CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA

Transcription

1 26 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA FINANCIAL STATEMENTS for the YtAR ENDED DECEMBER 31, 2004 Under provisions of state law, this report is a public document Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and. where appropriate, at the office of the parish clerk of court. < Release Date. JAMES T. BATES CERTIFIED PUBLIC ACCOUNTANT 612 Barksdale Blvd Bossier City, Louisiana 71111

2 : 26 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Financial Statements for the YEAR ENDED DECEMBER 31, 2004

3 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Table of Contents December Independent Auditor's Report 1 Financial Statements: Statement of Financial Position 2 Statement of Activities and Changes in Net Assets 3 Statement of Cash Flows 4 Page Notes to Financial Statements 5-7 Supplemental Information Schedule of Program Services Expenses 8 Schedule of Management and General Expenses 9 Report on Compliance and on Internal Control over Financial Reporting based on an Audit of Statements Performed in Accordance with Government Auditing Standards Schedule of Findings 12 Management Letter 13 Management's Response to Management Letter 14

4 flames t. nates CERTIFIED PUBLIC ACCOUNTANT 612 BARKSDALE BOULEVARD BOSSIER CITY. LOUISIANA MEMBER TELEPHONE AMERICAN INSTITUTE OF (318) CERTIF/ED PUBLIC ACCOUNTANTS FAX (318) To Christ Temple Church of Christ (Holiness) USA Shreveport, Louisiana I was engaged to audit the accompanying statement of financial position of Christ Temple Church of Christ (Holiness) USA as of December 31, 2004, and the related statements of activities and changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Church's management. I was unable to obtain sufficient, competent evidential matter regarding the cost of the Church's property and equipment, revenue, expenses and changes in net assets because the Church did not maintain complete accounting records for the year ended December 31, I was unable to satisfy myself about the cost of the Church's property and equipment, revenue, expenses and changes in net assets by means of other procedures. Because of the significance of the matters discussed in the preceding paragraph, the scope of my work was not sufficient to enable me to express, and I do not express, an opinion on the financial statements referred to in the first paragraph. In accordance with Government Auditing Standards, I have also issued a report dated March 21, 2005 on my consideration of Christ Temple Church of Christ (Holiness) USA's internal control over financial reporting and on my tests.of its compliance with certain laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of my audit. The accompanying supplemental schedules, listed as "Supplemental Information Schedules" in the table of contents, are not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and as noted in the paragraphs above, I was unable to obtain sufficient, competent evidential matter to enable me to express, and I do not express, an opinion on the information included in these schedules. Certified Public Accountant March 21, 2005

5 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Statement of Financial Position December 31, 2004 ASSETS Cash and Cash Equivalents Contracts Receivable Property and Equipment (Net) Other Assets 7,861 79, , Total Assets LIABILITIES Accounts Payable Notes Payable - Due Within One Year Notes Payable - Due After One Year Total Liabilities NET ASSETS Unrestricted 12, , , Total Liabilities and Net Assets See notes to financial statements.

6 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Statement of Activities and Changes in Net Assets Year Ended December 31, 2004 Unrestricted Revenues Con t ribu t i on s Daycare revenue Other revenue Total revenue Expenses Program Services Management and General Depreciation Total expenses Decrease in unrestricted net assets Net assets, beginning of year Net assets, end of year 141, , ,369 63,680 61,069 1,061,118 ( 36,019) ,948 See notes to financial statements.

7 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2004 Cash Flows From Operating Activities: Contributions Daycare revenue Other revenue Cash payments to employees and related benefits Net Cash used by Operating Activities Cash Flows From Investing Activities: Purchase of fixed assets Net Cash from Investing Activities Activities Cash Flows From Financing Activities: Proceeds from debt Payments on Debt Net Cash from Financing Activities Net Decrease in Cash Cash, Beginning of year Cash, End of year Reconciliation of Operating Income to Net Cash Fro» Operating Activities Decrease in unrestricted net assets Adjustments to reconcile operating Loss to net cash from operating Activities Depreciation expense (Increase)/decrease in operating assets Contracts receivable Other assets Increase/(decrease) in operating Liabilities Accounts payable 141, ,942 69,022 ( ) ( ) ( )..( ) 204,477.( ) { 11,363) ,861 ( 36,019) 61,069 ( 5,404) ( 53,000) Net Cash Flows used by Operating Activities See notes to financial statements.

8 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Notes to Financial Statements December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES; A. General: Christ Temple Church of Christ (Holiness) USA is an organization exempt for Federal income tax purposes under Section 501 (c) (3) of the Internal Revenue Code and is exempt from federal and state income taxes. B. Nature of Activities: The Church owns and operates a day care center for children. The Church receives funds from the State of Louisiana under several contracts to provide day care and food to children who meet eligibility requirements under the terms of the program. C. Basis of Accounting: The accompanying financial statements have been prepared on the accrual basis of accounting. D. Basis of Presentation: Financial statement presentation follows the recommendations of the Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-forprofit Organizations. Under SFAS No. 117, 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. The Church has no restricted net assets. E. Cash and Cash Equivalents: For purposes of cash flows, the organization considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents. F. Property and Equipment: Purchased property and equipment are stated at cost. Donated property and equipment are stated at their fair market value on the date of donation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets ranging from five to forty years. (Continued)

9 G. Contributions: CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Notes to Financial Statements December 31, 2004 All contributions received are considered available for unrestricted use unless the donor specifies a restriction. Amounts received that are restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. When a temporary restriction expires, temporarily restricted net asset are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. The Church received no restricted contributions for the year ended December 31, H. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 2. Contracts Receivable: Contracts receivable at December 31, 2004 are as follows: Louisiana Department of Education Food Program $ 22,473 Louisiana Office of Family Support 57,^01 Total $ 79,474 All contracts receivable at December 31, 2004, are fully collectible. 3. Property and Equipment: Property and Equipment consists of the following: Furniture and Fixtures - Church $ 29,700 Furniture and Fixtures - Daycare 51,500 Equipment 124,179 Vehicles 177,025 Building - Church 425,000 Building - Daycare 379,000 Building Improvements 11,978 Rental Property 290,870 Other Miscellaneous Property 8,052 1,497,304 Less Accumulated Depreciation ( Property and Equipment - Net $ 918,569 (Continued)

10 4. Notes Payable: CHRIST TEMPLE CHOKCH OF CHRIST (HOLIHESS) USA Notes to Financial Statements December 31, 2004 Notes Payable consists of the following: Am South Bank - note dated April 9, 2003, payable in fifty nine installments of $5,535, and one payment for the principal and interest due after the fifty ninth payment, interest at 6%, collateralized by Church building $ 606,969 Hibernia National Bank - note dated December 23, 2003, payable in monthly installments of $628, interest at 8%, collateralized by real estate 63,441 Hibernia National Bank - line of credit dated January 29, 2004, bearing interest at 5.25%, collateralized by real estate 154,477 Hibernia National Bank - note dated May 28,2004, payable in 180 monthly installments of $468, interest at 7.55%, collateralized by real estate 48,956 Other miscellaneous notes payable, consisting of six vehicle notes totaling $90,191 and one credit card account at a Bank with a balance of $12, Total notes payable $ 976,104 Maturities of notes payable are as follows: $220,193, $56,208, $566,628, $23,775, $24,229, 2010 and after - $85, Economic Dependency: The Church received 80% of its revenue from operations of the day care center. The majority of day care revenue is generated through contracts with the State of Louisiana. If significant budget cuts are made at the State level, the amount of funds received by the Church could be reduced significantly and have an adverse impact on its operations.

11 SUPPLEMENTAL INFORMATION

12 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Schedule of Program Services Expenses Year Ended December 31, 2004 PROGRAM SERVICES EXPENSES Salaries Contract labor Accounting Payroll tax expense Appraisal fees Automotive expense Benevolence gifts Convention contributions Education and literature Equipment lease Food purchases Insurance Interest Janitorial and cleaning Licenses Meeting expense Mission support Musicians Supplies Pastor allowance Radio ministry Rent Security Special speakers Repair and maintenance Repair - rental properties Taxes - property Telephone Travel Utilities Utilities Youth ministry 340,834 20,940 5,800 27,293 7,823 30,285 6,020 3,624 1,816 3,005 87,347 23,025 39,369 6, , ,470 6,455 11,827 1,655 7, ,650 3, , ,887 4,297 22, Total $

13 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Schedule of Management and General Expenses Year Ended December MANAGEMENT AND GENERAL EXPENSES Salaries $ 35,775 Payroll tax expense 2,736 Insurance 1,200 Office 11,531 Pastor allowance 11,827 Hospitality 611 Total $

14 OTHER REPORTS Additional Reports required by Government Auditing Standards and Office of Management and Budget Circular A-133, Audits of Institutions of Higher Education and Other Non-Profit Institutions

15 flames t. Kates CERTIFIED PUBLIC ACCOUNTANT 612 BARKSDALE BOULEVARD BOSSIER CITY, LOUISIANA MEMBER TELEPHONE AMERICAN INSTITUTE OF (318) CERTIFIED PUBLIC ACCOUNTANTS FAX<318) INDEPENDENT AUDITOR'S REPORT OF COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To Christ Temple Church of Christ {Holiness) USA Shreveport, Louisiana I was engaged to audit the financial statements of Christ Temple Church of Christ (Holiness) USA as of and for the year ended December 31, 2004 and issued my report thereon dated March 21, I was unable to obtain sufficient, competent evidential matter regarding the cost of the Church's property and equipment, revenue, expenses and changes in net assets because the Church did not maintain complete accounting records for the year ended December 31, Compliance As part of obtaining reasonable assurance about whether Christ Temple Church of Christ (Holiness) USA's financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit and, accordingly, I do not express such an opinion. The results of my tests disclosed an instances of noncompliance that is required to be reported under Government Auditing Standards which is described in the accompanying schedule of findings and questioned costs as Finding # Internal Control Over Financial Reporting In planning and performing my audit, I considered Christ Temple Church of Christ (Holiness) USA's internal control over financial reporting in order to determine my auditing procedures for the purpose of expressing my opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, I noted a certain matter involving the internal control over financial reporting and its operation that I consider to be a reportable condition. Reportable conditions involve matters coming to my attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in my judgment, could adversely affect Christ Temple Church of Christ (Holiness) USA's ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. The reportable condition is described in the accompanying schedule of findings and questioned costs as Finding ft A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the 10

16 financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. My consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, I consider Finding # to be a material weakness. This report is intended for the information and use of management, the Board of Directors, and applicable federal and state cognizant agencies and is not intended to be, and should not be, used by anyone other than the specified parties. Under Louisiana Revised Statute 24:213, this report is distributed by the Legislative Auditor as a public document. Certified Public Accountant March 21,

17 CHRIST TEMPLE CHURCH OF CHRIST (HOLINESS) USA Schedule of Findings December 31, 2004 FINDING Cost Allocation Plan; Criteria: The Church operates a day care center and has contracts with the Louisiana Department of Office of Family Support and Education to provide day care to children, whose family meets certain conditions. The contract with the Department of Education is to provide meals under the Child and Adult Care Food Program (CACFP). Cpnd_itigm.i_ The contract with the Department of Education requires the Church to maintain adequate records and documentation to support the CACFP costs paid or reimbursed, and any other records or documents to support CACFP operations and expenditures. The Church maintains a separate bank account for the program, however, only paid food costs from this account and did not reduce these costs for children who were not eligible for the program. No costs for payroll, utilities, overhead, etc, for the program were directly paid or reimbursed to other operations from this account, therefore, these expenses are not readily available for comparison to the Program's approved budget. Recommendation: A proper cost allocation plan should be developed to properly separate the cost applicable to the children who qualify for assistance through CACFP from the cost for those children who do not qualify for the program. Management's Response: We will develop a cost allocation system to properly separate the cost applicable to the children who qualify for assistance through CACFP from the cost for those children who do not qualify for the program. 12

18 James Kates CERTIFIED PUBLIC ACCOUNTANT 612 BARKSOALE BOULEVARD BOSSIER CITY, LOUISIANA MEMBER TELEPHONE AMERICAN INSTITUTEOF (318) CERTIFIED PUBLIC ACCOUNTANTS FAX(318) March 21, 2005 To Christ Temple Church of Christ (Holiness) USA Shreveport, Louisiana I was engaged to audit the financial statements of Christ Temple Church of Christ (Holiness) USA for the year ended December 31, In planning my audit for the purpose of expressing my opinion on the financial statements and not to provide assurance on the internal control, I noted certain matters involving the internal control and its operation that I consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to my attention relating to significant deficiencies in the design or operation of the internal control that, in my judgment, could adversely affect the Church's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable Condition - Material Weakness: The Church did not maintain complete accounting records for the year ended December 31, Records verifying the acquisition cost of property and equipment could not be provided. Deposits to bank accounts did not identify the source of revenue. Documentation verifying the purpose and nature of expenditures was not maintained. Cash receipts from offerings and rentals were not deposited to the Church's bank account, but maintained on Church premises,- expenses were paid from these funds with no documentation to support the expenditure. These conditions resulted in a disclaimer of opinion of the financial statements of the Church. Recommendations: I recommend the following: The Church should engage the services of an outside bookkeeping firm to develop and maintain compete and accurate accounting records. The Church should deposit all receipts daily and intact. The Church should maintain complete and adequate documentation for all disbursements. This report is intended solely for the information and use of management, and others within the organization. Certified Public Accountant 13

19 CHRIST TEMPLE CHURCH March 21, 2005 Christ Temple Church of Christ (Holiness) USA 1505GrigsbySL Shreveport, LA Phone: &4741 Fax: Bder Lawrence E Hart, ST. PastoffTeacher James T. Bates, CPA 612 Barksdale Boulevard Bossies City, Louisiana Re: Christ Temple Church of Christ (Holiness) USA We offer the following corrective actions to suggestions in your letter dated March 21, 2005: The Church has engaged an outside accounting firm to develop and maintain a complete accounting system on a monthly basis. Effective immediately, all cash receipts will be deposited daily and intact. Effective immediately, no checks or disbursements will be made without proper documentation. Very truly yours. Lawrence E. Hart, Pastor Overcomer's Ministry Revelation 12:11 And they overcame him by the blood of the Lamb and by the Word of their testimony; and they loved not their own lives unto the death. 14