HOUSATONIC COUNCIL BOY SCOUTS OF AMERICA, INC. AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION. YEARS ENDED DECEMBER 31, 2013 and 2012

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1 HOUSATONIC COUNCIL BOY SCOUTS OF AMERICA, INC. AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEARS ENDED DECEMBER 31, 2013 and 2012

2 CONTENTS Audited Financial Statements: Page Independent Auditors Report... 3 Statement of Financial Position... 5 Statement of Activities and Changes in Net Assets... 6 Statement of Cash Flows... 8 Notes to Financial Statements... 9 Supplementary Information: Schedule of Financial Position by Fund Schedule of Changes in Net Assets by Fund Schedule of Functional Expense... 21

3 Ansonia 158 Main Street, Suite 301 Ansonia, Connecticut P: Killingworth 166 Route 81 Killingworth, Connecticut P: New Haven 900 Chapel Street, Suite 620 New Haven, Connecticut P: Westport 611 Riverside Avenue Westport, Connecticut P: Principals Francis H. Michaud Jr. CPA John A. Accavallo CPA Sandra M. Woodbridge CPA Dominic L. Cusano MBA CPA Darin L. Offerdahl MBA CPA Guiding Successful People To the Board of Directors of Housatonic Council Boy Scouts of America, Inc. Derby, Connecticut INDEPENDENT AUDITORS REPORT We have audited the accompanying statement of financial position of Housatonic Council Boy Scouts of America, Inc. (a nonprofit organization) as of December 31, 2013 and 2012, 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. Members of the American Institute of Certified Public Accountants Members of the Connecticut Society of Certified Public Accountants

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Housatonic Council Boy Scouts of America, Inc. as of December 31, 2013 and 2012, 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 schedules of financial position by fund, changes in net assets by fund and schedules of functional expense on pages 19 and 21 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. Michaud Accavallo Woodbridge & Cusano, LLC Michaud Accavallo Woodbridge & Cusano, LLC Ansonia, Connecticut June 3,

5 STATEMENT OF FINANCIAL POSITION December 31, ASSETS CURRENT ASSETS Cash and cash equivalents $ 96,384 $ 231,697 Accounts receivable 23,092 1,250 Pledges receivable 6,413 1,501 Inventories 18,094 17,193 Other assets 8, TOTAL CURRENT ASSETS 152, ,183 PROPERTY, BUILDINGS AND EQUIPMENT - net of accumulated depreciation 439, ,606 OTHER ASSETS Long-term investments 429, ,935 LIABILITIES AND NET ASSETS TOTAL ASSETS $ 1,021,761 $ 1,014,724 CURRENT LIABILITIES Accounts payables and accrued expenses $ 4,047 $ 11,774 Custodial accounts 27,360 23,379 Deferred activity income 4,310 30,722 Deferred camp income 2,895 2,490 Note payable - line of credit ,163 TOTAL CURRENT LIABILITIES 39, ,528 NET ASSETS Board designated 312, ,674 Unrestricted 527, ,533 Total unrestricted 840, ,207 Temporarily restricted 49,301 48,301 Permanently restricted 93,041 75,688 TOTAL NET ASSETS 982, ,196 TOTAL LIABILITIES AND NET ASSETS $ 1,021,761 $ 1,014,724 See notes to financial statements - 5 -

6 See notes to financial statements HOUSATONIC COUNCIL BOY SCOUTS OF AMERICA, INC. STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2013 SUPPORT AND REVENUES Unrestricted Temporarily Permanently Total DIRECT SUPPORT Friends of scouting $ 78,513 $ - $ - $ 78,513 Less: Provision for Uncollectable (5,699) - - (5,699) Net Friends of Scouting 72, ,814 Special fundraising events 86, ,100 Less: Cost of events (12,011) - - (12,011) Net fundraising events 74, ,089 Foundations and trusts 43, ,349 Other 54,940 1,000-55,940 TOTAL DIRECT SUPPORT 245,192 1, ,192 INDIRECT SUPPORT - United Way 60, ,410 REVENUES Sales of supplies 4, ,650 Less: Cost of goods sold (3,069) - - (3,069) Net income from sales of supplies 1, ,581 Product sales 55, ,910 Less: Cost of goods sold (20,405) - - (20,405) Less: Commissions paid to Units (21,566) - - (21,566) Net income from product sales 13, ,939 Investment income 30, ,691 Unrealized gain(loss) on investment 23,218-17,353 40,571 Camping revenue 166, ,023 Activity revenue 114, ,754 Other revenue 1, ,004 TOTAL REVENUES 351,210-17, ,563 NET ASSETS RELEASED FROM RESTRICTIONS TOTAL SUPPORT AND REVENUES 656,812 1,000 17, ,165 EXPENSES Scouting program 449, ,351 Supporting services: Management and general 129, ,734 Fund raising 23, ,818 TOTAL EXPENSES 602, ,903 INCREASE(DECREASE) IN NET ASSETS 53,909 1,000 17,353 72,262 Net assets at January 1, ,207 48,301 75, ,196 NET ASSETS AT DECEMBER 31, 2013 $ 840,116 $ 49,301 $ 93,041 $ 982,

7 STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2012 SUPPORT AND REVENUES Unrestricted Temporarily Permanently Total DIRECT SUPPORT Friends of scouting $ 75,731 $ - $ - $ 75,731 Less: Provision for Uncollectable (5,699) - - (5,699) Net Friends of Scouting 70, ,032 Special fundraising events 61, ,070 Less: Cost of events (9,057) - - (9,057) 52, ,013 Foundations and trusts 66, ,498 Other 36, ,553 TOTAL DIRECT SUPPORT 225, ,096 INDIRECT SUPPORT - United Way 66, ,793 REVENUES Sales of supplies 4, ,432 Less: Cost of goods sold (212) - - (212) Net income from sales of supplies 4, ,220 Product sales 66,888-66,888 Less: Cost of goods sold (23,117) - - (23,117) Less: Commissions paid to Units (25,086) - - (25,086) Net income from product sales 18, ,685 Investment income 10, ,284 Unrealized gain(loss) on investment 24,868-10,367 35,235 Camping revenue 171, ,123 Activity revenue 33, ,940 Other revenue 1, ,439 TOTAL REVENUES 264,559-10, ,926 NET ASSETS RELEASED FROM RESTRICTIONS 115,153 (115,153) - - TOTAL SUPPORT AND REVENUES 671,601 (115,153) 10, ,815 EXPENSES Scouting program 386, ,942 Supporting services: Management and general 111, ,954 Fund raising 22, ,834 TOTAL EXPENSES 521, ,730 INCREASE(DECREASE) IN NET ASSETS 149,871 (115,153) 10,367 45,085 Net assets at January 1, , ,454 65, ,111 NET ASSETS AT DECEMBER 31, 2012 $ 786,207 $ 48,301 $ 75,688 $ 910,196 See notes to financial statements - 7 -

8 STATEMENT OF CASH FLOWS December 31, CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets $ 72,262 $ 45,085 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation 34,038 28,182 Unrealized gain on investments (51,013) (45,106) Contributions restricted for endowment (6,825) (6,825) (Increase) decrease in operating assets: Accounts receivable (21,842) 9,550 Pledges receivable (4,912) (1,501) Inventories (901) 120 Other current assets (8,104) 5,053 Increase (decrease) in operating liabilities: Accounts payable (7,727) 837 Custodial accounts 3,981 7,367 Deferred activity income (26,412) 24,427 Deferred camp income 405 (1,815) NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (17,050) 65,374 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (45,388) (151,623) Proceeds from sale of investments 16,207 15,939 Purchase of investments (60,435) (554) NET CASH USED IN INVESTING ACTIVITIES (89,616) (136,238) CASH FLOWS FROM FINANCING ACTIVITIES Contributions restricted for endowment 6,825 6,825 Proceeds from line of credit (35,472) 36,163 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (28,647) 42,988 NET CHANGE IN CASH (135,313) (27,876) Cash and cash equivalents at beginning of year 231, ,573 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 96,384 $ 231,697 Supplemental disclosure of cash flow information: Cash paid during the year for interest expense $ 671 $ 826 See notes to financial statements - 8 -

9 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Housatonic Council Boy Scouts of America, Inc. (Council) operates in Derby, Connecticut and includes the communities of Ansonia, Derby, Shelton, Seymour and Oxford, Connecticut. The Council is a nonprofit organization devoted to promoting, within the territory covered by the charter from time to time granted it by the Boy Scouts of America and in accordance with the congressional program, the ability of boys and young men and women to do things for themselves and others, training them in scout craft and teaching them patriotism, courage, and self-reliance. It also prepares them to make ethical choices over their lifetime and achieve their full potential using the methods that are now in common use by the Boy Scouts of America. The Council receives revenue from contributions, special events, activity fees and the sale of merchandise. The Council's scouting program includes: Tiger Cubs: One-year, family-oriented program for a group of teams, each consisting of a first-grade (or 7 year old) boy and an adult partner (usually a parent). A tiger cub den is part of the Cub Scout pack. Cub Scouts: Family-and community-centered approach to learning citizenship, compassion, and courage through service projects, ceremonies, games, and other activities promoting character development and physical fitness. Boy Scouting: With the Scout Oath and Scout Law as guides, and the support of parents and religious and neighborhood organizations, Scouts develop an awareness and appreciation of their role in their community and become well-rounded young men through the advancement of the program. Scouts progress in rank through achievements, gain additional knowledge and responsibilities, and earn merit badges that introduce a lifelong hobby or a rewarding career. Varsity Scouting: Program for young men ages that provides options for those who are looking for rugged high adventure or challenging sporting activities and still want to be a part of a Scouting program that offers the advancement opportunities and values of the Boy Scouts of America. There are five fields of emphasis, including advancement, high adventure/sports, personal development, service, and special programs and events. Venturing: Provides experiences to help young men and women, ages 14-20, become mature, responsible, caring adults. Young teens learn leadership skills and participate in challenging outdoor activities, including having access to Boy Scout camping properties, a recognition program, and youth-protection training. Learning for Life: A program to enable young people to become responsible individuals by teaching positive character traits, career development, leadership and life skills so they can make ethical choices and achieve their full potential. The Council's website address is Financial Statement Presentation The accompanying financial statements of the Council have been prepared on the accrual basis of accounting. The Council also 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

10 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 Use of Estimates In preparing the financial statements, in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. Functional Allocation of Expenses The cost of providing the various programs and other activities has been summarized by functional categories in the statement of activities. Accordingly, certain expenses have been allocated among the various programs and supporting services benefited. Support The Council reports contributions received or pledged as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Restricted net assets are reclassified to unrestricted net assets upon satisfaction of the time or purpose restrictions. Pledges receivable totaled $6,413 and $1,501 for the years ended December 31, 2013 and 2012, respectively, and represent temporarily restricted funds for specific uses. Revenue The Council sells product and supplies to boy scouts throughout their region. Revenue is recognized from the sales when the sale and transfer of goods occurs. The Council reports product and supply sales net of related expense in revenue on the Statement of Activities. Product sales for the years ended December 31, 2013 and 2012, was $55,910 and $66,888, respectively. Product expense totaled $41,971 and $48,203, respectively, for the years then ended. Net product sales for the years then ended totaled $13,939 and $18,685. Supply sales for the years ended December 31, 2013 and 2012, was $4,650 and $4,432, respectively. Supply expense totaled $3,069 and $3,440, respectively, for the years then ended. Net product sales for the years then ended totaled $1,581 and $4,220. The Council also derives revenue from camping and activities fees, which are generally considered to be exchange transactions in which the contractor requires the performance of specified activities. Revenue is recognized to the extent of services provided. Receipts in excess of revenues recognized are presented as deferred activity and camp revenue on the statement of financial position. Donated Assets and Services The Council records the estimated fair value of the donated materials, equipment and usage of assets as both revenues and expenses in the period in which the donation is received. If the asset has a useful life of greater than one year and a fair market value greater than $1,000, the council will capitalize and depreciate the asset over its remaining useful life. The Council recognizes donated services if they create or enhance non-financial assets or requires specialized skills and would typically be purchased if not provided by donation. The Council values these volunteer services based upon an hourly rate determined by an estimated standard market rate multiplied by the number of volunteer hours

11 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 Cash and Cash Equivalents and Credit Risk For purposes of reporting cash flows, the Council considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash. At December 31, 2013, the carrying amount of the Council s deposits was $96,384 and balances in banks amounted to $132,856. Deposits in banks are insured by the Federal Deposit Insurance Corporation up to $250,000. There are no amounts that remained uninsured at year-end. At December 31, 2012, the carrying amount of the Council s deposits was $231,697 and balances in banks amounted to $200,484. Deposits in banks are insured by the Federal Deposit Insurance Corporation up to $250,000. There are no amounts that remained uninsured at year-end. Pledges Receivable Pledges receivable consist of unconditional promises to give and are recognized when the pledge is received. All pledges are expected to be collected in less than one year and are measured at net realizable value because that amount results in a reasonable estimate of fair value. Inventory Inventories, consisting primarily of items for resale, are stated at the lower of cost or market, determined by the firstin, first-out method. Investments The Council carries investments in alternative investments at the fair value of their underlying assets and allocated to the investment in proportion to their ownership percentage in the Statement of Financial Position. Investment income and unrealized gains and losses are included in the Statement of Changes in Net Assets. Investments are exposed to various risks such as significant world events, interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the fair value of investments will occur in the near term and that such changes could materially affect the amounts reported in the Statement of Financial Position. Investments are invested in prudent manner so as to preserve and enhance the Council's ability to provide for the benefit of Scouting. In support of the mission of the Boy Scouts of America, the Endowment Fund are invested to provide sufficient earnings in the form of a total return from capital appreciation and income in real terms, considering inflation and to regulate the Trust's long term ability to distribute income. The primary investment mission is to preserve principal and purchasing power in real dollar terms, while supporting current income requirements. Endowment The Council's endowment fund consists of three funds established for various purposes. Its endowment includes both donor-restricted endowment funds and funds designated by the Board of Directors to function as endowment funds. Net assets associated with endowment funds, including funds designated by the Board of Directors, are classified and reported based upon the existence or absence of donor imposed restrictions. The Council has classified its Board designated endowment as unrestricted net assets and its donor-restricted endowment as permanently restricted net assets in the financial statements

12 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 The Board of Directors has interpreted the Connecticut Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation the Council classifies as permanently restricted net assets (a) the original value of the gifts donated to the permanent endowment (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment funds are classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Council in a manner consistent with the standard prudence prescribed by UPMIFA. In accordance with URMIFA, the Council considers the various factors in making a determination to appropriate or accumulate donor-restricted endowment funds including the purpose of the Council and the donor-restricted endowment fund, general economic conditions, the expected total return from income and the appreciation of investments and other Council resources. The Council's spending plan, as the method of distributing income from the Endowment Fund, is based on the yearend market value of the trust investments. The income withdrawals shall be no greater than fifty percent (50%) of the total income earned from the fixed portion of the allocation of Unrestricted Fund assets up to a maximum of five percent (5%) of the fund's value. 100% of the interest earned on the Eagle Scholarship Fund and the Campership Fund may be withdrawn. Property and Equipment Purchased property and equipment is carried at cost and includes expenditures that substantially increase the useful life of the equipment. Expenditures for maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions are included in income as incurred. Donations of equipment are recorded as support at their estimated fair value. Such donations are reported 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 used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Club reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Council reclassifies temporarily restricted net assets to unrestricted net assets at that time. Provision for depreciation is computed by the straight-line method over the estimated useful lives of the assets (generally 3 to 10 years for equipment and 5 to 33 years for building and improvements). The Council follows the practice of capitalizing all expenditures for property, plant and equipment in excess of $1,000. Fair Value Measurements The Financial Accounting Standards Board issued an accounting standard requiring certain assets to be reported at fair value. The standard defined fair value, established valuation techniques and required disclosures about fair value measurements. The Council adopted the standard as of January 1, The adoption of this standard did not require any new fair value measurements for the Council and there was no material impact to the financial statements

13 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 The standard provided for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels: Level 1 - Inputs consisting of unadjusted quoted prices in active markets for identical assets and have the highest priority. Level 2 - Inputs to the valuation methodology consisting of 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 and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 - Inputs to the valuation methodology that are unobservable and significant to fair value measurement. The level within the hierarchy at which the fair value measurement is calculated is based upon the lowest level of any input that is significant to the fair value measurement. When available, Level 1, observable inputs are used because they provide the most reliable evidence of fair value. Level 3 inputs are only used when Level 1 or Level 2 inputs are not available. All of the Council's pooled, long-term investments are considered to be Level 3 items. Net Assets Restricted net assets comprise those amounts restricted by donors, grantors, or applicable state law for endowment or other specific purposes. Temporarily restricted net assets comprise those amounts restricted by donors or grantors for use during a specified time period or for a particular purpose. The expiration of a temporary restriction is evidenced by a transfer of net assets to the unrestricted classification. Unrestricted net assets include general operations and board designated. General operations comprise the ongoing, day-to-day activities of the Council, including, but not limited to, merchandise sales, magazine publications, high-adventure base operations, program development, field support, and program marketing. Board-designated net assets are designated by the Council. These assets act as endowment and are described in the endowment policy note. Advertising Advertising costs are charged to operations in the period in which the advertisement is placed. Advertising expense for the years ended December 31, 2013 and 2012, $136 and $- respectively. Income Tax Status The Council is a nonprofit organization exempt from federal and state income taxes under Section 501 (c)(3) of the Internal Revenue Code as a charitable organization whereby only unrelated business income, as defined by Section 509(a)(1) of the Code, is subject to federal and state income tax. The Council currently has no unrelated business income. Accordingly, no provision for income taxes has been recorded. The Organization is subject to tax on unrelated business income, if incurred, as well as certain State filing fees. The Organization has concluded that there are no uncertain tax positions that would require recognition in the financial statements. The Organization s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based on ongoing analysis of tax laws, regulations and interpretations thereof as well as other factors. Generally, federal and state authorities may examine the Organization's tax returns for three years from the date of filing. Consequently, income tax returns for years prior to 2010 are no longer subject to examination by taxing authorities

14 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 Reclassifications Certain items in the prior year financial statements have been reclassified for comparative purposes to conform to the current year presentation. NOTE 2 - INVESTMENTS The Council, during 2008, entered into an investment management agreement with the Valley Community Foundation, Inc. (VCF), an affiliate of the Community Foundation of Greater New Haven, Inc., to manage all the Council's Long-Term Investments. Under the agreement, VCF is responsible for investing and managing all the funds under their control. Any expenditure of funds is made in accordance with the Spending Rule Policy as determined by VCF. The Council may, by providing VCF at least sixty days notice, direct VCF to distribute amounts larger than the amount calculated under the Policy. Investments are pooled with other funds held by VCF into Income Pool #1, which is managed by various investment managers for VCF. The investment pool consists of the following investments: Short-term investments 7.6% Fixed income 15.0% Equities: International 10.1% Domestic 38.6% Alternatives: Hedged equity 13.8% Absolute return 2.3% Real Assets 10.6% Private equity 1.9% 100.0% The following schedule summarizes the investment return in the Statement of Activities and Changes in Net Assets for the years ended December 31, 2013 and 2012 and a summary of changes in the fair value of the Council's Level 3 assets for the years ended December 31, 2013 and 2012: Balance at beginning of year $ 333,935 $ 304,213 Realized gains(losses) 6,509 2,056 Unrealized gains(losses) 34,062 35,480 Investment income 25,519 11,489 Investment expenses (4,144) (3,364) Additions 49,502 - Withdrawls (16,207) (15,939) Balance at end of year $ 429,176 $ 333,

15 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE 3 - ENDOWMENT FUND Changes in the endowment net assets for the years ended December 31, 2013 and 2012 are as follows: Unrestricted Board Designated Temporarily Restricted Permanently Restricted Total Balance at December 31, 2011 $ 247,049 $ 16,371 $ 65,321 $ 328,741 Investment return 34,739-10,367 45,106 Contributions 6, ,825 Transfer to Operating Fund (15,939) - - (15,939) Balance at December 31, ,674 16,371 75, ,733 Investment return 44,976-6,037 51,013 Contributions 10,851-11,316 22,167 Transfer to Operating Fund (16,207) - - (16,207) Balance at December 31, 2013 $ 312,294 $ 16,371 $ 93,041 $ 421,706 NOTE 4 - PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: December 31, Land and improvements $ 37,680 $ 27,209 Buildings and improvements 422, ,333 Furniture, fixtures and equipment 553, ,458 Vehicles 17,746 20,721 1,031, ,721 Less: Accumulated depreciation (600,151) (566,115) 431, ,606 Construction in progress 8,540 - Total $ 439,956 $ 428,606 NOTE 5 - LINE OF CREDIT The Council has a $100,000 line of credit with Naugatuck Valley Savings and Loan. The line of credit is collateralized by all of the Council assets and the outstanding principal balance is due on demand with interest payable monthly at prime plus 1.50%. As of December 31, 2013 and 2012, $691 and $36,163, of the line of credit had been used, respectively. Interest expense incurred on the line was $35 and $29 and interest rates were 3.25% and 4.75% as of the years then ended December 31, 2013, respectively

16 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE 6 - RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes: December 31, Net change Membership billboard advertising $ 18,164 $ 18,164 $ - Learning for life program 7,000 6,000 1,000 Camp Strang improvements 7,590 7,590 - Eagle scholarships 9,651 9,651 - Camperships 6,896 6,896 - Total $ 49,301 $ 48,301 $ 1,000 Permanently restricted net assets consist of endowment fund assets to be held indefinitely. The income from the following funds is restricted for the following purposes: Net change Eagle scholarships $ 30,727 $ 30,727 $ - Camperships 46,628 29,275 17,353 Camp improvements 15,686 15,686 - $ 93,041 $ 75,688 $ 17,353 NOTE 7 - LEASES The Council leases its office facility from a member of the board of directors under an agreement ending March Rent expense for the years ended December 31, 2013 and 2012 was $12,000, and is included under Occupancy Expense in the Statement of Functional Expenses. The Council leases office equipment under an operating lease expiring in 2016, and is classified under rental and maintenance of equipment in the Statement of Functional Expenses. Total lease expense for the years ended December 31, 2013 and 2012 was $3,596. Future minimum lease payments under the non-cancelable operating lease with remaining terms is as follows: 2014 $ 3, , $ 1,798 8,

17 NOTE 8 - PENSION PLAN HOUSATONIC COUNCIL BOY SCOUTS OF AMERICA, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 The Council participates in a multi-employer plan with Boy Scouts of America covering substantially all fulltime employees who have completed one year of service. Payments made into the multi-employer plan for the years ended December 31, 2013 and 2012 were $9,598 and $10,068, respectively. To be eligible, an employee must have completed twelve full months of continuous employment in a full-time regular, year-round position and worked at least 21 hours per week. Part-time or temporary employees become eligible after working 1,000 hours in the first twelve months of employment beginning with their hire date NOTE 9 - RELATED PARTY TRANSACTIONS The Council is an affiliate member of Boy Scouts of America. The Council purchases clothing, pins, badges and other goods from Boy Scouts of America for resale to its scouting members. Total purchases for the years ended December 31, 2013 and 2012 were $3,069 and $212, respectively. NOTE 10 - SUBSEQUENT EVENTS Management has evaluated subsequent events through June 2, 2014, the date on which the financial statements were available to be issued, and concluded that there were no items requiring adjustment to or disclosure in these financial statements

18 SUPPLEMENTARY INFORMATION

19 SCHEDULE OF FINANCIAL POSITION BY FUND December 31, Operating Fund Capital Fund Endowment Fund Total ASSETS CURRENT ASSETS Cash and cash equivalents $ 110,457 $ 161,351 $ - $ 27,618 $ 5,223 $ 42,728 $ 115,680 $ 231,697 Accounts receivable 23,092 1, ,092 1,250 Pledges receivable 1, ,000 1, ,413 1,501 Inventories 18,094 17, ,094 17,193 Other assets 8, , TOTAL CURRENT ASSETS 161, ,337 5,000 29,118 5,223 42, , ,183 NON-CURRENT ASSETS Property, buildings and equipment, net , , , ,606 Long-term investments 8,632 8,113 4,061 3, , , , ,935 TOTAL ASSETS $ 170,334 $ 188,450 $ 449,017 $ 461,541 $ 421,706 $ 364,733 $ 1,041,057 $ 1,014,724 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payables and accrued expenses $ 4,047 $ 11,774 $ 19,296 $ - $ - $ - $ 23,343 $ 11,774 Custodial accounts 25,655 20,273 1,705 3, ,360 23,379 Deferred activity income 4,310 30, ,310 30,722 Deferred camp income 2,895 2, ,895 2,490 Note payable , ,163 TOTAL CURRENT LIABILITIES 36,907 65,259 21,692 39, , ,528 NET ASSETS Unrestricted 108,263 99, , , , , , ,207 Temporarily restricted 25,164 24,164 7,766 7,766 16,371 16,371 49,301 48,301 Permanently restricted ,041 75,688 93,041 75,688 TOTAL NET ASSETS 133, , , , , , , ,196 TOTAL LIABILITIES AND NET ASSETS $ 170,334 $ 188,450 $ 449,017 $ 461,541 $ 421,706 $ 364,733 $ 1,041,057 $ 1,014,724 See Independent Auditors Report

20 SCHEDULE OF CHANGE IN NET ASSETS BY FUND December 31, 2013 December 31, 2012 Operating Endowment All Funds All Funds SUPPORT AND REVENUES Fund Capital Fund Fund Total Total DIRECT SUPPORT Friends of scouting $ 72,814 $ - $ - $ 72,814 $ 75,731 Less: Provision for Uncollectable (5,699) Net Friends of Scouting 72,814 72,814 70,032 Special fundraising events 86, ,100 61,070 Less: Cost of events (12,011) - - (12,011) (9,057) Net fundraising events 74, ,089 52,013 Foundations and trusts 43, ,349 66,498 Other direct support 7,345 43,372 5,223 55,940 36,553 TOTAL DIRECT SUPPORT 197,597 43,372 5, , ,096 INDIRECT SUPPORT - United Way 60, ,410 66,793 REVENUES Sales of supplies 4, ,650 4,432 Less: Cost of goods sold (3,069) - - (3,069) (212) Net income from sales of supplies 1, ,581 4,220 Product sales 55,910-55,910 66,888 Less: Cost of goods sold (20,405) - - (20,405) (23,117) Less: Commissions paid to Units (21,566) - - (21,566) (25,086) Net income from product sales 13, ,939 18,685 Investment income 26, ,405 30,691 10,284 Unrealized gain(loss) on investment ,571 40,571 35,235 Camping revenue 166, , ,123 Activity revenue 114, ,754 33,940 Other revenue 1, ,004 1,439 TOTAL REVENUES 323, , , ,926 TOTAL DIRECT SUPPORT AND REVENUES 581,350 43,616 50, , ,815 EXPENSES Scouting program 414,211 35, , ,942 Supporting services: Management and general 119,457 10, , ,954 Fund raising 23, ,818 22,834 TOTAL EXPENSES 557,415 45, , ,730 23,935 (1,872) 72,262 45,085 OPERATING TRANSFER IN(OUT) (13,699) 6,925 6, INCREASE(DECREASE) IN NET ASSETS 10,236 5,053 56,973 72,262 45,085 Net assets at beginning of year 123, , , , ,111 NET ASSETS AT END OF YEAR $ 133,427 $ 427,325 $ 421,706 $ 982,458 $ 910,196 See Independent Auditors Report

21 SCHEDULE OF FUNCTIONAL EXPENSE YEAR ENDED DECEMBER 31, 2013 Total Program Management and General Fund Raising Functional Expenses EMPLOYEE COMPENSATION Salaries $ 170,813 $ 39,931 $ 11,092 $ 221,836 Employee benefits 20,372 4,763 1,323 26,458 Payroll taxes 19,257 4,501 1,251 25,009 TOTAL EMPLOYEE COMPENSATION 210,442 49,195 13, ,303 OTHER EXPENSES Supplies 62,962 13,723 4,037 80,722 Telephone 6,173 1, ,916 Postage and shipping 2, ,893 Occupancy 29,608 6,454 1,898 37,960 Rental and maintenance of equipment 7,499 1, ,613 Printing and publications ,273 Auto and travel 23,180 5,051 1,486 29,717 Conferences and meetings 4, ,574 Specific assistance to individuals 10, ,220 Recognition awards 3, ,172 Professional fees - 39,956-39,956 Interest Insurance 10,227 2, ,112 Depreciation 34, ,038 Charter and national service fee - 4,503-4,503 Jamboree 36, ,340 Bad debts Miscellaneous 7,810 1, ,015 TOTAL OTHER EXPENSES 238,909 80,539 10, ,600 TOTAL FUNCTIONAL EXPENSES $ 449,351 $ 129,734 $ 23,818 $ 602,903 See Independent Auditors Report

22 SCHEDULE OF FUNCTIONAL EXPENSE YEAR ENDED DECEMBER 31, 2012 Total Program Management and General Fund Raising Functional Expenses EMPLOYEE COMPENSATION Salaries $ 165,552 $ 38,701 $ 10,750 $ 215,003 Employee benefits 21,926 5,126 1,424 28,476 Payroll taxes 19,715 4,608 1,281 25,604 TOTAL EMPLOYEE COMPENSATION 207,193 48,435 13, ,083 OTHER EXPENSES Supplies 44,963 9,800 2,883 57,646 Telephone 4,950 1, ,346 Postage and shipping 1, ,276 Occupancy 38,242 8,336 2,452 49,030 Rental and maintenance of equipment 6,401 1, ,206 Printing and publications 1, ,863 Auto and travel 18,893 4,117 1,212 24,222 Conferences and meetings Specific assistance to individuals 5, ,325 Recognition awards 5,349 1, ,858 Professional fees - 26,122-26,122 Interest Insurance 12,729 2, ,319 Depreciation 28, ,182 Charter and national service fee - 4,699-4,699 Jamboree Bad debts Miscellaneous 10,808 2, ,858 TOTAL OTHER EXPENSES 179,749 63,519 9, ,647 TOTAL FUNCTIONAL EXPENSES $ 386,942 $ 111,954 $ 22,834 $ 521,730 See Independent Auditors Report