COAST COMMUNITY COLLEGE DISTRICT FOUNDATION

Transcription

1 AUDITED FINANCIAL STATEMENTS and Independent Auditor s Report

2 TABLE OF CONTENTS June 30, 2017 INDEPENDENT AUDITOR S REPORT...1 FINANCIAL STATEMENTS...3 Statement of Financial Position...3 Statement of Activities...4 Statement of Cash Flows...5 Statement of Functional Expenses...6 NOTES TO THE FINANCIAL STATEMENTS...7

3 INDEPENDENT AUDITOR S REPORT Board of Directors Coast Community College District Foundation 1370 Adams Avenue Costa Mesa, CA We have audited the accompanying financial statements of the Coast Community College District Foundation (the Foundation), a component unit of the Coast Community College District, which comprise the statement of financial position as of June 30, 2017, and the related statements of activities, cash flows and functional expenses 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 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 Foundation 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 Foundation s internal control. Accordingly, we express no -1-

4 Board of Directors Coast Community College District Foundation 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 on page one present fairly, in all material respects, the respective financial position of the Coast Community College District Foundation 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. Prior Period Summarized Comparative Information The June 30, 2016 financial statements were audited by Vienti, Lloyd & Stutzman, LLP, whose practice became part of CliftonLarsonAllen LLP as of June 1, 2017, and whose report dated December 12, 2016 expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2016, is consistent, in all material respects, with the audited financial statements from which it has been derived. CliftonLarsonAllen LLP Glendora, California February 5,

5 STATEMENT OF FINANCIAL POSITION June 30, 2017 With Comparative Totals at June 30, 2016 June 30, 2017 June 30, 2016 Assets Cash and cash equivalents $ 232,462 $ 230,995 Due from Coast CCD Enterprise, Inc. 15,709 8,226 Investment held under split-interest agreement 46,742 45,826 Investment in Coast CCD Enterprise, Inc. 288, ,313 Total Assets $ 583,477 $ 689,360 Liabilities and Net Assets Liabilities: Accounts payable $ 47,388 $ 11,544 Split-interest agreement 8,390 7,940 Total Liabilities 55,778 19,484 Net Assets: Unrestricted 481, ,525 Temporarily restricted 45,886 46,351 Total Net Assets 527, ,876 Total Liabilities and Net Assets $ 583,477 $ 689,360 See the accompanying notes to the financial statements -3-

6 STATEMENT OF ACTIVITIES June 30, 2017 June 30, 2016 Unrestricted Temporarily Restricted Total Total Support and Revenue Contributions $ 5,382 $ $ 5,382 $ 1,271 Donated services 19,691 19,691 18,220 Total Support 25,073-25,073 19,491 Revenue Administrative fees- Coast CCD Enterprise, Inc. 89,031 89,031 90,771 Interest and dividends Change in value of split-interest agreement (465) (465) 182 Change in value of Coast CCD Enterprise, Inc. (115,749) (115,749) 8,471 Total Revnue (26,189) (465) (26,654) 100,342 Total Support and Revenue (1,116) (465) (1,581) 119,833 Operating Expenses Program services 96,862 96,862 59,851 Management and general 19,439 19,439 5,830 Fundraising 24,295 24,295 21,560 Total Expenses 140, ,596 87,241 Change in net assets (141,712) (465) (142,177) 32,592 Net Assets Beginning of year 623,525 46, , ,284 End of year $ 481,813 $ 45,886 $ 527,699 $ 669,876 See the accompanying notes to the financial statements -4-

7 STATEMENT OF CASH FLOWS June 30, 2017 June 30, 2016 Cash flows from operating activities Contributions and other income $ 5,382 $ 1,271 Interest and dividends Administrative and trademark fees, net 81,548 (126,729) Payments to suppliers (74,611) (51,465) Payments to/on behalf of employees for scholarships (10,000) (7,000) Net cash provided (used) by operating activities 2,848 (183,005) Cash flows from investing activities Interest and dividends on split interest agreement Interest and dividends reinvested (916) (800) Reclassification of investment to cash and cash equivalents - 17,319 Net cash provided (used) by investing activities - 17,319 Cash flows from financing activities Payments on split interest agreement (1,381) (618) Net cash used by financing activities (1,381) (618) Net increase (decrease) in cash and cash equivalents 1,467 (166,304) Cash and cash equivalents, beginning of year 230, ,299 Cash and cash equivalents, end of year $ 232,462 $ 230,995 Reconciliation of change in net assets to cash provided (used) by operating activities Change in net assets (142,177) 32,592 Adjustment to reconcile change in net assets to cash provided (used) by operating activities: Change in due from CCCD Enterprise, Inc. (7,483) - Change in value of Coast CCD Enterprise, Inc. 115,749 (7,948) Change in value of split-interest agreement Increase (decrease) in operating liabilities: Accounts payable 35,844 9,567 Due to Coast Community College District - (217,500) Net cash provided (used) by operating activities $ 2,848 $ (183,005) See the accompanying notes to the financial statements -5-

8 STATEMENT OF FUNCTIONAL EXPENSES Program Services June 30, 2017 June 30, 2016 Management & Services Fundraising Total Total Donated services $ 13,390 $ 6,301 $ $ 19,691 $ 18,220 Salaries and benefits 27,917 13,138 41,055 11,922 Scholarship payments 10,000 10,000 7,000 Services- other 3,188 3, Office expenses 6,595 6,595 1,051 Travel Conference and meetings 10,734 10,734 14,185 Insurance ,734 Hospitality 5,225 5,225 4,570 Supplies & materials ,185 Special events 1,336 24,295 25,631 23,543 Other expenses 17,534 17,534 2,791 $ 96,862 $ 19,439 $ 24,295 $ 140,596 $ 87,241 See the accompanying notes to the financial statements -6-

9 NOTES TO THE FINANCIAL STATEMENTS NOTE 1: ORGANIZATION The Coast Community College District Foundation (the Foundation) is a non-profit public benefit corporation organized under the Non-Profit Public Benefit Corporation Law of the State of California. The Foundation was incorporated on March 11, 1955 with the express purpose of promoting and assisting the educational program of the Coast Community College District (the District) in accordance with the mission, policies and priorities of the District. The Foundation s Board of Directors is composed of members from the local community, the Vice Chancellor of Administrative Services and the Chancellor of the District. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting These financial statements, which are presented on the accrual basis of accounting, have been prepared to focus on the Foundation as a whole and to present balances and transactions according to the existence or absence of donor imposed restrictions. Classification of Net Assets The Foundation reports information regarding its financial position and activities according to three classes of net assets unrestricted, temporarily restricted, or permanently restricted as follows: Unrestricted net assets Net assets not subject to donor imposed stipulations Temporarily restricted net assets Net assets subject to donor imposed stipulations that will be met by actions of the Foundation and/or the passage of time. At June 30, 2017 and 2016, temporarily restricted net assets consisted of a split interest agreement. Permanently restricted net assets Net assets subject to donor imposed stipulations that they be maintained permanently by the Foundation. The Foundation has no permanently restricted net assets. -7-

10 NOTES TO THE FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents Cash and cash equivalents are defined as cash in the bank, certificates of deposit and highly liquid securities purchased with a maturity of three months or less. Interest income on the certificates of deposit is recorded as income when earned. Due from Coast CCD Enterprise, Inc. Amounts due from Coast CCD Enterprise, Inc. and primarily related to the administrative fees and trademark fees. See Note 7. Investments held under Split-Interest Agreements Investments are certificates of deposit recorded at fair value. Investment in Coast CCD Enterprise, Inc. The investment in the Coast CCD Enterprise, Inc. is accounted for using the equity method. See Note 5. Fair-Value of Financial Instruments Accounting principles generally accepted in the United States of America require disclosure of an estimate of fair value of certain financial instruments. The Foundation s significant financial instruments are cash, accounts receivable. marketable equity securities, and other short term assets and liabilities. For these financial instruments, carrying values approximate fair value. Revenues and Expenses Revenues are reported as increases in unrestricted net assets unless use of the related asset is limited by donor imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expiration of temporary restrictions on net assets (i.e., the donor stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets. -8-

11 NOTES TO THE FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Contributions Contributions, including unconditional promises to give, are recognized as revenues in the period received. At June 30, 2017 and 2016, there were no material unconditional promises to give, therefore, no pledges receivable have been accrued in these financial statements. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value at the time of the gift. Estimates The preparation of the financial statements in accordance 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. Comparative Totals The financial statements and notes 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 general accepted in the United States of America. Accordingly, such information should be read in conjunction with the Foundation s financial statements for the year ended June 30, Income Taxes The Foundation qualifies as a tax exempt organization under the Internal Revenue Code Section 501 (c)(3) and California Revenue and Taxation Code 23701d. The Foundation has evaluated its tax positions and the certainty as to whether those positions will be sustained in the event or any audit by taxing authorities at the federal and state levels. The primary tax positions evaluated relate to the Foundation s continued qualification as a tax exempt organization and whether there are unrelated business income activities that would be taxable. Management has determined that all income tax positions will more likely than not be sustained upon potential audit or examination, therefore, no disclosures of uncertain income tax positions are required. The Foundation files informational returns in the U.S. federal jurisdiction, and the state of California. The statute of limitations for federal and California state purposes is generally three and four years, respectively. -9-

12 NOTES TO THE FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Subsequent Events The Foundation has evaluated subsequent events through February 5, 2018, which is the date these financial statements were available to be issued. There were no subsequent events requiring recognition as of June 30, NOTE 3: CONCENTRATION OF CREDIT RISK Custodial credit risk is the risk that, in the event of a financial institution s failure, the Foundation may not be able to recover its deposits and investments. The Foundation occasionally has a need to maintain cash balances in excess of the amount insured by the Federal Insurance Deposit Corporation (FDIC) limit of $250,000. At June 30, 2017 and 2016 none of the Foundation s bank balance was exposed to an uninsured credit risk. NOTE 4: INVESTMENTS Investments Investments are presented in the financial statements at their aggregate fair-value. As of June 30, 2017 and 2016, the fair value of the certificates of deposit was $46,742 and $45,826, respectively. Levels 1 through 3 have been assigned to the fair value measurements of investments. The fair value level of measurement is determined as follows: Level 1 quoted prices in an active market for identical assets. Level 2 quoted prices for similar assets and market contribution inputs. Level 3 the organization s own assumptions about market participation, including assumptions about risk, developed based on the best information available in the circumstances. The Foundation s certificates of deposit have been assigned Level 2 quoted prices for similar assets and market contribution inputs. NOTE 5: INVESTMENT IN COAST CCD ENTERPRISE, INC. The Foundation is a 50-percent shareholder in the Coast CCD Enterprise, Inc. (the Corporation). The 50-percent owned by the Foundation consists of 79 shares. This corporation was established to manage the swap meet operation at Orange Coast and Golden West Colleges. The Foundation -10-

13 NOTES TO THE FINANCIAL STATEMENTS NOTE 5: INVESTMENT IN COAST CCD ENTERPRISE, INC. accounts for this investment using the equity method. The Foundation recognizes its share of the Corporation s earnings based on the most recent available financial statements of the Corporation. The most recent available financial statements of the Corporation are for the fiscal year ending June 30, Condensed financial information for the Corporation for June 30, 2017 and 2016 is as follows: June 30, 2017 June 30, 2016 (Audited) (Audited) Total Assets $ 1,379,747 $ 1,625,564 Total Liabilities 802, ,546 Total Equity $ 577,125 $ 876,018 Total Revenues $ 5,948,117 $ 6,013,483 Total Expenses 6,247,010 5,950,939 Change in equity $ (298,893) $ 62,544 In 2016, the Foundation estimated its change in value using unaudited financial information. The difference is recognized in the subsequent year when audited financial information is available. During the fiscal years June 30, 2017 and 2016, the Foundation recognized a loss of $115,749 and a gain of $8,471, respectively, for its share of the change in value of the Coast CCD Enterprise, Inc. on the statement of activities. As of June 30, 2017 and 2016, the Foundation s proportionate share of the Corporation s change in equity was $(149,447) and $31,272, respectively. NOTE 6: SPLIT INTEREST AGREEMENT The Foundation is both the beneficiary and trustee of a unitrust agreement. The donated funds are held in trust and the donors retain all income rights during their lifetime equal to five percent of the net fair-value of assets of the trust valued as of the first day of each taxable year of the trust. The assets of the trust are currently invested in certificates of deposits. The Foundation will receive the remainder of any assets in the trust upon the termination of the trust. A liability is recorded for the amount due to beneficiaries. The present value of the estimated future payments to be distributed during the beneficiaries expected life is recorded using an actuarial calculated discount rate of 4.82%. This rate is based on estimated mortality rates and other assumptions that could change in the near term. The liability for the split interest agreement was $8,390 and $7,940, and the temporarily restricted net assets related to this unitrust were $45,886 and $46,351 as of June 30, 2017 and -11-

14 NOTES TO THE FINANCIAL STATEMENTS NOTE 6: SPLIT INTEREST AGREEMENT 2016, respectively. NOTE 7: RELATED PARTIES The primary purpose of the Foundation is to assist in providing and assisting the educational programs of the District. To assist the Foundation in carrying out its purpose, the District pays salaries and benefits of the administrative secretaries and accountants. The donated services for the fiscal years 2017 and 2016 was $19,691 and $18,220, respectively, and has been reflected in the financial statements as donated services. In addition to its equity described in Note 5, the Foundation will receive approximately one and one-half percent of the gross income from the Coast CCD Enterprise, Inc. for its administrative oversight of the Corporation. The Foundation received administrative fees totaling $89,031 and $90,771 for fiscal years 2017 and 2016, respectively, from the Corporation. -12-