AMARA INDEPENDENT AUDITORS REPORT AND FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015

Transcription

1 INDEPENDENT AUDITORS REPORT AND FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015

2 Years Ended December 31, 2016 and 2015 TABLE OF CONTENTS Page Independent Auditors Report... 1 Financial Statements: Statements of Financial Position... 2 Statements of Activities Statements of Functional Expenses Statements of Cash Flows... 7 Notes to the Financial Statements

3 FINNEY, NEILL & COMPANY, P.S. C E R T I F I E D P U B L I C A C C O U N T A N T S INDEPENDENT AUDITORS REPORT To the Board of Directors Amara We have audited the accompanying financial statements of Amara, which comprise the statements of financial position as of December 31, 2016 and 2015, 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 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amara as of December 31, 2016 and 2015, 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. Seattle, Washington June 21, Greenwood Avenue North Seattle, WA (206) FAX:

4 Statements of Financial Position December 31, 2016 and 2015 ASSETS Current assets: Cash and cash equivalents $ 1,499, ,504 Accounts receivable 72,936 91,304 Pledges receivable, net of allowances - current 2,626, ,240 Family preservation goods held for DSHS 15,413 - Prepaid and other assets 57,692 36,484 Total current assets 4,271,787 1,268,532 Pledges receivable, net of discounts - long-term 2,259,886 1,476,133 Insurance trust deposit 18,435 21,618 Deposits in escrow 26,142 26,149 Land and construction in progress 31,583 - Fixed assets, net 6,478,532 6,416,153 Total assets $ 13,086,365 9,208,585 LIABILITIES AND NET ASSETS Current liabilities: Current portion of note payable $ 155, ,218 Accounts payable 26,052 62,318 Accrued payroll and related 176, ,017 Accrued interest expense 12,429 12,788 Other accrued expenses 58, ,952 Family preservation goods contract liability - DSHS 54,950 - Other 8, Total current liabilities 493, ,655 Note payable, net of current portion 5,015,250 5,162,287 Total liabilities 5,508,362 5,657,942 Net assets: Unrestricted 1,644,635 1,246,038 Temporarily restricted 5,933,368 2,304,605 Total net assets 7,578,003 3,550,643 Total liabilities and net assets $ 13,086,365 9,208,585 The accompanying notes are an integral part of these financial statements. 2

5 Statement of Activities Year ended December 31, 2016 Temporarily Unrestricted Restricted Total Support and revenue: Contributions $ 891, ,182 1,187,453 Foundation grants 1,195,862 4,264,200 5,460,062 In-kind contributions 46,461-46,461 United Way 66,041-66,041 Contracts 586, ,674 Client service fees 233, ,165 Lease revenue 7,650-7,650 Other 5,000-5,000 3,032,124 4,560,382 7,592,506 Net assets released from restriction 931,619 (931,619) - Total support and revenue 3,963,743 3,628,763 7,592,506 Expenses: Program services: Adoption and Foster Care 1,729,408-1,729,408 Children's Services 639, ,678 Communications and Strategic Partnerships 492, ,794 Pregnancy and Parenting Total program services 2,861,880-2,861,880 Supporting services: Management and general 178, ,161 Fundraising 525, ,105 Total supporting services 703, ,266 Total expenses 3,565,146-3,565,146 Change in net assets 398,597 3,628,763 4,027,360 Net assets at beginning of year 1,246,038 2,304,605 3,550,643 Net assets at end of year $ 1,644,635 5,933,368 7,578,003 The accompanying notes are an integral part of these financial statements. 3

6 Statement of Activities Year ended December 31, 2015 Temporarily Unrestricted Restricted Total Support and revenue: Contributions $ 1,361,123 1,868,386 3,229,509 Foundation grants 929, ,500 In-kind contributions 158, ,067 United Way 70,119-70,119 Contracts 477, ,585 Client service fees 339, ,028 Sublease revenue, net of associated lease expense of $21,187 7,494-7,494 Investment income Other ,343,840 1,868,386 5,212,226 Net assets released from restriction 220,467 (220,467) - Total support and revenue 3,564,307 1,647,919 5,212,226 Expenses: Program services: Adoption and Foster Care 1,573,247-1,573,247 Children's Services 596, ,913 Communications and Strategic Partnerships 224, ,700 Pregnancy and Parenting 134, ,779 Total program services 2,529,639-2,529,639 Supporting services: Management and general 253, ,225 Fundraising 346, ,920 Total supporting services 600, ,145 Total expenses 3,129,784-3,129,784 Change in net assets 434,523 1,647,919 2,082,442 Net assets at beginning of year 811, ,686 1,468,201 Net assets at end of year $ 1,246,038 2,304,605 3,550,643 The accompanying notes are an integral part of these financial statements. 4

7 Statement of Functional Expenses Year ended December 31, 2016 Program Services Supporting Services Adoption & Children's Communications & Management Foster Care Services Partnerships Total & General Fundraising Total Total Salaries and related benefits $ 1,270, , ,428 2,056,930 63, , ,366 2,379,296 Contract labor 39, ,836 43, ,795 75, ,511 Program costs 47,500 41,561 3,016 92, ,077 Professional fees 21,371 3,402 1,923 26,696 4,580 1,625 6,205 32,901 Special events , , ,290 Supplies 35,431 11,245 5,308 51,984 25,909 8,004 33,913 85,897 Marketing and public relations ,690 63, ,519 10,719 74,117 Telephone and technology 41,400 17,836 9,267 68,503 15,867 9,481 25,348 93,851 Printing 2, ,363 2, ,580 5,943 Postage and shipping 1, ,448 1,080 1,201 2,281 4,729 Travel 56,007 9,729 5,179 70,915 5,115 1,399 6,514 77,429 Taxes, licenses and subscriptions 6, ,539 2, ,439 10,978 Occupancy 20,444 13,268 4,448 38,160 15,571 3,080 18,651 56,811 Insurance 19,992 8,822 4,904 33,718 (1,006) 3,395 2,389 36,107 Rental and maintenance 14,660 30,349-45, ,009 Interest expense 83,694 36,320 20, ,543 3,158 14,212 17, ,913 Bad debt expense ,064-9,064 9,064 Bank fees 6,455 1,794 1,014 9,263 1,581 12,715 14,296 23,559 Depreciation and amortization 62,369 29,310 15, ,699 27,567 10,398 37, ,664 Totals $ 1,729, , ,794 2,861, , , ,266 3,565,146 The accompanying notes are an integral part of these financial statements. 5

8 Statement of Functional Expenses Year ended December 31, 2015 Program Services Supporting Services Adoption & Children's Communications & Pregnancy Management Foster Care Services Partnerships & Parenting Total & General Fundraising Total Total Salaries and related benefits $ 1,252, , ,364 98,855 1,891,335 59, , ,935 2,119,270 Contract labor 27, ,750 29,190 56,600 15,475 72, ,265 Program costs 6,974 37,765-1,340 46, ,079 Professional fees ,711 6,711 15,277-15,277 21,988 Client assistance Special events ,549 76,549 76,823 Supplies 28,200 10,361 2, ,958 16,954 7,256 24,210 66,168 Marketing and public relations , ,688-23,956 23, ,644 Telephone and technology 39,768 13,015 1,609 1,892 56,284 14,538 8,661 23,199 79,483 Printing ,634-3,634 3,634 Postage and shipping 1, , ,089 1,153 4,017 Travel 30,045 2, ,754 36, ,276 37,402 Dues and subscriptions 7,292 4, ,334 2, ,720 15,054 Taxes and licenses 11,992 2, , ,199 1,416 16,691 Occupancy 66,739 6,674 5,562 11,123 90,098 2,225 18,909 21, ,232 Insurance 21,633 10, ,066 35, ,148 1,357 36,924 Rental and maintenance 16,970 37, ,437 3,750 2,540 6,290 62,727 Interest expense 23,891 10,861 1,304 1,738 37, ,778 5,646 43,440 Bad debt expense ,924-74,924 74,924 Bank fees 3, , ,670 8,950 12,433 Miscellaneous expense 8,593 3, , ,720 2,653 16,249 Depreciation and amortization 25,717 15,705 1,336 1,781 44, ,900 5,791 50,330 Totals $ 1,573, , , ,779 2,529, , , ,145 3,129,784 The accompanying notes are an integral part of these financial statements. 6

9 Statements of Cash Flows Increase (Decrease) in Cash and Cash Equivalents Years ended December 31, 2016 and Cash flows from operating activities: Change in net assets $ 4,027,360 2,082,442 Adjustments to reconcile change in net assets to cash provided by (used in) operating activities: Depreciation and amortization 153,535 52,548 In-kind donation of assets - (109,469) (Increase) decrease in assets: Accounts receivable 18,368 11,218 Pledges receivable (2,704,713) (1,555,768) Restricted deposits 3,190 (22,482) Family preservation goods held for DSHS (15,413) - Prepaid and other assets (21,208) 1,362 Increase (decrease) in liabilities: Accounts payable (36,266) 19,670 Construction payables (61,374) 119,952 Accrued payroll and related 27,451 25,547 Deferred rent - (9,799) Family friendly inventory contract liability - DSHS 54,950 - Other 8,005 3,549 Total adjustments (2,573,475) (1,463,672) Net cash provided by operating activities 1,453, ,770 Cash flows from investing activities: Purchase of land, building and equipment (238,625) (3,140,342) Net cash provided by (used in) investing activities (238,625) (3,140,342) Cash flows from financing activities: Proceeds from notes payable - 6,430,532 Payments on notes payable (151,218) (3,650,000) Net cash provided by (used in) financing activities (151,218) 2,780,532 Net increase in cash and cash equivalents 1,064, ,960 Cash and cash equivalents at beginning of year 435, ,544 Cash and cash equivalents at end of year $ 1,499, ,504 The accompanying notes are an integral part of these financial statements. 7

10 Notes To Financial Statements Years ended December 31, 2016 and DESCRIPTION OF ACTIVITIES & SUMMARY OF ACCOUNTING POLICIES Nature of Activities Amara has been serving children and families in the Puget Sound Region since With a focus on the child first, with highly trained staff and low caseloads, with a commitment to inclusiveness that embraces families of all types, and with its provision of high quality, individualized services through adoption finalization and beyond, the Organization has remained a leader in providing child welfare services to the community. The Organization is supported primarily by contributions from the community. At Amara, we work to ensure that every child in foster care has the love and support of a committed family as quickly as possible, and for as long as each child needs. Since our founding in 1921 as Medina Baby Home, a traditional orphanage, Amara has served vulnerable children and families. While our services have evolved over the past 96 years to meet emerging and urgent needs, our commitment to serving children has never wavered. We proudly provide our services to everyone, regardless of marital or economic status, religious beliefs, income level, education, gender identity or sexual orientation. We serve children in foster care and the families that care for them through the following programs: Children s Services: Amara is working to meet an urgent need in the community by serving children immediately upon their removal from their homes by Child Protective Services. In 2014, Amara established the only Emergency Sanctuary in King County and in 2016, another Sanctuary in Pierce County. The Sanctuary is a small home. It is professionally staffed 24/7 and the staff is complemented by a pool of well-trained Amara volunteers. We offer children warm attention and nurturing during their wait for a foster family, and we offer state case workers additional time to locate relatives or appropriate foster care givers. Foster-Adoption: When children in foster care are not able to return to their family, Amara finds loving foster/adoptive families to provide the love and support they need. We provide individualized coaching and support foster/adoptive parents so that they may sustain healthy and well-bonded families, capable of meeting the needs of vulnerable children. Post-Adoption: We recognize that adoption is a lifetime commitment and continue to be a resource post-adoption for adoptees and birth and adoptive families. The Board of Directors made the decision in the Spring of 2015 to sunset the Pregnancy and Parenting Counseling program at the end of 2015 after a suitable partner was not found to provide this service to the community. Across all of its programs, Amara served 780 parents and 428 children in 2016, and served 940 parents and 407 children in In addition, Amara s Communications and Strategic Partnerships have played a strong role in developing a community-wide effort to improve outcomes for children in foster care, and to increase support for children in care and their caregivers. Amara is committed to being an active voice for permanence for children in foster care, and directs its communication efforts there. These notes are an integral part of the financial statements. 8

11 Notes To Financial Statements, continued Years ended December 31, 2016 and DESCRIPTION OF ACTIVITIES & SUMMARY OF ACCOUNTING POLICIES, continued Basis of Accounting The financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Basis of Presentation The accompanying financial statements have been prepared in conformity with the disclosure and display requirements of the Presentation of Financial Statements for Not-for-Profit Entities Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification. This Topic establishes standards for external financial reporting by not-for-profit organizations and requires that resources be classified for accounting and reporting purposes into net asset classes according to donor imposed restrictions. Accordingly, the net assets of the Organization have been reported as follows: Unrestricted net assets are those currently available at the discretion of the board for use in the activities of the Organization. Temporarily restricted net assets are those stipulated by donors for specific operating purposes. Permanently restricted net assets are in the form of endowment or sustaining funds in which only the income from such funds may be expended. The Organization had no permanently restricted net assets at December 31, 2016 and Net assets of the temporarily and permanently restricted class are created only by donor-imposed restrictions on the use of funds. All other net assets, including board-designated or appropriated amounts and are reported as part of the unrestricted class. Accounting 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 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. Cash and Cash Equivalents For purposes of the statement of cash flows, the Organization considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents. Receivables The Organization recognizes revenue as earned as services are provided. Accounts receivable are unsecured and are stated at the amount management expects to collect from outstanding balances. Pledges receivable are unconditional promises to give that are recognized as revenues or gains in the period received and as assets, decrease of liabilities, or expenses depending on the form of benefits received. Based on management s assessment of the nature of the accounts and pledges receivable, the Organization has concluded that realization losses on balances outstanding at year end will be minimal, and has established their allowance for doubtful accounts at December 31, 2016 and 2015 accordingly. For the long-term pledges receivable due after December 31, 2017, management has recorded a discount of $85,526, calculated using a discount rate of 2.75%. These notes are an integral part of the financial statements. 9

12 Notes To Financial Statements, continued Years ended December 31, 2016 and DESCRIPTION OF ACTIVITIES & SUMMARY OF ACCOUNTING POLICIES, continued Family Preservation Goods Held for DSHS Amara oversees the purchasing, administration, and holding of an inventory of key household goods and supplies on behalf of the state. These goods go directly to families involved in the state s Family Assessment Response through referrals from their DSHS caseworker with the intention of keeping families intact and able to care for their children. These items are owned by DSHS, and any funds remaining unspent at the contract end date are to be returned to DSHS. The contract expires June 30, In 2016, the Organization purchased $39,347 in items for families, of which items costing $15,413 were stored and held by the Organization in inventory as of December 31, Cash held for purchases of items in accordance with the contract was $39,537 as of December 31, Debt Issuance Costs Debt issuance costs, net of accumulated amortization, are reported as a direct reduction of the obligation to which such costs relate. Amortization of debt issuance costs is reported as a component of interest expense. Fixed Assets Fixed assets are recorded at cost. Depreciation is computed using the straight-line method over estimated useful lives of ten years. Depreciation begins when the assets are placed in service. Repairs and maintenance of property and equipment are expensed as incurred. The Organization generally follows the practice of capitalizing expenditures for property and equipment in excess of $1,500. Depreciation and amortization expense for the years ended December 31, 2016 and 2015 was $144,663 and $50,330, respectively. Donated Assets, Goods and Services Donations of property and equipment are recorded at their estimated fair market values at the date of receipt. The Organization recognizes donated goods and services that create or enhance nonfinancial assets or that require specialized skills, which are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. For the years ended December 31, 2016 and 2015, $46,461 and $158,067 of donated goods and services were included in the statements of activities, respectively. Restricted and Unrestricted Support and Revenue Recognition Contributed support is recorded when cash is received or when ownership of donated assets is transferred. The Organization has adopted the Revenue Recognition section of the FASB Accounting Standards Codification Topic No. 958, Not-for-Profit Entities. In accordance with this Topic, contributions received are recorded as unrestricted, temporarily restricted or permanently restricted depending on the existence and/or nature of any donor restrictions. Contributions received with donor stipulations that limit the use of the donated assets are reported as temporarily restricted. When a donor 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 reported in the statement of activities as net assets released from restrictions. Restricted resources, whose restrictions are met in the reporting period received, are recorded as unrestricted. Temporarily restricted net assets are restricted for future periods. Functional Allocation of Expenses The costs of providing the various program services and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program and supporting services on the basis of benefits received. These notes are an integral part of the financial statements. 10

13 Notes To Financial Statements, continued Years ended December 31, 2016 and DESCRIPTION OF ACTIVITIES & SUMMARY OF ACCOUNTING POLICIES, continued Income Tax Status Pursuant to a letter of determination from the Internal Revenue Service, the Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and is classified as an organization other than a private foundation under Section 509(a)(1). Accordingly, no provision has been made for federal income tax in the accompanying financial statements. The Organization qualifies for the charitable contribution deduction under Section 170(b)(1)(A). The Organization accounts for tax positions in accordance with the FASB Accounting Standards Codification Topic No. 740, Income Taxes. With few exceptions, the Organization is subject to federal and state income tax examinations by tax authorities for the prior three years. Management has reviewed the Organization s tax positions and determined there were no uncertain tax positions as of December 31, 2016 and The Organization recognizes income tax related interest in interest expense and penalties in operating expenses. During the years ended December 31, 2016 and 2015, the Organization recognized no income tax related interest or penalties. Change in Accounting Principle Effective January 1, 2016, Amara adopted the provisions of Accounting Standards Update , Simplifying the Presentation of Debt Issuance Costs (ASU ). Under this new accounting policy, the Organization has retrospectively presented all debt issuance costs as a direct deduction from the carrying amount of the related obligation in the balance sheet. Amortization of the debt issuance costs is included as a component of interest expense. The effects of the retrospective application of the accounting change on the year ended December 31, 2015 is to decrease total assets and total liabilities by $86,495 and reclassify $2,218 of amortization to interest expense in the statement of functional expenses. Construction in progress The Organization follows a policy whereby project costs that are clearly associated with the acquisition, development, and construction of a real estate project are capitalized as a cost of that property. During the years ended December 31, 2016 and 2015, the Organization capitalized interest and real estate taxes of $0 and $101,072, respectively, associated with the construction of the new facility. Date of Management s Review Subsequent events have been evaluated through June 21, 2017, which is the date the financial statements were available to be issued. 2. CONCENTRATIONS Financial instruments that potentially subject the Organization to concentrations of credit risk consist principally of deposits in excess of federally insured limits and receivables. The Organization periodically has cash deposits and certificates of deposit which are in excess of federally insured limits. The Organization has not experienced any losses in such accounts, and management believes it is not exposed to any significant credit risk on these accounts. These notes are an integral part of the financial statements. 11

14 2. CONCENTRATIONS, continued AMARA Notes To Financial Statements, continued Years ended December 31, 2016 and 2015 The Organization believes its acceptance policies minimize potential credit risk on its receivables. In 2016 and 2015, respectively, 7% and 13% of the Organization s revenues and support were provided by one government contract and were related to foster care services provided by the Organization. In 2016 and 2015, respectively, $102,800 and $891,075, or 1% and 17%, of total revenues was contributed from members of the Board of Directors and other related parties of the Organization. 3. PLEDGES RECEIVABLE Pledges receivable of $4,886,086 and $2,181,373 at December 31, 2016 and 2015, primarily consisted of amounts due in the following year in support of the various programs of the Organization. Pledges receivable are reported net of a present value discount of $85,526 and $80,534 as of December 31, 2016 and 2015, respectively. The Organization has provided an allowance for doubtful pledges of $75,710 and $69,956 as of December 31, 2016 and 2015, respectively. Pledges receivable at December 31 are due as follows: Due in less than one year $ 2,701, ,730 Due in one to five years 2,317,912 1,443,633 Due in more than five years 27,500 32,500 5,047,323 2,331,863 Less: allowance for doubtful pledges (75,710) (69,956) Less: discount on future pledges (85,526) (80,534) Total pledges receivable, net $ 4,886,087 2,181,373 As of December 31, 2016 and 2015, 12% and 32% of total pledges receivable were promised by members of the Board of Directors and other related parties of the Organization, or $576,980 and $738,458, respectively. 4. FIXED ASSETS Fixed assets consisted of the following at December 31, 2016 and 2015: Land $ 2,982,151 2,982,151 Land improvements 93,500 93,500 Buildings 3,373,402 3,207,617 Furniture, equipment and software 233, ,601 Less accumulated depreciation and amortization (204,378) (59,716) $ 6,478,532 6,416,153 These notes are an integral part of the financial statements. 12

15 4. FIXED ASSETS, continued AMARA Notes To Financial Statements, continued Years ended December 31, 2016 and 2015 During 2014, the Organization executed a construction contract of $2,629,351 and incurred additional design, remediation and other capitalized costs to construct a new facility for the Organization. The construction was completed in September 2015, at which time the Organization moved its offices and occupied the new facility. During 2016, the Organization began design work with an architecture firm to build a new facility on their land to provide Emergency Sanctuary services to foster children, and expects to begin construction in LETTER OF CREDIT During 2016, the Organization established a letter of credit for up to $600,000 and requires interest only payments at 4.00%. The agreement expires on November 5, The balance outstanding as of December 31, 2016 and 2015 was $0. 6. NOTE PAYABLE During 2015, the Organization was issued a $5,400,000 bond note payable from US Bank and guaranteed by the Washington State Housing Finance Commission, with an interest rate of 2.75% and principal and interest payments due beginning January 1, 2016 of $25,022 per month. Outstanding principal and interest are due on December 31, Principal balances on the note payable were outstanding as of December 31 as follows: Outstanding principal balance $ 5,248,782 5,400,000 Less: Debt issuance costs, net of amortization (77,624) (86,495) Note payable, net $ 5,171,158 5,313,505 Interest expense, net of capitalized interest of $0 and $73,843, was $149,043 and $41,223 for the years ended December 31, 2016 and 2015, respectively. Future minimum principal payments on the US Bank Note Payable are expected to be paid as follows: 2017 $ 155, , , , ,270 Thereafter 4,424,330 $ 5,248,782 These notes are an integral part of the financial statements. 13

16 Notes To Financial Statements, continued Years ended December 31, 2016 and CONTINGENCIES Expenses incurred under certain grant programs are subject to audit by the granting agencies. If, as a result of such an audit, certain expenses incurred are determined to be non-reimbursable, the Organization may be liable for repayment of disallowed expenses previously claimed or received. Amounts disallowed, if any, would be recorded as a liability and expense at the time such amounts can first be reasonably determined, normally upon notification of the examination results of the granting agency. Management is not aware of any disallowed expenses in 2016 or LEASE COMMITMENTS The Organization ended their operating lease agreement for King County office space on September 30, The lease required the Organization to pay all executory costs such as taxes, maintenance, and insurance. In 2016, the Organization began leasing Emergency Sanctuary space in Pierce County. The lease terminates on March 31, 2017 and requires monthly rent payments of $1,850. The Organization also leases office space in Pierce County on a month to month basis for $785 per month, and leases Emergency Sanctuary space in King County on a month to month basis for $2,575 per month. Total occupancy expense, net of sublease related expenses, under the lease was $56,811 and $111,231 for the years ended December 31, 2016 and 2015, respectively. 9. RETIREMENT PLAN The Organization offers a 401(k) type pension plan to all eligible employees. Employees are eligible to participate in the plan if they have completed 1,000 hours of service during a calendar year. Generally, employees can defer up to 15% of their gross earnings, not to exceed federal limitations. The Plan allows a discretionary match and the Organization paid $38,670 and $31,760 into the plan during 2016 and 2015, respectively, for matching contributions. 10. SUBSEQUENT EVENT On April 7, 2017 Amara received a pledge of $1,000,000 designated to our campus at 5907 Martin Luther King Jr. Way S. payable in two installments of $500,000. The first of these installments was received on April 25, 2017, and to honor this designation Amara made a $500,000 principal payment on the Note Payable for the property in May These notes are an integral part of the financial statements. 14