Girl Scouts of Northern New Jersey. Financial Statements. September 30, 2016 and 2015

Transcription

1 Financial Statements

2 Board of Directors Girl Scouts of Northern New Jersey Independent Auditors' Report We have audited the accompanying financial statements of Girl Scouts of Northern New Jersey (a nonprofit organization), which comprise the statements of financial position as of September 30, 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 Girl Scouts of Northern New Jersey as of, 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. January 23, 2017 PKF O CONNOR DAVIES, LLP 300 Tice Boulevard, Suite 315, Woodcliff Lake, NJ I Tel: I Fax: I PKF O Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

3 Statements of Financial Position September 30, ASSETS Current Assets Cash and cash equivalents $ 2,249,207 $ 2,166,471 Investments 4,249,195 3,833,814 Accounts receivable, net 45, ,114 Pledges receivable, net 73,553 48,849 Inventory 186, ,662 Prepaid expenses 76, ,411 Total Current Assets 6,880,579 6,451,321 Land, buildings and equipment, net of accumulated depreciation 9,144,630 9,716,137 $ 16,025,209 $ 16,167,458 LIABILITIES AND NET ASSETS Current Liabilities Current portion of debt $ 102,654 $ 98,293 Accounts payable and accrued expenses 465, ,075 Deferred income 384, ,528 Total Current Liabilities 953, ,896 Debt, net of current portion 1,501,191 1,603,845 Total Liabilities 2,454,227 2,447,741 Net Assets Unrestricted 13,159,053 13,329,824 Temporarily restricted 396, ,568 Permanently restricted 15,325 15,325 Total Net Assets 13,570,982 13,719,717 $ 16,025,209 $ 16,167,458 See notes to financial statements 2

4 Statements of Activities Year Ended September 30, Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total PUBLIC SUPPORT Grants and contributions $ 576,555 $ 172,460 $ - $ 749,015 $ 495,208 $ 94,324 $ 3,115 $ 592,647 United Way allocations 3,856 4,000-7,856 4,069 11,400-15,469 Special events 97,695 7, ,195 88, ,786 Total Public Support 678, , , , ,724 3, ,902 REVENUE Program Related Revenues Cookie/nut sales, net of costs of $3,494,718 and $3,509,803 4,554, ,554,157 4,619, ,619,020 Sale of supplies and services, net of costs of $411,095 and $442, , , , ,487 Camping fees 1,036, ,036, , ,429 Program activity revenues 563, , , ,745 Council service fees 308, , , ,912 Net investment income (loss) 411,012 9, ,732 (94,532) 5,511 - (89,021) Other income 108, , , ,137 Net assets released from restrictions 171,644 (171,644) ,857 (157,857) - - Total Public Support and Revenue 8,198,281 22,036-8,220,317 7,754,118 (46,622) 3,115 7,710,611 EXPENSES Program services 7,183, ,183,219 7,203, ,203,146 Management and general 528, , , ,247 Fundraising 657, , , ,441 Total Expenses 8,369, ,369,052 8,302, ,302,834 Change in Net Assets (170,771) 22,036 - (148,735) (548,716) (46,622) 3,115 (592,223) NET ASSETS Beginning of year 13,329, ,568 15,325 13,719,717 13,878, ,190 12,210 14,311,940 End of year $ 13,159,053 $ 396,604 $ 15,325 $ 13,570,982 $ 13,329,824 $ 374,568 $ 15,325 $ 13,719,717 See notes to financial statements 3

5 Statements of Functional Expenses Year Ended September 30, Program Management Total Program Management Total Services and General Fundraising Expenses Services and General Fundraising Expenses Salaries $ 3,141,451 $ 249,314 $ 317,731 $ 3,708,496 $ 3,092,501 $ 247,753 $ 298,693 $ 3,638,947 Employee benefits and payroll taxes 1,086,517 94, ,408 1,301,971 1,037,552 91, ,797 1,240,172 Total Salaries and Related Expenses 4,227, , ,139 5,010,467 4,130, , ,490 4,879,119 Professional fees 490,144 71,883 46, , ,662 64,717 46, ,984 Supplies 459,651 4,052 43, , ,147 6,506 48, ,373 Phone and internet 81,072 5,621 4,003 90,696 81,240 5,934 4,999 92,173 Postage 12,882 2,826 4,456 20,164 15,055 4,297 3,850 23,202 Facilities 412,486 6,293 5, , ,394 6,106 5, ,314 Equipment 128,827 19,559 14, ,638 98,199 7,876 11, ,069 Marketing 20,980 10,890 48,387 80,257 34,537 11,483 16,036 62,056 Travel and transportation 303,084 10,329 6, , ,156 7,567 5, ,918 Training 72,869 13,463 11,467 97,799 49,832 8,005 9,578 67,415 Assistance and grants 64, ,586 73, ,637 Interest 106, , , ,821 Insurance 119,828 20,353 13, , ,515 20,862 13, ,286 Other 103,941 7,693 8, , ,449 9,514 9, ,349 Bad debt recovery (1,500) (1,500) Total Expenses before Depreciation 6,604, , ,531 7,767,708 6,621, , ,076 7,698,216 Depreciation 578,364 11,707 11, , ,449 11,804 11, ,618 Total Expenses $ 7,183,219 $ 528,029 $ 657,804 $ 8,369,052 $ 7,203,146 $ 504,247 $ 595,441 $ 8,302,834 See notes to financial statements 4

6 Statements of Cash Flows Year Ended September 30, CASH FLOWS FROM OPERATING ACTIVITIES Cash Received From Grants and contributions $ 829,506 $ 681,433 United Way allocations 7,856 15,469 Program services 9,740,432 9,831,997 Sale of supplies and services 778, ,180 Council service fee 310, ,912 Other income 203, ,787 Cash Paid For Salaries and benefits (5,010,467) (4,879,119) Program expenses (6,040,932) (6,171,420) Supplies and services (411,095) (442,693) Interest (106,537) (111,821) Net Cash from Operating Activities 300, ,725 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of equipment (29,837) (294,980) Purchase of investments (1,565,101) (1,561,274) Proceeds from sale of investments 1,475,597 1,357,620 Net Cash from Investing Activities (119,341) (498,634) CASH FLOWS FROM FINANCING ACTIVITIES Payment on long term debt (98,293) (93,844) Net Change in Cash and Cash Equivalents 82,736 (359,753) CASH AND CASH EQUIVALENTS Beginning of year 2,166,471 2,526,224 End of year $ 2,249,207 $ 2,166,471 See notes to financial statements 5

7 Statements of Cash Flows (Continued) Year Ended September 30, RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH FROM OPERATING ACTIVITIES Change in net assets $ (148,735) $ (592,223) Adjustments to reconcile change in net assets to net cash from operating activities Bad debt recovery - (1,500) Depreciation 601, ,618 Realized and unrealized loss (gain) on investments (325,877) 174,671 Changes in operating assets and liabilities Accounts and pledges receivable 67,268 (96,085) Inventory (43,860) 37,473 Prepaid expenses 45,451 17,694 Accounts payable and accrued expenses 102,899 12,818 Deferred income 1,880 75,259 Net Cash from Operating Activities $ 300,370 $ 232,725 See notes to financial statements 6

8 1. Organizational Status Girl Scouts of Northern New Jersey (the Organization ) is a not-for-profit organization chartered by the Girl Scouts of the USA. Girl Scouts of Northern New Jersey is a high capacity council providing the Girl Scout Leadership Experience to girls in 160 communities in the New Jersey counties of Bergen, Morris, Passaic, Sussex, and northern Warren. The mission of Girl Scouting is to build girls of courage, confidence and character, who make the world a better place. Financial support of the Girl Scout Leadership Experience is derived from many sources including corporations and foundations, product sales programs, annual appeals to Girl Scout families and community supporters, and special fund-raising events. As a nonprofit voluntary organization, Girl Scouts of Northern New Jersey is exempt from income tax under Section 501(c)(3) of the United States Internal Revenue Code. 2. Summary of Significant Accounting Policies Financial Statement Presentation The Organization reports information regarding its financial position and activities according to three classes of net assets based on the presence or absence of donor restrictions: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Unrestricted - The part of net assets that is neither permanently nor temporarily restricted by donor-imposed stipulations. Temporarily Restricted - Net assets resulting from contributions and other inflows of assets whose use by the Organization is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Organization pursuant to those stipulations. When such stipulations end or are fulfilled, such 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 resulting from contributions and other inflows of assets whose use by the Organization is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the Organization. Basis of Accounting and Use of Estimates The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ), which 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. 7

9 2. Summary of Significant Accounting Policies (continued) Cash and Cash Equivalents All highly liquid investment instruments with a maturity of three months or less at the time of purchase are considered to be cash equivalents. Pledges Receivable Pledges receivable are recognized as receivables and revenue in the period in which the Organization is notified by the donor of their commitment to make a contribution. Conditional pledges are recognized when the conditions on which they depend are substantially met. Unconditional pledges due in more than one year are reflected at the present value of estimated cash flows using a risk adjusted prevailing discount rate. Unamortized discounts are amortized over the life of the pledge as contribution income. Allowance for Uncollectible Receivables An allowance for uncollectible receivables is estimated based on a combination of writeoff history, aging analysis and any specific known troubled accounts. Fair Value Measurements The Organization follows U.S. GAAP guidance on Fair Value Measurements which defines fair value and establishes a fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets. Level 1 inputs have the highest reliability and are related to assets with unadjusted quoted prices in active markets. Level 2 inputs relate to assets with other than quoted prices in active markets which may include quoted prices for similar assets or liabilities or other inputs which can be corroborated by observable market data. Level 3 inputs are unobservable and are used to the extent that observable inputs do not exist. Investments Valuation and Income Recognition Investments are carried at fair value. Fixed income securities and mutual funds are valued at the closing price of the market in which the security is traded. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Realized and unrealized gains and losses are included in the determination of the change in net assets. Inventory Inventory consists principally of embroidered patches, books and clothing, and is valued at cost using the first-in, first-out method. 8

10 2. Summary of Significant Accounting Policies (continued) Land, Buildings and Equipment Land, buildings, and equipment are stated at cost or, if acquired by gift, at fair value at the time of the gift. The Organization follows the practice of capitalizing all expenditures for land, buildings and equipment in excess of $5,000. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets which range from 5 to 25 years. Deferred Income Deferred income represents revenues collected but not earned. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Accounting for Uncertainty in Income Taxes The Organization recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Management has determined that the Organization had no uncertain tax positions that would require financial statement recognition or disclosure. The Organization is no longer subject to examinations by the applicable taxing jurisdictions for the periods prior to September 30, Girl Scout Troop Activity Cash is held by troops and groups operate under the Organization s Federal identification number but not under its control. The Organization has no signature authority over and will not access the funds as long as a troop or group is functioning according to Girl Scout policies and procedures. Individual troops and groups have the responsibility to use funds in their control for the purposes of Girl Scouting as determined by the members and adult volunteers. The accompanying financial statements do not include financial data for individual Girl Scout troops and other groups such as service units and committees. Subsequent Events Evaluation by Management Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued, which date is January 23,

11 3. Pledges Receivable The Organization held fund-raising campaigns to enable the Organization to bring the Girl Scout Program to more girls in their jurisdiction. Pledges receivable at September 30 are as follows: Receivable in less than one year $ 50,214 $ 48,244 Receivable in more than one year but less than five years 29,673 5,850 79,887 54,094 Less allowance for uncollectible receivables (5,000) (5,000) Less discounts to net present value (1,334) (245) Net Pledges Receivable $ 73,553 $ 48, Land, Buildings, Equipment and Depreciation At September 30, land, buildings and equipment consist of the following: Life Land and land improvements $ 7,607,149 $ 7,607,149 Buildings and improvements 8,329,010 8,301, years Leasehold improvements 8,550 8,550 5 years Furniture and equipment 575, , years Vehicles 176, ,624 5 years Construction in progress 43,938 41,128 16,740,772 16,710,937 Accumulated depreciation (7,596,142) (6,994,800) 5. Fair Value and Investment Income $ 9,144,630 $ 9,716,137 The following are major categories of assets measured at fair value on a recurring basis at September 30, grouped by the fair value hierarchy: 2016 Level 1 Level 2 Total Mutual funds Equity funds $ 2,617,874 $ - $ 2,617,874 Bond funds 1,025,895-1,025,895 Fixed income Corporate bonds - 250, ,331 U.S. government securities 355, ,095 Total Investments $ 3,998,864 $ 250,331 $ 4,249,195

12 5. Fair Value and Investment Income (continued) 2015 Level 1 Level 2 Total Mutual funds Equity funds $ 2,323,529 $ - $ 2,323,529 Bond funds 935, ,769 Fixed income Corporate bonds - 174, ,493 U.S. government securities 400, ,023 Total Investments $ 3,659,321 $ 174,493 $ 3,833,814 The following schedule summarizes the investment income in the statement of activities for the year ended September 30: Temporarily Temporarily Unrestricted Restricted Unrestricted Restricted Interest and dividends $ 89,650 $ 5,205 80,668 $ 4,982 Realized and unrealized gain (loss) on investments 321,362 4,515 (175,200) Bank Loans $ 411,012 $ 9,720 $ (94,532) $ 5,511 The Organization maintains a non-revolving letter of credit agreement with Lakeland Bank in the amount of $169,200, which was reduced from $274,000 on July 12, The letter of credit agreement is collateralized by a first mortgage lien on the Riverdale Service Center property and a first mortgage lien on the Kinnelon, New Jersey camp property. Borrowings under the line are available through July 1, The interest rate on borrowings is 2% above the bank s prime lending rate. There were no borrowings under this letter of credit agreement at. The Organization also maintains a $500,000 revolving line of credit agreement with Lakeland Bank. This agreement is secured by the Organization s personal property, such as equipment, fixtures, inventory and receivables owned by the Organization. Borrowings under the line are available through March 30, 2017 with an interest rate of the Wall Street Journal prime rate plus 1%. There were no borrowings under this line of credit agreement at. 11

13 7. Debt Debt consists of the following at September 30: Jockey Hollow Camp Mortgage payable with principal payments amortizable over 20 years. The mortgage carries an interest rate equal to LIBOR plus 1.5% for 10 years commencing on September 27, The one month LIBOR rate was 0.46% at September 30, After 10 years, the rate expires, whereby the mortgage can be either paid off, paid down or renewed at a new rate. The mortgage is secured by the Paramus Service Center and the Randolph, New Jersey property. $ 1,423,257 $ 1,506,576 Lake Rickabear Camp Note payable with the State of New Jersey for dam restoration at the Kinnelon, NJ camp property. The loan carries an interest rate of 2% per annum payable in semi-annually installments of $8,501 for 20 years commencing on October 15, , ,780 Public Service Electric and Gas Company ("PSE&G") Loan payable with PSE&G for the energy conservation program at the Paramus, NJ service location. The loan is payable in monthly installments of $255 for 2 years commencing on May 14, The loan commitment has no stated interest rate. Prime rate, which is currently 3.25%, is used to calculate interest expense. - 1,782 1,603,845 1,702,138 Less current maturities 102,654 98,293 Debt, Net of Current Portion $ 1,501,191 $ 1,603,845 12

14 7. Debt (continued) Repayments of debt in future years are due as follows: Year Ending September 30, Amount 2017 $ 102, ,347, , , ,572 Thereafter 110,512 $ 1,603, Pension Plan The council participates in the National Girl Scout Council Retirement Plan ( NGSCRP ), a noncontributory defined benefit pension plan sponsored by Girl Scouts of the USA. The National Board of Girl Scouts of the USA voted to freeze the plan to new entrants and to freeze future benefit accruals for all current participants under the Plan effective July 31, The plan covers substantially all of the employees of various Girl Scout councils who were eligible to participate in the plan prior to the Plan freeze. Accrued and vested benefits prior to July 31, 2010 are based on years of service and salary levels. Although net Plan assets grew during the year, net Plan assets available for Plan benefits continue to be less than the actuarial present value of accumulated Plan benefits as of January 1, Based on the April 18, 2014 conditional approval by the Internal Revenue Service ( IRS ), all existing amortization bases in the Plan s funding standard account as of January 1, 2013 were combined into one base and the resulting amortization period for that single base was extended to 10 years. Approval applies as long as at a minimum, beginning with the January 1, 2013 calendar year, $30,000,000 is remitted. The $30,000,000 calendar year minimum applies for each succeeding calendar year until the Plan is fully funded based upon the requirements of the Pension Protection Act of 2006 ( PPA ). In addition, on April 8, 2014, President Obama signed H.R into law, a relief package unanimously passed by Congress that gives NGSCRP the flexibility to adopt the PPA funding requirements immediately or not at all. NGSCRP has elected to adopt this relief and not be subject to PPA. Aggregate annual contributions made in fiscal years 2015 and 2016 were $34.5 million and $34.3 million. The aggregate annual contributions decreased from 2015 to 2016 due to the January 1, 2016 spin-off of Girl Scouts of Middle Tennessee. Aggregate contributions made in fiscal 2017 are expected to continue to be $34.3 million. Contributions made by the Organization for the years ended were approximately $523,000 and $498,000. The Organization also provides a 401(k) plan which was established in The employees may voluntarily contribute a portion of their wages to the 401(k) plan on a taxdeferred basis. The Organization s contribution is discretionary and is determined by the Board of Directors on an annual basis. The Organization contributed $66,650 and $68,000, for the years ended, to the plan. 13

15 9. Rental Commitments The Organization leases certain office space and equipment under noncancelable leases expiring in various years through Rental expense amounted to $96,550 and $73,660 for the years ended. The minimum rental commitment for office space and equipment under all noncancelable-operating leases in effect at September 30, 2016 is as follows: 2017 $ 41, , $ 54, Temporarily Restricted Net Assets and Net Assets Released From Restrictions Temporarily restricted net assets available at were $396,604 and $374,568. The Organization received several grants whose funds were used to support program expenses related to various science, technology, engineering and math programs in addition to summer camp programming. Net assets released from donor restrictions by incurring expenses satisfying the restricted purpose totaled $171,644 and $157,857 for the years ended. 11. Permanently Restricted Net Assets Permanently restricted net assets are investments in perpetuity, the income from which is expendable to camp financial assistance for girls. Permanently restricted net assets at totaled $15, Related Party Transactions The Organization is a local affiliate of the GSUSA. The Organization purchases inventory for its Council Shops from GSUSA. Total purchases were approximately $369,000 and $338,000 for the years ended. The Organization s members also pay annual national membership dues to GSUSA. Some of these membership dues are paid directly to GSUSA by the member and some are collected by Girl Scouts of Northern New Jersey and remitted to GSUSA. Total membership fees paid to GSUSA for the Organizations members was approximately $677,000 and $691,000 for the years ended. 13. Risk Concentrations Demand Deposits The Organization occasionally maintains deposits in excess of Federally insured limits. 14

16 13. Risk Concentrations (continued) Cost of Merchandise The Organization operates in a concentrated industry with a limited number of national retail distributors. A majority of the Organization s merchandise is purchased from two vendors. The Organization s two largest vendors in 2016 and 2015 accounted for approximately 84% and 68% of cost of merchandise. In 2015, the Organization s two largest vendors accounted for approximately 27% of accounts payable. 14. Endowment Funds The Organization currently maintains various donor-restricted and board designated endowment funds whose purposes are to provide long term support for the programs of the Organization. In classifying such funds for financial statement purposes as permanently restricted, temporarily restricted or unrestricted net assets, the Board of Directors looks to the explicit directions of the donor. The Board of Directors has determined that, absent donor stipulations to the contrary, the provisions of State law do not impose either a permanent or temporary restriction on the income or capital appreciation derived from the original gift and/or additional gifts. The following is a reconciliation of the activity in the Endowment funds for the year ended September 30: 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Balance, October 1, 2015 $ - $ 1,557 $ 15,325 $ 16,882 Investment income (loss) 4,397 (44) - 4,353 Appropriated for expenditures (4,397) - - (4,397) Balance, September 30, 2016 $ - $ 1,513 $ 15,325 $ 16, Temporarily Permanently Unrestricted Restricted Restricted Total Balance, October 1, 2014 $ - $ 1,612 $ 12,210 $ 13,822 Contributions and pledge collections - - 3,115 Investment income (loss) 4,719 (54) - 4,665 Capital appreciation - 1,611-1,611 Appropriated for expenditures (4,719) (1,612) - (6,331) Balance, September 30, 2015 $ - $ 1,557 $ 15,325 $ 13,767 * * * * * 15