Network of Community Ministries, Inc.

Transcription

1 Financial Statements June 30, 2017

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

3 Independent Auditors Report To the Board of Directors Network of Community Ministries, Inc. We have audited the accompanying financial statements of Network of Community Ministries, Inc. which comprise the statement of financial position as of June 30, 2017, 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 U.S. generally accepted accounting principles; 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 error or fraud. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit involves performing procedures to obtain audit evidence about amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of 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 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 financial statements referred to above present fairly, in all material respects, the financial position of Network of Community Ministries, Inc. as of June 30, 2017, 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. Correction of an Error As discussed in Note 2 to the financial statements, an error resulting in the incorrect classification of net assets as of June 30, 2016 was discovered during the current year. Accordingly, the net assets have been restated in the June 30, 2016 net asset balance now presented to correct the error. Our opinion is not modified with respect to that matter. A Limited Liability Partnership Arlington, Texas November 21, 2017

5 Statement of Financial Position June 30, 2017 Assets Current assets: Cash $ 117,490 Accounts receivable 960 Donated inventory 246,768 Prepaid expenses and other 13,351 Total current assets 378,569 Property and equipment, net 368,927 Total assets $ 747,496 Liabilities and Net Assets Current liabilities: Accounts payable $ 16,276 Accrued compensated absences 7,052 Total current liabilities 23,328 Net assets: Unrestricted 623,345 Temporarily restricted 100,823 Total net assets 724,168 Total liabilities and net assets $ 747,496 See notes to financial statements. 3

6 Statement of Activities Year Ended June 30, 2017 Temporarily Unrestricted Restricted Total Revenue and support: Contributions $ 602,268 $ - $ 602,268 In-kind contributions 1,217,429-1,217,429 Emergency Services 64,002 80, ,853 Adolescents' and Children's Clinic 9,190 15,000 24,190 Seniors' Net 19,873-19,873 Net assets released from restrictions 264,266 (264,266) - Total revenue and support 2,177,028 (168,415) 2,008,613 Operating Expenses: Program services: Emergency Services 1,672,046-1,672,046 Adolescents' and Children's Clinic 92,215-92,215 Seniors' Net 135, ,391 Total program services 1,899,652-1,899,652 Management and general 189, ,600 Fundraising 170, ,878 Total operating expenses 2,260,130-2,260,130 Deficit of revenue over operating expenses (83,102) (168,415) (251,517) Non-operating gain (loss): Change in beneficial interest in assets held by others 2,010-2,010 Loss on disposal (3,940) - (3,940) Total non-operating loss (1,930) - (1,930) Change in net assets (85,032) (168,415) (253,447) Net assets at beginning of year, as restated 708, , ,615 Net assets at end of year $ 623,345 $ 100,823 $ 724,168 See notes to financial statements. 4

7 Statement of Functional Expenses Year Ended June 30, 2017 Program Services Emergency Adolescents' and Total Management and Services Children's Clinic Seniors' Net Program Services General Fundraising Total Assistance $ 1,253,080 $ 19,256 $ 9,699 $ 1,282,035 $ 2,047 $ - $ 1,284,082 Computer 18,360 2,243 5,577 26,180 10, ,663 Depreciation 53, ,399 10,210-63,609 Insurance ,345-10,345 Miscellaneous 25,161 7,774 7,525 40,460 18, ,247 Occupancy 80,927 13,754 46, ,712 17, ,317 Office 7,129 1, ,055 18,812 5,619 33,486 Payroll and benefits 207,868 43,022 51, ,190 83, , ,305 Professional fees ,050-9,050 Promotions and events 3, ,175 2,420 11,738 17,333 Utilities 22,947 4,920 14,579 42,446 7,247-49,693 Total $ 1,672,046 $ 92,215 $ 135,391 $ 1,899,652 $ 189,600 $ 170,878 $ 2,260,130 See notes to financial statements. 5

8 Statement of Cash Flows Year Ended June 30, 2017 Cash flows from operating activities: Change in net assets $ (253,447) Adjustments to reconcile change in net assets to net cash used by operating activities: Depreciation 63,609 Loss from disposal of property and equipment 3,940 Change in beneficial interest in assets held by others (2,010) Changes in operating assets and liabilities: Accounts receivable 49,040 Inventory (112,772) Prepaid expenses and other 3,893 Accounts payable and accrued compensated absences (11,516) Net cash used by operating activities (259,263) Cash flows from investing activities: Sales of investments 39,770 Purchases of property and equipment (8,595) Net cash provided by investing activities 31,175 Net decrease in cash (228,088) Cash at beginning of year 345,578 Cash at end of year $ 117,490 See notes to financial statements. 6

9 Notes to Financial Statements 1. Organization Network of Community Ministries, Inc. (Network) was founded in Network is supported by businesses, individuals and a coalition of religious, civic and social organizations and relies upon contributions and grants. The Network s mission is caring, coaching and empowering its neighbors in need for an improved quality of life. This mission is accomplished by offering charitable assistance to persons in need, primarily in the Richardson Independent School District (RISD) area of North Texas, and by alerting and educating the community on issues that affect those in need. The Network provides food, clothing, medical services and emergency financial assistance for rent and utilities and meets other needs of clients. The Network focuses its services on certain groups through three activities: Emergency Services, Adolescents and Children's Clinic and Seniors' Net. Emergency Services provides food, clothing and temporary financial assistance for rent and utilities to clients. Emergency Services also provides assistance with training, job skills and job search to assist clients to become financially independent. The Adolescents and Children's Clinic (Clinic) serves the health care needs of children of lowincome working parents. The Clinic services families who cannot afford a private doctor, are not on Medicaid and cannot take time from work to spend the day at Parkland Hospital. The Clinic is staffed by volunteer doctors and nurses, and there is no charge to the clients for these services. Seniors' Net provides multiple services for those who are 60 years of age and over including financial counseling, friendly visitors, family support, home maintenance and other services. Citizens in the community volunteer to provide this service. The activity is led by a paid director. Clients must meet eligibility and residence requirements to receive services. 2. Prior Year Restatement The Network s net assets as of June 30, 2016 were restated to correct for items incorrectly classified as unrestricted that should have been classified as temporarily restricted. This resulted in a decrease of $219,238 in unrestricted net assets and an increase of $219,238 in temporarily restricted net assets as of June 30,

10 3. Significant Accounting Policies Network of Community Ministries, Inc. Notes to Financial Statements Basis of Accounting and Financial Statement Presentation The accompanying financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP). 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. Unrestricted net assets may be designated for specific purposes by action of the board of directors. Temporarily restricted net assets - Net assets subject to donor or grantor stipulations that will be met by actions of the Network and/or the passage of time. 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 Network. Generally, the donors of these assets permit the Network to use all or part of the income earned on related investments for general or specific purposes. The Network had no permanently restricted net assets as of June 30, 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. Gains and losses are reported as increases or decreases in unrestricted net assets, unless their use is restricted by explicit donor stipulation or by law. 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. Contributions with donor-imposed restrictions that are met in the same year as the contributions were received are reported as unrestricted net assets. 8

11 Notes to Financial Statements Financial Instruments and Credit Risk Concentrations Financial instruments which are potentially subject to concentrations of credit risk consist principally of cash and accounts receivable. The Network places cash, which at times may exceed the federally insured limits, with high credit quality financial institutions to minimize risk. The Network has not experienced losses on such assets. The Network continually evaluates the collectability of accounts receivable and maintains allowances for potential losses, if considered necessary. Fair Value Measurements 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. Donated Inventory Inventory consists primarily of donated food, clothing, and toys and games. Donated inventory is recorded at estimated fair market value. The following summarizes the basis upon which fair market value is estimated: Donated food $1.70 per pound Clothing Thrift shop value Toys and games Wholesale price 9

12 Property and Equipment Network of Community Ministries, Inc. Notes to Financial Statements The Network capitalizes property and equipment over $1,000. Lesser amounts are expensed. Purchased property and equipment is capitalized at cost. Donations of property and equipment are recorded at their estimated fair value. Such donations are reported as unrestricted contributions unless the donor has restricted the donated asset to a specific purpose. Property and equipment are depreciated using the straight-line method over estimated useful lives of the assets. Contributions Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. Contributions are recorded as revenue at the time an unconditional right to the gift has been established and the proceeds are measurable in amount. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Donated Goods and Services The Network receives in-kind services and goods in the normal course of operations. Donated professional services meeting certain requirements (as defined by GAAP) are reported as contributions at the time the service is performed at the estimated fair value of such service. Donated goods are reported as contributions at their estimated fair value at the time of receipt. Functional Allocation of Expenses The costs of providing the various programs and activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefitted. Income Taxes The Network is exempt from federal income taxes under section 501(c)(3) of the Internal Revenue Code (IRC) and has not been classified as a private foundation as defined in the IRC. Income generated from activities unrelated to the Network s exempt purpose is subject to tax under IRC Section 511. The Network had no unrelated business income for the year ended June 30, Accordingly, no provision has been made for federal income tax in the accompanying financial statements. 10

13 Notes to Financial Statements GAAP requires the evaluation of tax positions taken in the course of preparing the Network s tax return and recognition of a tax liability (or asset) if the Network 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 Network and has concluded that as of June 30, 2017, 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 financial statements. Advertising The Network expenses advertising costs as they are incurred. Advertising costs for the year ended June 30, 2017 totaled $9,577. Risks and Economic Outlook The Network operates in the RISD area of North Texas and, as such, is dependent upon the community s interest in the Network s programs and the willingness and ability of donors in the area to continue supporting the Network. The ability of the Network s donors to continue giving amounts comparable with prior years may be dependent, among other things, upon current and future overall economic conditions. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain reported amounts in the financial statements and accompanying notes. Actual results could differ from these estimates and assumptions. 4. Beneficial Interest in Assets Held by Others/Board Designated Endowment During the year ended June 30, 2017, Network redeemed its beneficial interest in assets held by Texas Presbyterian Foundation (TPF). These consisted of funds contributed by the Network under an agreement with TPF to establish the board-designated Don Barnes Endowment Fund (Fund). The purpose of the Fund was to accept contributions and to provide support to or for the benefit of the Network and its activities. On April 27, 2017, the board of directors of the Network decided to liquidate the Fund and use it for operating expenses. Fair value of the Network s beneficial interests in assets held by others was based on the value of the Network s portion of the underlying investments in the Fund using valuation methods that were appropriate for those investments as determined by third-party trustees. These values were based on unobservable inputs and were considered Level 3 assets in the fair value hierarchy. 11

14 Notes to Financial Statements The following table presents activity for assets held by TPF at fair value for the year ended June 30, 2017, all of which were board designated and unrestricted: Beginning balance $ 37,760 Sales of investments (39,770) Reinvested dividends and interest 498 Total realized/unrealized gains 1,512 Ending balance $ - Total net gain from beneficial interest in assets held by others consists of the following for the year ended June 30, 2017: Dividends and interest $ 498 Unrealized gain 1,512 $ 2, Property and Equipment Property and equipment consist of the following as of June 30, 2017: Furniture and equipment $ 114,283 Medical equipment 90,022 Capital improvements and expansions 545,199 Website 8, ,099 Less: accumulated depreciation (389,172) $ 368,927 Depreciation expense was $63,609 for the year ended June 30, Line of Credit The Network has a revolving line of credit with a maximum draw of $50,000 expiring June 30, As of June 30, 2017, no amounts were outstanding under the line of credit. 12

15 Notes to Financial Statements 7. Temporarily Restricted Net Assets Temporarily restricted net assets consist of amounts restricted by donors for the following purposes as of June 30, 2017: Grandfamilies program $ 39,002 Client utilities 33,645 Food pantry - produce coolers 7,500 Job resource center 6,466 Clinic Toothfairy Project 5,000 Food pantry - food 4,250 Hygiene project 2,350 Client rent 1,000 Clinic 986 Food pantry - milk 624 $ 100, In-Kind Contributions The Network received donations of food, medical supplies, medical services, durable medical equipment, clothing and toys during the year ended June 30, The following represents the estimated value of these in-kind donations which are reflected in the accompanying statement of activities: 9. Commitments Donated goods $ 1,205,754 Donated medical services 11,675 $ 1,217,429 The Network leases its office and storage facilities under a non-cancelable operating lease. Rent expense related to this lease totaled $124,300 for the year ended June 30, The following is a schedule of future minimum lease payments under this lease agreement for the years ending June 30: 2018 $ 124, ,300 13

16 10. Subsequent Events Network of Community Ministries, Inc. Notes to Financial Statements The Network evaluated subsequent events after the statement of financial position date of June 30, 2017 through November 21, 2017, which was the date the financial statements were available to be issued, and concluded that no additional disclosures are required. 14