CONNECTICUT MUSIC EDUCATORS ASSOCIATION AUDITED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2016

Transcription

1 AUDITED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2016

2 TABLE OF CONTENTS Independent Auditor s Report 3 Financial Statements: Statement of Financial Position 5 Statement of Activities 6 Statement of Cash Flows 7 Notes to the Financial Statements 8 Supplemental Information: Statement of Functional Expenses 14 2

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 Board of Directors Connecticut Music Educators Association Cromwell, CT INDEPENDENT AUDITOR S REPORT We have audited the accompanying financial statements of Connecticut Music Educators Association, which comprise the statement of financial position as of June 30, 2016, and the related statements of activities 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 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 Connecticut Music Educators Association as of June 30, 2016, 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.

4 Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses on page 14 is presented for purposes of additional analysis and is 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 December 15,

5 STATEMENT OF FINANCIAL POSITION AS OF JUNE 30, 2016 ASSETS CURRENT ASSETS Cash and cash equivalents $ 442,639 Investments 117,456 Accounts receivable 4,478 TOTAL CURRENT ASSETS 564,573 FIXED ASSETS, NET 189,113 LIABILITIES AND STOCKHOLDER'S EQUITY TOTAL ASSETS $ 753,686 CURRENT LIABILITIES Accounts Payable and accrued expenses $ 7,975 TOTAL CURRENT LIABILITIES 7,975 NET ASSETS Unrestricted 745,711 TOTAL NET ASSETS 745,711 TOTAL LIABILITIES AND NET ASSETS $ 753,686 The accompanying notes are an integral part of these financial statements 5

6 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2016 PROGRAM REVENUES Festivals $ 534,266 Professional development 71,959 Membership dues 38,298 Royalties and rebates 6,574 School association fees 71,625 Total program revenues 722,722 EXPENSES Program services 549,734 Management and general 99,341 Total expenses 649,075 OTHER INCOME (EXPENSE) Investment & interest income (expense) (1,614) Miscellaneous 14,191 Total other income 12,577 Change in net assets 86,224 Net assets, beginning of year 659,487 NET ASSETS, END OF YEAR $ 745,711 The accompanying notes are an integral part of these financial statements 6

7 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 86,224 Adjustments to reconcile change in net assets to net cash provided by(used in) operating activities: Unrealized and realized gain/(loss) 4,344 Depreciation and amortization 3,579 Decrease(Increase) in operating assets: Accounts receivable (2,816) (Decrease)Increase in operating liabilities: Accounts payable 5,275 NET CASH PROVIDED BY OPERATING ACTIVITIES 96,606 CASH FLOWS FROM INVESTING ACTIVITIES Net investment activity (1,666) NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES (1,666) NET (DECREASE) INCREASE IN CASH 94,940 Cash at beginning of period 347,699 CASH AT END OF PERIOD $ 442,639 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for interest expense $ - The accompanying notes are an integral part of these financial statements 7

8 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business The Connecticut Music Educators Association (the Organization ) provides programs and activities for music educators, students and future music educators striving to enhance the quality of music education for all children. The Organization s goal is to promote and recognize effective music teaching, quality learning opportunities for all Connecticut students N-12, provide a unified voice on behalf of music educators in Connecticut and to maintain a vital, effective and efficient organization. Basis of Accounting The financial statements of Connecticut Music Educators Association have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. Net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor imposed restrictions. Accordingly, net assets and changes therein are classified as follows: Permanently restricted net assets - Net assets subject to donor imposed stipulations that they be maintained permanently by the Organization. Generally, the donors of the assets permit the Organization to use all or part of the income earned and capital gains for general or specific purposes. Temporarily restricted net assets - Net assets subject to donor-imposed stipulations that are met by using the money for the donor intended purpose or the passage of time. Unrestricted net assets - Net assets not subject to donor imposed stipulations Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of temporary restrictions on net assets (i.e., the donor stipulated purpose has been fulfilled and or the stipulated time has elapsed) are reported as reclassification between the applicable classes of net assets. Contributions, including unconditional promises to give, are recognized as revenues in the period received. Use of 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 reporting period. Actual results could differ from those estimates. Connecticut Music Educators Association does not consider pledges to be account. Donations are recognized when given. 8

9 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 Cash, Cash Equivalents and Credit Risk For purposes of the statement of cash flows, cash equivalents consist of liquid investments with an initial maturity of three months or less except for cash in the brokerage account being held for investment purposes. Fair market value approximates carrying amounts. Connecticut Music Educators Association maintains bank accounts insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 for Accrued Income The Organization carries its accrued income at cost less an allowance for doubtful accounts. On a periodic basis, management evaluates its accounts receivable and need for an allowance for doubtful accounts. Accrued income consists of receipts for programs that were due as of the date of the financial statements. The balance in this account was $4,478 for the year ended June 30, There is currently no allowance set up as management believes all amounts are collectible. Investments The Organization records all investments in equity securities with readily determinable fair values in the statements of financial position. Realized and changes in unrealized investment gains, losses and income are included in the statements of activities and changes in net assets. The value of all contributions to the fund is presented on the statements of financial position as unrestricted net assets. Fair Value of Financial Instruments The Organization has established a framework for measuring fair value, based on a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels, as follows: Level 1 Inputs to the valuation methodology based on unadjusted quoted market prices in active markets that are accessible at the measurement date. Level 2 inputs include the following: Quoted prices for similar assets and liabilities in active markets Quoted prices for identical or similar assets or liabilities in markets that are not active Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Unobserved inputs for the asset or liability (supported by little or no market activity). Level 3 inputs include managements own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). The fair value of investments, consisting of equity securities is estimated using the valuation methodology based on unadjusted quoted market prices in active markets that are accessible at the measurement date. Equity securities are generally categorized in Level 1 of the fair value hierarchy. 9

10 Donated Property and Equipment NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 Donated marketable securities and other non-cash donations are recorded as contributions at their estimated fair values at the date of donation. Donations of property and equipment are recorded as contributions at their estimated fair value at the date of donation when the estimated value is $500 or more. Such donations are reported as increases in unrestricted net assets 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 contributions. Absent donor stipulations regarding how long those donated assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted net assets at that time. Donated services are recognized as contributions in accordance with the ASC, Accounting for Contributions Received and Contributions Made: the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Organization. Volunteers also provided support and services throughout the year that are not recognized as contributions in the financial statements since the recognition criteria under the codification were not met. Fixed Assets Fixed assets are recorded at cost or donated fair market value and all fixed assets with a value of $1,000 or more, with a useful life of greater than one year, are capitalized. Maintenance and repairs are charged to expense as incurred. Equipment is depreciated using the straight-line method over their estimated useful lives ranging from 3 to 15 years. When fixed assets are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Functional Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the Statement of Activities and in the Statement of Functional Expenses. Accordingly, certain costs have been allocated among the services and supporting services benefited. When possible, costs are allocated to each service based on actual expenditures for that service. Income Taxes 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 Organization is also exempt from State income taxes. Accordingly, no provision for income taxes has been made in the financial statements. The Organization is subject to tax on unrelated business income, if incurred, as well as certain state filing fees. 10

11 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 The Organization has concluded that there are no uncertain tax positions that would require recognition in the financial statements. If the Foundation were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties would be reported as income taxes. 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 Foundation's tax returns for three years from the date of filing. Consequently, income tax returns for years prior to 2013 are no longer subject to examination by taxing authorities. Dissolution Statement In the event Connecticut Music Educators Association shall dissolve, the Board of Directors shall determine the distribution of the net assets. All assets and balances must be given to an organization created and operated exclusively for charitable purposes as described in Section 501(c) (3) of the Internal Revenue Code. NOTE 2 INVESTMENTS The following is a summary of the aggregate carrying amount of investments by major types at June 30, 2016: Market Value 2016 Cumulative Unrealized Gain/(Loss) Cost Equity Securities $ 120,134 $ (2,678) $ 117,456 Total $ 120,134 $ (2,678) $ 117,456 Total investment return is summarized as follows for the year ended June 30, 2016: 2016 Unrealized loss $ (4,344) Realized gain 307 Interest/dividend income 2,698 Investment Fees $ (275) (1,614) 11

12 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 NOTE 3 FIXED ASSETS As of June 30, 2016, property, plant and equipment consist of: 2016 Land $ 65,000 Equipment 149, ,113 Less accumulated depreciation (25,000) Total Net Fixed Assets $ 189,113 Depreciation expense was $3,579 for the year ended June 30, NOTE 4 OPERATING LEASE COMMITMENT Connecticut Music Educators Association leases office equipment from an unrelated party. The lease runs from February 27, 2013 through January 27, The minimum lease payments are payable in monthly installments of $231. Additional charges occur with usage that is expensed in operating expenses over the course of the year. Minimum annual payments are as follows: Years Ended June 30, , ,617 $ 4,389 NOTE 5 SUBSEQUENT EVENTS Management has evaluated subsequent events through December 15, 2016, the date on which the financial statements were available to be issued. 12

13 SUPPLEMENTARY INFORMATION

14 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED JUNE 30, 2016 Program Management and General Total Functional Expense All State $ 211,772 $ - $ 211,772 HS Region 129, ,359 MS Region 92,610-92,610 Professional development 56,321-56,321 Salaries - 39,975 39,975 Conference 15,403-15,403 Insurance - 11,172 11,172 Building maintenance - 2,838 2,838 CMEA News 9,650-9,650 Elementary honors choir 11,598-11,598 Elementary honors orchestra 4,939-4,939 Lobbying 6,625-6,625 Real estate tax - 4,944 4,944 Utilities - 4,126 4,126 Payroll taxes - 4,939 4,939 Stipends - 3,800 3,800 Accounting - 9,470 9,470 Equipment rental & maintance - 6,959 6,959 Depreciation 3,579-3,579 Telephone/internet - 2,679 2,679 Banking/credit card fees - 3,112 3,112 Office supplies - 3,008 3,008 Website - 2,319 2,319 Operations 2,544-2,544 Miscellaneous 5,334-5,334 TOTAL FUNCTIONAL EXPENSES $ 549,734 $ 99,341 $ 649,075 See independent auditors report. 14