DICKSON COUNTY HELP CENTER, INC.

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1 FINANCIAL STATEMENTS JOE OSTERFELD, CPA CERTIFIED PUBLIC ACCOUNTANT 710 NORTH MAIN STREET ~ SUITE A PO BOX 807 COLUMBIA, TN

2 FINANCIAL STATEMENTS TABLE OF CONTENTS Page Independent Auditor s Report 1 Financial Statements: Statement of Assets, Liabilities and Net Assets - Modified Cash Basis 2 Statement of Support, Revenues and Expenses Modified Cash Basis 3 Statements of Functional Expenses Modified Cash Basis 4 Statement of Cash Flows Modified Cash Basis 5 Notes to Financial Statements 6

3 Joe Osterfeld, CPA Certified Public Accountant 710 North Main Street ~ Suite A ~ PO Box 807 ~ Columbia, TN Telephone: ~ joeosterfeldcpa@att.net To the Board of Directors Dickson County Help Center Dickson, Tennessee INDEPENDENT AUDITOR S REPORT We have audited the accompanying financial statements of Dickson County Help Center (a nonprofit organization), which comprise the statement of assets, liabilities, and net assets modified cash basis as of March 31, 2016, and the related statements of support, revenue, and expense modified cash basis, functional expenses modified cash basis and cash flows modified cash basis for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting as described in Note 1; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for 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. Auditor s 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and net assets of Dickson County Help Center as of March 31, 2016, and its support, revenue, and expenses, functional expenses, and cash flows for the year then ended in accordance with the modified cash basis of accounting as described in Note 1. Basis of Accounting We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Joe Osterfeld, CPA Columbia, Tennessee August 4,

4 STATEMENT OF ASSETS, LIABILITIES AND NET ASSETS - MODIFIED CASH BASIS Temporarily ASSETS Unrestricted Restricted Total Cash and cash equivalents $ 89,414 $ 13,382 $ 102,796 Pledges receivable 1,410-1,410 Other assets Total Current Assets 91,249 13, ,631 Land 37,200-37,200 Buildings and improvements 412, ,221 Furniture and fixtures 29,414-29,414 Computers and equipment 5,627-5,627 Vehicles 13,000-13,000 Less: accumulated depreciation (70,995) - (70,995) Net equipment and software 426, ,467 Total Assets $ 517,716 $ 13,382 $ 531,098 LIABILITIES Payroll liabilities $ 4,261 $ - $ 4,261 Sales tax payable 1,265-1,265 Current portion of long-term debt 14,299-14,299 Total Current Liabilities 19,825-19,825 Note payable, long-term portion 53,713 53,713 Total Liabilities 73,538-73,538 NET ASSETS Unrestriced net assets 442, ,493 Temporarily restricted net assets 1,685 13,382 15,067 Total net assets 444,178 13, ,560 Total Liabilties and Net Assets $ 517,716 $ 13,382 $ 531,098 The accompanying notes are an integral part of the financial statements. 2

5 STATEMENT OF SUPPORT, REVENUE AND EXPENSES - MODIFIED CASH BASIS FOR THE YEAR ENDED Temporarily Unrestricted Restricted Total Revenue and Support: Thrift store sales, less discounts $ 251,455 $ - $ 251,455 Donated merchandise 182, ,617 Contributions 163,283 21, ,300 Special event fundraiser 99,806-99,806 Interest income Gain or loss on sale of asset (998) - (998) Other income 1,914-1,914 Net assets released from restrictions 27,881 (27,881) - Total Revenue and Support 726,210 (6,864) 719,346 Expenses: Program Services 595, ,385 Management and general 83,044 83,044 Fundraising 17,622 17,622 Total Expenses 696, ,051 Increase (decrease) in net assets 30,159 (6,864) 23,295 Net Assets - Beginning of Year 414,019 20, ,265 Net Assets - End of Year $ 444,178 $ 13,382 $ 457,560 The accompanying notes are an integral part of the financial statements. 3

6 STATEMENT OF FUNCTIONAL EXPENSES - MODIFIED CASH BASIS DICKSON COUNTY HELP CENTER, INC. FOR THE YEAR ENDED Program Management Fund- Services & General raising Total Salaries $ 159,098 $ 53,033 $ - $ 212,131 Payroll tax expense 11,715 3,905-15,620 Assistance 336, ,681 Advertising 4,371 1,457-5,828 Bank service charge 3,602 1,201-4,803 Depreciation expense 12,790 4,264-17,054 Dues and subscriptions 2, ,077 Insurance 9,035 3,012-12,047 Interest 2, ,769 Legal and professional fees 6,918 2,306-9,224 Miscellaneous Office supplies and expense 3,970 1,323-5,293 Postage 1, ,344 Repairs and maintenance 6,054 2,018-8,072 Security expense Supplies 10,318 1,480 17,622 29,420 Taxes and license Telephone 2, ,393 Temporary Labor 3,650-3,650 Volunteer Recruitment Trash Removal 3,215 1,072-4,287 Travel 1, ,838 Utilities 14,137 4,712-18,849 Total Expenses $ 595,385 $ 83,044 $ 17,622 $ 696,051 The accompanying notes are an integral part of the financial statements. 4

7 STATEMENT OF CASH FLOWS - MODIFIED CASH BASIS FOR THE YEAR ENDED Cash Flows from Operating Activities: Change in net assets $ 23,295 Adjustment to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation expense 17,054 (Gain) Loss on sale of asset 998 (Increase) decrease in pledge receivables 4,530 Increase (decrease) in accrued expenses 1,881 Net cash provided (used) by operating activities 47,758 Cash Flows from Investing Activities Purchase of equipment (24,648) Sale of equipment 6,458 Net cash provided (used) by investing activities (18,190) Cash Flows from Financing Activities: Payment on mortgage (23,361) Net cash provided (used) by Financing activities (23,361) Net Increase (Decrease) in Cash and Cash Equivalents 6,207 Cash and Cash Equivalents - Beginning of Year 96,589 Cash and Cash Equivalents - End of Year $ 102,796 Supplemental Information: Dickson County Help Center, Inc. paid $2,769 in interest expense during the year ending March 31, The accompanying notes are an integral part of the financial statements. 5

8 NOTES TO THE FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Activities Dickson County Help Center, Inc. (the Center) provides Christian spiritual guidance, emotional comfort, and physical support for those persons caught in a temporary situation of need through the prudent use of gifts donated by the citizens and businesses of Dickson County. The Center runs a thrift store to help fund its activities. The Center is governed by a board of directors. Basis of Accounting and Presentation The financial statements of the Center have been prepared on the modified cash basis of accounting. This presentation was chosen based on the contributions of items to the thrift store. The Center does not recognize a financial contribution until the items donated to the thrift store have been sold. As a result the Center does not recognize an inventory at the end of the fiscal year. The Center s management believes that this recognition policy better aligns the financial statements with the actual activity of the Center. The Center reports information regarding its net assets, support, revenues, expenses, gains and losses based on the existence of donor-imposed restrictions. Accordingly the Center uses three classes of net assets: unrestricted net assets, temporarily restricted net assets, 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 action of the Center and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently Restricted Net Assets Net assets subject to donor-imposed stipulations that must be maintained permanently by the Center. Generally, the donor of these assets permit the organization to use all or part of the income earned on any related investments for general or specific purposes. Currently, there are no assets that meet this description. Cash, Cash Equivalents, and Credit Risk For the purposes of the statement of cash flows, cash and cash equivalents are defined as all cash on hand and deposited in FDIC insured bank accounts including certificates of deposit (if any). At March 31, 2016, the Center did not have any bank deposits exceeding the $250,000 FDIC deposit insurance coverage. 6

9 NOTES TO THE FINANCIAL STATEMENTS Donations of Property, Equipment and Facilities Donations of property and equipment are recorded as support at their estimated fair value at the date of donation. The Center reports these donations as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be use to acquire property and equipment is reported as restricted support. Absent donor stipulations regarding how those long- lived assets must be maintained, the Center reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Center transfers temporarily restricted net assets to unrestricted net assets at that time. Donated Services The Center records donated services when they create or enhance a non-financial asset or for specialized skills provided by entities or persons possessing those skills that would be purchased if they were not donated. Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the Statement of Activities and in the Statement of Functional Expenses. Accordingly, certain costs including fund raising costs have been allocated among the programs and supporting services benefited. Fair Values of Financial Instruments Financial instruments of the Center include cash and pledge receivables. Management estimates that the fair value of all financial instruments at fiscal year end does not differ materially from the carrying values of the financial instruments recorded in the accompanying statement of financial position. Income Tax Status The Center is an organization, which is not considered a private foundation and is exempt from federal income taxes under Section 501 (c) (3) of the Internal Revenue Code. The Center s Form 990, Return of Organization Exempt from Income Tax, for the years ending March 31, 2014, 2015 and 2016 are subject to examination by the IRS, generally for 3 years after they are filed. Management has concluded that the Center has taken no uncertain tax positions as of March 31, Therefore, no provision for income taxes has been included in the Center's financial statements. Property and Equipment Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed on a straight-line basis over the estimated useful life of assets and is reflected as an expense in the Statement of Functional Expenses. 7

10 NOTES TO THE FINANCIAL STATEMENTS Restricted and Unrestricted Revenue and Support Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statement of Activities as net assets released from restrictions. 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 those estimates. NOTE 2 PROPERTY AND EQUIPMENT Property and equipment consist of the following: Land $ 37,200 Building & improvements 412,221 Furniture & fixtures 29,414 Computers & eqiupment 5,627 Vehicles 13, ,462 Less: accumulated depreciation (70,995) $ 426,467 Useful lives are 5 to 7 years for vehicles, 5 to 7 years for equipment and 31.5 for buildings. NOTE 3 IN-KIND DONATIONS AND EXPENSES The Center receives food, clothing, furniture and other household items. In-kind donations and expenses have been recorded in the statement of activities based on the estimated values NOTE 4 FUNDRAISING The Center hosts several fundraising events throughout the year which are recorded in the statement of activities for the year ended March 31,

11 NOTES TO THE FINANCIAL STATEMENTS NOTE 5 - NOTES PAYABLE On July 29, 2014, the Center entered into a loan agreement with the Bank of Dickson for a $100,000 loan secured by the building located at 103 West College St in Dickson, TN. The loan has an interest rate of 3.5% and 84 monthly payments of $1,344.19, maturing July 29, The long term portion of $68,012 for the note payable with the Bank of Dickson is due as follows: $13,989 in the fiscal year ended March 31, 2017, $14,470 in the fiscal year ended March 31, 2018, $14,985 in the fiscal year ended March 31, 2019, $15,518 in the fiscal year ended March 31, 2020, $9,050 in the fiscal year ended March 31, The Center has been making additional principle payments on this loan. At the current rate of additional principle payments, the loan should be paid off in September NOTE 6 PLEDGES The Center held pledge campaign during the 2013 fiscal year. Management has assessed the remaining balance and allowance for un-collectibles and expects collections to not differ significantly from the amount recorded in the statement of financial position. NOTE 7 TEMPORARILY RESTRICTED ASSETS In prior and current years, the Center has received donations restricted by the donors for the purpose of helping families that were victims of natural disasters. At March 31, 2016, the balance of those temporarily restricted assets was $1,836. The Center also has a building fund that is temporarily restricted for the purpose of making payments on the building purchased in However, all temporarily restricted funds received during the current fiscal year were used for the temporarily restricted purpose of the donation. At March 31, 2016, the balance of the building fund temporarily restricted assets was ($2,928). In addition, the Center began a new temporarily restricted purpose fund for the Backpack Program. At March 31, 2016, the balance of those temporarily restricted assets was $14,474. NOTE 8 DATE OF MANAGEMENT S REVIEW Management has evaluated subsequent events through August 4, 2016 which is the financial statement issuance date. No other material subsequent events have occurred that need to be disclosed. 9