FIRST BAPTIST CHURCH OF FRISCO

Transcription

1 FIRST BAPTIST CHURCH OF FRISCO Financial Statements (With Auditor s Report Thereon) Year Ended June 30, 2014

2 TABLE OF CONTENTS INDEPENDENT AUDITOR S REPORT FINANCIAL STATEMENTS: Statement of Financial Position Statement of Activities Statement of Cash Flows Notes to Financial Statements

3 Nabors CPA Services, P.C. (972) Main Street, Suite 201 Frisco, Texas How well do you know your CPA? INDEPENDENT AUDITOR S REPORT Budget and Finance Team First Baptist Church of Frisco Frisco, Texas I have audited the accompanying statement of financial position of First Baptist Church of Frisco as of June 30, 2014, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of First Baptist Church of Frisco management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First Baptist Church of Frisco as of June 30, 2014, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. August 29, 2014 Member of: Amercian Institute of CPAs Texas Society of CPAs -1-

4 FINANCIAL STATEMENTS -2-

5 FIRST BAPTIST CHURCH OF FRISCO Statement of Financial Position June 30, 2014 ASSETS: Current: Cash and cash equivalents $ 660,302 Accounts receivable 1,036 Total current assets 661,338 Non-current: Capital assets, net of accumulated depreciation 11,377,178 Total non-current assets 11,377,178 Total assets $ 12,038,516 LIABILITIES and NET ASSETS Current liabilities: Accounts payable $ 139,223 Other liabilities 1,000 Note payable - current portion 201,188 Total current liabilities 341,411 Long-term liabilities: Leases Payable 50,799 Note payable 5,400,330 Total long-term liabilities 5,451,129 Total liabilities 5,792,540 Net Assets: Unrestricted, undesignated 5,803,583 Unrestricted, designated 165,652 Total unrestricted 5,969,235 Temporarily restricted 276,741 Total net assets 6,245,976 Total liabilities and net assets $ 12,038,516 The accompanying notes are an integral part of these statements. -3-

6 FIRST BAPTIST CHURCH OF FRISCO Statement of Activities Year Ended June 30, 2014 Temporarily Unrestricted Restricted Total REVENUES, GAINS AND OTHER SUPPORT Gifts and offerings $ 3,369, ,339 4,022,991 Transfer from designated 609, ,306 Other designated income 33,899 33,899 Sonshine School 214, ,648 Sonshine Academy 257, ,382 Other income 33,970 33,970 Interest income Net assets released from restrictions 458,075 (458,075) Total revenues, gains and other support 4,977, ,264 5,172,711 EXPENSES Program expenses: Worship ministry: Pastoral worship 7,628 7,628 Media worship 15,528 15,528 Choral worship 32,877 32,877 Outreach and evangelism 3,992 3,992 General education and adult 68,777 68,777 Discipleship and assimilation 2,610 2,610 Senior adult and pastor care 5,671 5,671 Children's ministry 237, ,522 Preschool ministry: Preschool programs 57,172 57,172 Childcare 81,016 81,016 Student ministry: High school 180, ,430 Girls ministry 4,965 4,965 Middle school 4,089 4,089 College 4,601 4,601 Missions ministry 481, ,328 Sonshine school: Wages 202, ,263 Other expense 44,358 44,358 Sonshine Academy: Wages 186, ,198 Other expense 16,547 16,547 Total program expenses 1,637,572 1,637,572 Supporting expenses: Administrative: Food service 44,670 44,670 Office and support 217, ,290 Buildings and grounds 352, ,705 Interest expense $ 210, ,803-4-

7 Temporarily Unrestricted Restricted Total EXPENSES (continued) Supporting expenses: (continued) Personnel: Retirement $ 40,274 40,274 Insurance 211, ,776 Payroll taxes 61,837 61,837 Salary and housing 1,518,457 1,518,457 Depreciation expense 321, ,034 Total supporting expenses 2,978,846 2,978,846 Total expenses 4,616,418 4,616,418 Change in net assets 361, , ,293 Net assets, July 1 5,608,206 81,477 5,689,683 Net assets, June 30 $ 5,969, ,741 6,245,976 The accompanying notes are an integral part of these statements. FIRST BAPTIST CHURCH OF FRISCO Statement of Activities Year Ended June 30,

8 FIRST BAPTIST CHURCH OF FRISCO Statement of Cash Flows Year Ended June 30, 2014 Cash flows from operating activities: Gifts, offerings and fee income $ 5,196,212 Investment income 515 Cash paid to suppliers and employees (4,302,151) Net cash provided/(used) by operating activities 894,576 Cash flows from investing activities: Acquisition of capital assets (115,549) Net cash provided/(used) by investing activities (115,549) Cash flows from financing activities: Note payments (385,269) Net cash provided/(used) by financing activities (385,269) Increase/(decrease) in cash and cash equivalents 393,758 Cash and cash equivalents at beginning of year 266,544 Cash and cash equivalents at end of year $ 660,302 Cash flows from operating activities: Reconciliation of Changes in Net Assets to Net Cash Provided by Operating Activities Change in net assets $ 556,293 Adjustment to reconcile change in net assets to net cash provided/(used) by operating activities: Depreciation 321,034 (Increase)/decrease in accounts receivable (1,036) Increase/(decrease) in accounts payable 42,692 Increase/(decrease) in leases payable (24,407) Net cash provided/(used) by operating activities $ 894,576 The accompanying notes are an integral part of these statements. -6-

9 FIRST BAPTIST CHURCH OF FRISCO Notes to the Financial Statements For the Year Ended June 30, 2014 (1) SUMMARY OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Nature of Activities First Baptist Church of Frisco (Church) was organized in The Church is a nonprofit organization and is dedicated to spreading the Gospel through establishing, developing, and promoting all aspects of church ministry within Frisco, Texas, and the surrounding communities. The Church is supported primarily through contributions from the congregation. B. Basis of Accounting The financial statements of the Church have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. C. Basis of Presentation Financial statement presentation follows the requirements of the Financial Accounting Standards Board, accordingly, the Church 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. The Church has no permanently restricted net assets. D. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. E. Cash and Cash Equivalents Cash and cash equivalents include all monies in banks and highly liquid investments with maturity dates of less than three months. The carrying value of cash and cash equivalents approximates fair value because of the short maturities of those financial instruments. F. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are valued at their fair values in the statement of financial position. Unrealized gains and losses are included in the change in net assets. -7-

10 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) G. Capital Assets Capital assets are carried at cost or, if donated, at the approximate fair market value at the date of donation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Capital assets with an original cost of at least $5,000 are capitilized. H. Revenue Recognition Contributions received are recorded as increases in unrestricted or temporarily restricted net assets, depending on the existence and/or nature of any donor restrictions. All donor restricted contributions are reported as increases in temporarily restricted net assets. When a 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. I. Income Taxes The Church is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. (2) FINANCIAL INSTRUMENTS The Church maintains its cash balances in a brokerage account and a bank in the surrounding area. The balances in the brokerage account are insured up to $500,000 by the Securities Investor Protection Corporation. The balances in the bank are insured by the Federal Deposit Insurance Corporation up to $250,000 for interest bearing accounts, and unlimited amounts for non-interest bearing accounts. At June 30, 2014, the Church had uninsured cash balances of $367,731. (3) CAPITAL ASSETS A summary of changes in capital assets is as follows: Balance Balance June 30, 2012 Additions Deletions June 30, 2014 Land $ 2,578,777 2,578,777 Buildings and improvements 10,792, ,549 10,908,268 Equipment 749, ,764 Furniture 14,407 14,407 Vehicles 86,400 86,400 Total capital assets 14,222, ,549 14,337,616 Less: accumulated depreciation (2,639,404) (321,034) (2,960,438) Net capital assets $ 11,582,663 (205,485) 11,377,178 FIRST BAPTIST CHURCH OF FRISCO Notes to the Financial Statements For the Year Ended June 30,

11 (3) CAPITAL ASSETS (continued) Depreciation is calculated on the straight-line basis with the following estimated useful lives: Equipment Furniture and fixtures Buildings and improvements 5-10 years 7 years years (4) NOTES PAYABLE On June 24, 2014, the Church refinanced a construction loan previously held at North Dallas Bank & Trust. The amount of the loan commitment was $5,061,518. Payments of $31,907 per month including interest at 3.25% for 240 months began July 24, 2014 and continue through June 24, The minimum interest rate for this loan will be 3.25% and the maximum will be 5.90% depending on fluctuations in the prime rate. Debt service requirements at the current interest rates are as follows: Period Ending June 30, Principal Interest Total 2015 $ 201, , , , , , , , , , , , , , ,889 Thereafter 4,528,198 1,215,143 5,743,341 Total $ 5,601,518 2,056,268 7,657,786 On July 29, 2009, the Church established a line of credit for $500,000 at North Dallas Bank & Trust. On December 9, 2010, the line of credit was increased to $1,500,000. The note bears interest at 4.25%. Monthly payments of accrued unpaid interest began on January 9, 2011 with subsequent interest payments being due on the same day of each month until maturity on December 9, The interest rate may be increased to a maximum of 18.00% if regular monthly interest payments are not made or the note is not paid in full by the maturity date. Changes in notes payable for the year ended June 30, 2014, are as follows: Beginning Ending Due Within Balance Additions Retirements Balance One Year Notes Payable $ 5,796,380 (194,862) 5,601, ,188 Line of credit 190,407 (190,407) $ 5,986,787 (385,269) 5,601, ,188 FIRST BAPTIST CHURCH OF FRISCO Notes to the Financial Statements For the Year Ended June 30,

12 (5) TEMPORARILY RESTRICTED ASSETS The Church reports gifts of cash and other assets as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. 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. The Church reports gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as temporarily restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Church reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Temporarily restricted net assets are available for the following purposes at June 30, 2014: Building and grounds $ 233,880 Missions ministry 29,601 Preschool ministries 13,260 Total $ 276,741 Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors during the period as follows:: Purpose restrictions accomplished: Student ministry $ 3,697 Preschool ministry 24,336 Missions ministry 17,621 Benevolence 13,746 Buildings and grounds 154,268 Debt reduction 190,407 Total $ 458,075 FIRST BAPTIST CHURCH OF FRISCO Notes to the Financial Statements For the Year Ended June 30,

13 (6) OPERATING LEASES The Church has obligations under noncancellable lease agreements for office copier equipment. On September 13, 2010, Xerox Corporation leased new equipment to the Church for 60 months and paid the Church $48,000 to pay the scheduled lease payments to Key Equipment Finance, Inc. for the previous leased equipment. The Church entered into a new lease agreement on November 29, 2012 with Xerox Corporation to lease new equipment in addition to existing equipment. The new lease is for 60 months. Future lease payments under these agreements are as follows: Year Ending June 30, Xerox Corporation 2015 $ 49, , , ,845 Total $ 123,423 (7) CAPITAL LEASES In fiscal year 2012 the Church purchased several golf carts under three separate capital lease agreements expiring in The liability, representing the present value of future minimum lease payments totaled $86,400. In fiscal year 2013 the Church purchased a telephone system under a capital lease agreement expiring in The liability, representing the present value of future minimum lease payments totaled $86,400. The leased assets are amortized over their estimated productive lives. Amortization of assets under capital lease is included in depreciation expense. Following is a summary of assets held under capital lease at June 30, 2014: 2012 Ingersol Rand Club Cars - 8 passenger $ 50, Club Car Carryall 10, Village Club Cars 25,400 AT&T Telephone System 16,811 $ 103,211 Less accumulated depreciation (23,636) $ 79,575 FIRST BAPTIST CHURCH OF FRISCO Notes to the Financial Statements For the Year Ended June 30, FIRST BAPTIST CHURCH OF FRISCO

14 (7) CAPITAL LEASES (continued) Aggregate future minimum lease payments under capital lease obligation as of June 30, 2014 are approximtaed as follows: Years ending June 30, 2015 $ 28, , , ,910 Total future minimum lease payments 54,856 Less amount representing interest (4,057) Present value of future minimum lease payments $ 50,799 (8) COMPENSATED ABSENCES The Church allows employees to carry 40 up to hours of vacation over each year. Sick leave may also be carried forward, but is not paid upon termination. There was no material accrued vacation payable at June 30, (9) SUBSEQUENT EVENTS Subsequent events have been evaluated through August 29, 2014, which is the date the financial statements were issued. Notes to the Financial Statements For the Year Ended June 30,