THE URBANART COMMISSION FINANCIAL STATEMENTS

Transcription

1 THE URBANART COMMISSION FINANCIAL STATEMENTS June 30, 2013 and 2012

2 TABLE OF CONTENTS Page INDEPENDENT AUDITOR'S REPORT 1 FINANCIAL STATEMENTS Statements of Financial Position 3 Statements of Activities and Changes in Net Assets 4 Statements of Functional Expenses 5 Statements of Cash Flows 6 Notes to Financial Statements 7

3 INDEPENDENT AUDITOR'S REPORT To the Board of Directors The UrbanArt Commission We have audited the accompanying financial statements of The UrbanArt Commission (a nonprofit organization), which comprise the statements of financial position as of June 30, 2013 and 2012, and the related statements of activities and changes in net assets, 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. Auditor s 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 audits to obtain reasonable assurance about whether the financial statements are free from material misstatements. 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. 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. 1

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The UrbanArt Commission as of June 30, 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. Memphis, Tennessee December 9,

5 THE URBANART COMMISSION STATEMENTS OF FINANCIAL POSITION June 30, 2013 and 2012 Assets (as restated) Assets Cash and cash equivalents $ 52,023 $ 26,559 Cash restricted for in-progress projects 405, ,011 Program receivables 27,450 21,405 Unconditional promises to give 1,600 2,750 Other receivables Prepaid expenses 3, , ,423 Property and Equipment Furniture and equipment 20,971 21,273 Less: accumulated depreciation 10,097 15,107 Net property and equipment 10,874 6,166 Total assets $ 501,505 $ 774,589 Liabilities and Net Assets Liabilities Accounts payable and accrued liabilities $ 7,769 $ 20,807 Deferred revenue 505, ,732 Total liabilities 512, ,539 Net Assets Unrestricted (11,284) (15,950) Total liabilities and net assets $ 501,505 $ 774,589 The accompanying notes are an integral part of the financial statements. 3

6 THE URBANART COMMISSION STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS For the Years Ended June 30, 2013 and (as restated) Public Support and Revenue Project revenue $ 790,253 $ 728,958 Grants 46,850 24,000 Contributions 4,892 5,125 Donated materials and services 16,200 13,500 Other income 2,895 7,450 Total public support and revenues 861, ,033 Expenses Program 740, ,731 Management and general 103, ,143 Fundraising 10,417 11,544 Total expenses before depreciation 853, ,418 Change in Net Assets before depreciation 7,550 35,615 Depreciation expense 2,884 3,054 Change in net assets 4,666 32,561 Net assets, beginning of year, as previously stated (15,950) 85,107 Prior period adjustment - (133,618) Net assets, beginning of year, as restated (15,950) (48,511) Net assets, end of year $ (11,284) $ (15,950) The accompanying notes are an integral part of the financial statements. 4

7 THE URBANART COMMISSION STATEMENTS OF FUNCTIONAL EXPENSES For the Years Ended June 30, 2013 and Program Management Services & General Fundraising Total Artwork $ 616,339 $ - $ - $ 616,339 Payroll 99,606 60,673 9, ,353 Professional fees 1,500 26,700-28,200 Operations 5,319 8, ,344 Facilities 11,040 2, ,800 Business 4,420 2, ,041 Travel and meetings 1,831 2, ,463 Total functional expenses $ 740,055 $ 103,068 $ 10,417 $ 853, (as restated) Program Management Services & General Fundraising Total Artwork $ 454,718 $ - $ - $ 454,718 Payroll 107,910 65,731 9, ,472 Professional fees 30,178 23,500-53,678 Operations 7,130 9, ,565 Facilities 12,493 2, ,615 Business 7,160 6, ,462 Travel and meetings 2,142 2, ,908 Total functional expenses $ 621,731 $ 110,143 $ 11,544 $ 743,418 The accompanying notes are an integral part of the financial statements. 5

8 THE URBANART COMMISSION STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2013 and (as restated) Cash Flows Provided By (Used For) Operating Activities: Change in net assets $ 4,666 $ 32,561 Adjustments to Reconcile Change in Net Assets to Net Cash Provided By (Used For) Operating Activities: Depreciation 2,884 3,054 Change in Operating Assets and Liabilities: Increase (Decrease) in Cash and Cash Equivalents: Program receivables (6,045) 130,220 Unconditional promises to give 1,150 1,875 Other receivables (467) 30,611 Prepaid expenses (2,867) (50) Accounts payable and accrued liabilities (13,038) (102,301) Deferred revenue (264,712) 544,014 Total adjustments (283,095) 607,423 Net cash provided by operating (used for) activities (278,429) 639,984 Cash Flows From (Used For) Investing Activities: Purchase of property and equipment (7,592) (2,205) Change in cash and cash equivalents (286,021) 637,779 Cash and cash equivalents at beginning of the year 743, ,791 Cash and cash equivalents at end of the year $ 457,549 $ 743,570 The accompanying notes are an integral part of the financial statements. 6

9 THE URBANART COMMISSION NOTES TO FINANCIAL STATEMENTS June 30, 2013 and 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations The UrbanArt Commission (the Organization ) is a not-for-profit organization whose purpose is to promote quality public art and urban design by providing consulting services and development of city and county public art projects which encourage a greater awareness of and respect for the arts. Method of Accounting The financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Contributions and Grants The Organization reports contributions as unrestricted, temporarily restricted, or permanently restricted depending on the existence and/or nature of any donor restrictions. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. When a donor restriction expires in the same year received, revenue is recognized as unrestricted net assets. Donated Goods and Services Contributions of donated non-cash assets are recorded at their fair value in the period received. Contributions of donated services that create or enhance non-financial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. Donated legal services at June 30, 2013 and 2012 totaled $16,200 and $13,500, respectively. 7

10 Concentrations and Credit Risks Two sources comprised approximately 92% and 93% of the Organization s revenues as of June 30, 2013 and 2012, respectively. Credit risks primarily relate to cash and cash equivalents. Cash and cash equivalents are primarily held in bank accounts at one financial institution. Noninterest bearing accounts at the institution have unlimited insurance with the Federal Deposit Insurance Corporation (FDIC). Cash and Cash Equivalents For purposes of the statements of cash flows, the Organization considers all highly liquid debt instruments purchased with initial maturities of three months or less to be cash equivalents. Accounts Receivable Receivables are primarily due from the City of Memphis, and foundations located in the Memphis metropolitan area. Management considers the amounts to be collectible and does not consider an allowance for doubtful accounts to be necessary at June 30, 2013 and Property and Equipment Property and equipment purchases in excess of $500 are capitalized and stated at cost. Depreciation is calculated using the straight-line method over the useful lives of the assets, generally 5 years for computer equipment and furniture and fixtures. Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful life of the respective assets. Functional Expense Allocation The costs of providing various programs and supporting services have been reported on a functional basis in the Statements of Activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited based on estimates made by management. Net Assets In accordance with generally accepted accounting principles, the Organization is required to report 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. Unrestricted net assets include funds available for unrestricted use as well as any funds that may be designated by the board of directors for a particular use. Temporarily restricted net assets are subject to donor-imposed restrictions either for use during a specified time period or for a particular purpose. Restricted net assets are reclassified to unrestricted net assets upon satisfaction of the time or purpose restriction and reported in the Statements of Activities as net assets released from restrictions. When a donor restriction expires in the same year received, the contribution is reported as unrestricted. Permanently restricted net assets are subject to 8

11 donor-imposed restrictions and are required to be maintained permanently by the Organization. There were no restrictions on net assets at June 30, 2013 and Tax Status The Organization is exempt from income tax under Section 501(c)(3) of the Internal Revenue Code and has been determined to be an organization which is not a private foundation. The Organization files an exempt return with the U.S. federal jurisdiction. The federal returns for tax years 2009 and beyond remain subject to examination by taxing authorities. Advertising Costs The Organization expenses all advertising costs as incurred. There were no advertising expenses for the year ended June 30, Advertising expense was $524 for the year ended June 30, Date of Management s Review The Organization evaluated its June 30, 2013 financial statements for subsequent events through December 9, 2013, the date the financial statements were available to be issued. The company is not aware of any subsequent events which would require recognition or disclosure in the financial statements. NOTE 2 PLEDGES RECEIVABLE Pledges receivable are unconditional promises to give and are recorded as received and primarily represent pledges from various contributors due in The Organization believes all pledges will be received and therefore, no allowance for uncollectible amounts is deemed necessary. NOTE 3 LINE OF CREDIT The Organization maintains a line of credit of $35,000 with a bank which expires on February 1, The outstanding borrowings bear interest based on the prime rate plus 1.75%, currently 5.00% at June 30, There were no borrowings outstanding under this line of credit at June 30, 2013 and NOTE 4 PRIOR PERIOD ADJUSTMENT In 2013, it was determined that project management fees received should be earned as the related project progresses instead of the time of receipt. As a result, deferred revenue should be recorded when the fees are received. The Organization has recorded a prior period adjustment to reflect the deferred revenue at June 30, 2011 for $133,618. The Organization has also restated their June 30, 2012, financial statements to reflect the error. 9

12 The following financial statement line items were affected by the adjustment as of and for the year ended June 30, 2012: Previously Prior Period Stated Adjustment As Restated Statement of Financial Position Deferred revenue $ 717,011 $ 52,721 $ 769,732 Unresticted net assets 36,771 (52,721) (15,950) Statement of Activities and Changes in Net Assets Project revenue $ 648,061 $ 80,897 $ 728,958 Change in net assets (48,336) 80,897 32,561 Net assets, beginning of year 85,107 (133,618) (48,511) Net assets, end of year 36,771 (52,721) (15,950) Statement of Cash Flows Change in net assets $ (48,336) $ 80,897 $ 32,561 Deferred revenue 624,911 (80,897) 544,014 10