Independent Auditor s Report

Transcription

1 Board of Directors Allens Lane art Center Association Philadelphia, Pennsylvania Michael Bizga LLC CPA th Street Hammonton, New Jersey (609) Independent Auditor s Report We have audited the accompanying financial statements of Allens Lane art Center association as of August 31, 2014 and the related statements of activities, functional expenses and cash flows 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 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. 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 of 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 under 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 opinion.

2 Audit Report August 31, 2014, Page 2 of 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Allens Lane Art Center Association as of August 31, 2014 and the changes in its net assets and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Michael Bizga CPA LLC Hammonton, New Jersey January 6, 2015

3 Allens Lane art Center Association Audit Report Document Index Contents Page Independent Auditor s Report 1-2 Financial Statements: Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 7-11 I

4 Financial Statements Year Ended August 31, 2014

5 Statement of Financial Position SEE NOTES TO FINANCIAL STATEMENTS August 31, 2014 Assets Current Assets: Cash $ 7,621 Prepaid expenses 24,983 Total Current Assets $ 32,604 Equipment (Net) 1,432 Total Assets $ 34,036 Liabilities Liabilities & Net Assets Accounts payable & accrued expenses $ 6,415 Deferred revenue 20,360 Total Liabilities $ 26,775 Net Assets Unrestricted $ 7,261 Total Net Assets $ 7,261 Total Liabilities & Net Assets $ 34,036-3-

6 Statement of Functional Expenses SEE NOTES TO FINANCIAL STATEMENTS Fiscal year ended August 31, 2014 General & Functional Program Administrative Fundraising Total Expense Expense Expense Expense Expense Salaries & other $ 165,108 $ 23,037 $ 20,917 $ 209,062 Compensation Payroll taxes 12,929 1,735 1,912 16,576 Employee benefits 7, ,016 Accounting 6,138 6,138 Advertising & promotion 5,534 5,534 Office Expense 5, ,155 Royalties 6,577 6,577 Rent 98,670 10, ,633 Interest expense Depreciation 1, ,991 Insurance 13,365 1,485 14,850 Program supplies 19,238 19,238 Program activities 34,368 34,368 Equipment rentals 2,834 2,834 Telephone 2, ,231 Art Sales Commissions 4,339 4,339 Totals $ 379,516 $ 45,262 $ 22,829 $ 447,607-5-

7 Statement of Cash Flows SEE NOTES TO FINANCIAL STATEMENTS Cash flows from operating activities Change in net assets $ ( 20,153) Adjustments to reconcile changes in net assets to Net cash provided by (used) in operating activities Depreciation 1,991 Accounts receivable 280 Prepaid expense ( 3,428) Accounts payable ( 3,826) Deferred revenues 9,855 Net cash provided by (used) in operating activities $ ( 15,281) Increase (decrease) in cash $ ( 15,281) Cash, beginning of year $ 22,902 Cash end of year $ 7,621 Cash paid during the year for interest $ 65-6-

8 Note 1: Change in Unrestricted Net Assets: Allens Lane Art Center Association Notes to Financial Statements The Organization with the concurrence of its independent auditor decided to restate its leasehold improvement accounts amounting to $ 1,678,668 and related depreciation of $ 632,194 taken in subsequent periods. The primary reason for restating these assets, it was decided, was the organization does not have any financial or equity interest of any kind in these assets and their related real property assets. The improvements were made to facilities and land owned by the City of Philadelphia through its Fairmount Park Commission. The organization also realized that the leasehold improvements and its related depreciation expense were not clearly presenting the results of its operating activities and its unrestricted net assets. ($ 1,678, ,194 = $ 1,046,474). This change in unrestricted net assets was a non-cash event. The net decrease in unrestricted net assets of $ 20,153 was basically caused by recognizing $ 20,000 of grants in the prior accounting period and recognizing $ 20,000 of expenses in the current accounting period. If the grants and expenses were recognized in the current accounting period, the decrease of unrestricted net assets would have been $ 153. Note 2: Nature of Activities & Significant Accounting Policies Organization: Allens Lane Art Center Association ( Organization ) is a not for profit corporation located in the Mount Airy neighborhood of Philadelphia, Pennsylvania. Its mission is to provide cultural, athletic, education and civic activities for the diverse inhabitants of Philadelphia and the surrounding communities. The Organization provided art classes to a variety of age groups and skill levels, provides a summer day camp to children ages 5-12 and holds live theatre plays at its facility. Basis of Presentation In accordance with the financial Standards Board in its Accounting Standards Codification, Not for profit entities presentation of financial statements, the Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. -7-

9 Notes to Financial Statements Contributions Contributions, including unconditional promises to give, are recognized as revenue in the period the promise is received. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire within the fiscal year in which the contributions are received. All other donor restricted contributions are reported as increases in temporarily or permanently restricted net assets depending upon the nature of the restrictions. When a restriction expires (that is when a stipulated time restriction ends or the purpose of the restriction is accomplished), the restricted net assets are transferred to unrestricted net assets. Conditional promises to give are contributions that will be received subject to the occurrence of a specified future, uncertain event. Such contributions will be recognized and recorded in the financial statements when the conditions on which they depend are substantially met. Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and liabilities and disclosure of contingent assets and liabilities at the date of the Financial statements and reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Cash The Organization maintains cash in bank deposit accounts, which at times, may exceed federally insured limits. The Organization has not experienced any losses in such accounts. The Organization believes it is not exposed to any significant risk on its cash accounts. Property & Equipment Property and equipment are stated at cost. Depreciation is provided using the straight line method over the estimated useful lives of the assets (ranging from five to seven years). Acquisition of property and equipment with a useful life of greater than one year are capitalized. The costs of the assets are indicated in the statement of financial position. -8-

10 Notes to Financial Statements Note 2: Nature of Activities & Significant Accounting Policies (Continued) Grants Grants received are recorded as unrestricted, temporarily restricted or permanently restricted support depending on the existence and/or nature of any donor restrictions. However, grants that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the reporting period in which the revenue is recognized. Unpaid volunteers have made significant contributions of their time in the furtherance of the Organization s mission. The value of this contributed time is not included in these financial statements because the criteria for recognition as contributed services have not been satisfied. The Organization s facilities are provided at a discounted charge by the Philadelphia Fairmount Park Commission. The fair market rental value of the facilities for the year ended August is $ 97,500 and this amount is included in the financial statements. Deferred Program Revenues Funds received in advance for certain programs, primarily subscriptions for the theatre program beginning in September of each year and related advertising revenues, are deferred and recognized when earned. Functional Allocation of Expenses The cost of providing the program and activities has been summarized on a functional basis in the statement of functional expense. Accordingly, certain costs have been allocated among the program and supporting services benefitted. Income Taxes The Organization is exempt from federal income taxes under provisions of the Internal Revenue Code Section 501 ( c ) (3) and it is exempt from state income taxes under the provisions of the Pennsylvania Nonprofit Corporation Law. -9-

11 Notes to Financial Statements Income Taxes (Continued) The Organization is required to file Internal Revenue Service Form 990, Return of Organization Exempt from Income Tax and Pennsylvania Bureau of Charitable Organization s Form BCO-10 & 23. Both forms are subject to audits by relevant authorities. Note 3: Line of Credit The Organization has a $ 50,000 unsecured line of credit with Valley Green Bank with an interest rate of 3.25%. As of August 31, 2014 there was no outstanding balance with Valley Green Bank. Note 4: Commitments & Contingencies The Organization signed a twenty (20) year lease with the Fairmount Historic Preservation Trust in order to satisfy the long term lease requirement for the Commonwealth of Pennsylvania renovation grant. The lease agreement required the Organization to make a payment of $ 12,500 due January 2008 then $ 1,000 for each year thereafter until In kind rent expense of $ 97,750 is not included in the future minimum rental payments schedule. The Organization also has a five (5) year lease for a copier machine expiring May The cost is $ 1,900 per year. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year as of August 31, 2014: Years Ending August 31, 2015 $ 1, , , , ,000 Thereafter 8,000 Total $ 13,

12 Notes to Financial Statements Note 5: Evaluation of Subsequent Events The Organization has evaluated subsequent events through January 6, 2015, the date which the financial statements were available to be issued. End of Notes to Financial Statements -11-

13 Statement of Activities SEE NOTES TO FINANCIAL STATEMENTS Support & Revenues Unrestricted Temporarily Total Restricted Support Government Grants $ 16,379 $ 16,379 Corporate Contributions Foundation Grants 56,340 56,340 Individual Contributions 8,906 8,906 Board Contributions 9,075 9,075 Rent-In-Kind Contribution 97,500 97,500 Fund Raising 2,507 2,507 Total Support $ 190,772 $ 190,772 Program Revenues Summer Day Camp Fees $ 124,094 $ 124,094 Theater Revenues 25,503 25,503 Class Tuitions 75,092 75,092 Gallery Commissions 6,138 6,138 Facility Rents 5,855 5,855 Total Revenues $ 236,682 $ 236,682 Total Support & Revenues $ 427,454 $ 427,454 Expenses Program Costs & Services $ 359,516 $ 20,000 $ 379,516 General & Administrative 45,262 45,262 Fundraising Costs 22,829 22,829 Total Expenses $ 427,607 $ 20,000 $ 447,607 Increase (Decrease) In Net Assets $ ( 153) $ (20,000) $ (20,153) Net Assets Beginning $ 1,053,888 $ 20,000 $ 1,073,888 Extraordinary Item * (1,046,474) (1,046,474) Net Assets Ending $ 7,261 $ -0- $ 7,261 See Note 1 on Page 7-4-