NORTH COUNTRY TRAIL ASSOCIATION, INCORPORATED. FINANCIAL STATEMENTS For the year ended December 31, 2014

Transcription

1 NORTH COUNTRY TRAIL ASSOCIATION, INCORPORATED FINANCIAL STATEMENTS For the year ended December 31, 2014

2 TABLE OF CONTENTS INDEPENDENT AUDITOR S REPORT... 1 FINANCIAL STATEMENTS Statements of Financial Position... 5 Statements of Activities... 6 Statements of Functional Expenses... 8 Statements of Cash Flows Notes to Financial Statements... 11

3 INDEPENDENT AUDITORS REPORT February 2, 2015 Board of Directors North Country Trail Association, Incorporated Lowell, Michigan We have audited the accompanying financial statements of North Country Trail Association, Incorporated, which comprise the statements of financial position as of December 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 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.

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of North Country Trail Association, Incorporated as of December 31, 2014, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited the North Country Trail Asociation, Incorporated s 2013 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated February 28, In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2013, is consistent, in all material respects, with the audited financial statements from which it has been derived. Certified Public Accountants Page 2

5 FINANCIAL STATEMENTS Page 3

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7 STATEMENTS OF FINANCIAL POSITION December 31, 2014 and 2013 ASSETS Current Assets Cash $ 358,964 $ 264,115 Government receivables - 33,994 Prepaid expenses 4,733 5,207 Inventory 4,511 7,013 Investments 49,089 42,355 Total Current Assets 417, ,684 Property and Equipment Land and building 20,000 20,000 Software and equipment 25,355 25,355 Trail equipment 12,559 12,559 57,914 57,914 Less: accumulated depreciation 35,179 33,355 Net Property and Equipment 22,735 24,559 $ 440,032 $ 377,243 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable $ 34,052 $ 6,739 Accrued payroll and payroll liabilities 1,069 1,397 Deferred revenue 21,936 31,640 Total Current Liabilities 57,057 39,776 Net Assets Unrestricted net assets 322, ,795 Temporarily restricted net assets 60,574 68,672 Total Net Assets 382, ,467 $ 440,032 $ 377,243 See accompanying notes to financial statements. Page 5

8 STATEMENTS OF ACTIVITIES For the year ended December 31, 2014 With comparative totals for 2013 Support Contributions: Unrestricted Temporarily Restricted Donations $ 414,290 $ 42,149 Government contributions 416,175 - Program revenue 11,201 - Merchandise sales 24,381 - Rental fees 7,588 - Interest income 1,655 - Unrealized gain on investments 4,073 - Other income 6,617 - Net assets released from restrictions 50,247 (50,247) Total Support 936,227 (8,098) Disbursements Program services: Public service, education and cartography 167,224 - Trail work and planning 227,239 - Networking and volunteer support 249,649 - Supporting services: Management and general 121,941 - Fundraising 116,568 - Total Disbursements 882,621 - Change in Net Assets 53,606 (8,098) Net Assets - Beginning of year 268,795 68,672 Net Assets - End of year $ 322,401 $ 60,574 See accompanying notes to financial statements. Page 6

9 $ 456,439 $ 383, , ,540 11,201 46,111 24,381 33,909 7,588 11,412 1,655 1,471 4,073 8,303 6,617 12, , , , , , , , , , , , , , ,395 45,508 11, , ,958 $ 382,975 $ 337,467 Page 7

10 STATEMENTS OF FUNCTIONAL EXPENSES For the year ended December 31, 2014 With comparative totals for 2013 Program Services Public Service, Networking Education and Trail Work and Volunteer Cartography and Planning Support Total Salaries, wages and benefits $ 29,641 $ 137,556 $ 105,148 $ 272,345 Payroll taxes 2,224 10,095 7,689 20,008 Advertising and promotion 1, ,315 Affiliate agreements - 6,639-6,639 Bank/credit card charges - - 3,746 3,746 Computer equipment 14,331 1,397 8,026 23,754 Depreciation 1, ,824 Development expenses Dues and subscriptions ,948 7,294 Insurance Intern stipend 4, ,928 Licenses and fees Meeting expenses Miscellaneous Northstar expense ,288 24,288 Office equipment Office supplies 1, ,465 10,185 Outreach and hospitality 2,220 30,239 26,903 59,362 Postage ,141 8,290 Printing and photographs 7, ,573 Professional fees ,272 Rent 2, ,842 13,032 Repairs and maintenance ,146 Program events 1,591-8,139 9,730 Telephone and internet 744 1,941 5,331 8,016 Trail equipment and supplies 47,131 10,800-57,931 Trail maintenance 32, ,951 Trail shop merchandise 4,650-9,163 13,813 Travel expenses 3,022 23,572 4,803 31,397 Utilities 2, ,092 4,635 Volunteer training/recognition 4,848-9,961 14,809 Website fees - - 1,163 1,163 Workers' compensation $ 167,224 $ 227,239 $ 249,649 $ 644,112 See accompanying notes to financial statements. Page 8

11 Supporting Services Management and General Fundraising $ 68,180 $ 81,687 $ 422,212 $ 391,004 5,528 5,768 31,304 32, , ,639 6, ,879 4, ,947 20, ,824 3,038-17,292 17, ,371 4,686 7,567-7,567 6, ,928 26, , ,020 1, ,288 24, ,459 10, ,323 61,889 57,216-3,443 11,733 17, ,573 33,164 17, ,407 10,247 1, ,462 17, ,368 1, ,730 49, ,736 7, ,931 63, ,951 27, ,813 20,840 17,297 3,176 51,870 66, ,152 6, ,809 11, ,163 1,641 2,272-2,272 2,779 $ 121,941 $ 116,568 $ 882,621 $ 931,395 Page 9

12 STATEMENTS OF CASH FLOWS For the years ended December 31, 2014 and Cash Flows from Operating Activities Cash received from donors and operations $ 946,691 $ 988,288 Interest received 1,655 1,471 Cash paid to suppliers and for operating expenses (850,836) (929,354) Net Cash Provided by Operating Activities 97,510 60,405 Cash Flows from Investing Activities Purchases of investments (5,198) (1,955) Net Increase in Cash 92,312 58,450 Beginning Cash 264, ,665 Ending Cash $ 356,427 $ 264,115 Reconciliation of Change in Net Assets to Net Cash Provided by Operating Activities Change in net assets $ 45,508 $ 11,509 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 1,824 3,038 Unrealized gain on investments (4,073) (8,303) (Increase) decrease in current assets: Accounts receivable - 7,462 Pledges receivable - 30,000 Government receivables 33,994 (258) Prepaid expenses 474 (301) Inventory 2,502 (2,259) Increase (decrease) in current liabilities: Accounts payable 27,313 1,647 Accrued payroll and payroll liabilities (328) (84) Deferred revenue (9,704) 17,954 Net Cash Provided by Operating Activities $ 97,510 $ 60,405 See accompanying notes to financial statements. Page 10

13 NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2014 Note A Nature of Organization and Significant Accounting Policies Nature of Organization The North Country Trail Association (Association) is a not-for-profit entity that develops, maintains, protects, and promotes the North Country Scenic Trail as the premier hiking path across the northern tier of the United States. Support comes primarily from various government funding, contributions from charitable organizations, and membership dues and contributions. Basis of Accounting and Financial Statement Presentation The accompanying financial statements of the Association have been prepared on the accrual basis of accounting. For financial reporting purposes, the Association presents its financial statements by unrestricted, temporarily restricted and permanently restricted net asset classifications. Concentration of Support The Association received $416,175 in grants in 2014 from the National Park Service, which is a division of the United States Department of the Interior. These grants represented approximately 45% of the Association's total revenue in Cash and Cash Equivalents For purposes of the statements of cash flows, the Association considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. Government Receivables Government receivables are stated at the amount management expects to collect from outstanding balances. Management has reviewed the balances that comprise the various categories of government receivables and determined such balances to be fully collectible. Accordingly, no provision for uncollectible accounts is included in the financial statements. If amounts become uncollectible, a provision for the potential loss will be charged to operations when that determination is made. Inventory Inventory is stated at lower of cost or market, with cost determined by the first-in, first-out (FIFO) method. Investments Investments are reported at their fair market value in the statement of financial position. Unrealized gains and losses are included in the change in net assets. Investments include certificates of deposit with a maturity greater than three months and marketable equity securities. Page 11

14 NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2014 Note A Nature of Organization and Significant Accounting Policies (Continued) Property and Equipment The Association depreciates its property and equipment using the Modified Accelerated Cost Recovery System (MACRS) for both financial reporting and tax purposes. Depreciation of trail equipment, software, and office equipment is computed over three to seven years. The building and related land, which is a historic schoolhouse located in White Cloud, Michigan, is stated at fair market value at the time of donation. The schoolhouse is not being depreciated. Assets over $5,000 are capitalized. Maintenance and repairs are expensed as incurred. Deferred Revenue Deferred revenue represents grants received for which related expenditures required by the grants have not yet been made. Net Assets The Association reports information regarding its financial position and activities according to three classes of net assets: Unrestricted net assets are not restricted by donors, or the donor-imposed restrictions have expired. Temporarily restricted net assets contain donor-imposed restrictions that permit the Association to use or expend the assets as specified. Temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions when the restrictions are satisfied either by the passage of time or by actions of the Association. However, if a restriction is fulfilled in the same time period in which the contribution is received, the Association reports the support as unrestricted. Permanently restricted net assets contain donor-imposed restrictions that stipulate the resources be maintained permanently, but permit the Association to use or expend part or all of the income derived from the donated assets for specific purposes. Investment earnings available for distribution are recorded in unrestricted net assets. Contributions Contributions are recognized when the donor makes a promise to give to the Association that is, in substance, unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donorrestricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Page 12

15 NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2014 Note A Nature of Organization and Significant Accounting Policies (Continued) Donated Services For the fiscal year ended December 31, 2014, management reports that volunteers contributed approximately 75,203 hours of service. The financial statements do not estimate or reflect the value or cost of these services since they do not meet the criteria for recognition as contributed services. Comparative Financial Information The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Association s financial statements for the year ended December 31, 2013, from which the summarized information was derived. Income Tax Status The Association is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. The Association evaluates tax positions taken on its federal Exempt Organization Business Income Tax Returns in accordance with generally accepted accounting principles, which require that tax positions taken be more-likely-than-not to be sustained. Management believes that the Association has no significant unrecognized tax benefits under that criteria. Penalties and interest, if any, assessed by income taxing authorities are included in operating expenses. The Association s federal Exempt Organization Business Income Tax Returns are generally subject to examination by taxing authorities for three years after they were filed. Concentration of Credit Risk From time to time the Association s cash balance in one financial institution exceeds the $250,000 amount insured by the Federal Deposit Insurance Corporation (FDIC). Functional Allocation of Expenses The costs of providing the various programs and activities have been summarized on a functional basis in the Statement of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Fund raising costs include both direct and indirect costs related to the solicitation of contributions from the general public. Page 13

16 NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2014 Note A Nature of Organization and Significant Accounting Policies (Continued) Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 reported period. Actual results could differ from those estimates. Subsequent Events Management evaluates events occurring subsequent to the date of the financial statements in determining the accounting for and disclosure of transactions and events that affect the financial statements. Subsequent events have been evaluated through the date of the accompanying independent auditor's report which is the date the financial statements were available to be issued. Note B Government Receivables Government receivables consist of amounts due from the National Parks Service as follows: Receivable in less than one year $ - $ 33,994 Note C Investments Investments are recorded at fair market value. Investments consist of the following: Index funds $ 49,089 $ 42,355 Page 14

17 NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2014 Note D Operating Lease Commitments Lessee The Association leased office space in Lowell under a five year lease requiring monthly payments of $1,491 that expired in February A new lease was signed and expires in March The new lease requires monthly payments of $1,200. The lease expense for the year ended December 31, 2014 was $15,462. Future minimum lease payments are as follows: Year ending December 31, 2015 $ 14, , , , ,400 Note E Operating Lease Lessor The Association was the lessor of office space under an operating lease agreement. The lease term was for two years and expired in March The lease was not renewed. The agreement required payments of $400 per month. Rental income under this lease agreement was $1,200 for the year ended December 31, Note F Fair Value Measurement Generally accepted accounting principles establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1- Unadjusted quoted prices in active markets for identical assets or liabilities Level 2- Quoted prices in markets that are not considered active or financial instruments for which significant inputs include quoted prices for similar assets or liabilities, interest rates, credit risk, etc. Level 3- Significant unobservable inputs, which may include the Association s own assumptions in determining fair value. The asset or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Association s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Page 15

18 NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2014 Note F Fair Value Measurement (Continued) Assets measured at fair value on a recurring basis comprise the following: Level 1 Based Fair Value on Quoted Prices Description December 31, 2014 in Active Markets Index funds $ 49,089 $ 49,089 Level 1 Based Fair Value on Quoted Prices Description December 31, 2013 in Active Markets Index funds $ 42,355 $ 42,355 Note G Restrictions on Net Assets Temporarily restricted net assets at December 31, 2014 relate to funds donated that were designated for a specific future use. Temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions when the restrictions are satisfied. Note H Retirement Plans All employees who meet certain age and length of service requirements are eligible to participate in the Association s 403(b) plan. The Plan allows employees to defer a percentage of wages. The Association matches 100% of the employees' deferral up to 5% of their gross pay. The Association s 403(b) contributions for the year ended December 31, 2014 were $11,354. Page 16