ALAMANCE COMMUNITY COLLEGE FOUNDATION, INC.

Transcription

1 ALAMANCE COMMUNITY COLLEGE FOUNDATION, INC Audited Financial Statements AUDITED FINANCIAL STATEMENTS For The Years Ended

2 2016 Board of Directors Paul Mauney Fairfax Reynolds Ami Hill John Currin President Vice President Secretary Treasurer Jerry Bailey John Bellingham Pete Blaetz Tony Brandewie Charles Canaday, Jr. Ted Chandler Justin Church Christopher Clemmons Marla Dunham F. Samuel Eberts, III. Algie Gatewood William Gomory Dale Greeson Brenda Hampton Doug Hargrove Brad Harmon Charles R. Harris Wade Harrison Frank Hood Ed Hooks Reggie Lipscomb Grover Moore Vicki Moran Aaron Noble, Jr. Jack Overacre, Jr. Sue Rich Nancy Rosborough Kelly Shirley Nancy Whitfield Taylor Wilson 1

3 CONTENTS INDEPENDENT AUDITORS REPORT... Page 3 AUDITED FINANCIAL STATEMENTS: Statements of Financial Position... 5 Statements of Activities... 6 Statements of Cash Flows... 7 Notes to Financial Statements

4 INDEPENDENT AUDITORS REPORT September 15, 2016 To the Board of Directors Alamance Community College Foundation, Inc. Graham, North Carolina We have audited the accompanying financial statements of Alamance Community College Foundation, Inc. (the Foundation), a non-profit organization, which comprise the statements of financial position as of, and the related statements of activities 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 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 audits 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 auditors 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 auditors consider 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. 3 Gilliam Coble & Moser, L.L.P. is a member of Allinial Global, an association of legally independent firms. 813 Chapel Hill Road PO Box 621 Burlington, NC Fax North Elm Street, Suite 400 Greensboro, NC Fax The Knowledge To Help You Succeed

5 To the Board of Directors Alamance Community College Foundation, Inc. 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 Alamance Community College Foundation, Inc. as of and the results of its operations and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Certified Public Accountants Burlington, North Carolina September 15,

6 STATEMENTS OF FINANCIAL POSITION Assets Cash and cash equivalents $ 894,499 $ 667,211 Long term investments 8,764,968 9,121,168 Prater and Dillingham trusts 1,116,934 1,195,253 Sales tax receivable 2,574 3,059 Grants receivable - 1,231 Promises to give - net 189, ,968 Cash surrender value of life insurance 10,789 11,339 Funds held for others 221, ,280 Property and equipment - net 962 1,641 Total assets $ 11,201,760 $ 11,581,150 Liabilities Accounts payable $ - $ 75,000 Custodial funds 221, ,280 Total liabilities 221, ,280 Net Assets Unrestricted 238, ,062 Temporarily restricted 3,706,393 4,067,063 Permanently restricted 7,035,055 6,937,745 Total net assets 10,980,343 11,262,870 Total liabilities and net assets $ 11,201,760 $ 11,581,150 The accompanying notes are an integral part of these financial statements. 5

7 STATEMENTS OF ACTIVITIES For The Years Ended Unrestricted Temporarily Restricted Permanently Restricted Changes in Net Assets Revenue and other support: Contributions $ 318,463 $ 385,265 $ 88,642 $ 792,370 $ 1,145,549 Contributed goods and services 39,662 11,254-50,916 37,572 Support services from ACC 236, , ,369 Investment income (loss) - net 9,060 (205,542) - (196,482) 120,622 Miscellaneous 5,350 (8,527) 8,668 5,491 3,801 Net assets released from restrictions 543,120 (543,120) Total revenue and other support 1,152,330 (360,670) 97, ,970 1,544,913 Expenses Programs: Student scholarships 497, , ,386 College work study match 75, ,000 75,000 Other student support 35, ,486 41,886 Programs and resources for ACC faculty and staff 30, ,054 27,057 Other education-related programs 287, , ,045 Support services from ACC 209, , ,992 Other Foundation expenses 37, ,534 39,652 Total expenses 1,171, ,171,497 1,474,018 Increase (decrease) in net assets (19,167) (360,670) 97,310 (282,527) 70,895 Net assets - beginning of year 258,062 3,631,199 7,373,609 11,262,870 11,191,975 Prior period adjustment - 435,864 (435,864) - - Net assets - beginning of year restated 258,062 4,067,063 6,937,745 11,262,870 11,191,975 Net assets - end of year $ 238,895 $ 3,706,393 $ 7,035,055 $ 10,980,343 $ 11,262,870 The accompanying notes are an integral part of these financial statements. 6

8 STATEMENTS OF CASH FLOWS For The Years Ended Cash Flows From Operating Activities Increase (decrease) in net assets $ (282,527) $ 70,895 Adjustments to reconcile increase (decrease) in net assets to net cash provided by operating activities: Net realized and unrealized loss on investments 478, ,261 Endowment contributions (97,310) (216,313) Depreciation Amortization of discount on promises to give (426) (514) Allowance for uncollectible on promises to give (5,812) (7,093) Cash surrender value of life insurance 550 1,435 Changes in operating assets and liabilities: Promises to give 153, ,145 Accounts payable (75,000) 75,000 Other receivables 1,716 (2,299) Net cash provided by operating activities 174, ,196 Cash Flows From Investing Activities Proceeds from the sale of investments 2,202,377 2,367,018 Purchase of investments (2,246,622) (2,739,518) Net cash used in investing activities (44,245) (372,500) Cash Flows From Financing Activities Proceeds from contributions restricted for endowment 97, ,313 Net cash provided by financing activities 97, ,313 Net increase in cash 227,288 24,009 Cash - beginning 667, ,202 Cash - ending $ 894,499 $ 667,211 The accompanying notes are an integral part of these financial statements. 7

9 NOTES TO FINANCIAL STATEMENTS Note 1: Summary of Significant Accounting Policies Nature of activities - Alamance Community College Foundation, Inc. (the Foundation) is a nonprofit organization which was formed for the purpose of providing financial support for educational programs of Alamance Community College (the College) in the form of student scholarships, professional development for faculty and staff, educational enrichment, and other programs. Financial statement presentation - The Foundation 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 financial statements include certain prior-year summarized comparative information in total, but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformation with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Foundation s financial statements for the year ended June 30, 2015, from which the summarized information was derived. Fund accounting - The accounts of the Foundation are maintained in accordance with principles of fund accounting, whereby resources for various purposes are classified for accounting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund and are reported accordingly. Operating funds include temporarily restricted and unrestricted resources. Currently, funds are restricted for scholarships and other programs. Endowment funds are used to account for donations stipulating that the principal remains intact and only the income from investing the principal is spent. Endowment earnings may be either restricted or unrestricted. Use of accounting estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. Those estimates and assumptions affect the reported amounts of assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Cash and cash equivalents - Cash and cash equivalents include all cash balances and highly liquid investments with an original maturity of three months or less. The Foundation has credit risk exposure arising from cash deposits in excess of federally insured limits. Income taxes - The Foundation is exempt from income taxes under Internal Revenue Code Section 501(c)(3) and the applicable state tax laws. The Internal Revenue Service has determined that the Foundation is not a private foundation within the meaning of Section 509(a) of the Internal Revenue Code. 8

10 NOTES TO FINANCIAL STATEMENTS Note 1: Summary of Significant Accounting Policies (continued) Revenue recognition - Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. 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 are reported in the statements of activities as net assets released from restrictions. Investments - The Foundation carries investments in marketable securities with readily determinable fair values in the statement of financial position. Unrealized gains are included in the change of net assets in the accompanying statement of activities. Property and Equipment - Property and equipment is stated at cost if purchased, or fair market value at date of gift if donated. Renovations and significant improvements to existing structures are capitalized. Minor replacements and repairs are expensed as incurred. The following is a summary of costs and the accumulated depreciation at : Equipment and furniture $ 34,621 $ 34,621 Less accumulated depreciation (33,659) (32,980) $ 962 $ 1,641 Depreciation - The cost of property and equipment is depreciated over the assets estimated useful lives using the straight-line method. Depreciation for the years ending June 30, 2016 and 2015 was $679. Advertising - The Foundation expenses advertising costs as incurred. Total advertising costs for the years ended were $3,051 and $1,487, respectively. Note 2: Cash Surrender Value of Life Insurance The Foundation is the beneficiary of certain whole life insurance policies donated by Foundation supporters. The policies have aggregate death benefits for the years ended June 30, 2016 and 2015 of $46,000 and $56,000 with an aggregate cash surrender value of $10,789 and $11,339, respectively. During the year ended June 30, 2016, the Foundation s Board of Directors elected to not pay life insurance premiums on policies whose earnings no longer cover the premiums due causing some policies to lapse. Policies whose earnings cover the premium or that receive a designated gift to fund the premium will continue. 9

11 NOTES TO FINANCIAL STATEMENTS Note 3: Promises to Give Promises to give, less an allowance for uncollectible items, are recorded at their fair value with amounts due later than one year at present value of estimated future cash flows. Promises to give at are as follows: Invest in the Promise $ 159,900 $ 308,350 Campus Campaign 37,199 42, , ,688 Receivable in less than one year 185, ,288 Receivable in one to five years 11, ,400 Total unconditional promises to give 197, ,688 Less discounts to net present value (discount rate at, was.41% and.28%, respectively) (74) (500) Less allowance for uncollectible promises to give (7,408) (13,220) Net unconditional promises to give $ 189,617 $ 336,968 Note 4: Donated Materials, Facilities and Services The Foundation receives donated materials, facilities, and services from the College. Services, materials, and facilities are reported at fair market value as of the date of gift. The estimated value of services, insurance and facilities has been reflected in the accompanying financial statements as in-kind donations with a like amount included in expenses. In-kind donations from the College reflected in the financial statements are as follows: Administrative $ 208,511 $ 206,179 Program related 28,164 31,190 Total support services $ 236,675 $ 237,369 10

12 NOTES TO FINANCIAL STATEMENTS Note 5: Prater and Dillingham Endowments The Foundation is the beneficiary of the Elwood Prater Alamance Community College Scholarship Endowment and the J C and Fran Dillingham Endowment administered by the Alamance Foundation, a supporting organization of the Community Foundation of Greater Greensboro. All assets held by the Community Foundations are subject to variance power which allows the Board of Directors of the Community Foundations to modify any restrictions or conditions on the distribution of assets for any specified charitable purpose or to specified organizations, if in their sole judgment such restriction becomes, in effect, unnecessary, incapable of fulfillment or inconsistent with the charitable needs of the area served by the Foundation. The Foundation receives an annual distribution from the endowments to use for awarding scholarships. For the years 2016 and 2015, the distribution approximated 4.0% of the endowment balance. As of, the beneficial interest in the endowments was $1,116,934 and $1,195,253, respectively. Note 6: Investments Investments held and managed by the Foundation are reported at fair market value as of June 30, 2016 and Due to market fluctuations, the stated values may vary. The following is a summary of investments classified by major type at : Cost Market Cost Market Fixed income $ 2,501,493 $ 2,565,104 $ 2,647,313 $ 2,634,645 Equities 5,477,505 6,199,864 4,997,059 6,486,523 Total $ 7,978,998 $ 8,764,968 $ 7,644,372 $ 9,121,168 Investment income consists of the following: Dividends and interest, net of expenses $ 282,282 $ 238,883 Net realized and unrealized losses (478,764) (118,261) Total investment income (loss) $ (196,482) $ 120,622 Investment advisory fees totaled $44,996 and $50,668 for the years ended June 30, 2016 and 2015, respectively. 11

13 NOTES TO FINANCIAL STATEMENTS Note 7: Fair Value Measurement Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. That framework provides fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 Level 2 Level 3 Valuation is based upon quoted prices in active markets for identical securities. Valuation is based upon other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk). Valuation is based upon significant unobservable inputs (including the Fund s own assumptions in determining the fair value of investments). The asset s or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following is a description of the valuation methodologies used for assets measured at fair value: Common stocks, corporate bonds, and U.S. government securities: Value at the closing price reported on the active market on which the individual securities are traded. Mutual funds: Valued at the net asset value of shares held by the Foundation at year end. Promises to give: Discounted to approximate fair value. Trust funds: Valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuers. There have been no changes in the methodology used at. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Foundation believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. 12

14 NOTES TO FINANCIAL STATEMENTS Note 7: Fair Value Measurement (continued) The following table sets forth by level, within the fair value hierarchy, the Foundation's assets at fair value as of June 30, 2016: Level 1 Level 2 Level 3 Total Mutual funds: Fixed income $ 2,565,104 $ - $ - $ 2,565,104 Equities 6,199, ,199,864 Trust funds - 1,116,934-1,116,934 Promises to give, net , ,617 Total assets at fair value $ 8,764,968 $ 1,116,934 $ 189,617 $ 10,071,519 The following table sets forth by level, within the fair value hierarchy, the Foundation's assets at fair value as of June 30, 2015: Level 1 Level 2 Level 3 Total Mutual funds: Fixed income $ 2,634,645 $ - $ - $ 2,634,645 Equities 6,486, ,486,523 Trust funds - 1,195,253-1,195,253 Promises to give, net , ,968 Total assets at fair value $ 9,121,168 $ 1,195,253 $ 336,968 $ 10,653,389 Level 3 Gains and Losses The table below sets forth a summary of changes in the fair value of the Foundation's Level 3 assets for the year ended June 30, 2016: Balance, beginning of year $ 336,968 New pledges, payments, and discounts (net) (147,351) Balance, end of year $ 189,617 The table below sets forth a summary of changes in the fair value of the Foundation's Level 3 assets for the year ended June 30, 2015: Balance, beginning of year $ 469,506 New pledges, payments, and discounts (net) (132,538) Balance, end of year $ 336,968 13

15 NOTES TO FINANCIAL STATEMENTS Note 8: Custodial Funds In 2015, The Foundation became the custodian of certain investments held for the benefit of the College, provided as a donation through the Rebecca S. Thigpen estate. The fair market value of the account was $221,417 and $243,280 as of, respectively. Note 9: Temporarily Restricted Net Assets Released The following is a schedule of temporarily restricted net assets that satisfied their respective program restrictions and were reclassified to unrestricted net assets during the year Student scholarships $ 307,157 $ 302,862 Other student support 19,174 12,000 Other education related programs 207, ,099 College work study matching expense 7,500 - Other Foundation expenses 1,822 1,722 Total Net Assets Released $ 543,120 $ 842,683 For the year ended June 30, 2015, the Foundation received donations of $400,000 to purchase land, which was transferred to the College. Note 10: Restricted Net Assets Temporarily restricted net assets are available for scholarships, college work study, and other educational programs and totaled $3,706,393 and $4,067,063 as of, respectively. Permanently restricted net assets consist of academic, program, memorial, and various other endowment funds and totaled $7,035,055 and $6,937,745 as of, respectively. Note 11: Related Party Transactions Foundation Directors conduct transactions with the Foundation that occur within a normal contributor or supplier relationship, on terms and conditions no more favorable than those with which it is reasonable to expect the entity would have adopted if dealing with the Director at arm's length in similar circumstances. These transactions include the following and have been quantified below where the transactions are considered likely to be of interest to users of the financial statements: Directors' contributions and donations to the Foundation and its endowments totaled $45,491 and $48,605 for the years ended, respectively. 14

16 NOTES TO FINANCIAL STATEMENTS Note 12: Subsequent Events The Foundation has evaluated events and transactions that occurred between June 30, 2016 and September 15, 2016, which is the date that the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. Note 13: Prior Period Adjustment The accompanying financial statements have been restated to reflect a reduction of $435,864 of permanently restricted net assets, based on a comprehensive evaluation of prior years contributions by donors. Temporarily restricted net assets have been increased by this same amount. Note 14: Reclassifications Certain reclassifications have been made to prior periods to conform to current year presentations. 15