UNITED WAY OF POSEY COUNTY, INC. FINANCIAL STATEMENTS. Years Ended December 31,2017 and (With Independent Auditor's Report Thereon)

Transcription

1 FINANCIAL STATEMENTS Years Ended December 31,2017 and 2016 (With Independent Auditor's Report Thereon)

2 CONTENTS Independent Auditor's Report Financial Statements: Statements offinancial Position Statements of Activities Statements of Functional Expenses Statements of Cash Flows Notes to Financial Statements

3 rr:)riney Hancock CPAs ~ PSC INDEPENDENT AUDITOR'S REPORT Board of Directors United Way of Posey County, Inc. We have audited the accompanying financial statements of United Way of Posey County, Inc. (a nonprofit organization), which comprise the statements of financial position as of December 31,2017 and 2016, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these fmancial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in th~ 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 suffic ient and appropriate to provide a basis for our audit opinion. Opinion ln our opinion, the financial statements refe rred to above present fairly, in all material respects, the financial position of United Way of Posey County, Inc. as of December 31, 2017 and 2016, 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. Evansville, Indiana Julyll, in f rin ey banc o c k. c o m Veach Road, Suite 2 - Owensboro, Kentucky Fax: Southeast First Street- Evansville, Indiana Fax: A member of Allinial Global- An association of legally independent firms

4 STATEMENTS OF FINANCIAL POSITION December 31, 2017 and 2016 ASSETS Current assets: Cash $ 160,397 $ 114,198 Certificates of deposit 76,150 76,615 Grant receivable 66,590 Pledges receivable, net 515, ,689 Other current assets 4,695 4,566 Total current assets 823, ,068 Property and equipment: Furniture and equipment 14,037 14,037 Accumulated depreciation (11,721) (9,666) Property and equipment, net 2,316 4,371 Beneficial interest in assets held by others 21,506.19,158 Total assets $ 847,124 $ 757,597 LIABILITIES AND NET ASSETS Current liabilities: Accounts payable $ 6,486 $ 6,606 Allocations and grants payable 350, ,490 Designations payable 124, ,122 Accrued expenses 1,813 1,813 Total current liabilities 482, ,031 Net assets: Unrestricted (188,629) (222,228) Temporarily restricted 531, ,636 Permanently restricted 21,506 19,158 Total net assets 364, ,566 Total liabilities and net assets $ 847,124 $ 757,597 See Notes to Financial Statements. 2

5 STATEMENTS OF ACTIVITIES Years Ended December 3 I, and Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total Support and revenue: Campaign revenue: Contributions received $ 58,276 $ 565,870 $ $ 624,146 $ 58,507 $ 579,424 $ $ 637,931 Donor designations (11 7,379) (117,379) (143,154) (143,154) Provision for uncollectible (18,000) (18,000) (20,038) (20,038) Net campaign revenue 58, , ,767 58, , ,739 Other revenue: Grants and other contributions 8,649 66,590 75,239 8,220 8,220 Designations from other United Ways 9,097 34,206 43,303 12,796 37,404 50,200 Service fees 1,582 l,582 1,079 1,079 Investment income 1,4 11 1,4 11 1,435 1,435 Change in beneficial interest in assets held by others 2,348 2, Net assets released from restrictions 453,636 ( 453,636) 475,021 (475,021) Total support and revenue 532, ,65 1 2, , ,058 (21,385) ,460 Expenses: Program services: Gross funds awarded 493, , , ,810 Less donor designations (143,154) (143, 154) (J 40,320) (1 40,320) Net funds awarded 350, , , ,490 Other program services 71,254 71,254 72,024 72,024 Supporting services: Management and general 54,971 54, ,332 54,332 Fundraising 22,337 22,337 22,362 22,362 Total expenses 499, , , ,208 Change in net assets 33,599 77,65 1 2, ,598 57,850 (21,385) ,252 Net assets, beginning of year (222,228) 453,636 19, ,566 (280,078) 475,021 18, ,3 14 Net assets, end of year $ (188,629) $ 531,287 $ 21,506 $ 364, 164 $ (222,228) $ 453,636 $ 19,158 $ 250,566 See Notes to Financial Statements

6 STATEMENTS OF FUNCTIONAL EXPENSES Years Ended December 31, and Support Services Support Services Program Management Fund Program Management Fund Services & General Raising Total Services & General Raising Total Allocations to agencies $ 493,644 $ $ $ 493,644 $ 490,810 $ $ $ 490,810 Less donor designations (143,154) (143,154) (140,320) ( 140,320) Net funds awarded 350, , , ,490 Salaries 49,501 34,270 11,424 95,195 45,907 31,782 10,594 88,283 Payroll taxes 3,937 2, ,57 1 3,041 2, ,849 Salaries and benefits 53,438 36,996 12, ,766 48,948 33,888 11,296 94,132 Conferences and travel ,306 Contract services 3,823 8,430 12,253 8,615 10,587 1,019 20,22 1 Depreciation 1, ,055 1, ,229 Dues and fees , ,421 Insurance 1,969 1, ,786 I, 791 1, ,444 Miscellaneous ,301 Occupancy 3,276 2, ,300 3,028 2, ,823 Office 1,909 1, ,671 1,710 1, ,288 Postage Printing and publications Special events 5,878 5,878 5,374 5,374 Supplies ,387 1,387 Telephone UWW dues 3,593 2, ,910 3, 711 2, ,137 Workshops $ 421,744 $ 54,971 $ 22,337 $ 499,052 $ 422,514 $ 54,332 $ 22,362 $ 499,208 See Notes to Financial Swtements. 4

7 STATEMENTS OF CASH FLOWS Years Ended December 31, 2017 and Cash flows from operating activities: Change in net assets $ 113,598 $ 37,252 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation 2,055 2,229 Increase in beneficial interest in assets held by others (2,348) (787) Provision for bad debts 18,000 20,038 Decrease (increase) in assets: Grants receivable (66,590) Pledges receivable, net 5,219 (9,457) Other current assets (129) (1,192) Increase (decrease) in liabilities: Accounts payable (120) 887 Allocations and grants payable (145,555) Designations payable (23,951) 7,802 Accrued expenses 1,813 Net cash provided by (used in) operating activities 45,734 (86,970) Cash flows from investing activities: Net redemptions of certificates of deposit Net cash provided by investing activities Net increase (decrease) in cash 46,199 (86,488) Cash, beginning of year 114, ,686 Cash, end of year $ 160,397 $ 114,198 See Notes to Financial Statements. 5

8 NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2017 and Organization and Summary of Significant Accounting Policies Nature of Organization The United Way of Posey County, Inc. (United Way) is a nonprofit organization created in August 1962 to provide visionary leadership and assess community needs, mobilize resources, and direct those resources toward services which enhance the quality of life for people living in Posey County, Indiana. To accomplish this, United Way conducts an annual campaign in the fall of each year to raise support for allocations to participating agencies in the subsequent calendar year. Basis of Accounting The financial statements of the Club have been prepared on the accrual basis of accounting. Basis of Presentation United Way 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. Cash and Cash Equivalents United Way considers all highly liquid investments with an original maturity of less than 90 days to be cash equivalents. There were no cash equivalents at December 31, 2017 or Pledges and Grants Receivable A grant receivable is recognized to the extent that performance requirements specified by the grant are met. No allowance for doubtful accounts is considered necessary due to the nature of the relationship with the grantor. Pledges receivable consist of unconditional promises to give, which are due within one year, for which the net receivable value is a reasonable estimate of the fair value. Amounts pledged during the annual campaign period are recorded as temporarily restricted revenue, since the funds are raised with the stipulation that they be used in the subsequent year. The allowance for doubtful accounts is based on management's evaluation of the collectibility of promises to give. In determining the allowance, management regularly evaluates promises to give and considers financial condition, credit history, and economic factors. 6

9 NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2017 and Organization and Summary of Significant Accounting Policies, Continued Beneficial Interest in Assets Held by Others The beneficial interest in assets held by others, which consists of assets contributed to another organization in which United Way specified itself as the beneficiary, is carried at fair market value. Furniture and Equipment Furniture and equipment are recorded at cost. Expenditures in excess of $500 are capitalized. Donated furniture and equipment are recorded at fair value on the date of donation. If donors stipulate a time period during which the assets must be used, the contributions are recorded as increases in temporarily restricted net assets. In the absence of such stipulations, contributions of furniture and equipment are recorded as increases in unrestricted net assets. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. Contributions Contributions received are recorded as increases in unrestricted, temporarily restricted, or permanently restricted net assets, depending on the existence or nature of any donor restrictions. Contributions that are restricted by donors are reported as increases in unrestricted net assets if the restrictions expire in the same reporting period. All other restricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When restrictions expire (that is, when a stipulated time restriction ends or a 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. Contributions made to United Way which are designated by the donor to a specified organization, are deducted from gross campaign revenues. Donated Services A substantial number of volunteers donate significant amounts of their time in the program and supporting services and fund raising campaigns of the United Way. However, the value ofthese services is not reflected in the financial statements as it does not meet the criteria for recognition. 7

10 NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2017 and Organization and Summary of Significant Accounting Policies, Continued Advertising The Club expenses the costs of adve1iising as incurred. Functional Allocation of Expenses The costs of providing various services and activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. In addition, United Way complies with United Way of America cost deduction standards. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 2. Pledges Receivable Pledges receivable consisted of the following at December 31: Pledges receivable: Current campaign $ 485,208 $ 509,063 Prior campaign 65,168 75, , ,027 Allowance for uncollectible pledges: Current campaign 18,000 20,038 Prior campaign 16,906 26,300 34,906 46,338 Pledges receivable, net $ 515,470 $ 538,689 8

11 NOTES TO FINANCIAL STATEMENTS Years Ended December 31,2017 and Beneficial Interest in Assets Held by Others United Way contributed funds to the Community Foundation Alliance (CFA) and specified itself as the beneficiary. Income is to be distributed to the United Way for unrestricted purposes and the principal must remain intact for perpetuity. CF A was granted variance power to modify any restriction or condition of the distribution of the funds for any specified charitable purposes or to specified organizations if such restriction becomes unnecessary, incapable offulfillment, or inconsistent with the charitable needs of the community and area served. An unrealized gain of $2,348 and $787 for the years ended December 31, 2017 and 2016, respectively, related to the beneficial interest are reported as changes in permanently restricted net assets. The historical cost of the beneficial interest is $20,000. The fair value was $21,506 and $19,158 at December 31, 2017 and 2016, respectively. 4. Fair Value Measurements Fair value of assets measured on a recurring basis consisted of the beneficial interest in assets held by others. Fair values were as follows: Significant Unobservable Inputs (Level 3) Fair Value December 31, 2017 $ 21,506 $ 21,506 December 31, $ 19,158 $ 19,158 Financial assets valued using Level 1 inputs are based on unadjusted quoted market prices within active markets. United Way had no assets valued using Level 1 inputs. Financial assets valued using Level 2 inputs are based primarily on similar assets in active or inactive markets and are Level2 inputs. United Way had no assets valued using Level2 inputs. Fair value of the beneficial interest in assets held by others is measured using the fair value of the assets held in the fund as reported by the trustee. The Organization considers the measurement of its beneficial interest to be a Level 3 input because even though that measurement is based on unadjusted fair values of the fund assets, the Organization will never receive those assets or have the ability to direct the trustee to redeem them. There have been no changes in valuation techniques and related inputs in 2017 and

12 NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2017 and Fair Value Measurements, Continued United Way recognizes transfers between levels in the fair value hierarchy at the end of the reporting period. There were no transfers between levels in 2017 or At least annually, management and the Board ofdirectors review and approve the United Way's fair value measurement policies and procedures and determine if the valuation techniques used in fair value measurements are still appropriate. The table below presents information about the fair value measurements in the beneficial interest in assets held by others (Level 3) for the years ended December 31: Beginning of year Total gains (losses) recognized in the change in permanently restricted net assets: Change in value of beneficial interest in assets held by others End of year $ 19,158 $ 18,371 2, $==2=1~,5=0=6 $==1=9~, 1=5=8 5. Allocations Payable for Future Campaign In December of each year, United Way's board approves allocations to be paid to agencies for the following year. At December 31, 2017 and 2016, $350,490 in allocations had been approved for the following year and recorded as a liability at December 31, 2017 and Restricted Net Assets Temporarily restricted net assets consisted of time-restricted pledges and grants in the amount of $531,287 and $453,636 at December 31, 2017 and 2016, respectively. Net assets released from time restrictions were $453,636 and $475,021 for the years ended December 31,2017 and 2016, respectively. Permanently restricted net assets consisted of a beneficial interest in assets held by others as of December 31,2017 and 2016 (See Note 3). 10

13 NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2017 and Income Taxes The Organization is exempt from income taxes as a nonprofit corporation under Section 50 1 ( c )(3) of the Internal Revenue Code, except on net income derived from unrelated business activities. United Way believes that it has support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements. 8. Leases & Related Party United Way leased office space from the Executive Director on a month-to-month basis through March 31, Rent paid to the Executive Director was $1,098 for the year ended December 31, In addition, United Way reimbursed the Executive Director for the use of secretarial staffthrough March 31,2016. Total secretarial reimbursement was $8,492 for the year ended December 31, Since April 1, 2016, United Way leases facilities under a noncancelable operating agreement. Future minimum lease payments are as follows for the years ended December 31: $ 6,300 2,100 $ 8,400 Total rent expense was $6,300 and $5,823 for the years ended December 31, 2017 and 2016, respectively. 9. Concentrations of Credit Risk Financial instruments that potentially subject United Way to credit risk consist principally of cash on deposit at financial institutions and pledges receivable, which represent unsecured support. Cash in banks may, at times, exceed federal deposit insurance limits. United Way attempts to minimize this risk by using high-credit quality financial institutions. Pledges receivable are periodically reviewed by management for their collectibility and an allowance for doubtful accounts is established, as deemed necessary. United Way has contributions from one corporate donor which represent 15% and 16% of campaign contributions for the years ended December 31, 2017 and 2016, respectively, and 15% and 21% of outstanding pledges receivable at December 31, 2017 and 2016, respectively. 11

14 NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2017 and Concentrations of Credit Risk, Continued Contributions from employees of this corporate donor represent 32% and 32% of campaign contributions for the years ended December 31, and 2016, respectively, and 33% and 44% of outstanding pledges receivable at December 31, 2017 and 2016, respectively. 10. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (F ASB) issued Accounting Standards Update (ASU) , Revenue ji-om Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. The amendments of this ASU will be effective for annual reporting periods beginning after December 15, In August, 2016, FASB issued ASU Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. The amendments in this ASU make improvements to the information provided in financial statements and accompanying notes of not-for-profit entities. The amendments set forth the F ASB' s improvements to net asset classification requirements and the information presel}.ted about a not-for-profit entity's liquidity, financial performance, and cash flows. The ASU will be effective for fiscal years beginning after December 15, Earlier adoption is permitted. In February 2016, FASB issued ASU , Leases (Topic 842). Under ASU , a lessee will recognize in the statement of financial position a liability to make lease payments and a right-to-use asset representing its right to use the underlying asset for the lease term for all leases with a lease term of more than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. The amendments of this ASU are effective for reporting periods beginning after December 15, 2019, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Management is currently assessing the impact the adoption of these ASUs will have on its financial statements. 11. Subsequent Events United Way has evaluated subsequent events through July 11, 2018, the date the financial statements were available to be issued. 12