American Bus Association Foundation, Inc. Financial Report December 31, 2016

Transcription

1 American Bus Association Foundation, Inc. Financial Report December 31, 2016

2 Contents Independent auditor s report 1-2 Financial statements Balance sheet 3 Statement of activities 4 Statement of cash flows 5 Notes to financial statements 6-11

3 Independent Auditor s Report To the Board of Governors American Bus Association Foundation, Inc. Washington, D.C. Report on the Financial Statements We have audited the accompanying financial statements of American Bus Association Foundation, Inc. (the Foundation), which comprise the balance sheet as of December 31, 2016, 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 American Bus Association Foundation, Inc. as of December 31, 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. 1

4 Report on Summarized Comparative Information We have previously audited the Foundation s 2015 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated March 31, In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived. Washington, D.C. April 17,

5 Balance Sheet December 31, 2016 (With Comparative Totals for 2015) Assets Cash $ 230,508 $ 156,550 Investments 5,297,160 4,926,219 Pledges receivable, net 440, ,037 Prepaid expenses 9,981 18,421 Liabilities and Net Assets $ 5,977,789 $ 5,714,227 Liabilities: Accounts payable $ 5,681 $ 17,448 Due to affiliate 1,961 2,188 Deferred revenue 12,880 18,275 20,522 37,911 Net assets: Unrestricted 1,670,232 1,545,978 Temporarily restricted 4,287,035 4,130,338 5,957,267 5,676,316 $ 5,977,789 $ 5,714,227 See notes to financial statements. 3

6 Statement of Activities Year Ended December 31, 2016 (With Comparative Totals for 2015) 2016 Temporarily 2015 Unrestricted Restricted Total Total Support and revenue: Contributions $ 36,920 $ 71,657 $ 108,577 $ 515,774 Live auction 51,250-51,250 76,700 Silent auction 59,829-59,829 51,741 Golf and baseball fundraisers ,460 Marketplace fundraiser 21,123-21,123 21,420 Net assets released from restrictions 102,367 (102,367) - - Total support and revenue 271,689 (30,710) 240, ,095 Expenses: Program services: Research 42,367-42,367 76,231 Scholarship awards 60,000-60,000 57,500 Supporting services: General and administrative 104, ,950 95,027 Fundraising 39,183-39,183 23,808 Total expenses 246, , ,566 Change in net assets before investment income 25,189 (30,710) (5,521) 433,529 Investment income, net 99, , ,472 15,040 Change in net assets 124, , , ,569 Net assets: Beginning 1,545,978 4,130,338 5,676,316 5,227,747 Ending $ 1,670,232 $ 4,287,035 $ 5,957,267 $ 5,676,316 See notes to financial statements. 4

7 Statement of Cash Flows Year Ended December 31, 2016 (With Comparative Totals for 2015) Cash flows from operating activities: Change in net assets $ 280,951 $ 448,569 Adjustments to reconcile change in net assets to net cash provided by operating activities: Realized and unrealized (gain) loss on investments (185,672) 61,558 Change in present value discount 9,157 (22,105) Changes in assets and liabilities: Decrease (increase) in: Pledges receivable 163,740 (167,190) Prepaid expenses 8,440 2,676 (Decrease) Increase in: Accounts payable (11,767) 17,259 Due to affiliate (227) 1,396 Deferred revenue (5,395) (779) Net cash provided by operating activities 259, ,384 Cash flows from investing activities: Purchase of investments (243,689) (1,719,454) Proceeds from sale of investments 58, ,856 Net cash used in investing activities (185,269) (957,598) Net increase (decrease) in cash 73,958 (616,214) Cash: Beginning 156, ,764 Ending $ 230,508 $ 156,550 See notes to financial statements. 5

8 Notes to Financial Statements Note 1. Nature of Activities and Significant Accounting Policies Nature of activities: American Bus Association Foundation, Inc. (the Foundation), a District of Columbia nonprofit corporation, was formed in 1996 to support the industry with research and scholarships that benefit policy makers, the public and American Bus Association, Inc. (ABA), a related party. A summary of the Foundation s significant accounting policies follows: Basis of accounting: The accompanying financial statements are presented in accordance with the accrual basis of accounting, whereby unconditional support is recognized when received, revenue is recognized when earned and expenses are recognized when incurred. Basis of presentation: The accompanying financial statement presentation follows the recommendations under the Not-for-Profit Entities topic of the Financial Accounting Standards Board (FASB) Accounting Standards ASC (ASC). Under the ASC, the Foundation 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 Foundation had no permanently restricted net assets at December 31, Unrestricted net assets: Net assets that are neither permanently restricted nor temporarily restricted by donor-imposed stipulations. Temporarily restricted net assets: Result from unconditional contributions whose use is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Foundation pursuant to these stipulations. Net assets may be temporarily restricted for various purposes, such as use in future periods or used for specified purposes. Financial risk: The Foundation maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Foundation has not experienced any losses in such accounts. The Foundation believes it is not exposed to significant financial risk on cash. The Foundation invests in professionally managed portfolios that various securities which are exposed to risks such as market, interest and credit. Due to the level of risk associated with such investments, and the level of uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in risks in the near term could materially affect investment balances and the amounts reported in the financial statements. Investments: Investments with readily determinable fair values are reflected at fair market value. The unrealized gains and losses are reported in the statement of activities as part of the investment income and are considered to be unrestricted for use in operations unless restricted by the donor for purpose. Prior year information: The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America (GAAP). Accordingly, such information should be read in conjunction with the Foundation s financial statements for the year ended December 31, 2015, for which the summarized information was obtained. 6

9 Notes to Financial Statements Note 1. Nature of Activities and Significant Accounting Policies (Continued) Revenue recognition: Unconditional contributions, including unconditional promises to give (pledges receivable), are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met. All donor-restricted revenue is reported as an increase in temporary or permanently restricted net assets, depending on the nature of the restriction. When a temporary restriction expires (that is, when a time restrictions 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. An allowance for uncollectible pledges receivable is provided based upon management s judgment including such factors as prior collection history, type of contribution and nature of the fund-raising activity. There was no allowance for uncollectible contributions considered necessary by management at December 31, 2016, based on review of these factors. Contributions to be received after one year are discounted at an appropriate discount rate of 4% commensurate with the risks involved. Amortization of discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. The discount totaled $24,206 at December 31, Auction and fundraiser fees are recognized at the time of the event. Amounts received in advance of the event are recorded as deferred revenue. Income taxes: The Foundation is generally exempt from federal income taxes under the provisions of Section 501(c)(3) of the Internal Revenue Code. Income, which is not related to exempt purposes, less applicable deductions, is subject to federal and state corporate income taxes. The Foundation did not have any unrelated business income for the year ended December 31, Management evaluated the Foundation s tax positions and concluded that the Foundation had taken no uncertain tax positions that require adjustment to the financial statements. Use of estimates: The preparation of financial statements 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. Pending accounting pronouncement: In August 2016, the FASB issued Accounting Standards Update (ASU) No , 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 FASB s improvements to net asset classification requirements and the information presented 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 applicable is permitted. The changes in this ASU should generally be applied on a retrospective basis in the year that the ASU is first applied. Subsequent events: Subsequent events have been evaluated through April 17, 2017, which is the date the financial statements were available to be issued. 7

10 Notes to Financial Statements Note 2. Pledges Receivable At December 31, 2016, outstanding pledges receivable totaled $464,346. The promises to give are generally scheduled to be paid over a period of one to five years when first promised. A summary of pledges receivable along with a schedule of anticipated receipts by year is as follows: Pledges receivable $ 464,346 Less discount to present value (24,206) $ 440,140 Pledges receivable, due in less than one year $ 172,700 Pledges receivable, due in one to four years 291,646 $ 464,346 Note 3. Related Party Transactions and Balances ABA, a related party through common management, performs managerial services on behalf of the Foundation. There are no fees charged to the Foundation for these services. The amount of services provided by ABA to the Foundation is nominal in amount. The Foundation had a net outstanding payable to ABA of $1,961 as of December 31, Note 4. Temporarily Restricted Net Assets Changes in temporarily restricted net assets during the year ended December 31, 2016, are as follows: Balance Balance December 31, Investment December 31, 2015 Additions Income Releases 2016 Programmatic restriction: Research Fund $ 3,269,946 $ 71,657 $ 162,463 $ (42,367) $ 3,461,699 Snyder Scholarship Fund 346,088-16,640 (52,500) 310,228 Picknelly Memory Fund 53,499-2,623 (2,500) 53,622 Cornell Memory Fund 33,062-1,612 (2,500) 32,174 Yellow Ribbon Fund 82,743-4,069 (2,500) 84,312 Time restriction: Contributions 345, ,000 $ 4,130,338 $ 71,657 $ 187,407 $ (102,367) $ 4,287,035 8

11 Notes to Financial Statements Note 5. Fair Value Measurements and Investments The Foundation follows the ASC Topic, Fair Value Measurement. The topic applies to all assets and liabilities that are being measured and reported on a fair value basis. The topic establishes a framework for measuring fair value in accordance with GAAP and expands disclosure about fair value measurement. The topic enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The topic requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. In determining the appropriate levels, the Foundation performs a detailed analysis of the assets and liabilities that are subject to the topic. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. There were no liabilities subject to fair value measurement at December 31,

12 Notes to Financial Statements Note 5. Fair Value Measurements and Investments (Continued) The table below presents the balances of assets at December 31, 2016, measured at fair value on a recurring basis by level within the hierarchy Description Total Level 1 Level 2 Level 3 Mutual funds: High yield bond $ 273,792 $ 273,792 $ - $ - Total mutual funds 273, , Fixed income securities: Corporate bonds 751, ,896 - U.S. Treasury securities 663, ,501 - U.S. Government bonds 121, ,146 - Total fixed income securities 1,536,543-1,536,543 - Equities common stocks: Technology 381, , Healthcare 323, , Communication services 301, , Consumer defensive 260, , Consumer cyclical 239, , Utilities 154, , Industrials 154, , Financial services 145, , Energy 100, , Basic materials 41,170 41, Real estate 37,384 37, Total common stocks 2,140,559 2,140, Equities exchange-traded funds: Foreign large blend 542, , Short-term bond 264, , Small-cap blend 247, , Mid-cap blend 189, , Diverisified emerging markets 102, , Total exchange-traded funds 1,346,266 1,346, $ 5,297,160 $ 3,760,617 $ 1,536,543 $ - The Foundation s mutual funds, common stocks and exchange traded funds are publicly traded on the active exchanges and are considered Level 1 items. The corporate bonds, U.S. Treasury, and U.S. Government bonds, are priced based on their stated interest rates and quality ratings. The interest and quality ratings are observable at commonly quoted intervals for the full term of the instruments and are, therefore, considered Level 2 items. 10

13 Notes to Financial Statements Note 5. Fair Value Measurements and Investments (Continued) Investment income for the year ended December 31, 2016, consists of the following: Interest and dividends, net of fees of $38,036 $ 100,800 Realized and unrealized gain on investments, net 185,672 $ 286,472 11