Living Water Ministries, a Shared Ministry of the Lower Michigan Synods of the ELCA

Transcription

1 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT January 31, 2015 and 2014

2 C O N T E N T S INDEPENDENT AUDITORS' REPORT... 1 FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION... 3 STATEMENT OF ACTIVITIES... 4 STATEMENT OF CASH FLOWS... 6 NOTES TO FINANCIAL STATEMENTS... 7 SUPPLEMENTAL INFORMATION COMBINING SCHEDULES OF ACTIVITIES... 15

3 BRICKLEY DELONG CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT July 22, 2015 Board of Directors Living Water Ministries, a Shared Ministry New Era, Michigan We have audited the accompanying financial statements of Living Water Ministries, a Shared Ministry of the Lower Michigan Synods of the ELCA (a Michigan nonprofit corporation), which comprise the statements of financial position as of January 31, 2015 and 2014, 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 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 audit. We conducted our audit 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 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 Front Ave., NW Suite Morris Ave., Suite 500, P.O. Box S. State St., P.O. Box 331 Grand Rapids, MI Muskegon, MI Hart, MI PHONE (616) PHONE (231) PHONE (231) FAX (616) FAX (231) FAX (231)

4 BRICKLEY DELONG Board of Directors Living Water Ministries, a Shared Ministry July 22, 2015 Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Living Water Ministries, a Shared Ministry as of January 31, 2015 and 2014, 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. Other Matter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The combining schedules on pages 15 and 16 are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Muskegon, Michigan 2

5 STATEMENT OF FINANCIAL POSITION January 31, 2015 and 2014 ASSETS CURRENT ASSETS Cash $ 74,169 $ 120,185 Accounts receivable 11,259 11,327 Inventory 13,494 16,940 Prepaid expenses 5,540 8,002 Total current assets 104, ,454 INVESTMENTS 22,317 22,214 PROPERTY AND EQUIPMENT, net of accumulated depreciation 242, ,463 ASSETS HELD FOR SALE 385, ,704 $ 754,435 $ 842,835 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Current maturities of long-term debt $ 14,000 $ 10,000 Note payable to bank 75,000 - Accounts payable 8,184 34,936 Accrued liabilities Deferred revenue 6,740 8,300 Total current liabilities 103,924 53,581 LONG-TERM DEBT, less current maturities 145, ,811 Total liabilities 249, ,392 NET ASSETS Unrestricted 419, ,817 Temporarily restricted 63,929 67,065 Permanently restricted 21,561 21, , ,443 $ 754,435 $ 842,835 The accompanying notes are an integral part of these statements. 3

6 STATEMENT OF ACTIVITIES Years ended January 31, 2015 and Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and support Synod grants $ 99,241 $ - $ - $ 99,241 Episcopal support 15, ,000 Donations 88,913 7,997-96,910 Program fees, net of scholarships awarded totaling $8,640 in 2015 and $11,361 in , ,302 Interest income Other income 2, ,502 Gain on sale of equipment 2, ,900 Net assets released from restrictions Satisfaction of purpose restrictions 11,236 (11,236) - - Total revenues 481,251 (3,136) - 478,115 Expenses Salaries 133, ,241 Fringe benefits 31, ,770 Payroll taxes 9, ,770 Contracted services 12, ,951 Marketing and publicity 25, ,195 Office 32, ,608 Training and travel 4, ,743 Insurance 25, ,046 Program expense 111, ,547 Food and kitchen supplies 25, ,616 Repairs and maintenance 11, ,850 Utilities and telephone 19, ,596 Vehicle expense 16, ,031 Interest 10, ,356 Other Depreciation 26, ,496 Total expenses 497, ,443 Change in net assets from continuing operations (16,192) (3,136) - (19,328) Discontinued operations (104,855) - - (104,855) Change in net assets (121,047) (3,136) - (124,183) Net assets at beginning of year 540,817 67,065 21, ,443 Net assets at end of year $ 419,770 $ 63,929 $ 21,561 $ 505,260 The accompanying notes are an integral part of these statements. 4

7 2014 Temporarily Permanently Unrestricted Restricted Restricted Total $ 94,625 $ - $ - $ 94,625 15, ,000 77,649 53, , , , , , ,182 (38,182) ,152 14, , , ,575 29, ,355 9, ,817 5, ,301 16, ,044 18, ,016 4, ,066 21, ,518 98, ,802 24, ,840 10, ,472 15, ,176 8, ,136 13, ,257 8, ,817 18, , , ,926 62,226 14,898-77,124 (107,104) - - (107,104) (44,878) 14,898 - (29,980) 585,695 52,167 21, ,423 $ 540,817 $ 67,065 $ 21,561 $ 629,443 5

8 STATEMENT OF CASH FLOWS Years ended January 31, 2015 and Operating activities Change in net assets $ (124,183) $ (29,980) Adjustments to reconcile change in net assets to net cash provided by (used for) operating activities Depreciation 47,546 66,555 Gain on sale of equipment (45,889) (356) Income from investments (103) (107) (122,629) 36,112 (Increase) decrease in operating assets Accounts receivable 68 11,021 Inventory 3,446 2,246 Prepaid expenses 2,462 (4,779) Increase (decrease) in operating liabilities Accounts payable (26,752) 34,936 Accrued liabilities (345) 132 Deferred revenue (1,560) 8,300 Net cash provided by (used for) operating activities (145,310) 87,968 Investing activities Equipment purchases (13,084) (1,171) Proceeds from sale of equipment 47, Net cash provided by (used for) investing activities 34,854 (815) Financing activities Net proceeds from (reduction in) short-term note payable 75,000 (10,000) Principal payments on long-term debt (10,560) (12,132) Net cash provided by (used for) financing activities 64,440 (22,132) INCREASE (DECREASE) IN CASH (46,016) 65,021 Cash at beginning of year 120,185 55,164 Cash at end of year $ 74,169 $ 120,185 Supplemental cash flow disclosure Cash paid during the year for interest $ 10,356 $ 13,294 The accompanying notes are an integral part of these statements. 6

9 NOTES TO FINANCIAL STATEMENTS January 31, 2015 and 2014 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Living Water Ministries, a Shared Ministry, (Organization) is a nonprofit corporation organized in 1987 as a ministry of Gospel proclamation committed to the fellowship and spiritual growth of individuals, the care of the environment, the support of our neighbors in crisis, and the support of congregations as extensions of their ministry. The Organization owns, operates, and maintains camping properties in Michigan. The corporation is organized and operated exclusively for religious, educational, charitable and public welfare purposes. A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows. Basis of Accounting The financial statements are presented on an accrual basis of accounting which recognizes income when earned and expenses when incurred. Basis of Presentation The Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted net assets. Unrestricted net assets: Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets: Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Organization and/or the passage of time. Permanently restricted net assets: Net assets subject to donor-imposed stipulations that resources be maintained permanently but permits the Organization to use up or expend part or all of the income (or other economic benefits) derived from the donated assets. 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 on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Revenue Recognition The Organization records appropriations, grants, and earned revenues on an accrual basis. The Organization records as revenue in the period received the following types of contributions, when they are received unconditionally, at their fair value: cash, promises to give (pledges), certain contributed services and gifts of long-lived and other assets. Conditional contributions are recognized as revenue when the conditions on which they depend have been substantially met. Substantially all of the Organization s appropriations and grants are considered to be contributions for purposes of applying revenue recognition policies. Contributions are recorded net of estimated uncollectible amounts. Revenue received for expenditures to be incurred in the succeeding year is reported as deferred revenue and is not recognized as revenue until the year earned. The Organization reports gifts of cash or other assets as temporarily restricted support if they are received with donor stipulations limiting the use of the donated assets. When a donor restriction expires, temporarily restricted net assets are reclassified as unrestricted net assets and are reported in the statement of activities as net assets released from restriction. 7

10 NOTES TO FINANCIAL STATEMENTS January 31, 2015 and 2014 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Investments Investments are reported at their fair values which are generally based on quoted market prices. Gains and losses of disposition are accounted for on a specific identification basis. Net realized and unrealized gains and losses are included in the statement of activities. Inventories and Prepaid Expenses Canteen inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Property and Equipment Property and equipment are recorded at cost or estimated fair market value on the date donated. Property and equipment are assets with an initial cost of more than $1,000 and an estimated useful life in excess of one year. Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable and amortizable assets to operations over their estimated service lives utilizing the straight-line method. Volunteers A number of volunteers, including the members of the Board of Directors, have made significant contributions of time to the Organization s policy-making, program, and support functions. The value of this contributed time does not meet the criteria for recognition of contributed services and, accordingly, is not reflected in the accompanying financial statements. Non-monetary Transactions Non-monetary transactions are recorded on the basis of the market value of services provided or assets transferred. Advertising Costs The Organization expenses the cost of advertising and promotions as incurred. Advertising expense was $16,610 and $13,540 for the years ended January 31, 2015 and 2014, respectively. Tax Status The Organization is exempt from federal income tax under Internal Revenue Code 501(c)(3). Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates. Date of Management's Review Subsequent events have been evaluated through July 22, 2015, which is the date the financial statements were available to be issued. 8

11 NOTES TO FINANCIAL STATEMENTS January 31, 2015 and 2014 NOTE B INVESTMENTS Investments are stated at fair value and consist entirely of a share of the pooled investments held in the Mission Investment Fund of the Evangelical Lutheran Church in America. NOTE C FAIR VALUE MEASUREMENTS The framework for measuring fair value provides a 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) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy are described below: Level 1 Level 2 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Organization has the ability to access. Inputs to the valuation methodology include the following: Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. 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. Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at January 31, 2015 and Investment fund: The fair value of the Organization s investment in the assets held at the Mission Investment Fund of the Evangelical Lutheran Church in America (MIF) is based on a percentage interest of those assets fair value as represented by MIF s management. 9

12 NOTES TO FINANCIAL STATEMENTS January 31, 2015 and 2014 NOTE C FAIR VALUE MEASUREMENTS Continued The method 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 Organization 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. The following table sets forth by level, within the fair value hierarchy, the Organization s assets at fair value as of January 31, 2015 and 2014: Assets at Fair Value as of January 31, 2015 Level 1 Level 2 Level 3 Total Investment fund $ - $ 22,317 $ - $ 22,317 Assets at Fair Value as of January 31, 2014 Level 1 Level 2 Level 3 Total Investment fund $ - $ 22,214 $ - $ 22,214 NOTE D PROPERTY AND EQUIPMENT Property and equipment as of January 31, 2015 and 2014 consists of the following: Land improvements $ 15,034 $ 15,034 Buildings 669, ,995 Fixtures and equipment 38,566 34,846 Furniture and equipment 35,600 35,600 Vehicles 106,271 99, , ,246 Less accumulated depreciation (638,278) (611,783) 227, ,463 Land 15,000 15,000 $ 242,052 $ 255,463 10

13 NOTES TO FINANCIAL STATEMENTS January 31, 2015 and 2014 NOTE E ASSETS HELD FOR SALE In September 2014, the Organization approved the closing of one of its two campgrounds, Michi-Lu-Ca, and authorized the sale of the property. As of January 31, 2015 and 2014, the assets held for sale were as follows: Land improvements $ 34,746 $ 34,746 Buildings 909, ,075 Fixtures and equipment 78,244 78,244 Furniture and equipment 59,394 60,594 1,081,729 1,102,659 Less accumulated depreciation (832,925) (830,755) 248, ,904 Land 136, ,800 $ 385,604 $ 408,704 The sale of these assets for approximately $1.5 million was finalized in May Inventory was stored and will be sold. The net activity for this campground is presented as change in net assets of discontinued operations for the year ended January 31, The net activity for this campground for the year ended January 31, 2014 was also reclassified and presented in discontinued operations. NOTE F NOTE PAYABLE The Organization has a secured line of credit with borrowings limited to $100,000 and interest payable at the Wall Street Journal prime rate plus one percent with a floor of 6 percent and a ceiling of 9 percent (effective rate was 6 percent at January 31, 2015). The note is secured by the Organization s campground and related property in Oceana County. In May 2015, the line of credit was paid off with the proceeds from the sale described in Note E and in June 2015 the line of credit was closed. NOTE G LONG-TERM DEBT Long-term debt at January 31, 2015 and 2014 consists of the following: % Mortgage payable in monthly installments of $1,765 including interest; final payment due July 2024 $ 159,251 $ 169,811 Less current maturities (14,000) (10,000) $ 145,251 $ 159,811 11

14 NOTES TO FINANCIAL STATEMENTS January 31, 2015 and 2014 NOTE G LONG-TERM DEBT Continued Aggregate maturities of long-term debt for 2016 through 2020 and thereafter are as follows: Year ending January 31, Amount 2016 $ 14, , , , ,000 Thereafter 83,251 $ 159,251 In May 2015, this debt was paid off with the proceeds from the sale described in Note E. NOTE H PENSION PLAN The Organization maintains a defined contribution pension plan, covering substantially all full-time employees. The Organization contributes an amount determined by the Plan which is 10% of eligible wages. Employees are permitted to contribute to the plan. Expense for the year ended January 31, 2015 and 2014 was $7,970 and $11,681, respectively. NOTE I FUNCTIONAL EXPENSES The cost of providing the various programs and other activities has been summarized on a functional basis for the years ended January 31, 2015 and Accordingly, certain costs have been allocated among the programs and supporting services benefited based on management s analysis and estimates Program services $ 618,050 $ 687,680 Supporting services Management and general 188, ,345 Fundraising 8,204 3,060 $ 814,508 $ 849,085 12

15 NOTES TO FINANCIAL STATEMENTS January 31, 2015 and 2014 NOTE J RESTRICTED NET ASSETS Temporarily restricted net assets as of January 31, 2015 and 2014 are available for the following purposes: Building improvements $ 16,918 $ 22,829 High ropes course 25,000 25,000 Environmental education 9,191 9,416 Foster camp 7,820 7,820 Other 5,000 2,000 Total temporarily restricted net assets $ 63,929 $ 67,065 Temporarily restricted net assets were released from donor restrictions by incurring expenses satisfying the restricted purpose as follows: Building improvements $ 5,994 $ - Scholarships 5,017 6,665 Environmental education 225 4,200 Foster camp - 7,602 Other - 19,715 Total temporarily restricted net assets released from restriction $ 11,236 $ 38,182 Permanently restricted net assets are comprised entirely of donor endowments restricted for scholarships. 13

16 SUPPLEMENTAL INFORMATION

17 COMBINING SCHEDULE OF ACTIVITIES Year ended January 31, 2015 Administration Michi-Lu-Ca Stony Lake Day Camp Gathering Total Revenues Synod grants $ 99,241 $ - $ - $ - $ - $ 99,241 Episcopal support 15, ,000 Donations 91,623 3,869 5, ,779 Program fees, net of scholarships awarded totaling $8, , ,103 31,100 78, ,598 Interest income Other income 2, ,502 Gain on sale of equipment - 42,989 2, ,889 Total revenues 208, , ,290 31,100 78, ,325 Expenses Salaries 59, ,424 58,211 15, ,665 Fringe benefits 14,281 27,521 13,880 3,609-59,291 Payroll taxes 5,528 8,866 4, ,636 Contracted services 12, ,265 Marketing and publicity 24, ,330 Office 31, , ,318 Training and travel 2,471 3,414 2, ,157 Insurance 11,629 10,776 9,608 2,545 1,264 35,822 Program expense 8,340 28,922 25, , ,469 Food and kitchen supplies 2,590 34,816 22, ,432 Repairs and maintenance 1,304 21,609 10, ,459 Utilities and telephone 6,821 36,553 12, ,149 Vehicle expense 11,787 6,677 3, ,708 Interest 2,375-7, ,356 Other Depreciation - 21,050 26, ,546 Total expenses 196, , ,586 22,463 78, ,508 Net activity $ 12,308 $ (104,855) $ (40,296) $ 8,637 $ 23 $ (124,183) 15

18 COMBINING SCHEDULE OF ACTIVITIES Year ended January 31, 2014 Administration Michi-Lu-Ca Stony Lake Day Camp Gathering Total Revenues Synod grants $ 94,625 $ - $ - $ - $ - $ 94,625 Episcopal support 15, ,000 Donations 116,439 47,402 14, ,114 Program fees, net of scholarships awarded totaling $11, , ,517 25,100 88, ,506 Interest income Other income 11,058 11, ,194 Gain on sale of equipment Total revenues 237, , ,670 25,100 88, ,105 Expenses and loss Salaries 69, ,738 51,600 9, ,313 Fringe benefits 15,561 29,165 11,600 2,194-58,520 Payroll taxes 5,204 9,754 3, ,571 Contracted services 5, ,301 Marketing and publicity 16, ,600 Office 16,803 1,648 1, ,664 Training and travel 1,616 3,109 2, ,175 Insurance 5,565 15,582 11,130 4,823-37,100 Program expense 8,415 35,802 16, , ,604 Food and kitchen supplies 3,329 44,751 21, ,591 Repairs and maintenance - 22,551 10, ,023 Utilities and telephone 1,810 58,453 13, ,629 Vehicle expense 4,450 12,974 2, ,110 Interest , ,294 Other 8,092 4, ,035 Depreciation - 47,821 18, ,555 Total expenses 161, , ,243 18,799 73, ,085 Net activity $ 76,383 $ (107,104) $ (20,573) $ 6,301 $ 15,013 $ (29,980) 16