily restricted net assets. When a 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 and Cash Equivalents - The Organization considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Property and Equipment - Property and equipment with a cost greater than $1,000 and an estimated useful life of one or more years are capitalized and are carried at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed using the straight-line method based on the estimated useful lives of the various classes of assets. The cost of maintenance and repairs is recorded as expense as incurred. Assets held by the Organization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. 9

12 Notes to Financial Statements (Continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In-kind Contributions - Donated assets and services are reflected as contributions in the accompanying statements at their estimated values at date of receipt. Contributions of services are recognized if the services received create or enhance a non-financial asset or the services require specialized skills that are provided by individuals possessing those skills. Advertising - Advertising costs are charged to operations when incurred. Advertising costs for the years ended December 31, 2014 and 2013 were $11,529 and $33,623, respectively. Federal Income Tax - The Internal Revenue Service has determined that the Organization is exempt from federal income tax under Internal Revenue Code Section 501(c)(3); accordingly no provision has been made for federal income tax in the accompanying financial statements Although the tax years ending December 31, 2011 through December 31, 2014 remain open for examination by various taxing authorities, it is management's opinion that no significant uncertain tax positions remain open at December 31, Concentrations of Credit Risk - Financial instruments which potentially subject the Organization to concentrations of credit risk consist primarily of bank deposits in excess of federally insured limits and pledged accounts receivable. Management does not believe significant credit risk exists at December 31, 2014 and Functional Allocation of Expense - The majority of expenses generally can be identified with the program or supporting services to which they relate and are charged accordingly. Other expenses by function have to be allocated among program and supporting services classifications on the basis of full-time equivalent employees, salaries and other bases determined by management of the Organization. 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 assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Date of Management's Review - Management has evaluated subsequent events through March 31, 2015, the date which the financial were available to be issued. NOTE 3 - CASH All cash is held in demand deposits at local banks and are insured up to $250,000 by the FDIC. Assets have not been pledged for excess deposits. Management does not believe that it is exposed to significant credit risk regarding cash Petty cash $ 270 $ 270 Cash - checking 13,375 20,043 Cash - savings 370, ,634 Certificates of deposit 76,181 76,014 $ 460,123 $ 403,961 10

13 Notes to Financial Statements (Continued) NOTE 4 - ACCOUNTS RECEIVABLE The Organization's accounts receivable at December 31 consisted of: Contributions 6,660 $ 9,940 Radiothon 2,182 2,765 Hands 27,861 1% promotion 2,883 3,169 11,725 $ 43,735 The Organization believes all accounts receivable are collectible and no allowance has been recorded as of December 31, 2014 and NOTE 5 - INVESTMENTS Investments are summarized as follows at December 31, 2014 and 2013: December 31, 2014 Cost Fair Value Carrying Value Cash and Money Market Funds $ 542 $ 542 $ 542 Bond Funds 435, , ,603 Mutual Funds 430, , , ,510 $ 961,920 $ 961,920 December 31, 2013 Cost Fair Value Carrying Value Bond Funds $ 421,361 $ 432,962 $ 432,962 Mutual Funds 408, , , ,704 $ 942,267 $ 942,267 The following schedule summarizes the investment return and its classification in the statement of activities for the year ended December 31: Unrestricted Total Unrestricted Total Interest and dividends $ 34,651 $ 34,651 $ 24,462 $ 24,462 Realized gains (losses) (7,178) (7,178) 29,095 29,095 Unrealized gains (losses) (6,810) (6,810) 58,299 58,299 Total investment return $ 20,663 $ 20,663 $ 111,856 $ 111,856 11

14 Notes to Financial Statements (Continued) NOTE 6 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31, 2014 and 2013: Cost December 31, 2014 Accumulated Depreciation Office equipment $ 56,199 $ (47,272) 8,927 Furnitures and fixtures 208,668 (161,159) 47,509 Building 1,360,675 (618,069) 742,606 Donation box equipment 54,173 (53,410) 763 Net 1,679,715 $ (879,910) 799,805 Cost December 31, 2013 Accumulated Depreciation Office equipment $ 56,199 $ (39,509) $ 16,690 Furnitures and fixtures 197,548 (152,871) 44,677 Building 1,360,675 (579,308) 781,367 Donation box equipment 54,173 (42,575) 11,598 Net $ 1,668,595 $ (814,263) $ 854,332 Depreciation expense for the years ended December 31, 2014 and 2013 were $68,510 and $66,617, respectively. NOTE 7 - LEASES The Organization has a land lease with Johnson City Medical Center Hospital, Inc. for a period of twenty five years, which expires in the year At the expiration of the original term, the lessee has the right and option, subject to the lessor's consent, to renew or extend this lease for an additional term of twenty five years. The annual rent is one dollar. In 2010, the Organization entered into a capital lease agreement for a server. The server lease began September 2010 and monthly payments are $232 for sixty months. In May 2013, the Organization entered into a capital lease arrangement for computer equipment. Monthly payments are $309 for thirty six months. For the years ended December 31, 2014 and 2013, payments were $6,496 each year. Amortization of assets under capital leases is included in depreciation expense for the year ended December 31, 2014 and Future minimum lease payments required under the two capital leases for years ending December 31 were as follows: 2015 $ 5, ,546 Total gross minimum lease payments 7,111 Less interest (17.25% and %) 731 Present value of minimum lease payments 6,380 Less current installments of obligations 4,900 Obligations under capital leases excluding current installments 1,480 12

15 Notes to Financial Statements (Continued) NOTE 7 - LEASES (Continued) The following is an analysis of the leased assets in office equipment at December 31, 2014 and 2013: Capital assets - server and computer equipment $ 17,949 $ 8,649 Less accumulated amortization (12,589) (1,802) Net leased assets 5,360 $ 6,847 NOTE 8 - TEMPORARILY RESTRICTED NET ASSETS During the years ended December 31, 2014 and 2013, net assets were released from donor restrictions by incurring expenses satisfying the following restricted purposes: Donated goods and services $ 98,802 $ 86,128 Room contributions 750 2,808 Restricted donations 6,100 2,718 $ 105,652 $ 91,654 NOTE 9 - RELATED PARTY TRANSACTIONS Two Board members' employer provides to the Organization monthly payroll check writing, quarterly preparation of payroll tax returns, and annual preparation of applicable tax forms. The total amount paid for these services for the years ended December 31, 2014 and 2013 were $9,422 and $8,621, respectively. Another Board member's employer provides printing services to the Organization. The total amount paid for these services for the years ended December 31, 2014 and 2013 were $11,357 and $9,073, respectively. Another Board member's employer provides computer maintenance services and two capital leases to the Organization. The total amount paid for these services for the years ended December 31, 2014 and 2013 amounted to $18,511 and $7,873, respectively. The principal balances due on computer equipment capital leases through this employer's finance company at December 31, 2014 and 2013 were $6,380 and $11,309, respectively. Two Board members' employer also administers the retirement plan described in Note 10. Accounts receivable from national affiliate at December 31, 2014 and 2013 were $2,883 and $31,030, respectively. NOTE 10 - RETIREMENT PLAN In September 2011, the Organization began offering a Section 408(p) SIMPLE plan to employees. There is no age limit to the plan. The Organization matches 100% of the employee's salary reduction contributions up to 3% of his/her compensation. To be eligible, employees must have earned at least $5,000 per year in each of the previous two years. For the years ended December 31, 2014 and 2013, retirement expense was $6,922 and $5,097, respectively. 13

16 Notes to Financial Statements (Continued) NOTE 11 - DONATED GOODS AND SERVICES Donated goods and services are reflected as contributions in the accompanying financial statements in the amounts of $98,802 and $86,128 for the years ended December 31, 2014 and 2013 respectively. These amounts reflect the estimated fair value of the contributions at the date of receipt. Only amounts having an available objective valuation basis are reflected in the financial statements. NOTE 12 - FAIR VALUE MEASUREMENTS Total (Level 1) December 31, 2014 Cash and Money Market Funds 542 $ 542 Bond Funds 436, ,603 Mutual Funds 524, , ,920 $ 961,920 Total (Level 1) December 31, 2013 Bond Funds $ 432,962 $ 432,962 Mutual Funds 509, ,305 $ 942,267 $ 942,267 Level 1 measurements are based on fair values for investments determined by reference to quoted market prices for investments in active markets for identical assets. The Organization recognizes transfers into and out of levels within the fair value hierarchy at the end of the reporting period. There were no transfers between levels in the year ended December 31, 2014 and