HURTT FAMILY HEALTH CLINIC, INC. (A NONPROFIT CORPORATION)

Transcription

1 (A NONPROFIT CORPORATION) Financial Statements With Independent Auditors Report September 30, 2013 and 2012

2 Table of Contents Independent Auditors Report 1 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 Page

3 INDEPENDENT AUDITORS REPORT Board of Directors Hurtt Family Health Clinic, Inc. Tustin, CA We have audited the accompanying financial statements of Hurtt Family Health Clinic, Inc. (the Clinic), which comprise the statements of financial position as of September 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 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 Clinic's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Clinic'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 Board of Directors Hurtt Family Health Clinic, Inc. Tustin, CA Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hurtt Family Health Clinic, Inc. as of September 30, 2013 and 2012, and the changes in its net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Brea, California January 24, 2014

5 Statements of Financial Position September 30, ASSETS: Current assets: Cash and cash equivalents $ 510,340 $ 466,518 Grants and accounts receivable (note 3) 683, ,544 Inventory - medicines 8,110 11,201 Prepaid expenses 3,690 - Total current assets 1,205,646 1,106,263 Property and equipment (note 4) 386, ,479 Total Assets $ 1,592,173 $ 1,460,742 LIABILITIES AND NET ASSETS: Current liabilities: Accounts payable and accrued expenses $ 100,505 $ 115,283 Total liabilities 100, ,283 Unrestricted undesignated net assets 1,491,668 1,345,459 Total Liabilities and Net Assets $ 1,592,173 $ 1,460,742 See notes to financial statements -3-

6 Statements of Activities Year Ended September 30, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total SUPPORT, REVENUE, AND RECLASSIFICATIONS: Grants and contributions $ 1,089,769 $ - $ 1,089,769 $ 1,007,957 $ - $ 1,007,957 Federally Qualified Health Care Grant 716, , , ,771 In-kind contributions 580, , , ,414 Patient services 1,031,799-1,031, , ,490 Total Support, Revenue, and Reclassifications 3,418,825-3,418,825 3,134,632-3,134,632 EXPENSES: Program services 2,678,723-2,678,723 2,564,495-2,564,495 Supporting activities: General and administrative 494, , , ,216 Fundraising 99,885-99,885 3,195-3, , , , ,411 Total Expenses 3,272,616-3,272,616 2,941,906-2,941,906 Change in Net Assets 146, , , ,726 Net Assets, Beginning of Year 1,345,459-1,345,459 1,152,733-1,152,733 Net Assets, End of Year $ 1,491,668 $ - $ 1,491,668 $ 1,345,459 $ - $ 1,345,459 See notes to financial statements -4-

7 Statements of Functional Expenses Year Ended September 30, Supporting Activities Supporting Activities Program General and Program General and Services Administrative Fundraising Total Services Administrative Fundraising Total Direct Assistance - Clinic Operations $ 697,409 $ - $ - $ 697,409 $ 635,215 $ - $ - $ 635,215 Compensation and related expenses 1,255, ,108 94,717 1,686,977 1,496, ,167-1,674,081 Occupancy expenses 77, ,036 74, ,116 Insurance expense 20, ,829-16,528-16,528 Professional services 288,345 72, ,262 72, , ,660 Telephone, utilities, and maintenance 40, ,725 30, ,649 Depreciation and amortization 119,076 3,221 1, ,395 97, ,723 Vehicles 13, ,816 13, ,939 Supplies 102,702 18, ,133 99,450 22, ,756 Dues and subscriptions 25,451 2,053 1,132 28,636 19,753 2,891 1,445 24,089 Information technology 38,911 4,992 2,753 46,656 23,920 3,500 1,750 29,170 Other - 54,742-54,742-28,980-28,980 Total $ 2,678,723 $ 494,008 $ 99,885 $ 3,272,616 $ 2,564,495 $ 374,216 $ 3,195 $ 2,941,906 See notes to financial statements -5-

8 Statements of Cash Flows Year Ended September 30, CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 146,209 $ 192,726 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation and amortization 123,395 97,723 Donated assets - (26,600) Net change in: Grants and accounts receivable (54,962) (325,766) Inventory - medicines 3,091 (1,569) Prepaid expenses (3,690) - Accounts payable and accrued expenses (14,778) 17,530 Net Cash (Used in) Provided by Operating Activities 199,265 (45,956) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of equipment (155,443) (46,943) Net Cash Used in Investing Activities (155,443) (46,943) Change in Cash and Cash Equivalents 43,822 (92,899) Cash and Cash Equivalents, Beginning of Year 466, ,417 Cash and Cash Equivalents, End of Year $ 510,340 $ 466,518 See notes to financial statements -6-

9 Notes to Financial Statements September 30, 2013 and NATURE OF ORGANIZATION: Nature of Activities Hurtt Family Health Clinic, Inc., formerly known as OCRM Health Care Services and Casa de Salud Family Health Clinic (the Clinic) was incorporated as a nonprofit organization under the laws of the State of California in 2000 and is committed to providing medical services to an underserved population at minimum costs to patients. Patients receive access to the highest quality primary healthcare, dental care, mental health counseling, disease prevention and patient healthcare education available. The Clinic also has preventive educational services available to low income families. Some of these are nutrition, exercise, lifestyle modification, childcare, stress reduction, smoking cessation and other topics that reduce the cost of treatment and disease. In March 2009, the Clinic became a Federally Qualified Healthcare Clinic (FQHC). This designation is reserved for community clinics that offer a wide variety of services for those at poverty level or below. In addition to grant funding, the Clinic receives specialized training, access to lower cost prescriptions and assistance with malpractice insurance for providers. As a result, the Clinic has been able to significantly expand the scope of operations and services provided to help those in need. Related Entity The Hurtt Family Health Clinic, Inc. board previously consisted of the same board of directors as the Orange County Rescue Mission (OCRM). OCRM is a nonprofit organization which provides emergency and transitional care to homeless individuals and families. The board previously controlled both entities. In addition, OCRM has an economic interest in the Clinic. Therefore, the financial statements for OCRM, the controlling entity, were previously consolidated, whereas these financial statements are reported as a separate entity. During the current year, the relationship changed and the financial statements for the Clinic are no longer consolidated into OCRM. Basis of Presentation The financial statements have been prepared on the accrual basis of accounting. Revenue is recognized when earned and expenses are recognized when incurred. Under FASB Accounting Standards Codification (ASC) , the Clinic is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. The Clinic does not have any permanently restricted net assets at September 30, 2013 and

10 Notes to Financial Statements September 30, 2013 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounting for Contributions Contributions received are recorded as increases in unrestricted, temporarily restricted or permanently restricted net assets, depending on the existence and/or nature of any donor restrictions. Unrestricted contributions are recognized as an increase in unrestricted net assets when received. Contributions restricted by the donors are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the donor-imposed restriction. When restrictions are satisfied, either by the passage of time or by accomplishing the purpose, the temporarily restricted net assets are reclassified to the unrestricted net assets and reported in the statements of activities as net assets released from restrictions. When restrictions are satisfied in the same accounting period as the receipt of the contribution, the Clinic reports both the revenue and the related expense in the unrestricted net asset class. Cash and Cash Equivalents For purposes of the statements of cash flows, the Clinic considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents. Deposits with various banks and broker dealers may, at times, exceed federally insured limits. The Organization has not experienced any losses on these accounts. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Property and Equipment Property and equipment are recorded at cost when purchased and fair market value on the date of donation. Estimated useful lives and depreciation methods are as follows: Asset Type Buildings Building improvements Equipment and furniture Vehicles Useful Life years 7 years 5-7 years 5 years Depreciation Method Straight line Straight line Straight line Straight line -8-

11 Notes to Financial Statements September 30, 2013 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: Fair Value of Financial Instruments Financial and nonfinancial assets and liabilities are recorded at their fair market value in accordance with ASC 820 Fair Value Measurements. This standard defines fair value and establishes a hierarchy for reporting the reliability of input measurements used to assess fair value for all assets and liabilities. ASC 820 defines fair value as the selling price that would be received for an asset, or paid to transfer a liability, in the principal or most advantageous market on the measurement date. The hierarchy prioritizes fair value measurements based on the types of inputs used in the valuation technique. The inputs are categorized in the following levels: Level 1 Observable inputs such as quoted prices in active markets for identical assets or liabilities Level 2 Directly or indirectly observable input for quoted and other than quoted prices for identical or similar assets and liabilities in active or nonactive markets Level 3 Unobservable inputs not corroborated by market data, therefore requiring the entity to use the best information available in the circumstances, including the entity s own data Certain assets and liabilities are carried at cost on the statements of financial position and thus are not considered financial instruments. Donated Materials and Services Material gift-in-kind items used in the Clinic s programs and donated goods distributed are recorded as in-kind contributions and program expenses in the statements of activities. A physical count of items on hand at the end of the year is performed to determine the inventory on the statements of financial position at September 30, 2013 and Contributed services are reported as in-kind contributions at their fair value if such services create or enhance nonfinancial assets or would have been purchased if not provided by donation, require specialized skills, and are provided by individuals possessing such specialized skills. Such items are capitalized or charged to operations as appropriate. Medications Inventory Medications inventory consists of purchased and donated medications used in the operation of the Clinic s programs. The inventory is stated at cost if purchased or recorded at its fair value at the date of donation and is valued on a first in, first out method. Income Taxes The Clinic is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) and similar provisions of the State of California Revenue and Taxation Code of the Internal Revenue Code. -9-

12 Notes to Financial Statements September 30, 2013 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis on the statements of activities and functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Uncertain Tax Positions The financial statement effects of a tax position taken or expected to be taken are recognized in the financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Interest and penalties, if any, are included in expenses in the statements of activities. As of September 30, 2013 and 2012, the Clinic had no uncertain tax positions that qualify for recognition or disclosure in the financial statements. The Clinic files information tax returns in the U.S. and various states. The Clinic is subject to income tax examinations for the current year and certain prior years based on the applicable laws and regulations. 3. GRANTS AND ACCOUNTS RECEIVABLE: Grants and accounts receivable consist of the following: September 30, Proposition 10 Funding-County of Orange $ 68,750 $ 96,250 TSR (Tobacco Settlement Revenue)-County of Orange 38,230 30,524 Insurance receivable 542, ,831 FQHC (Federally Qualified Health Center) Funding-DHHS 68,991 55,583 Total receivables - gross 718, ,188 Allowance for doubtful accounts (34,909) (33,644) Grants and accounts receivable - net $ 683,506 $ 628, PROPERTY AND EQUIPMENT: Property and equipment consist of the following: September 30, Equipment and office furniture $ 285,816 $ 337,751 Improvements 200, ,435 Vehicles 440, , , ,849 Less accumulated depreciation (540,826) (627,370) $ 386,527 $ 354,

13 Notes to Financial Statements September 30, 2013 and NET ASSETS: Net assets consist of the following: Unrestricted net assets Invested in property and equipment Available for operations Total unrestricted net assets September 30, $ 386,527 $ 354,479 1,105, ,980 $ 1,491,668 $ 1,345, RELATED PARTY TRANSACTIONS: The Clinic is charged occupancy expense from Orange County Rescue Mission, Inc., a related party, in the amount of $74,116 each year. Expense is charged to the Clinic based on a percentage of depreciation expense on the Clinic and administration buildings. The Clinic reimburses the Orange County Rescue Mission, Inc. a related party, for administration support for strategic planning and oversight, accounting support, development support, information technology support, human resource support and security. The total amount reimbursed was $338,795 and $298,881, for the years ended September 30, 2013 and 2012, respectively. 7. COMMITMENT AND CONTINGENCY: The Clinic has contracted with various funding agencies to perform certain healthcare services and receives Medi-Cal and Medicare revenue from the state and federal governments. Reimbursements received under these contracts and payments from Medi-Cal and Medicare are subject to audit by federal and state governments and other agencies. Upon audit, if discrepancies are discovered, the Clinic could be held responsible for refunding the amounts in question. The Clinic does not believe material amounts, if any, will have to be refunded and thus a liability has not been recorded. 8. LINE OF CREDIT: During the year ended September 30, 2013, the Clinic entered into a line of credit agreement with a bank with a maximum amount of $500,000, expiring March During the year, no funds were drawn on this account. 9. LEASES: In addition to the rent noted in footnote 6 above, the Clinic leases certain medical space under operating lease agreements that expire at various dates through Monthly lease expenses are approximately $2,700. Lease expense for the years ended September 30, 2013 and 2012, was $77,036 and $74,116, respectively. Future minimum lease payments for the year ending September 30, 2014 $ 32, , , ,058 $ 117,

14 Notes to Financial Statements September 30, 2013 and SUBSEQUENT EVENTS: Subsequent events have been evaluated through the report date, which represents the date the financial statements were available to be issues. Subsequent events after that date have not been evaluated. -12-