Financial Statements For The Year Ended December 31, 2015 With Independent Auditor s Report

Transcription

1 Financial Statements For The Year Ended December 31, 2015 With Independent Auditor s Report

2 Independent Auditor s Report Table of Contents Financial Statements Page Number Independent Auditor's Report 1-2 Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statements of Cash Flows 6-7 Notes to Financial Statements 8-12

3 Independent Auditor s Report To the Board of Directors Lenawee Humane Society Adrian, Michigan I have audited the accompanying financial statements of Lenawee Humane Society, a Nonprofit Organization, as of December 31, 2015, which comprise the statement of financial position as of December 31, 2015, 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 My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I 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, I 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. 1

4 To the Board of Directors Lenawee Humane Society Adrian, Michigan Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lenawee Humane Society as of December 31, 2015, 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 I have previously audited Lenawee Humane Society s 2014 financial statements, and I expressed an unmodified audit opinion on those audited financial statements in my report dated March 11, In my opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2014 is consistent, in all material respects, with the audited financial statements from which it has been derived. Adrian, Michigan February 10,

5 Statement of Financial Position December 31, 2015 Temporarily Total Assets Unrestricted Restricted Current assets: Cash and cash equivalents $ 9,306 $ 49,984 $ 59,290 $ 99,099 Inventory 5,655 5,655 5,265 Total current assets 14,961 49,984 64, ,364 Property assets 216, , ,708 Total assets $ 231,937 $ 49,984 $ 281,921 $ 308,072 Liabilities and net assets Current liabilities: Accounts payable 4,477 4,477 4,069 Accrued expenses 9,406 9,406 10,236 Current portion of lease payable 2,648 2,648 2,458 Total current liabilities 16,531-16,531 16,763 Noncurrent liabilities: Noncurrent portion of lease payable - - 2,435 Total liabilities 16,531-16,531 19,198 Net assets: Temporarily restricted 49,984 49,984 39,934 Unrestricted 215, , ,940 Total net assets 215,406 49, , ,874 Total liabilities and net assets $ 231,937 $ 49,984 $ 281,921 $ 308,072 The accompanying notes are an integral part of this statement. 3

6 Statement of Activities For the Year Ended December 31, 2015 Temporarily Total Unrestricted Restricted Revenues Contributions $ 142,288 $ 2,789 $ 145,077 $ 215,630 Dues 4,958 4,958 12,444 Special events 134, , ,866 Dog licenses - 4,676 Grants 82,916 82,916 77,444 Shelter services 103, ,781 97,636 Clinic services 34,231 34,231 Store sales 20,468 20,468 23,998 Interest Loss on disposal of assets - (4,386) Contributed materials 35,733 35,733 52,671 Contributed services 17,031 17,031 8,567 Other income ,310 Net assets released from restriction 75,655 (75,655) - - Total revenues 568,499 10, , ,877 Expenses Programs: Store 47,237 47,237 78,901 Shelter 324, , ,314 Hope Clinic 92,947 92,947 Humane Education 34,360 34,360 23,443 Total programs 498, , ,658 General and Administrative 18,494 18,494 18,786 Fund-raising 84,625 84,625 98,214 Total expenses 602, , ,658 Change in net assets (33,534) 10,050 (23,484) 70,219 Net assets at beginning of year 248,940 39, , ,655 Net assets at end of year $ 215,406 $ 49,984 $ 265,390 $ 288,874 The accompanying notes are an integral part of this statement. 4

7 Statement of Functional Expenses For the Year Ended December 31, 2015 Hope Humane General & Fund Total Store Shelter Clinic Education Program Administrative Raising Cost of goods sold $ 6,668 $ 6,668 $ 6,668 $ 19,616 Salaries 21, ,954 40,009 25, ,513 7,765 35, , ,070 Payroll taxes 1,638 13,240 2,994 1,919 19, ,646 23,018 19,427 Director's liability insurance - 1,381 1, Insurance 645 4, , ,883 7,601 Interest Repair & maintenance 931 2,564 3, , ,648 11,821 Advertising 4, ,382 2,128 8,510 12,262 Dues and subscriptions License and fees Travel 2,525 2,525 2,525 4,272 Meetings and conferences 1,151 6, , ,970 10,786 Office supplies 496 1, , ,581 2,025 Equipment lease , ,523 1,747 Supplies 12,811 16,086 28,897 28,897 27,966 Postage ,195 5,772 5,070 Professional fees 1,250 2, , ,250 3,645 Contracted services 29,872 20,543 50,415 50,415 41,692 Special events - 30,444 30,444 41,837 Telephone 702 1, , ,510 3,116 Utilities 4,451 8,901 2,225 2,225 17,802 2,225 2,226 22,253 30,789 Depreciation 4,271 10,676 2,135 17,082 2,136 2,135 21,353 15,310 Amortization Bank charges 905 1, , ,754 5,167 Contributed materials 33,733 33,733 33,733 47,171 Contributed services 1,470 8, , ,454 8,504 Miscellaneous 274 2, , ,854 3,372 Total expenses $ 47,237 $ 324,370 $ 92,947 $ 34,360 $ 498,914 $ 18,494 $ 84,625 $ 602,033 $ 572,658 The accompanying notes are an integral part of this statement. 5

8 Statement of Cash Flows For the Year Ended December 31, 2015 Increase (Decrease) In Cash Temporarily Total Unrestricted Restricted Cash flows from operating activities: Cash received from contributors $ 147,246 $ 2,789 $ 150,035 $ 228,074 Cash from program income and grants 292,782 82, , ,620 Cash from other ,310 Interest received Cash paid for program and other expenses (452,388) (75,655) (528,043) (474,948) Net cash provided by (used in) operating activities (12,308) 10,050 (2,258) 111,077 Cash flows from investing activities: Property asset purchases (35,306) (35,306) (96,781) Net cash used in investing activities (35,306) - (35,306) (96,781) Cash flows from financing activities: Repayment of lease payable (2,245) (2,245) (1,964) Repayment of line of credit (40,000) (40,000) Proceeds from line of credit 40,000 40,000 (8,000) Net cash used in financing activities (2,245) - (2,245) (9,964) Increase (decrease) in cash (49,859) 10,050 (39,809) 4,332 Cash at beginning of year 59,165 39,934 99,099 94,767 Cash at end of year $ 9,306 $ 49,984 $ 59,290 $ 99,099 The accompanying notes are an integral part of this statement. 6

9 Statement of Cash Flows For the Year Ended December 31, 2015 Reconciliation of Change in Net Assets To Net Cash Provided By (Used In) Operating Activities Temporarily Total Unrestricted Restricted Change in net assets $ (33,534) $ 10,050 $ (23,484) $ 70,219 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation 21,353 21,353 15,310 Amortization Loss on disposal of assets - - 4,386 (Increase) decrease in: Prepaid expenses - - 4,346 Inventory (390) (390) 13,090 Increase (decrease) in: Accounts payable ,069 Accrued expenses (830) (830) (1,029) Total adjustments 21,226-21,226 40,858 Net cash provided by (used in) operating activities $ (12,308) $ 10,050 $ (2,258) $ 111,077 The accompanying notes are an integral part of this statement. 7

10 Notes To Financial Statements December 31, Summary of Significant Accounting Policies Organization The Lenawee Humane Society (LHS) is a non-profit, tax exempt organization, incorporated in the State of Michigan in LHS is dedicated to caring for unwanted animals and providing them with necessary medical treatment, food and shelter until we can find them a permanent home environment. Lenawee Humane Society s major sources of revenue are contributions and program fees from adoption and store sales. Basis of Accounting The records of LHS are maintained on the accrual basis of accounting. Using this method, revenues are recognized when earned and expenses are recognized when incurred. Financial Statement Presentation 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 generally accepted accounting principles. Accordingly, such information should be read in conjunction with the organization s financial statements for the year ended December 31, 2014, from which the summarized information was derived. LHS has adopted Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statement for Not-for-Profit Organizations. Under SFAS No. 117, LHS is required to report information regarding its financial position and activities according to three classes of net assets: Unrestricted, Temporarily Restricted, and Permanently Restricted. The following classes are maintained: Unrestricted Net Assets The unrestricted net asset class includes general and board-designated assets and liabilities of LHS. The unrestricted net assets of LHS may be used at the discretion of management to support LHS s purposes and operations. Temporarily Restricted Net Assets The temporarily restricted net asset class includes assets and trust obligations of LHS related to grants or gifts with explicit donor-imposed restrictions that have not been met as to a specified purpose, or to later periods of time or after specified dates. Cash and Cash Equivalents For purposes of the Statement of Cash Flows, LHS considers all demand deposits in the bank to be cash. 8

11 Notes To Financial Statements December 31, Summary of Significant Accounting Policies (Continued) Inventories Inventories are stated at the lower of cost or market, on a first-in, first-out basis. Capital Assets Capital assets are stated at cost or fair market value on the date received. Those assets that are expected to provide benefit to future periods are capitalized. Assets are depreciated over their estimated useful lives on the straight-line method. Contributions LHS reports grants and program revenue as restricted support. When the grant or program requirements are met, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statement of Activities as net assets released from restrictions. Advertising LHS s expenses advertising costs as they are incurred. Advertising expenses for the years ended December 31, 2015 and 2014 were $8,510 and $12,262, respectively. Subsequent Events LHS s management has considered subsequent events to February 10, The financial statements were available to be issued on February 10, Use of 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 the reported 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. 2. Tax-Exempt Entity The Lenawee Humane Society is a nonprofit organization which is exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue Code of According to the Internal Revenue Service s statute of limitations, there are three years, , of Form 990 information returns that are potentially subject to examination. 9

12 Notes To Financial Statements December 31, Deposits and Investments Deposits Custodial credit risk is the risk that in the event of a bank failure, the deposits may not be returned to LHS. LHS does not have a deposit policy for custodial credit risk. As of December 31, 2015, LHS s bank balance of $59,315 had no exposure to custodial credit risk. All deposits were insured. 4. Inventory At December 31, 2015 and 2014, inventory consisted of finished goods of $5,655 and $5,265, respectively, available for sale in the Pawpourri Store. 5. Capital Assets A summary of capital assets follows: Balance Balance January 1, 2015 Additions Deletions December 31, 2015 Capital asset not depreciated: Land $ 15,081 $ 15,081 Land improvements 21,625 21,625 Building and improvements 250,816 14, ,218 Computers and equipment 57,607 14,342 71,949 Furniture and fixtures 3,671 6,562 10,233 Vehicle 18,337 18,337 Equipment subject to capital lease 6,857 6, ,913 35, ,219 Less: accumulated depreciation (169,400) (21,353) (190,753) Less: accumulated amortization (886) (685) (1,571) Net capital assets $ 203,708 $ 13,268 $ - $ 216,976 Depreciation and amortization expense at December 31, 2015 and 2014 was $21,353 and $15,310 and $685 and $686, respectively. 10

13 Notes To Financial Statements December 31, Line of Credit LHS established a line of credit with TLC Community Credit Union of $25,000, secured by all assets of the organization, with a maturity date of December 9, The initial rate of interest is 4.25%. At the end of the fiscal year, the principal balance was $0. Interest expense for the year ended December 31, 2015 was $ Leases LHS is obligated by a capital lease with First Lease for a telephone system. The equipment value of $6,857 has been added to capital assets and presented as a lease payable. Payments of $231 are due monthly until September The interest portion of the lease payments was $290 and $769 for the years ended December 31, 2015 and 2014, respectively. LHS is obligated by a lease for a postage meter with Pitney Bowes. The lease payments of $297 are due on a quarterly basis ending June The total lease expense, including the cost of postage and total of phone system payments, for the years ended December 31, 2015 and 2014 were $8,309 and $7,804, respectively. Future lease commitments are as follows: Year Ended December 31, Lease Commitments 2016 $ 3, Total $ 4, Temporarily Restricted Net Assets The LHS received a contribution restricted specifically for life saving treatment for dogs. The remaining balance of the initial contributions at December 31, 2015 was $29,235. LHS also received grant funds to trap, neuter and release feral cats. The amount restricted to the next calendar year is $18,450. There are also funds restricted for the Adoption Ambassador program of $2, Contributed Services and Materials LHS received contributed services in its Shelter program of $7,031. Management and general services of $10,000 were also contributed. The revenues are shown separately within the financial statements and the expenses are classified according to type. LHS also received contributed materials of animal care products, such as food and cat litter, for its shelter program of $23,788. LHS received contributed materials through donation of items for its fundraisers of $9,545. LHS received contribution of office equipment and furniture of $2,400. These amounts represent the value of items LHS would otherwise have to pay to support its operations and are presented as revenue and expense within the financial statements. 11

14 Notes To Financial Statements December 31, Fundraising Expenses Fund-raising expenses at December 31, 2015 and 2014 were $84,625 and $87,374, respectively. 11. Concentrations A main source of revenue for LHS is from businesses and individuals located in Lenawee County. Adverse economic conditions in Lenawee County will affect LHS s revenue. 12