ADVANCE MEMPHIS FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013

Transcription

1 FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013

2 Table of Contents December 31, 2014 and 2013 Page Independent Auditor s Report... 2 Statements of Financial Position... 3 Statements of Activities... 4 Statements of Functional Expenses... 5 Statements of Cash Flows... 6 Notes to the Financial Statements... 7

3 Independent Auditor s Report To the Board of Directors Advance Memphis Memphis, Tennessee We have audited the accompanying financial statements of Advance Memphis (a nonprofit corporation), which comprise the statements of financial position as of December 31, 2014 and 2013, 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 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 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 Advance Memphis as of December 31, 2014 and 2013, 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. Memphis, Tennessee August 26, 2015

4 Statements of Financial Position December 31, 2014 and 2013 ASSETS Cash and cash equivalents $ 363,615 $ 319,830 Accounts receivable 90, ,400 Grants receivable 88,750 38,750 Other receivables 2,999 2,625 Prepaid insurance 8,785 4,864 Property and equipment, net 405, ,638 Total assets $ 959,735 $ 925,107 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ 15,146 $ 8,175 Accrued salaries and wages 17,297 30,197 Total liabilities 32,443 38,372 Net Assets Unrestricted 838, ,985 Temporarily restricted 88,750 63,750 Total net assets 927, ,735 Total liabilities and net assets $ 959,735 $ 925,107 See accompanying notes to the financial statements. 3

5 Statements of Activities For the years ended December 31, 2014 and 2013 Temporarily Temporarily Unrestricted restricted Total Unrestricted restricted Total Revenues Staffing and outsourcing services $ 1,171,863 $ - $ 1,171,863 $ 1,271,164 $ - $ 1,271,164 Less: Direct staffing and outsourcing costs 1,139,904-1,139,904 1,180,610-1,180,610 Net staffing and outsourcing services 31,959-31,959 90,554-90,554 Support and other revenues Grants 194, , , ,543 82, ,043 Contributions 468, , , ,991 Other income 29,583-29,583 20,001-20,001 Total revenues, support, and other revenues 725, , , ,089 82, ,589 Reclassifications Net assets released from restriction 122,500 (122,500) - 74,500 (74,500) - Total revenues and reclassifications 847,681 25, , ,589 8, ,589 Expenses Program services, net of direct costs 286, , , ,698 Management and general 456, , , ,003 Fundraising 88,982-88,982 78,873-78,873 Total expenses 832, , , ,574 Change in net assets 15,557 25,000 40, ,015 8, ,015 Net assets, beginning of year 822,985 63, , ,970 55, ,720 Net assets, end of year $ 838,542 $ 88,750 $ 927,292 $ 822,985 $ 63,750 $ 886,735 See accompanying notes to the financial statements. 4

6 Statements of Functional Expenses For the years ended December 31, 2014 and 2013 Program Services Program Services Management and General Fundraising Total Management and General Fundraising Total Salaries and wages Staffing and outsourcing $ 994,515 $ - $ - $ 994,515 $ 1,028,022 $ - $ - $ 1,028,022 Support services - 235,453 47, , ,327 45, ,789 Service delivery 142, , , ,916 Payroll taxes 113,965 17,860 3, , ,985 16,129 3, ,634 Retirement and health benefits - 119,563 24, ,852-95,528 20, ,525 Total compensatory expenses 1,251, ,876 75,780 1,699,769 1,311, ,984 70,529 1,702,886 Other expenses Insurance 45,046 10,169-55,215 46,406 15,264-61,670 Materials and supplies 23,817-10,045 33,862 30,862-5,607 36,469 Depreciation 24,251 2,878 1,439 28,568 19,970 2,349 1,175 23,494 Drug testing 21, ,071 14, ,417 Telephone 8,389 9, ,643 7,291 8, ,203 Professional fees - 17,402-17,402-17,611-17,611 Staff development - 16,776-16,776-7,250-7,250 Utilities 13,354 1, ,711 12,781 1, ,037 Office - 15,160-15,160-11,240-11,240 Repairs and maintenance 12, ,351 10, ,325 Meals 11, ,143 15, ,018 Bank charges - 6,495-6,495-15,986-15,986 Auto and transportation 6, ,352 8, ,551 Matching funds 4, ,359 6, ,492 Computer supplies - 3,831-3,831-2,713-2,713 Assistance 3, ,729 2, ,449 Postage Travel , ,563 Contract labor Subtotal 1,426, ,480 88,982 1,972,028 1,489, ,003 78,873 1,971,184 Less: Direct staffing and outsourcing costs reported in the Statement of Activities 1,139, ,139,904 1,180, ,180,610 Total expenses $ 286,662 $ 456,480 $ 88,982 $ 832,124 $ 308,698 $ 403,003 $ 78,873 $ 790,574 See accompanying notes to the financial statements. 5

7 Statements of Cash Flows For the years ended December 31, 2014 and 2013 Cash flows from operating activities Change in net assets $ 40,557 $ 145,015 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 28,568 23,494 Loss on sale of property and equipment 1,643 1,150 Changes in operating assets and liabilities Accounts receivable 50,382 (84,553) Grants receivable (50,000) 48,457 Other receivables (374) (1,394) Prepaid insurance (3,921) (2,171) Accounts payable 6,971 (6,653) Accrued salaries and wages (12,900) (8,386) Net cash provided by operating activities 60, ,959 Cash flows from investing activities Purchase of property and equipment (17,141) (126,280) Proceeds from the sale of property and equipment - 1,500 Net cash used in investing activities (17,141) (124,780) Change in cash and cash equivalents 43,785 (9,821) Cash and cash equivalents, beginning of year 319, ,651 Cash and cash equivalents, end of year $ 363,615 $ 319,830 See accompanying notes to the financial statements. 6

8 Notes to the Financial Statements December 31, 2014 and 2013 Note 1 Nature of operations Advance Memphis (the Organization ) is a nonprofit corporation organized under the laws of the State of Tennessee. Located in one of the nation's poorest zip code areas, its mission is to foster economic revitalization of the Cleaborn-Foote neighborhood by empowering residents with knowledge, resources, and skills to be economically self-sufficient through its Biblically based training and staffing programs. The Organization manages an outsourcing and staffing service through which graduates of its training programs apply learned skills with continuing oversight by Advance Memphis. Note 2 Summary of significant accounting policies Basis of accounting The accompanying financial statements have been prepared using the accrual basis of accounting. Under this method of accounting, support and revenue are recognized in the period earned and expenses are recognized when incurred. Financial statement presentation Under accounting standards for non-profit organizations, the Organization 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. Cash and cash equivalents For purposes of the statement of cash flows, the Organization considers all highly liquid investments with a maturity of three months or less to be cash equivalents. Accounts receivable Accounts receivable consist primarily of amounts due from customers for staffing services provided. Based on the Organization's collection history and management's assessment of each customer's creditworthiness, it has concluded that no allowance for doubtful accounts is necessary at December 31, 2014 and Grants receivable Grants receivable are recorded when they are determined to be an unconditional promise to give. Property and equipment Property and equipment is recorded at acquisition cost, if purchased, or at estimated fair value at the date of the contribution, if contributed. Major renewals and betterments that extend the useful lives of assets are also recorded at cost. Expenditures for normal repair and maintenance are expensed as they occur. Depreciation is determined using the straight-line method over the estimated useful lives of the assets, generally seven to thirtynine years for building and improvements and five to ten years for computers, equipment, and furniture. 7

9 Notes to the Financial Statements December 31, 2014 and 2013 Note 2 Summary of significant accounting policies (continued) Donor-imposed restrictions Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction is satisfied or expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction is satisfied or expires, temporarily restricted net assets are reclassified to unrestricted net assets. Income taxes The Organization is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and has been classified as an organization that is not a private foundation under Sections 509(a)(1) and 170(b)(1)(A)(vi). The Organization files tax returns in the United States federal jurisdiction and is not currently under tax examination. The Organization is no longer subject to examination by federal authorities for years prior to Based on the evaluation of the Organization s tax positions, management believes all positions taken would more likely than not be upheld under examination. Therefore, no provision for the effects of uncertain tax positions has been recorded for the years ended December 31, 2014 and 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 reporting period. Actual results could differ from those estimates. Subsequent events Management has evaluated subsequent events through August 26, 2015, the date the financial statements were available to be issued. 8

10 Notes to the Financial Statements December 31, 2014 and 2013 Note 3 Property and equipment As of December 31, 2014 and 2013, property and equipment consisted of the following: Building and improvements $ 442,594 $ 442,594 Computers and equipment 68,572 59,610 Furniture 28,013 24,834 Land 2, , ,038 Accumulated depreciation (135,611) (108,400) Property and equipment, net $ 405,568 $ 418,638 Depreciation expense for the year $ 28,568 $ 23,494 Note 4 Line of credit The Organization has $100,000 of credit available under a revolving line of credit agreement with a local bank that is collateralized by real property. Interest is payable monthly at 5.00%. The agreement is expected to be renewed under substantially similar terms when it matures on November 20, Note 5 Temporarily restricted net assets Temporarily restricted net assets consisted of the following as of December 31, 2014 and 2013: Time restrictions $ 88,750 $ 38,750 Purpose restrictions Employee specialist compensation - 25,000 $ 88,750 $ 63,750 For the years ended December 31, 2014 and 2013, net assets were released from restrictions by the passage of time or incurring expenses satisfying the purpose of restrictions imposed by donors as follows: Time restrictions $ 97,500 $ 74,500 Purpose restrictions Employee specialist compensation 25,000 - $ 122,500 $ 74,500 9

11 Notes to the Financial Statements December 31, 2014 and 2013 Note 6 Direct staffing and outsourcing costs Direct staffing and outsourcing costs for the years ended December 31, 2014 and 2013 consisted of the following: Wages $ 994,514 $ 1,028,023 Payroll taxes 100, ,181 Workers compensation insurance 45,046 46,406 Direct staffing and outsourcing costs $ 1,139,904 $ 1,180,610 Note 7 Retirement plan The Organization sponsors a Simple IRA Plan for qualified employees meeting service and compensation requirements. Employees are allowed to make elective deferrals into the plan and are fully vested in any contributions made to their account, including employer matching funds of $34,269 and $28,849 contributed, respectively, for the years ended December 31, 2014 and Note 8 Concentrations of risk For the year ended December 31, 2014, one customer accounted for approximately seventy-one percent (71%) of accounts receivable and approximately fifty-four percent (54%) of gross revenues from staffing and outsourcing services. For the year ended December 31, 2013, two customers accounted for approximately ninety-one percent (91%) of accounts receivable and approximately seventy-six percent (76%) of gross revenues from staffing and outsourcing services. Note 9 Subsequent event On July 10, 2015, the Organization purchased real property for a contract price of $125,000. The purchase was financed with a $245,000 promissory note payable to a bank with the unused credit available for improvements to the real property. Interest only is payable monthly at a 3.00% initial rate that varies with the U.S. Prime Rate until the note matures on July 10, 2020, at which time the entire unpaid balance is due unless demand is made prior thereto. The note is collateralized by the real property. 10