THE NEW HAVEN READS COMMUNITY BOOK BANK, INC. Financial Statements. June 30, 2017 and 2016

Transcription

1 Financial Statements June 30, 2017 and 2016 DONALD L. PERLROTH & COMPANY Certified Public Accountants STURBRIDGE COMMONS 250 STATE STREET, C-1 NORIB HA VEN, CONNECTICUT TELEPHONE: (203) FAX: (203)

2 Contents Report of Independent Auditor 1-2 Statement of Financial Position as of June 30, 2017 with summarized comparative information as of June 30, Statement of Activities for the year ended June 30, 2017 with summarized comparative information for the year ended June 30, 2016 Statements of Cash Flows Notes to Financial Statements Supplementary Information - Schedule of Functional Expenses for the year ended June 30, 2017 with summarized comparative information for the year ended June 30,

3 DONALD L. PERLROTH & COMPANY Certified Public Accountants STURBRIDGE COMMONS 250 STATE STREET, C-1 NORTH HA VEN, CONNECTICUT TELEPHONE: (203) FAX: (203) REPORT OF INDEPENDENT AUDITOR Board of Trustees The New Haven Reads Community Book Bank, Inc. New Haven, Connecticut We have audited the accompanying financial statements of The New Haven Reads Community Book Bank, Inc. (a nonprofit organization) 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 µnited 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. 1

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The New Haven Reads Community Book Bank, 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. Report on Summarized Comparative Information We have previously audited The New Haven Reads Community Book Bank, Inc. 's 2016 financial statements, and our report dated November 30, 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. Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses is presented for purposes of additional analysis and is not a required part of the 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. Respectfully submitted, DONALD L. PERLROTH & COMPANY Certified Public Accountants January 17, 2018 DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 2

5 Statement of Financial Position as of June 30, 2017 with summarized comparative information as of June 30, 2016 Unrestricted Temporarily Restricted Totals ASSETS Cash and cash equivalents Grants receivable Prepaid expenses Investments Security deposit Fixed assets, net $ 479,667 59,698 3, ,610 4,500 41,667 $ 37,742 $ 517,409 $ 425,352 59, ,703 3,535 5, , ,463 4,500 4,500 41,667 46,673 Total $ 869,677 $ 37,742 $ 907,419 $ 921,452 LIABILITIES AND NET ASSETS Liabilities: Accounts payable Accrued expenses $ ,372 $ 456 $ 2,813 18,372 8,522 Total liabilities 18,828 18,828 11,335 Net assets: Unrestricted: For current operations 570,239 Christine Alexander Memorial Fund 280,610 Temporarily restricted 37, , , , ,463 37, ,539 Total net assets Total 850,849 37,742 $ 869,677 $ 37, , ,117 $ 907,419 $ 921,452 The accompanying comments are an integral part of this statement DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 3

6 Statement of Activities for the year ended June 30, 2017 with summarized comparative information for the year ended June 30, 2016 Unrestricted Temporarily Restricted Revenues and support: Contributions: Corporate $ 64,577 $ Federated 18,028 Other 289,114 14,000 Grants: Government 110,050 Non-government 121,649 21,900 Fundraising 30,750 Investment income 2,863 Realized gains (losses) from investments, net 12,013 Unrealized gains (losses) from investments, net 23,585 In-kind donations Other Net assets released from restrictions Total revenue and support 42, , ,801 (179,697) (143,797) Totals $ 64,577 $ 6,127 18,028 15, , , , , , ,707 30,750 23,895 2,863 2,790 12,013 42,396 23,585 (51,633) 42,667 42, , ,130 Expenses: Program services Support services: General and administrative Financial development 640,262 93,737 39, , ,171 93,737 74,993 39,531 28,949 Total expenses 773, , ,113 Change in net assets 122,271 (143,797) (21,526) 89,017 Net assets - beginning 728, , , ,100 Net assets - ending $ 850,849 $ 37,742 $ 888,591 $ 910,117 The accompanying comments are an integral part of this statement DONALD L. PERLROTII & COMP ANY, Certified Public Accountants 4

7 Statements of Cash Flows for the years ended June 30: 2017 Cash flows from operating activities: Change in net assets $ (21,526) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 5,006 Realized losses (gains), net (12,013) Unrealized losses (gains), net (23,585) Proceeds from investments 451 Decrease (increase) in operating assets: Grants receivable 134,005 Prepaid expenses 2,226 Security deposit Increase (decrease) in operating liabilities: Accounts payable (2,356) Accrued expenses 9,851 Total adjustments 113,585 Net cash provided by operating activities 92,059 Cash flows from investing activities: Capital expenditures Net increase in cash and cash equivalents 92,059 Cash and cash equivalents - beginning of year 425,352 Cash and cash equivalents - ending of year $ 517, $ 89,017 3,269 (42,396) 51, (77,495) 7,256 (4,500) (1,139) 4,995 (58,119) 30,898 (25,736) 5, ,190 $ 425,352 The accompanying comments are an integral part of this statement DONALD L. PERLROTH & COMPANY, Certified Public Accountants 5

8 Notes to Financial Statements for the years ended June 30, 2017 and Description of organization The New Haven Reads Community Book Bank, Inc. is a not-for-profit corporation founded in The Organization's goal is to create a community of readers by connecting people with the materials and training necessary to promote literacy. The Organization also offers after-school tutoring services, kindergarten and pre-kindergarten programs, homework assistance, club activities and provides gently-used books to the public. 2. Summary of significant accounting policies A. Basis of accounting The financial statements of the Organization have been prepared on the accrual basis of accounting. B. Basis of presentation The Organization's financial statement presentation follows the recommendations of the Financial Accounting Standards Board Accounting Standards Codification 958. The Organization 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. This pronouncement establishes standards for external financial reporting by not-for-profit organizations. Resources are reported for accounting purposes in separate classes of net assets based on the existence or absence of donor-imposed restrictions. In the accompanying financial statements, net assets that have similar characteristics have been combined into similar categories as follows: Unrestricted Net assets that are not subject to explicit donor-imposed stipulations. Unrestricted net assets may be designated for specific purposes by action ofthe Board of Directors. DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 6

9 Notes to Financial Statements for the years ended June 30, 2017 and Summary of significant accounting policies - continued B. Basis of presentation - continued Temporarily restricted Net assets whose use by the Organization is subject to explicit donor-imposed stipulations that can be fulfilled by actions of the Organization pursuant to those stipulations or that expire by the passage of time. Permanently restricted Net assets subject to explicit donor-imposed stipulations that they be maintained permanently by the Organization. Generally, the donors of these assets permit the Organization to use all or part of the investment return on these assets. Such assets primarily represent the historic dollar amount (principal portion) of the Organization's restricted endowment funds. Revenues are reported as increases in unrestricted net assets unless use of the related assets 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 stipulations or law. Expirations of temporary restrictions on net assets, that is, the donor-imposed stipulated purpose has been accomplished and/or the stipulated time period has elapsed, are reported as reclassifications between the applicable classes of net assets. C. Cash and cash equivalents Cash and cash equivalents include all checking and interest-bearing cash accounts from highly liquid investments with maturity dates of less than three months. The Organization does not maintain deposits with financial institutions which exceed federally insured limits. D. Receivables Receivables are periodically reviewed and those deemed uncollectible are written off utilizing the direct write-off method. The effect on the financial statements of using the direct write-off method rather than the allowance for bad debts is not material. There was no bad debt expense for the years ended June 30, 2017 and DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 7

10 Notes to Financial Statements for the years ended June 30, 2017 and Summary of significant accounting policies - continued E. Fixed assets Equipment, furniture and leasehold improvements are stated at cost. Donated assets are capitalized at the estimated fair value at the date of receipt. Maintenance, repairs and minor renewals are charged to operations as incurred. Upon the sale or disposition of properties, the asset account is relieved of the cost and the accumulated depreciation account is charged with depreciation taken prior to the sale or disposition, and any resultant gain or loss is credited or charged to income. The Organization capitalizes donated or purchased assets in excess of $1,500. Donated assets are capitalized at the estimated fair value at the date of receipt. F. Contributions All contributions are considered to be available for the general programs of the Organization unless specifically restricted by the donor. The Organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. G. Donated materials, services and facilities The Organization records donated materials, services and use of facilities when received, as contributions in the accompanying statements at their estimated value at the date of receipt. No amounts have been recognized for the values of donated services. The Organization recorded a total of $42,667 as the value of the donated use of facilities for each of the years ended June 30, 2017 and DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 8

11 Notes to Financial Statements for the years ended June 30, 2017 and Summary of significant accounting policies - continued H. Use of estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. I. Subsequent events The Organization has determined that there are no subsequent events required to be disclosed through January 17, J. Fair values of financial instruments Accounting Standards Codifications have established a framework for measuring fair value under accounting principles generally accepted in the United States of America. The new definition of fair value focuses on the price that would be received to sell the asset or paid to transfer the liability which is referred to as the exit price. This establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels (Level 1, 2 and 3). DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 9

12 Notes to Financial Statements for the years ended June 30, 2017 and Summary of significant accounting policies - continued J. Fair values of financial instruments - continued Level 1-Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Organization has the ability to access at the measurement date. 3. Tax status Level 2 - Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Level 3 - Unobservable inputs reflecting the Organization's estimates of the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). The Organization's financial instruments include cash, grants receivable, prepaid expenses, certain investments, accounts payable and accrued expenses. The carrying values of cash, grants receivable, accounts payable and accrued expenses approximate their fair values due to their short-term nature. The carrying value of notes payable, when applicable, approximates their fair value due to their bearing interest at rates that approximate current market rates for notes with similar maturities and credit quality. The Organization is a non-stock, not-for-profit corporation, exempt from income tax under section 501{c){3) of the Internal Revenue Code, and contributions to it are tax deductible within the limitations prescribed by the Code. Each year, the Organization evaluates its tax position. As of June 30, 2017, the Organization determined it has no uncertainties regarding income taxes. The Organization is no longer subject to examination by the Internal Revenue Service for years prior to the year ended June 30, Grants receivable Grants receivable are recorded as revenue at the time they are awarded. DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 10

13 Notes to Financial Statements for the years ended June 30, 2017 and Investments The Organization's investments are managed by The Community Foundation of Greater New Haven. The income earned from the investments m~y be used for general purposes. The Foundation's long-term asset allocation model for investments is as follows: Global equity Private assets Bonds Hedged investments Cash equivalents 57.56% 4.57% 14.63% 20.70% 2.54% The fair value of assets, measured on a recurring basis, classified as Level 3, were $280,610 and $245,463 as of June 30, 2017 and The following is a reconciliation of the Level 3 investment as of June 30: Beginning balance Investment income Realized gain (loss), net Unrealized gain (loss), net Investment expense Total $245,463 2,329 11,926 23,825 (2,933) $ Fixed assets Fixed assets as of June 30, 2017 consist of the following: Furniture and equipment Leasehold improvements Total cost Less accumulated depreciation Fixed assets, net $ 17,891 36,757 54,648 (12,981) $ Depreciation is computed under the straight-line method over the estimated useful lives of five to fifteen years. Total depreciation expense for the years ended June 30, 2017 and 2016 was $5,006 and $3,269, respectively. DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 11

14 Notes to Financial Statements for the years ended June 30, 2017 and Net assets Temporarily restricted net assets and net assets released from restrictions by incurring ~xpenses satisfying the restricted purpose or by the expiration of time restrictions are all for general purposes relating to program services. 8. Operating lease The Organization rents space under a 5-year lease that began January 2016 and ends December Rental expense for the year ended June 30, 2017 and 2016 was $24,310 and $12,000, respectively. Minimum future rental payments for the next 4 years and in the aggregate are as follows: Year ending June 30: Total 24,908 25,554 26,193 13,247 $ 89, Functional allocation of expenses Ttie costs of providing the various programs and 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. 10. Concentration of credit risk The Organization considers investments in marketable equity securities and mutual funds to be sufficiently diversified to minimize individual investment risks. The investments are subject to the risks of the securities markets as a whole. 11. Contingencies _The Organization, at year end, maintained two accounts with People's United Bank, N.A. amounting to $436,114. This exceeds the $250,000 FDIC insurance and, therefore, constitutes an off-balance sheet credit risk. The Organization has not experienced any losses from such concentrations. DONALD L. PERLROTH & COMP ANY, Certified Public Accountants 12

15 SUPPLEMENTARY INFORMATION

16 THE NEW HAVEN READS COMMUNITY BOOK, INC. Schedule of Functional Expenses for the year ended June 30, 2017 with summarized comparative information for the year ended June 30, _2016 Program. General and Financial Totals Services Administrative Development Salaries and wages $ 474,363 $ 43,856 $ 14,115 $ 532,334 $ 465,814 Payroll taxes 44,549 3,578 1,031 49,158 35,635 Subtotal 518,912 47,434 15, , ,449 Accounting fees 5,500 5,500 5,475 Bank charges ,459 Cleaning and maintenance 8, ,474 6,699 Computer hardware and maintenance 1,114 1, ,321 8,965 Consultant 3,525 3, Contract labor 5,000 5,000 5,000 Contract service expenses 7,000 7,000 Contract service fees 2,100 3,200 5,300 3,150 Depreciation 5,006 5,006 3,269 Equipment ,040 Fees and registrations Graphic design 1,225 1, In-kind donations - rent 40,482 1, ,667 42,667 Insurance 12,492 12,492 10,275 Investment fees 2,963 2,963 2,404 Office supplies ,058 9,468 9,661 Payroll service 3,265 3,265 2,859 Postage and shipping 71 1,454 1,525 3,050 Printing 1, ,131 4,777 5,687 Program expenses 4,052 4,052 Professional development ,897 Rent 21,636 1, ,310 12,000 Supplies 1, ,698 4,760 Telephone 2, ,230 4,612 Tutoring, supplies and snacks 26,482 26,482 43,690 Utilities 3, , Volunteer appreciation 203 Web licenses 3,239 1, ,081 3,077 Totals year ended June 30, 2017 $ 640,262 $ 93,737 $ 39,531 $ 773,530 Totals year ended June 30, 2016 $ 585,171 $ 74,993 $ 28,949 $ 689,113 DONALD L. PERLROTH & COMPANY, Certified Public Accountants 13