ASSOCIATION OF HEALTHCARE INTERNAL AUDITORS, INC. FINANCIAL STATEMENTS. December 31, 2012 and 2011

Transcription

1 ASSOCIATION OF HEALTHCARE INTERNAL AUDITORS, INC. FINANCIAL STATEMENTS

2 TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT 1 STATEMENT OF FINANCIAL POSITION 2 STATEMENT OF ACTIVITIES 3 STATEMENT OF CASH FLOWS 4 NOTES TO FINANCIAL STATEMENTS 5-9

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4 STATEMENT OF FINANCIAL POSITION ASSETS Cash and cash equivalents $ 629,339 $ 574,621 Accounts receivable 345 1,661 Prepaid expenses 14,069 10,137 Furniture and equipment, net of accumulated depreciation of $11,993 and $10,375, respectively - 1,618 Total assets $ 643,753 $ 588,037 LIABILITIES AND NET ASSETS Accounts payable $ 6,150 $ 3,243 Deferred revenues - membership dues 105, ,466 Deferred revenues - other 1,359 1,569 Total liabilities 113, ,278 Net Assets Unrestricted: General 504, ,452 Board designated 26,307 26,307 Total net assets 530, ,759 Total liabilities and net assets $ 643,753 $ 588,037 The accompanying notes are an integral part of the financial statements

5 STATEMENT OF ACTIVITIES For the Years Ended REVENUE AND SUPPORT Annual conference $ 332,717 $ 314,613 Regional seminar 21,688 38,554 Webinars 16,023 15,148 Internet and website fees - 11,341 New Perspectives fees and subscriptions 325 5,585 Membership dues 221, ,329 Other operating income 16,914 8,285 Interest income 8,865 5,216 Unrealized gains (losses) on investments 23,362 (12,438) Total revenue and support 641, ,633 EXPENSES Program services Annual conference 258, ,294 Regional seminar 9,888 9,975 Webinars 9,850 6,173 Internet and website 552 4,984 Audit library Membership 16,068 8,863 Marketing 5,760 25,361 New Perspectives journal expenses 99,799 66,026 Scholarships - 1,000 Other committee expenses 3,621 2,036 Total program services expenses 404, ,540 Management and general Board activities 16,471 17,384 General administrative 14,894 23,817 Management services 149, ,620 Professional and legal fees 6,825 5,930 Depreciation 1,619 2,399 Total management and general expenses 189, ,150 Total expenses 593, ,690 CHANGE IN NET ASSETS 47,823 33,943 NET ASSETS - BEGINNING OF YEAR 482, ,816 NET ASSETS - END OF YEAR $ 530,582 $ 482,759 The accompanying notes are an integral part of the financial statements

6 STATEMENT OF CASH FLOWS For the Years Ended CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 47,823 $ 33,943 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 1,619 2,399 Changes in assets and liabilities (Increase) decrease in: Accounts receivable 1,316 3,112 Prepaid expenses (3,933) 3,646 Increase (decrease) in: Accounts payable 2,907 (14,783) Deferred revenues - membership dues 5,196 (13,978) Deferred revenues - webinar (210) 808 Net cash provided (used) by operating activities 54,718 15,147 NET INCREASE (DECREASE) IN CASH 54,718 15,147 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 574, ,474 CASH AND CASH EQUIVALENTS, END OF YEAR $ 629,339 $ 574,621 The accompanying notes are an integral part of the financial statements

7 NOTE 1 - ORGANIZATION AND PURPOSE ASSOCIATION OF HEALTHCARE INTERNAL AUDITORS, INC. NOTES TO FINANCIAL STATEMENTS The Association of Healthcare Internal Auditors, Inc. (AHIA) was incorporated in 1981 in the State of Illinois. AHIA is an international organization dedicated to the advancement of the healthcare internal auditing profession, which includes auditing disciplines such as operational, compliance, clinical/medical, financial and information technology. The AHIA mission is to provide healthcare auditors with specialized education and networking opportunities and to provide leadership to the healthcare audit profession. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Basis of Accounting The financial statements are prepared on the accrual basis of accounting. Using this method revenues are recognized when earned and expenses are recognized when incurred. b. Basis of Presentation AHIA has adopted Financial Accounting Standards Board FASB ASC , Financial Statements of Not-for-Profit Organizations. Pursuant to this pronouncement, AHIA is required to report information regarding its financial position and activities according to these classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. At AHIA had only unrestricted net assets; however, a portion of these were board-designated for specific purposes. c. Cash and Cash Equivalents For the purpose of reporting the statements of cash flows, AHIA considers all cash instruments with a maturity of three months or less to be cash equivalents. d. Property and Equipment Equipment is recorded at cost and depreciated using the straight-line method with an estimated useful life of five years. Assets with a cost of $500 or more are capitalized. e. 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. Actual results could differ from those estimates. f. Fair Value Measurements AHIA adopted Financial Accounting Standards Board FASB ASC Fair Value Measurements which requires use of a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels: quoted market prices in active markets for identical assets and liabilities (Level 1); inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly (Level 2); and unobservable inputs from the asset or liability (Level 3)

8 NOTES TO FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) g. Income Taxes The Internal Revenue Service has ruled that the AHIA qualifies as a tax-exempt entity under Section 501(c)(6) of the Internal Revenue Code. AHIA is not aware of any course of action or series of events that have occurred that might adversely affect AHIA's status. AHIA follows FASB ASC 740 Income Taxes, which requires entities to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority. AHIA has evaluated tax positions taken related to its tax-exempt status, and none are considered to be uncertain; therefore, no amounts have been recognized as of December 31, Tax returns for AHIA for the previous three years (2009 through 2011) are subject to examination by the Internal Revenue Service, generally three years after initial filing. NOTE 3 - CONCENTRATION OF CREDIT RISK AHIA maintains a cash balance at a commercial bank. This account is insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). From time to time, AHIA s balances at this commercial bank may exceed the insured amounts. In addition, AHIA maintains money market funds and investment accounts at an institutional brokerage which are not insured by the FDIC. NOTE 4 - BOARD DESIGNATED NET ASSETS AHIA's board of directors has collected funds designated to be used for educational purposes. These designated funds amounted to $26,307 and $26,307, respectively, at. NOTE 5 - COMMITMENTS In 2013, AHIA renewed an agreement for the provision of outside editorial services related to the AHIA quarterly journal, New Perspectives. The terms of the agreement, which is in effect for 9 months from April 1, 2013 through December 31, 2013 and can be terminated upon 90 days written notice, includes initial monthly payments to the contractor of $1,856 per month. In addition, the contract allows for the contractor to receive reimbursement for expenses from AHIA, up to a maximum of $5,000 annually, and a commission of 33% of advertising sales obtained. Also during 2010, AHIA renewed an agreement with a management company for management and administrative services, effective January 1, 2010 and continuing until terminated by either party upon 120 days written notice. Under the terms of the agreement AHIA is to pay the management company an annual fee as determined each year, plus reimbursement of certain expenses. The annual fee is subject to change in future years by mutual agreement to account for cost of living adjustments and other costs of doing business. For the year ended December 31, 2013, the fee will be $153,747. For the years ended December 31, 2012 and 2011, the management fee was $149,629 and $146,620, respectively. AHIA has also made commitments with hotels for conferences to be held in 2013, 2014 and If the 2013 conference is cancelled, then AHIA will be contractually obligated to pay an amount of liquidated damages based upon the date of cancellation according to the following schedule: Date of Cancellation Approximate Amount of Liquidated Damages Due Prior to February 23, 2013 $ 173,000 From February 24, 2013 to August 23, ,

9 NOTE 5 - COMMITMENTS (continued) ASSOCIATION OF HEALTHCARE INTERNAL AUDITORS, INC. NOTES TO FINANCIAL STATEMENTS If the 2014 conference is cancelled, then AHIA will be contractually obligated to pay an amount of liquidated damages based upon the date of cancellation according to the following schedule: Date of Cancellation Approximate Amount of Liquidated Damages Due Prior to October 9, 2013 $ 148,000 From October 10, 2013 to September 19, ,000 If the 2015 conference is cancelled, then AHIA will be contractually obligated to pay an amount of liquidated damages based upon the date of cancellation according to the following schedule: Date of Cancellation Approximate Amount of Liquidated Damages Due NOTE 6 - INVESTMENTS Prior to December 30, 2013 $ 45,110 From December 31, 2013 to July 29, ,220 From July 30, 2014 to December 30, ,775 From December 31, 2014 to August 29, ,330 AHIA holds certain investments at December 31, These investments are considered cash and cash equivalents for presentation on the statement of financial position. Investments included in cash and cash equivalents are summarized as follows at December 31, 2012: Fair Value Cost Unrealized gain to date Money market mutual funds $ 160,554 $ 160,554 $ - Equity mutual funds 280, ,985 10,960 Total $ 441,499 $ 430,539 $ 10,960 Components of investment income, as presented on the statement of activities and changes in net assets, are comprised of the following for the years ended December 31: Interest and dividend income $ 8,865 $ 5,216 Realized gains - - Unrealized gains (losses) on investments 23,362 (12,438) Total investment income $ 32,227 $ (7,222) NOTE 7 - FAIR VALUE MEASUREMENTS The carrying amount reported in the statement of financial position for cash and cash equivalents, accounts payable and accrued liabilities, approximate fair value because of the immediate or short-term maturities of these financial instruments. -7-

10 NOTES TO FINANCIAL STATEMENTS NOTE 7 - FAIR VALUE MEASUREMENTS (continued) AHIA adopted Statement of Financial Accounting Standards FASB ASC , Fair Value Measurements as of January 1, 2008, which among other things requires enhanced disclosures about investments that are measured and reported at fair value. FASB ASC establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 Quoted prices are available in active markets for identical investments as of the reporting date. The types of investments included in Level 1 include mutual funds, listed equities, listed derivatives, cash, and cash equivalents. For AHIA, Level 1 investments consist of money market mutual funds and equity mutual funds. Level 2 Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in this category include corporate and government bonds, less liquid and restricted equity securities and certain over-thecounter derivatives. AHIA has no Level 2 investments. Level 3 Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. Investments that are included in this category generally include limited partnership interests in corporate private equity and real estate funds, funds of hedge funds, and distressed debt. AHIA has no Level 3 investments. In certain cases, the inputs used to measure fair value may fall in to different levels of the fair value hierarchy. In such cases, an investment s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following table summarizes the valuation of AHIA s investments by the above FASB ASC fair value hierarchy levels as of December 31, 2012: Fair Value Measurements at Reporting Date Using: Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs Description Fair Value (Level 1) (Level 2) (Level 3) Money market and equity mutual funds $ 441,499 $ 441,499 $ - $ - -8-

11 NOTES TO FINANCIAL STATEMENTS NOTE 7 - FAIR VALUE MEASUREMENTS (continued) The following table summarizes the valuation of AHIA s investments by the above FASB ASC fair value hierarchy levels as of December 31, 2011: Fair Value Measurements at Reporting Date Using: Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs Description Fair Value (Level 1) (Level 2) (Level 3) Money market and equity mutual funds $ 409,374 $ 409,374 $ - $ - NOTE 8 - SUBSEQUENT EVENTS Effective June 15, 2009, AHIA adopted the provisions of Financial Accounting Standards Board FASB ASC Subsequent Events. This statement requires management to evaluate, through the date the financial statements are issued or available to be issued, events or transactions that may require recognition or disclosure in the financial statements, and to disclose the date through which subsequent events were evaluated. AHIA's financial statements were available to be issued on June 26, 2013, and this is the date through which subsequent events were evaluated. AHIA did not identify any subsequent events requiring disclosure