CITY ARTS CENTER, INC. June 30, 2010

Transcription

1 June 30, 2010

2 June 30, 2010 Audited Financial Statements Independent Auditors Report... 1 Statement of Financial Position--Modified Cash Basis... 2 Statement of Activities--Modified Cash Basis... 3 Statement of Changes in Cash... 4 Notes to Financial Statements... 5 Additional Financial Information Independent Auditors Report on Additional Financial Information Schedule of Functional Expenses--In Total Schedule of Education Expenses Schedule of Exhibit Expenses Schedule of Administrative Expenses Schedule of Fund Raising Expenses... 15

3 Independent Auditors Report The Board of Directors City Arts Center, Inc. Oklahoma City, Oklahoma We have audited the accompanying statement of financial position--modified cash basis of City Arts Center, Inc. (the Center ) as of June 30, 2010, and the related statement of activities-- modified cash basis, and changes in cash for the year then ended. These financial statements are the responsibility of the Center s management. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note A to the financial statements, the Center prepares its financial statements on the modified cash basis of accounting. This basis is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of City Arts Center, Inc. as of June 30, 2010, and the changes in its net assets and changes in its cash for the year then ended, in conformity with the basis of accounting described in Note A. As described in Note A to the financial statements, the Center changed its capitalization policy for property and equipment during the year ended June 30, Oklahoma City, Oklahoma April 12,

4 STATEMENT OF FINANCIAL POSITION--MODIFIED CASH BASIS June 30, 2010 ASSETS CURRENT ASSETS Cash $ 224,971 PROPERTY AND EQUIPMENT Leasehold improvements 425,578 Equipment 126,470 Furniture and fixtures 80, ,433 Less accumulated depreciation 459, ,749 TOTAL ASSETS $ 397,720 NET ASSETS Unrestricted $ 397,720 TOTAL NET ASSETS $ 397,720 See notes to financial statements. 2

5 STATEMENT OF ACTIVITIES--MODIFIED CASH BASIS Year Ended June 30, 2010 Temporarily Unrestricted Restricted Total REVENUES AND SUPPORT Contributions $ 678,762 $ - $ 678,762 Government grants 59,251-59,251 Tuition 150, ,596 Special events 37,510-37,510 Rentals 26,208-26,208 Sales and commissions 41,517-41,517 Management fees 10,762-10,762 Interest 1,553-1,553 Other 6,238-6,238 In-kind support 219, ,240 Net assets released from restrictions: Restrictions satisfied by payments 20,226 (20,226) - TOTAL REVENUES AND SUPPORT 1,251,863 (20,226) 1,231,637 EXPENSES Program: Education 326, ,264 Exhibit 282, ,902 Administrative 498, ,412 Fund raising 127, ,654 TOTAL EXPENSES 1,235,232-1,235,232 CHANGE IN NET ASSETS 16,631 (20,226) (3,595) NET ASSETS AT BEGINNING OF YEAR 381,089 20, ,315 NET ASSETS AT END OF YEAR $ 397,720 $ - $ 397,720 See notes to financial statements. 3

6 STATEMENT OF CHANGES IN CASH Year Ended June 30, 2010 OPERATING ACTIVITIES Cash received from donors and customers $ 1,010,844 Interest received 1,553 Cash paid to suppliers and employees (984,124) NET CASH PROVIDED BY OPERATING ACTIVITIES 28,273 INVESTING ACTIVITIES Purchases of property and equipment (11,935) NET CASH USED IN INVESTING ACTIVITIES (11,935) NET CHANGE IN CASH 16,338 CASH AT BEGINNING OF YEAR 208,633 CASH AT END OF YEAR $ 224,971 RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING ACTIVITIES Change in net assets $ (3,595) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 30,242 Loss on sale of assets 1,626 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 28,273 See notes to financial statements. 4

7 NOTES TO FINANCIAL STATEMENTS June 30, 2010 NOTE A--NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Organization: City Arts Center, Inc. (the Center ) is a not-for-profit organization formed for the purpose of providing classes, seminars and workshops for the visual arts, music, dance, theatre and related arts and cultural endeavors. It also provides an exhibition and performance facility for artists and performers. The Center s support comes primarily through donor contributions and tuition for education and training classes. Accounting Standards Codification: The Center adopted the applicable portions of the Financial Accounting Standards Board ( FASB ) Accounting Standards Codification ( ASC ) insofar as they relate to the modified cash basis of accounting used by the Center. The ASC does not alter current accounting principles generally accepted in the United States of America ( GAAP ), but rather integrated existing accounting standards with other authoritative guidance. The ASC provides a single source of authoritative GAAP for nongovernmental entities and supersedes all other previously issued non-sec accounting and reporting guidance. The adoption of the ASC did not have any effect on the Center s financial statements. Basis of Accounting: The records of the Center are maintained on the modified cash basis of accounting and the accompanying statements have been prepared on that basis. The cash basis differs from accounting principles generally accepted in the United States of America primarily because certain revenues are recognized when received rather than when earned and certain expenses are recognized when paid rather than when the obligation is incurred. Modifications to the cash basis are the recording of fixed asset acquisitions, depreciation expense, and recognition of in-kind support and related in-kind expenses. Basis of Presentation: The Center reports information regarding its financial position and activities according to three classes of net assets as follows: Unrestricted net assets - Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets - Net assets subject to donor-imposed stipulations that may or will be met, either by actions of the Center and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities modified cash basis as net assets released from restrictions. Contributions that are restricted by the donor are reported as an increase in unrestricted net assets if the restriction expires in the same period in which the contribution is received. 5

8 NOTES TO FINANCIAL STATEMENTS--Continued June 30, 2010 NOTE A--NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES-- Continued Basis of Presentation--Continued: Permanently restricted net assets - Net assets subject to donor-imposed stipulations that they be maintained permanently by the Center. Generally, the donors of these assets permit the Center to use all or part of the income earned on any related investments for general or specific purposes. At June 30, 2010, the Center had no permanently restricted net assets. Contributions received are reported as unrestricted, temporarily restricted or permanently restricted support, depending on the existence or nature of any donor restrictions. The Center reports gifts of cash and other assets as restricted contributions if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction is satisfied, 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 modified cash basis as net assets released from restrictions. Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Tax Status: The Center is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code (the Code ), and is classified as other than a private foundation under Section 509(a) of the Code. Generally, all revenue earned outside the purpose for which the Center is created is taxable as earned income. Accounting for Uncertain Tax Positions: The Financial Accounting Standards Board issued guidance on the accounting for uncertainty in income taxes. The Center adopted the disclosure requirements of this new guidance for the year ended June 30, Management evaluated their tax positions and concluded that they had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. With few exceptions, they are no longer subject to income tax examinations by the U.S. federal, state or local tax authorities for years before

9 NOTES TO FINANCIAL STATEMENTS--Continued June 30, 2010 NOTE A--NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES-- Continued Property and Equipment: Purchases of property and equipment are valued at cost. Donations of property and equipment are recorded as in-kind 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 unless the restriction is met in the same reporting period. Absent donor stipulations regarding how long those donated assets must be maintained, the Center reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Center reclassifies temporarily restricted net assets to unrestricted net assets at that time. Property and equipment are depreciated using the straight-line method over the following estimated lives: Leasehold improvements Equipment Furniture and fixtures 7-20 Years 5-7 Years 5-7 Years Concentration of Credit Risk: The Center maintains cash in bank deposit accounts which, at times, may exceed federally insured limits. The Center has not experienced any losses in such accounts, and does not believe that it is exposed to any significant credit risk on cash. In-kind Support: The Center recognizes various types of in-kind support including professional services, advertising, materials, and property and equipment. Contributed services are recognized at fair value if the services received (a) create or enhance long-lived assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Contributions of tangible assets are recognized at fair value when received. The amounts reflected in the accompanying financial statements as in-kind support are offset by like amounts included in expenses or property and equipment. The Center receives donated services from unpaid volunteers assisting in the activities of the Center which do not meet the two recognition criteria described above. Accordingly, the value of these contributed services has not been determined and is not reflected in the accompanying financial statements. 7

10 NOTES TO FINANCIAL STATEMENTS--Continued June 30, 2010 NOTE A--NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES-- Continued Significant Contributors: For the year ended June 30, 2010, the Center received $330,000 from a single contributor which represents approximately 27% of the Center s total revenues and support received. Functional Expenses: Costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities modified cash basis. Costs are allocated between program education, program exhibit, administrative and fund raising based on evaluations of the related activities. Administrative expenses are those expenses which are not directly identifiable with any other specific function, but provide for the overall support and direction of the Center. Change in Accounting Policy: The Center has historically capitalized all property and equipment in excess of $250. In April 2010, the Center increased their capitalization threshold policy to $1,000 to simplify accounting for property and equipment. A change in accounting policy is required to be reported retroactively as of the beginning of the first period presented in financial statements with the cumulative effect recorded against beginning net assets. As such, property and equipment held at July 1, 2009 with an original cost of less than $1,000 was removed from the Center s books and recorded against beginning net assets which had a carrying value of $12,621. Additionally, the effect of this change in accounting policy decreased depreciation expense by $2,710 and increased supplies and maintenance expense by $6,414 for the year ended June 30, Subsequent Events: The Center has evaluated subsequent events through April 12, 2011, which is the date the financial statements were available to be issued. There are no subsequent events requiring recognition or disclosure in the accompanying financial statements. NOTE B--IN-KIND SUPPORT Noncash contributions recognized in the statement of activities modified cash basis include the following for the year ended June 30, 2010: Use of facilities $ 126,000 Utilities 93,240 $ 219,240 8

11 NOTES TO FINANCIAL STATEMENTS--Continued June 30, 2010 NOTE C--FUNDS AT OKLAHOMA CITY COMMUNITY FOUNDATION The Oklahoma City Community Foundation (the Foundation ) maintains funds that have been contributed by various third party donors to the Foundation for the benefit of the Center. The earnings from these funds are paid to the Center each year. For the year ended June 30, 2010, the Center received approximately $80,000 from the funds which are included in contributions in the statements of activities - modified cash basis. The value of the funds at June 30, 2010, was approximately $1,404,000. The Center has no remainder interest in the corpus of the funds. 9

12 Independent Auditors Report on Additional Financial Information The Board of Directors City Arts Center, Inc. Oklahoma City, Oklahoma Our report on our audit of the basic financial statements of City Arts Center, Inc. as of June 30, 2010 appears on page 1. The audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules of functional expenses are presented for purposes of additional analysis and are not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Oklahoma City, Oklahoma April 12,

13 SCHEDULE OF FUNCTIONAL EXPENSES--IN TOTAL Year Ended June 30, 2010 Payroll and benefits $ 533,134 Contract services 11,815 Building supplies and maintenance 67,921 Mileage and travel 33,165 Postage 10,942 Advertising and marketing 75,893 Insurance 18,293 Artist commissions 18,046 Telephone 7,219 Rent (In-kind) 126,000 Utilities (In-kind) 93,240 Hospitality 7,805 Office supplies 12,528 Professional Fees 14,000 Dues and subscriptions 9,088 Bank and credit card fees 7,678 Depreciation 30,242 Instructor fees 89,751 Class supplies 10,539 Special events 30,253 Exhibits 26,212 Miscellaneous 1,468 $ 1,235,232 11

14 SCHEDULE OF EDUCATION EXPENSES YEAR ENDED JUNE 30, 2010 Payroll and benefits $ 87,951 Contract services 3,120 Building supplies and maintenance 184 Mileage and travel 2,152 Postage 3,960 Advertising and marketing 23,286 Rent (In-kind) 50,400 Utilities (In-kind) 37,296 Office supplies 87 Dues and subscriptions 569 Bank and credit card fees 5,092 Hospitality 4,392 Instructor fees 89,751 Class supplies 10,539 Special events 6,523 Exhibits 912 Miscellaneous 50 $ 326,264 12

15 SCHEDULE OF EXHIBIT EXPENSES YEAR ENDED JUNE 30, 2010 Payroll and benefits $ 133,790 Building supplies and maintenance 867 Mileage and travel 7,255 Postage 2,465 Advertising and marketing 20,700 Artist commissions 18,046 Rent (In-kind) 37,800 Utilities (In-kind) 27,972 Dues and subscriptions 580 Hospitality 159 Office supplies 141 Bank and credit card fees 887 Special events 6,940 Exhibits 25,300 $ 282,902 13

16 SCHEDULE OF ADMINISTRATIVE EXPENSES YEAR ENDED JUNE 30, 2010 Payroll and benefits $ 254,209 Contract services 8,695 Building supplies and maintenance 66,870 Mileage and travel 23,276 Advertising and marketing 6,808 Postage 1,822 Insurance 17,718 Telephone 7,219 Rent (In-kind) 25,200 Utilities (In-kind) 18,648 Hospitality 2,892 Office supplies 12,261 Professional fees 14,000 Bank and credit card fees 974 Dues and subscriptions 6,108 Depreciation 30,242 Special events 52 Miscellaneous 1,418 $ 498,412 14

17 SCHEDULE OF FUND RAISING EXPENSES YEAR ENDED JUNE 30, 2010 Payroll and benefits $ 57,184 Mileage and travel 482 Postage 2,695 Advertising and marketing 25,099 Insurance 575 Rent (In-kind) 12,600 Utilities (In-kind) 9,324 Hospitality 362 Office supplies 39 Dues and subscriptions 1,831 Bank and credit card fees 725 Special events 16,738 $ 127,654 15