Virginia Voice, Inc. Report on Financial Statements. For the year ended June 30, 2017 (with comparative totals for the year ended June 30, 2016)

Transcription

1 Report on Financial Statements For the year ended June 30, 2017 (with comparative totals for the year ended June 30, 2016)

2 Contents Page Independent Auditor's Report Financial Statements Statement of Financial Position... 3 Statement of Activities... 4 Statement of Cash Flows... 5 Notes to Financial Statements Supplementary Information Schedule of Functional Expenses... 13

3 Independent Auditor's Report Board of Directors Virginia Voice, Inc. Richmond, Virginia Report on the Financial Statements We have audited the accompanying financial statements of Virginia Voice, Inc. which comprise the statement of financial position as of June 30, 2017, and 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 of 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.

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Virginia Voice, Inc. as of June 30, 2017, 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. Other Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information on page 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Report on Summarized Comparative Information We have previously audited Virginia Voice, Inc. s 2016 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in out report dated December 20, In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2016, is consistent, in all material respected, with the audited financial statements from which it has been derived. Richmond, Virginia December 5,

5 Statement of Financial Position As of June 30, 2017, with comparative totals for 2016 Assets Current assets Cash $ 156,029 $ 104,093 Accounts receivable 30,000 Accrued investment income 1,651 1,661 Total current assets 187, ,754 Investments 950, ,897 Property and equipment net 31,345 25,243 Total assets $ 1,169,192 $ 1,090,894 Liabilities and net assets Current liabilities Payroll liabilities $ 1,280 $ 194 Accrued rent 16,687 13,391 Total current liabilities 17,967 13,585 Net assets Unrestricted: Undesignated 130,113 32,723 Board designated 996, ,558 Total unrestricted 1,126, ,281 Temporarily restricted 24,859 83,028 Total net assets 1,151,225 1,077,309 Total liabilities and net assets $ 1,169,192 $ 1,090,894 See Notes to Financial Statements 3

6 Statement of Activities For the year ended June 30, 2017, with comparative totals for 2016 Unrestricted Operating Endowment Total Temporarily Fund Fund Unrestricted Restricted Support and revenue: Contributions and gifts $ 247,928 $ $ 247,928 $ 6,237 $ 254,165 $ 221,390 Program revenues 36,499 36,499 36,499 36,499 Interest and dividends 31 14,199 14,230 14,230 15,597 Realized and unrealized gain (loss) on investments 125, , ,001 (11,636) Total support and revenues 284, , ,658 6, , ,850 Net assets released from restriction 64,406 64,406 (64,406) 348, , ,064 (58,169) 429, ,850 Expenses Program services 300, , , ,802 Support services Management and general 25,003 13,618 38,621 38,621 59,471 Fundraising 17,200 17,200 17,200 20,466 Total expenses 342,361 13, , , ,739 Excess/(deficiency) of support and revenues over expenses before transfers 6, , ,085 (58,169) 73,916 (113,889) Transfers 90,887 (90,887) Change in net assets 97,390 34, ,085 (58,169) 73,916 (113,889) Net assets beginning of year 32, , ,281 83,028 1,077,309 1,191,198 Net assets end of year $ 130,113 $ 996,253 $ 1,126,366 $ 24,859 $ 1,151,225 $ 1,077,309 See Notes to Financial Statements 4

7 Statement of Cash Flows For the year ended June 30, 2017, with comparative totals for Operating activities Change in net assets $ 73,916 $ (113,889) Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation 5,717 4,747 (Gain) loss on investments (125,374) 11,636 Change in: Accounts receivable (30,000) 31,025 Accrued investment income Payroll liabilities 1, Deferred revenue (31,025) Accrued rent 3,296 2,872 Net cash used in operating activities (71,349) (94,312) Investing activities Purchase of property and equipment (11,819) (14,063) Purchase of investments (446,952) (616,574) Proceeds from sale of investments 582, ,550 Net cash provided by investing activities 123,285 51,913 Net change in cash 51,936 (42,399) Cash at beginning of year 104, ,492 Cash at end of year $ 156,029 $ 104,093 See Notes to Financial Statements 5

8 Notes to Financial Statements June 30, 2017 Note 1. Organization and Nature of Activities Virginia Voice, Inc. (the Organization) is a not for profit organization incorporated under the laws of the Commonwealth of Virginia. The Organization provides audio reading and information services specifically for the benefit of those with blindness, vision impairment, or physical disabilities that limit reading. The readings are broadcast by way of closed circuit and are available in the Richmond and Hampton Roads service areas utilizing specially manufactured radios provided by the organization. The service is also accessible through the internet. Note 2. Summary of Significant Accounting Policies Basis of accounting: Virginia Voice, Inc. prepares its financial statements on the accrual basis of accounting. Under this method, revenues and the related assets are recognized when earned, and expenses are recognized when obligations are incurred. This method of accounting is in conformity with accounting principles generally accepted in the United States of America (GAAP). Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. Basis of presentation: The Organization reports 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 financial statements report amounts separately by class of net assets as follows: Unrestricted amounts include funds with no donor restrictions placed on the organization as to their use or purpose and those net assets currently available at the discretion of the Organization s Board of Directors for use in operations and those resources invested in property or equipment. Temporarily restricted amounts are those which are stipulated by donors for specific operating purposes or time restricted for use in a future period. When a donor restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently restricted amounts have been restricted by donors to be maintained by the organization in perpetuity, the income from which is expendable in accordance with the conditions of each specific donation. The Organization does not have permanently restricted net assets at June 30,

9 Notes to Financial Statements June 30, 2017 Note 2. Summary of Significant Accounting Policies, Continued Accounts receivable: Accounts receivable in the accompanying statement of financial position consists of program revenues expected to be received within one year. The Organization uses the allowance method to account for uncollectible receivables. The allowance is based on the current status of individual accounts and management s estimate of the collectability of the outstanding balances and historical experience. Based on management s evaluations, there was no allowance for doubtful accounts at June 30, Property and equipment: Property and equipment are stated at cost net of accumulated depreciation. The cost for major improvements is capitalized, while the cost of maintenance and repairs are expensed as incurred. When property and equipment are sold or otherwise disposed, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in current year s operations. Depreciation is computed using the straight line method over estimated useful lives as follows: Furniture and equipment Leasehold improvements 3 10 years 15 years Investments: All securities are reported at fair value. Investment transactions are accounted for on the trade date. Realized gains and losses on investments sold are computed using the average historical cost of the investments sold as of the trade date. See Note 5 for additional information on fair value measurements. Revenue recognition: All contributions are considered available for the Organization s general programs unless specifically restricted by the donor. Program revenues that are designated for future periods are reported as deferred revenue until the required passage of time or delivery of related services. Contributed services: Volunteers are a critical component of the Organization s service. More than 200 volunteers serve as readers, radio deliverers and studio operators. The organization recognizes the value of contributed services in the statement of activities if the services either (a) create or enhance a nonfinancial asset or (b) require specialized skills, provided by individuals possessing those skills, which would have been purchased if not contributed. No amounts have been recognized in the statement of activities for the value of reader, radio deliverer, and studio operator services because the criteria for recognition have not been satisfied. 7

10 Notes to Financial Statements June 30, 2017 Note 2. Summary of Significant Accounting Policies, Continued Functional allocation of expenses: The costs of providing various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Income taxes: The Organization is a qualifying nonprofit organization as defined in Section 501(c)(3) of the Internal Revenue Code and the tax statutes of the Commonwealth of Virginia, and is exempt from federal and state income taxes. Accordingly, the accompanying financial statements do not reflect a provision or liability for federal and state income taxes. The Organization has determined that it does not have any material unrecognized tax benefits or obligations as of June 30, Fiscal years ending on or after June 30, 2014 remain subject to examination by federal and state tax authorities. Recently issued accounting standards: In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) , Revenue from contracts with Customers (Topic 606), which creates a new comprehensive revenue recognition standard that will serve as a single source of revenue guidance for all companies in all industries. In August 2017, the FASB issued a proposed ASU intended to clarify and improve the scope and the accounting guidance for contributions received and made, primarily by not for profits. The proposed ASU provides guidance on if a transaction should be accounted for as a contribution or an exchange and helps organizations evaluate whether a contribution is conditional or unconditional, and better distinguish a donor imposed condition from a donor imposed restriction. Both ASU and the proposed ASU are effective for annual reporting periods beginning after December 15, On February 25, 2016, the Financial Accounting Standards Board (FASB) issued an accounting standards update (ASU) to improve financial reporting about lease transactions. The ASU requires organizations that lease assets to recognize on the statement of financial position the assets and liabilities for the rights and obligations created by those leases. The ASU effective date is for fiscal years beginning after December 15, On August 18, 2016, the FASB issued an ASU that would require changes to the net asset classification and provide better information about a not for profit entity s liquidity, financial performance and cash flows. This change is intended to enhance the usefulness of a not for profit s financial statements. The ASU effective date is for fiscal years beginning after December 15,

11 Notes to Financial Statements June 30, 2017 Note 3. Property and Equipment Major classes of property and equipment consist of the following at June 30, 2017: Transmitter equipment $ 2,274 Studio equipment 61,424 Radio receivers 136,809 Office equipment 56,745 Leasehold improvements 49, ,548 Less: accumulated depreciation (275,203) $ 31,345 Depreciation expense for fiscal year 2017 totaled $5,717. Note 4. Investments Investments consist of the following at June 30, 2017: Cost Fair Value Money market instruments $ 102,985 $ 102,985 Corporate bonds 176, ,604 Equities 483, ,578 $ 763,195 $ 950,167 Investment income consists of the following for the year ending June 30, 2017: Interest and dividend income $ 14,230 Gain (realized and unrealized) on investments 125,001 $ 139,231 Note 5. Fair Value Measurements Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy are described below: Level 1: Level 2: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Organization has the ability to access. Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. 9

12 Notes to Financial Statements June 30, 2017 Note 5. Fair Value Measurements, Continued Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, Money market instruments, corporate bonds, and equities: All Level 1 assets, valued at the closing price reported on the active market on which the individual securities are traded. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Organization believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Note 6. Temporarily Restricted Net Assets Temporarily restricted net assets consist of assets restricted for the following purposes at June 30, 2017: Capital improvements $ 17,154 Other technology 6,009 Personnel 1,587 Theater program 109 $ 24,859 Note 7. Net Assets Released from Temporary Restrictions Net assets released from temporary restrictions during the year ending June 30, 2017 consist of the following: Capital improvements $ 23,665 Other technology 9,152 Radios/Studio & IT Equipment 30,398 Theater program 1,191 $ 64,406 10

13 Notes to Financial Statements June 30, 2017 Note 8. Board Restricted Investment Account The Organization s board restricted investment account consists of amounts available for disbursement at the discretion of the board. The Organization appropriates amounts for expenditure based upon accumulated earnings in the funds and the needs of the organization. The primary objective is long term capital appreciation and total return. The Organization utilizes diversified investment classes that provide the opportunity to achieve the return objectives without exposing the funds to unnecessary risk. The changes in board restricted net assets consist of the following for the year ended June 30, 2017: Board restricted net assets, June 30, 2016 $ 961,558 Investment return: Interest and dividends 14,230 Net gain (realized and unrealized) 125,001 Investment management fees (13,618) Total investment return 125,613) Expenditures (90,918) Board restricted net assets, June 30, 2017 $ 996,253 Return objectives and risk parameters: The Organization has adopted investment and spending policies for board restricted assets that attempt to provide a predictable stream of funding to programs supported by its board restricted investment account while seeking to maintain the purchasing power of the board restricted assets. Under this policy, as approved by the Board of Directors, the restricted assets are invested in a manner that is intended to produce results that meet or exceed established index funds while assuming a moderate level of risk. The Organization s primary investment objective is to build capital through investing and holding those investments over a long term period. Strategies employed for achieving objectives: To satisfy its long term rate of return objectives, the Organization relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Organization targets a diversified asset allocation to achieve its long term return objectives within prudent risk constraints. Spending policy and how the investment objectives relate to spending policy: The Organization s spending policy is 5% of a rolling 12 quarter average value of the fund. 11

14 Notes to Financial Statements June 30, 2017 Note 9. Lease Commitments The Organization leases office space under a ten year lease agreement that originated in 1997 and called for 3% annual increases in monthly payments beginning in The lessor has not required increases in rent since 2007 (but may choose to do so at any time). As such, the Organization continues to make monthly rental payments of $940 per month. The difference between the contractual amount due and rent paid is reported as accrued rent in the statement of financial position. Note 10. Subsequent events: The Organization has evaluated subsequent events through December 5, 2017, the date which the financial statements were available to be issued. In October 2017, $250,000 was granted to the Organization from the Lipman Foundation. A portion of the contribution will go towards operating expenses, while the majority will be added to the board restricted investment account. 12

15 Schedule of Functional Expenses For the year ended June 30, 2017, with comparative totals for 2016 Program Management Services and General Fundraising Salaries $ 194,348 $ 19,919 $ 13,617 $ 227,884 $ 226,230 Employee benefits 13, ,639 11,517 Professional fees 13,201 4,400 1,100 18,701 55,118 Investment management fees 10,758 2,860 13,618 14,578 Payroll taxes 15,510 2,115 17,625 14,937 Rent 14,581 14,581 14,157 Other expenses 10,313 1,148 11,461 7,879 Marketing 6,146 6,146 2,066 Depreciation 5,717 5,717 4,747 Printing 5, ,014 7,633 6,353 Postage and shipping 2, ,480 3,292 Telephone 2, ,982 1,393 Insurance 1,713 1, ,207 3,378 Equipment purchases/installation ,572 Equipment maintenance ,699 Travel ,164 Supplies ,151 1,551 Bank fees Meetings and workshops 1,067 1, Regulatory fees Staff development Dues and subscriptions 2,976 2,976 2,642 Total functional expenses $ 300,158 $ 38,621 $ 17,200 $ 355,979 $ 375,739 13