ISLAMIC SOCIETY OF ORANGE COUNTY FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION. March 31, 2013

Transcription

1 FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION March 31, 2013

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3 Assets (Unaudited) (Audited) Current assets: Cash and cash equivalents (Notes 2 and 9) $ 407,390 $ 213,100 Tuition receivable (Notes 2 and 9) 18,397 17,550 Prepaid expenses and other current assets 6,398 12,219 Total current assets 432, ,869 Noncurrent assets: Restricted cash (Notes 2 and 3) 187, ,132 Capital assets, net of accumulated depreciation (Notes 2 and 4) 5,831,449 6,003,843 Deposits - 1,950 Burial plots (Notes 2 and 6) 120, ,482 Total noncurrent assets 6,139,406 6,406,407 Total Assets $ 6,571,591 $ 6,649,276 Liabilities and Net Assets ISLAMIC SOCIETY OF ORANGE COUNTY Statements of Financial Position Liabilities: Current liabilities: Accounts payable $ 23,528 $ - Accrued expenses 86,797 94,614 Unearned tuition (Note 2) 43,665 35,406 Loans payable (Note 5) - 21,750 Total liabilities 153, ,770 Net assets: Unrestricted (Note 2) 6,296,919 6,370,024 Temporarily restricted (Notes 2 and 6) 120, ,482 Total net assets 6,417,601 6,497,506 Total Liabilities and Net Assets $ 6,571,591 $ 6,649,276 See accompanying notes and independent accountant's compilation report

4 Statements of Activities Year Ended March 31, 2013 (With Comparative Totals For The Year Ended March 31, 2012) 2013 (Unaudited) 2012 (Audited) Temporarily Unrestricted Restricted Total Total Revenues, gains and other support: Tuition and fees (Note 2) $ 1,633,396 $ - $ 1,633,396 $ 1,693,210 General donations (Note 2) 384, , ,057 Zakat and sadaqa (Note 7) 253, , ,982 Lunch, afterschool program and fieldtrips 151, ,470 93,470 Mortuary services 335, , ,850 Membership dues (Note 2) 18,706-18,706 13,870 Sales and rentals (Note 8) 171, ,898 99,549 Fundraising (Note 2) 514, , ,811 Pre-school project contributions - 20,600 20, ,413 Other 36,514-36,514 61,410 Net assets released from restrictions: Satisfaction of program restrictions 27,400 (27,400) - - Total revenues, gains and other support 3,526,771 (6,800) 3,519,971 3,723,622 Expenses: (Note 2) Program services: Education 1,487,558-1,487,558 1,676,984 Mosque 620, , ,068 Total program services 2,107,599-2,107,599 2,058,052 Supporting services: General and administrative 1,083,165-1,083, ,690 Fundraising 56,079-56,079 68,960 Total supporting services 1,139,244-1,139, ,650 Depreciation (Notes 2 and 4) 353, , ,719 Total expenses 3,599,876-3,599,876 3,329,421 Change in net assets (73,105) (6,800) (79,905) 394,201 Net assets at beginning of the year 6,370, ,482 6,497,506 6,103,305 Net assets at end of the year $ 6,296,919 $ 120,682 $ 6,417,601 $ 6,497,506 See accompanying notes and independent accountant's compilation report

5 Statements of Cash Flows Years Ended (Unaudited) (Audited) Cash flows from operating activities: Change in net assets $ (79,905) $ 394,201 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activites: Depreciation 353, ,719 (Increase) decrease in assets: Tuition receivable (847) (8,612) Prepaid expenses and other current assets 5,821 (12,219) Deposits 1,950 - Increase (decrease) in liabilities: Accounts payable 23,528 - Accrued expenses (7,817) 60,366 Unearned tuition 8,259 7,596 Net cash provided by operating activities 304, ,051 Cash flows from investing activities: Proceeds from sale of burial plots 36,457 31,649 Purchase of burial plots (29,657) - Acquisition of capital assets (180,639) (603,318) Net cash used in investing activities (173,839) (571,669) Cash flows from financing activities: Decrease (increase) in restricted cash 85,857 (63,261) Repayments of loans payable (21,750) (76,250) Net cash provided by (used in) financing activities 64,107 (139,511) Net increase in cash and cash equivalents 194,290 33,871 Cash and cash equivalents at beginning of year 213, ,229 Cash and cash equivalents at end of year $ 407,390 $ 213,100 See accompanying notes and independent accountant's compilation report

6 Notes to Financial Statements (1) Organization The Islamic Society of Orange County (the Society) was established in 1976 as a nonprofit, non-political corporation which caters to the needs of the Muslim community by operating a religious organization according to the principles of the Islamic Faith. It provides educational seminars, religious services, and a full-time accredited Preschool to Eighth Grade Orange Crescent School (OCS). The Society s facilities can also be used for community gatherings, social occasions and mortuary services. The Society s financial support is based primarily upon school fees, voluntary contributions and membership dues. (2) Summary of Significant Accounting Policies A summary of the Society s significant accounting policies in the preparation of the accompanying financial statements follows: Basis of Presentation The accompanying financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America using the accrual basis of accounting. In accordance with the Accounting Standards Codification (ASC) Section , Presentation of Financial Statements of Not-for-Profit Organizations, net assets of the Society and changes therein are classified and reported as follows: Unrestricted net assets Net assets that are not subject to donorimposed stipulations. Temporarily restricted net assets Net assets subject to donor-imposed stipulations that will be met by actions of the Society and/or passage of time. Permanently restricted net assets Net assets subject to donor-imposed stipulations that the principal be maintained permanently by the Society. The Society is permitted to use the income earned on the related investments for general or specified operating purposes. Revenues are reported as increases in unrestricted net assets unless their use is limited by donor-imposed restrictions. Expenses are recorded as decreases in unrestricted net assets. Gains and losses on assets and liabilities 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 net assets released from restrictions

7 Notes to Financial Statements (2) Summary of Significant Accounting Policies, Continued Basis of Presentation, continued 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 conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Society s financial statements for the year ended March 31, 2012, from which the summarized information was derived. Cash and Cash Equivalents The Society maintains cash balances in a financial institution in Southern California. At times, the balances are in excess of federally insured limits. The Federal Deposit Insurance Corporation (FDIC) is providing unlimited insurance on non-interest bearing transaction accounts and up to $250,000 on interest bearing accounts. The coverage on non-interest bearing accounts expires on December 31, 2012 and the coverage on the interest bearing accounts will expire on December 31, At March 31, 2013 and 2012, uninsured bank balance was $160,382 and $0, respectively. Cash for purposes of the statement of cash flows is defined as deposits in accounts with banks and financial institutions which are unrestricted as to withdrawal or use, and which have original maturities of three months or less. Restricted Cash Restricted cash represents donor restricted cash accounts for specific purposes. Tuition Receivable and Allowance for Doubtful Accounts Tuition receivable at primarily represents monies owed for school tuition for the year then ended. Receivables are reviewed regularly by management and are recorded when management believes there is a high probability of collection. As substantially all amounts in tuition receivable at were collected subsequent to year end, there is no allowance for doubtful accounts. Capital Assets and Depreciation Capital assets are stated at cost. Expenditures for major additions and improvements are capitalized. Minor replacements, maintenance and repairs are charged to expense as incurred. Depreciation of capital asset is provided over the estimated useful lives of the respective assets on the straight-line basis as follows: Buildings and improvement Furniture and fixtures Office equipment years 15 years 5 years - 6 -

8 Notes to Financial Statements (2) Summary of Significant Accounting Policies, continued Impairment of Long-lived Assets Long-lived assets to be held and used by the Society are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Once a triggering event has occurred, the impairment test employed is based on whether the intent is to hold the asset for continued use or to hold the asset for sale. If the intent is to hold the asset for continued use, the impairment test involves a comparison of undiscounted cash flows against the carrying value of the asset as an initial test. If the carrying value of such asset exceeds the undiscounted cash flows, the asset would be deemed to be impaired. Impairment would then be measured as the difference between the fair value of the fixed or amortizing intangible asset and the carrying value to determine the amount of the impairment. The Society determines fair value generally by using the discounted cash flow method. If the intent is to hold the asset for sale and certain other criteria are met (i.e., the asset can be disposed of currently, appropriate levels of authority have approved sale, and there is an actively pursuing buyer), the impairment test is a comparison of the asset s carrying value to its fair value less costs to sell. To the extent that the carrying value is greater than the asset s fair value less costs to sell, an impairment loss is recognized for the difference. Assets held for sale are separately presented in the balance sheet and are no longer depreciated. During 2013 and 2012, the Society determined that no event or changes in circumstances indicated that an impairment of its long-lived assets had occurred. Burial Plots The Society provides Muslim burial services through a mortuary facility located on its premised. The Society also maintains a burial plot inventory which is regularly replenished when the number of plots is substantially diminished. Such burial plots are stated at cost. Unearned Tuition Unearned tuition reflects the amounts that have been billed for tuition relating to future periods. Income Taxes The Society is exempt from federal and state income taxes under Section 501 (c)(3) of the Internal Revenue Code. The Society could be subject to taxes on net income derived from unrelated business activities. The Society does not believe it has unrelated business activities and as such, does not have any uncertain tax positions

9 Notes to Financial Statements (2) Summary of Significant Accounting Policies, continued Income Taxes, continued Tax years that remained subject to examination by major tax jurisdictions are fiscal year ended March 31, 2010, 2011 and The Society shall record as current year expense any interest that may be assessed on prior year taxes. Contributions, Pledges and Revenue Recognition Contributions and pledges received are recorded as unrestricted, temporarily restricted, or permanently restricted depending on the existence and/or nature of any donor restrictions in the period received. Conditional contributions are recorded as support in the period the condition is met. Restricted contributions, if any are reported as temporarily restricted and are then reclassified to unrestricted net assets upon expiration of the restriction, usually when the funds are spent. Unconditional pledges are recorded as receivables in the year they are made, less a suitable allowance for uncollectible pledges as estimated by management. Membership dues are recognized on all members in the membership year which runs from April 1 to March 31. Tuition fees for services income is recognized when the services are performed. Tuition fees received for future periods are accounted for as unearned tuition. Other income is recorded when received. Fundraising Fundraising activities provide the structure necessary to encourage and secure private financial support from individuals, foundations, and corporations. For the years ended, the Society s fundraising activities raised a total of $514,568 and $507,811, respectively, and incurred $56,079 and $68,960, respectively. Donated Services A number of Society s members have donated significant amounts of time to help further the Society s programs. No amounts have been reflected in the financial statements for donated member services to the Society, as no objective basis is available to measure the value of such services. Functional Expenses The costs of providing the various programs and other 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 benefited. Advertising Costs Advertising costs are expensed as incurred. The total advertising expense for the years ended were $7,919 and $2,500, respectively

10 Notes to Financial Statements (2) Summary of Significant Accounting Policies, continued Fair Value of Financial Instruments The Society measures its financial assets and liabilities in accordance with accounting principles generally accepted in the United States. For certain of the Society s financial instruments, including cash and cash equivalents, tuition receivable, accounts payable, and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. 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 amount of assets and liabilities and disclosures 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. Recent Pronouncements In October 2012, the FASB issued Update No Statement of Cash Flows (Topic 230): Not-for Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows, a consensus of the FASB Emerging Issues Task Force. The amendments in this Update require a Notfor-Profit entity (NFP) to classify cash receipts from the sale of donated financial assets consistently with cash donations received in the statement of cash flows if those cash receipts were from the sale of donated financial assets that upon receipt were directed without any NFP-imposed limitations for sale and were converted nearly immediately into cash. Accordingly, the cash receipts from the sale of those financial assets should be classified as cash inflows from operating activities, unless the donor restricted the use of the contributed resources to long-term purposes, in which case those cash receipts should be classified as cash flows from financing activities. Otherwise, cash receipts from the sale of donated financial assets should be classified as cash flows from investing activities by the NFP. The amendments in this update are effective prospectively for fiscal years, and interim periods within those years, beginning after June 15, Retrospective application to all prior periods presented upon the date of adoption is permitted. Early adoption from the beginning of the fiscal year of adoption is permitted. For fiscal years beginning before October 22, 2012, early adoption is permitted only if a NFP s financial statements for those fiscal years and interim periods within those years have not yet been made available for issuance. Management does not believe that the implementation of this statement will have a material effect on the Society s financial statements

11 Notes to Financial Statements (3) Restricted Cash Restricted cash consists of the following at Capital improvements $ 9,851 $ 108,378 Zakat 177, ,754 Total $ 187,275 $ 273,132 (4) Capital Assets A summary of capital assets at is as follows: Estimated Useful Lives Land $ 2,386,966 $ 2,386,966 Buildings and improvements years 7,483,703 7,384,654 Office equipment 15 years 209, ,895 Furniture and fixtures 5 years 511, ,830 Total 10,591,984 10,411,345 Accumulated depreciation (4,760,535) (4,407,502) Capital assets, net $ 5,831,449 $ 6,003,843 Management believes that capital assets essentially served all functions and depreciation presented as unallocated in the Statement of Activities. Depreciation expense for the years ended were $353,033 and $303,719, respectively. (5) Loans Payable The Society received non-interest bearing advances from several community members. The advances are unsecured and due on demand. As of March 31, 2013 and 2012, the balance of loans payable was $0 and $21,750, respectively

12 Notes to Financial Statements (6) Net Assets Temporarily restricted net assets, consisted of burial plots are available for the following at : Burial plots $ 120,682 $ 127,482 At, there were no permanently restricted net assets. (7) Zakat and Sadaqa Zakat and Sadaqa represent granting of financial assistance to under privileged community members. The community members make financial contributions to the Society to enable it to grant such assistance. For the years ended, the contribution received for this purpose was $253,537 and $270,982, respectively and the assistance provided amounted to $144,365 and $171,557, respectively, which included tuition assistance of $78,835 and $100,000, respectively to OCS students. (8) Sales and Rentals The Society rents its kitchen and meeting rooms to community members. The society also receives rental income from the lease of its bookstore. All such rental income is included as a component of sales and rental revenues in the accompanying statements of activities. (9) Concentration of Credit Risk The Society maintains its cash and cash equivalents in bank accounts that, at times, may exceed federally insured limits. The Society has not experienced any losses in such accounts. Management believes that the Society is not exposed to any significant credit risk related to cash and cash equivalents. The Society has a credit risk concentration with respect to receivables and a geographic concentration related to the fact that substantially all of their donors are located in Orange and Los Angeles counties. (10) Subsequent Events The Society evaluates events and transactions occurring subsequent to the date of the financial statements for matters requiring recognition or disclosure in the financial statements. The accompanying financial statements consider events through May 6, 2013, the date the financial statements were available for release

13 Notes to Financial Statements (11) Reclassifications Certain reclassifications have been made to the prior year s financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or net assets

14 SUPPLEMENTARY INFORMATION Year Ended March 31, 2013

15 Supplementary Information Schedule of Functional Expenditures For the Year Ended March 31, 2013 (With Comparative Totals For the Year Ended March 31, 2012) Program Services Supporting Services Total General Total Program and Fundraising Supporting (Unaudited) (Audited) Education Mosque Services Administrative Expenses Services Depreciation Total Total Salaries and wages $ 970,909 $ 168,563 $ 1,139,472 $ 425,603 $ - $ 425,603 $ - $ 1,565,075 $ 1,533,862 Program expense 44, , ,736 8,477-8, , ,259 Outside services 6,738 2,487 9, , , , ,402 Employee benefits 147,385 76, , , ,588 Payroll taxes 95,486 14, ,216 36,997-36, , ,883 Utilities and telephone , , ,266 97,307 Insurance , , ,120 83,344 Security 19,015 16,871 35,886 44,780-44,780-80,666 55,476 Repairs and maintenance ,866 11,212 63,349-63,349-74,561 66,733 Fieldtrips and school events 60,268 2,237 62, ,505 52,810 Fundraising ,079 56,079-56,079 68,960 Books and materials 31,489 7,206 38, ,695 50,492 Supplies 4,128 14,929 19,057 15,167-15,167-34,224 35,225 Rent 14, ,412 4,663-4,663-20,075 20,004 Legal and professional ,491-18,491-18,491 13,326 Printing and postage 3,861 6,927 10,788 2,018-2,018-12,806 14,401 Bank Charges ,825-11,825-11,825 10,209 Miscellaneous 8, ,037 1,764-1,764-10,801 5,949 Taxes and licenses 1,055 1,220 2,275 6,803-6,803-9,078 5,415 Advertising - 1,455 1,455 6,464-6,464-7,919 2,500 Zakat, sadaqa and fitra 78,835 65, , , ,557 Depreciation , , ,719 Total functional expenditures $ 1,487,558 $ 620,041 $ 2,107,599 $ 1,083,165 $ 56,079 $ 1,139,244 $ 353,033 $ 3,599,876 $ 3,329,421 See accompanying notes and independent accountant's compilation report

16 Supplementary Information Schedule of Revenues, Gains, and Other Support For the Years Ended March 31, 2013 (Unaudited) March 31, 2012 (Audited) OCM OCS Total OCM OCS Total Local Donation - General and Food pantry $ 257,387 $ 29,075 $ 286,462 $ 291,499 $ 27,796 $ 319,295 Kitchen and Women Committee Contribution 97,625-97,625 51,973-51,973 Membership 18,706-18,706 13,870-13,870 Youth Activities 16,776-16,776 6,795-6,795 Islamic Weekend School - Tuition 36,071-36,071 42,910-42,910 Sales and Rentals (Rahma Café and Gr8 Find Store) 134,998 36, ,898 64,499 35,050 99,549 Mortuary Services 335, , , ,850 Orange Crescent School - Registration - 157, , , ,684 Orange Crescent School - Tuition - 1,439,462 1,439,462-1,532,616 1,532,616 Fundraising 394, , , , , ,087 PreSchool Project 20,600-20, , ,413 Other 5,667 14,070 19,737 30,136 21,992 52,128 Field Trip,Food and After School Program 7, , , ,600 93,470 Zakat and Sadaqa 253, , , ,982 Total revenues, gains, and other support $ 1,578,324 $ 1,941,647 $ 3,519,971 $ 1,696,656 $ 2,026,966 $ 3,723,622 See accompanying notes and independent accountant's compilation report

17 Supplementary Information Schedule of Expenses For the Years Ended March 31, 2013 (Unaudited) March 31, 2012 (Audited) OCM OCS Total OCM OCS Total Salaries $ 304,520 $ 1,260,553 $ 1,565,073 $ 210,306 $ 1,323,555 $ 1,533,861 Fringe Benefits Allowance 40,302-40,302 36,387-36,387 Payroll Taxes 26, , ,213 18, , ,883 Lease/Equipment rental 2,243 13,561 15,804 2,429 17,574 20,003 Health Insurance (Medical and Dental) 36, , ,962 24, , ,086 Books (Store, Weekend School) 7,206 31,489 38,695 5,975 44,517 50,492 Property Taxes, License and Payroll Services 5,482 15,292 20,774 5,570 11,685 17,255 Special Events Expenses, Travel, Field Trip ,192 51, ,702 51,118 D & O, General and Workers insurance 46,458 61, ,120 39,138 47,318 86,456 Utilities/Trash 50,400 50, ,921 45,150 41,739 86,889 Telephone 6,777 3,568 10,345 6,610 3,808 10,418 Repair/Maintenance/Lanscaping 46,968 28,094 75,062 41,306 25,327 66,633 Janitorial Supplies 20,260 1,718 21,978 9,927 4,205 14,132 Office Supplies/Postage/Miscellaneous dues 7,454 9,784 17,238 4,514 2,119 6,633 Printing/Advertising/Fundraising and Bank Charges 42,737 37,881 80,618 40,858 52,398 93,256 Program/Food/After School/School Events 224,504 61, , ,963 63, ,308 Supplies/School/ISOC 3,574 8,342 11,916 4,353 15,292 19,645 Teachers Training/outside services 35,761 21,763 57,524 69,149 30,454 99,603 Mortuary Services Expenses 180, , , ,720 Security 39,261 41,405 80,666 26,284 29,191 55,475 Legal and Professional 8,673-8,673 8,892-8,892 Zakat/Sadaqa/Fitra 144, , , ,557 Total expenses before depreciation 1,280,126 1,966,717 3,246, ,973 2,038,729 3,025,702 Depreciation expense 211, , , , , ,719 Total expenses $ 1,491,952 $ 2,107,924 $ 3,599,876 $ 1,169,420 $ 2,160,001 $ 3,329,421 See accompanying notes and independent accountant's compilation report