ENGINEERING MINISTRIES INTERNATIONAL, INC. AND AFFILIATE

Transcription

1 ENGINEERING MINISTRIES INTERNATIONAL, INC. CONSOLIDATED FINANCIAL STATEMENTS With Independent Auditors' Report

2 Table of Contents Independent Auditors' Report 1 Financial Statements Consolidated Statements of Financial Position 3 Consolidated Statements of Activities 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 Page

3 ,/()1)/()/4 &5(,4023H 2)1024 Board of Directors Engineering Ministries International, Inc. Colorado Springs, Colorado We have audited the accompanying consolidated financial statements of Engineering Ministries International, Inc. and Affiliate, which comprise the statements of financial position as of, and the related statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial 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 audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. -1-

4 Board of Directors Engineering Ministries International, Inc. Colorado Springs, Colorado Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Engineering Ministries International, Inc and Affiliate. as of, and the changes in its net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Colorado Springs, Colorado May 26,

5 Consolidated Statements of Financial Position December 31, ASSETS: Cash and cash equivalents $ 1,991,924 $ 1,842,200 Investments 593, ,766 J`YX[Yg fywy]juv`yobyh 17,741 30,774 Prepaid expenses 108,377 UggYhgobYh 637, ,907 Total Assets $ 3,349,802 $ 2,776,539 LIABILITIES AND NET ASSETS: Liabilities: Accounts payable and accrued expenses $ 89,920 $ 61,861 Net assets: Unrestricted: Operating 658, ,747 Equity in fixed assets 637, ,907 1,296, ,654 Temporarily restricted: Staff support 1,465,688 1,105,943 Projects 480, ,307 Pledges receivable 17,741 30,774 1,963,752 1,739,024 Total net assets 3,259,882 2,714,678 Total Liabilities and Net Assets $ 3,349,802 $ 2,776,539 See notes to consolidatd financial statements -3-

6 Consolidated Statements of Activities Year Ended December 31, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total SUPPORT AND REVENUE: Contributed services $ 5,344,781 $ - $ 5,344,781 $ 5,305,033 $ - $ 5,305,033 Contributions 182,461 4,690,206 4,872, ,008 4,239,131 4,345,139 Interest income 8,514-8,514 7,578-7,578 Other income 183, , , ,136 Total Support and Revenue 5,719,535 4,690,206 10,409,741 5,620,755 4,239,131 9,859,886 NET ASSETS RELEASED: Purpose restrictions 4,187,986 (4,187,986) - 3,866,985 (3,866,985) - Administrative assessments 252,029 (252,029) - 294,240 (294,240) - Time restrictions 25,463 (25,463) - 33,345 (33,345) - 4,465,478 (4,465,478) - 4,194,570 (4,194,570) - EXPENSES: Program services 8,985,399-8,985,399 8,659,566-8,659,566 Supporting activities: General and administrative 726, , , ,587 Fund-raising 152, , , , , , , ,257 Total Expenses 9,864,537-9,864,537 9,441,823-9,441,823 Change in Net Assets 320, , , ,502 44, ,063 Net Assets, Beginning of Year 975,654 1,739,024 2,714, ,152 1,694,463 2,296,615 Net Assets, End of Year $ 1,296,130 $ 1,963,752 $ 3,259,882 $ 975,654 $ 1,739,024 $ 2,714,678 See notes to consolidated financial statements -4-

7 Consolidated Statements of Cash Flows Year Ended December 31, CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 545,204 $ 418,063 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation and amortization 15,253 20,108 Loss on disposal of fixed assets (1,500) - Changes in operating assets and liabilities: Pledges receivable 13,033 (8,407) Prepaid expenses (38,485) 62,239 Accounts payable and accrued expenses 28,059 (48,928) Net Cash Provided by Operating Activities 561, ,075 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments - (245,807) Reinvested interest and dividends (6,124) (7,578) Proceeds from maturities of certificates of deposits 14,100 17,341 Proceeds from sale of fixed assets 1,500 - Purchases of fixed assets (421,316) (224,142) Net Cash Provided (Used) by Investing Activities (411,840) (460,186) Net Change in Cash and Cash Equivalents 149,724 (17,111) Cash and Cash Equivalents, Beginning of Year 1,842,200 1,859,311 Cash and Cash Equivalents, End of Year $ 1,991,924 $ 1,842,200 See notes to consolidated financial statements -5-

8 Notes to Consolidated Financial Statements 1. NATURE OF ORGANIZATION: The vision of Engineering Ministries International, Inc. (EMI) is to design a world of hope to the spiritually and physically poor. EMI's mission is to mobilize design professionals to minister to the less fortunate in developing nations. EMI proclaims the Gospel of Jesus by helping others change their world, through the development of hospitals, schools, orphanages, bridges, water supplies, electricity, and more. EMI's commitment is to enrich the lives of those who give and those who receive. EMI, a nonprofit organization incorporated in the State of Colorado, is exempt from income tax under Section 501(c)(3) of the U.S. Internal Revenue Code (the Code) and is not a private foundation under Section 509(a) of the Code. EMI controls an entity in the Middle East-North Africa that is legally recognized in that area. This affiliate is under common control as defined by accounting principles generally accepted in the United States of America and is included in the financial statements. The organization exists to further EMI's work and operates under its mission and vision. PRINCIPLES OF CONSOLIDATION Due to the economic influence and control by EMI, the Middle East-North Africa entity is considered to be a controlled affiliate of EMI. The consolidated financial statements include the consolidated financial sources and activities of EMI and the foreign affiliate. All significant intercompany balances and transactions have been eliminated. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: EMI maintains its accounts and prepares its consolidated financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of any contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could differ from the estimates. The significant accounting policies followed are described below to enhance the usefulness of the consolidated financial statements to the reader. CASH AND CASH EQUIVALENTS Cash and cash equivalents include checking and money market accounts. These accounts may at times, exceed federally insured limits. EMI has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. -6-

9 Notes to Consolidated Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: FAIR VALUE MEASUREMENTS The Fair Value Measurement Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels: Level 1 inputs consist of unadjusted quoted prices in active markets for identical assets and have the highest priority, Level 2 inputs consist of observable inputs other than quoted prices for identical assets, and Level 3 inputs have the lower priority. All investments held by EMI are reflected as Level 1 fair value measurement based on the Fair Value Measurement Topic of the FASB ASC. INVESTMENTS Investments consist of certificates of deposit held at cost. All certificates of deposit held have an original maturity date of ninety days or more. JF?>A?M L?=?CP;<F?oH?N Pledges receivable are unconditional promises to give and are recognized as assets and support in the period made and recorded at their net realizable value based upon management's estimate of the pledges being collectible. An allowance for uncollectible amounts of $5,445 and $9,406 was recorded as of December 31, 2015 and 2014, respectively. FIXED ASSETS Fixed assets are recorded at cost or, if donated, estimated fair value at the date of receipt. Items with a cost or fair value greater than $3,000 are capitalized. Depreciation and amortization is provided on the straight-line method over estimated useful lives of three to fifty years. CLASSES OF NET ASSETS The consolidated financial statements report amounts separately by class of net assets: Unrestricted net assets include resources that are used to support EMI's current operations and provide for the long-term needs of EMI, as well as resources invested in furniture, equipment, and website. Temporarily restricted net assets are resources restricted according to donors requests and primarily for the support of EMI's staff, field ministries, and pledges receivable. -7-

10 Notes to Consolidated Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: UNCERTAIN TAX POSITIONS The financial statement effects of a tax position taken or expected to be taken are recognized in the financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Interest and penalties, if any, are included in expenses in the statements of activities. As of December 31, 2015, EMI had no uncertain tax positions that qualify for recognition or disclosure in the consolidated financial statements. EMI is generally no longer subject to U.S. federal and state tax examinations by tax authorities for years before SUPPORT AND REVENUE Contributions are recorded when made, which may be when cash or other assets are received or unconditionally promised. Gifts of cash and other assets are reported as restricted support if they are received with donor stipulations that limit the use of the donated amounts. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is satisfied, temporarily restricted net assets are reclassified to unrestricted net assets in the statements of activities as net assets released from restrictions. All contributions are considered available for unrestricted use unless specifically restricted by the donor. Those contributions received after year-end that were postmarked by December 31, 2015, were recorded as contributions and cash and cash equivalents rather than pledges receivable. EMI recognizes contributed services that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Other income is recognized when it is earned. ALLOCATION OF EXPENSES The costs of providing various programs and other activities have been summarized on a functional basis in the consolidated statements of activities. Accordingly, certain costs relating to more than one function (salaries, promotional expenses, and depreciation) have been allocated among the program services and supporting activities benefited. -8-

11 Notes to Consolidated Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: FIELD OFFICES EMI has field offices located in India, Nicaragua, and Uganda. As of, current assets in these countries and the Middle East-North Africa affiliate, including cash and cash equivalents, totaled $132,051 and $261,260, respectively. Related party payables to non-consolidated ministry partners include current liabilities amounting to $20,777 and $21,465, respectively. There was no support and revenue received from foreign sources during the years ending, respectively. All significant intercompany balances and transactions have been eliminated. 3. JF?>A?M L?=?CP;<F?oH?N8 Pledges receivable consist of the following: December 31, Due in less than one year $ 23,186 $ 40,180 Allowance for doubtful pledges (5,445) (9,406) No discount was calculated due to all pledges maturity in less than one year. $ 17,741 $ 30,774-9-

12 Notes to Consolidated Financial Statements UggYhgobYh Wcbg]ghg cz h\y Zc``ck]b[8 December 31, Buildings * $ 547,110 $ - Furniture and equipment 174, ,514 Website development 11,185 11, , ,699 Less accumulated depreciation and amortization (163,207) (151,104) 569,999 37,595 Construction in progress * 67, ,312 $ 637,970 $ 231,907 * Items capitalized in buildings for the year ended December 31, 2015 and in construction in process for the year ended December 31, 2014 are for a joint building project in Uganda with another organization. This amount reflects EMI's portion of the building. 5. CONTRIBUTED SERVICES: A substantial number of volunteers have made significant contributions of time to develop programs and provide technical assistance on projects for EMI. These services are an integral part of EMI's ministry. The total number of hours contributed to EMI during the years ended were approximately 65,819 and 68,752, respectively. These hours consisted of approximately 36,796 professional hours and 29,023 intern hours for 2015, and approximately 31,363 professional hours and 37,389 intern hours for These hours were valued at $102 per hour for professionals and $54 per hour for interns for the years ended December 31, 2015 and These hours are reflected as revenue and as expense in the accompanying statements of activities. Donated services were also recorded for construction on a building in Uganda that is reflected as buildings for the year ended December 31, 2015 and construction in progress for the year ended December 31, The total number of hours contributed to this project were 1,334 and 1,616 for the years ended December 31, 2015 and 2014, respectively. EMI valued these services of dollars worth of hours at the same rates used for other projects for a total of $22,332 for one professional and $2,017 for one professional whose time was donated by another organization for the year ended December 31, These services were valued at dollars worth of hours at $52,989 for professionals, $17,402 for interns, and $33,993 for one professional whose time was donated by another organization for the year ended December 31,

13 Notes to Consolidated Financial Statements 6. OPERATING LEASE: EMI leases office space under operating leases for their U.S. office and overseas offices. Rent expense for the years ended, totaled $94,613 and $94,701, respectively. EMI also leases a copy machine under an operating lease. Lease expense for the years ended, was $5,848 and $5,483, respectively. Future minimum lease payments are as follows: Year Ending December 31, $ $ 55,308 16,205 1,120 72, EMPLOYEE BENEFITS: EMI has a 403(b) retirement plan that is available for all employees. There were no employer contributions for the years ended. 8. SUBSEQUENT EVENTS: Subsequent events have been evaluated through the report date, which represents the date the consolidated financial statements were available to be issued. Subsequent events after that date have not been evaluated. -11-