Financial Statements February 28, 2015 and 2014

Transcription

1 Financial Statements February 28, 2015 and 2014

2 Table of Contents February 28, 2015 and 2014 Page Independent Auditor s Report... 1 Financial Statements Statements of Financial Position... 2 Statements of Activities... 3 Statements of Functional Expenses... 4 Statements of Cash Flows... 5 Notes to the Financial Statements... 6

3 INDEPENDENT AUDITOR S REPORT To the Board of Directors of Oasis of Hope, Inc. Memphis, Tennessee We have audited the accompanying financial statements of Oasis of Hope, Inc., which comprise the statements of financial position as of February 28, 2015 and 2014, and the related statements of activities, functional expenses, and cash flows for the years 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 of 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits 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. According, 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oasis of Hope, Inc. as of February 28, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Memphis, Tennessee May 1, 2015 CANNON WRIGHT BLOUNT PLLC 756 RIDGE LAKE BLVD MEMPHIS TN PHONE FAX

4 Statements of Financial Position February 28, 2015 and 2014 ASSETS Cash $ 219,453 $ 69,604 Grants receivable 6,242 54,373 Rents receivable, net 10,740 3,614 Prepaid expenses 2,754 - Receivable from related parties 10,000 - Inventories 47,470 47,470 Intangible assets, net 4,346 4,861 Property and equipment, net 2,100,637 2,139,658 Total assets $ 2,401,642 $ 2,319,580 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ 5,976 $ 1,000 Accrued payroll 3,665 3,105 Due to related parties 423 4,933 Tenant security deposits 1, Total liabilities 11,664 9,838 Net assets Unrestricted 2,381,645 2,272,242 Temporarily restricted 8,333 37,500 Total net assets 2,389,978 2,309,742 Total liabilities and net assets $ 2,401,642 $ 2,319,580 See independent auditor s report and notes to the financial statements 2

5 Statements of Activities For the Years Ended February 28, 2015 and Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Revenues and support Contributions $ 514,870 $ - $ 514,870 $ 478,146 $ - $ 478,146 Grant reimbursements , ,212 Rental income 97,561-97,561 71,680-71,680 Other grants 84,857 8,333 93,190 66,660-66,660 Fundraising 1,874-1,874 11,051-11,051 Other 11,948-11,948 6,528-6,528 Net assets released from restrictions 37,500 (37,500) - 25,000 (25,000) - Total revenues and support 748,610 (29,167) 719, ,277 (25,000) 760,277 Expenses Program services 421, , , ,308 Management and general 176, , , ,011 Fundraising 41,000-41,000 32,951-32,951 Total expenses 639, , , ,270 Change in net assets 109,403 (29,167) 80, ,007 (25,000) 202,007 Net assets, beginning of year 2,272,242 37,500 2,309,742 2,045,235 62,500 2,107,735 Net assets, end of year $ 2,381,645 $ 8,333 $ 2,389,978 $ 2,272,242 $ 37,500 $ 2,309,742 See independent auditor s report and notes to the financial statements 3

6 Statements of Functional Expenses For the Years Ended February 28, 2015 and Program Management Program Management Services and General Fundraising Total Services and General Fundraising Total Compensation and Related Expenses Compensation $ 126,952 $ 62,110 $ 31,165 $ 220,227 $ 125,123 $ 37,950 $ 27,317 $ 190,390 Employee benefits Retirement plan 8,144 4,172 2,094 14,410 (493) (148) (106) (747) Insurance 9,750 4,995 2,506 17,251 15,364 4,596 3,309 23,269 Payroll Taxes 10,398 5,327 2,674 18,399 11,288 3,377 2,431 17,096 Total compensation and related expenses 155,244 76,604 38, , ,282 45,775 32, ,008 Other Expenses Advertising and promotion 1, ,707 1, ,752 Bad debt expense - 37,115-37,115-26,369-26,369 Camp 11, ,426 11, ,557 Coaching/Uniforms 6, ,300 6, ,036 Contribution to others , ,000 Depreciation and amortization 46,564 2,117-48,681 37,156 1,971-39,127 Education 5,707 2,462-8,169 9,167 5,607-14,774 Food 7, ,296 12, ,393 Ministry 11, ,694 11, ,251 Miscellaneous 14,091 13,984-28,075 4,662 16,021-20,683 Product/cost of sales 13, ,208 14, ,605 Professional fees - 35,608-35,608-32,815-32,815 Property management fees 9, ,754 4, ,425 Recreation/Festivals 10, ,464 15, ,333 Repairs and maintenance 53,306 1,661-54,967 30,255 5,645-35,900 Supplies 20,938 4,755 2,561 28,254 21, ,025 Taxes and insurance 29, ,525 17, ,636 Transportation 10, ,828 8, ,105 Utilities 13,229 2,620-15,849 13,650 2,826-16,476 Totals $ 421,281 $ 176,926 $ 41,000 $ 639,207 $ 387,308 $ 138,011 $ 32,951 $ 558,270 See independent auditor s report and notes to the financial statements 4

7 Statements of Cash Flows For the Years Ended February 28, 2015 and Cash flows from operating activities Change in net assets $ 80,236 $ 202,007 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 48,681 39,127 Change in operating assets and liabilities Grants receivable 48, ,596 Rents receivable, net (7,126) (1,059) Prepaid expenses (2,754) 945 Receivable from related parties (10,000) - Other receivables - 1,050 Accounts payable 4,976 (135,933) Accrued payroll 560 (553) Due to related parties (4,510) 4,933 Accrued employer retirement contributions - (16,978) Tenant security deposits 800 (600) Net cash provided by operating activities 158, ,535 Cash flows from investing activities Purchases of property and equipment (9,145) (492,114) Cash flows from financing activities Principal payments on notes payable - (100,000) Net change in cash 149,849 (148,579) Cash, beginning of year 69, ,183 Cash, end of year $ 219,453 $ 69,604 See independent auditor s report and notes to the financial statements 5

8 Notes to the Financial Statements February 28, 2015 and 2014 Note 1- Organization Activity and organization Oasis of Hope, Inc. (the Organization") is a not-for-profit corporation organized under the laws of the State of Tennessee. The Organization's purpose is to provide affordable housing to those in the very low to moderate income range along with education, sports, spiritual development, personal finance, employment, and senior citizen programs. The Organization owns and manages rental properties in Memphis, Tennessee. The Organization is affiliated with Oasis Appliance, Inc. as a result of a common board of directors. These financial statements include only the accounts and operations of the Organization and do not extend to any financial statements of Oasis Appliance, Inc. Note 2- Summary of significant accounting policies Basis of accounting and presentation The Organization prepares its financial statements in accordance with accounting principles generally accepted in the United States, which involves the application of accrual accounting; consequently, revenues and gains are recognized when earned and expenses and losses when incurred. Under generally accepted accounting principles, the Organization is required to report information regarding its financial position and activities according to three classes of net assets as follows: Unrestricted Net Assets: Net assets that are not subject to donor-imposed stipulations. Unrestricted net assets may be designated for specific purposes by action of the Board of Directors or may otherwise be limited by contractual agreements with outside parties. Temporarily Restricted Net Assets: Net assets whose use by the Organization is subject to 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: Net assets subject to donor-imposed stipulations that they be maintained permanently by the Organization. The Organization has no permanently restricted net assets as of February 28, 2015 and Contributions and grants Contributions and grants are reported as increases in unrestricted net assets unless they are restricted by donorimposed stipulations. Satisfaction of donor imposed stipulations that simultaneously increase unrestricted net assets and decrease temporarily restricted assets are reported as reclassifications. Temporarily restricted revenue received and expended during the same fiscal year is recorded as unrestricted revenue in the statement of activities. Donated goods and services Donated goods are reflected as contributions and are recorded at their estimated fair market value at the date of receipt. No amounts have been reflected in the statements for donated services as no objective basis is available to measure the value of such services. Grants receivable Grants receivable represents amounts owed as reimbursement of grant-related expenses as well as unconditional promises to give. The Organization considers grants receivable at February 28, 2015 and 2014, to be fully collectible; accordingly, no allowance for doubtful accounts is required. 6

9 Notes to the Financial Statements February 28, 2015 and 2014 Rents receivable Rents receivable are stated at unpaid balances net of the allowance for doubtful accounts of $10,555 and $15,000 at February 28, 2015 and 2014, respectively. Management periodically evaluates uncollected rents receivable based on aging and balances and considers the allowance to be adequate. Intangible assets Intangible assets include $7,730 in website design cost which is being amortized using the straight-line method over 15 years. Amortization expense was $515 and $516 for the years ended February 28, 2015 and 2014, respectively, and accumulated amortization was $3,384 and $2,869 at February 28, 2015 and 2014, respectively. Inventories Inventories are stated at lower of cost or market and consist of undeveloped lots. Property and equipment Acquisitions of property and equipment in excess of $1,000 are capitalized. Property and equipment are stated at cost, if purchased, or fair market value at the date of donation. Depreciation is provided on a straight-line basis over the estimated useful life of the asset. Depreciation ranges from five to seven years for furniture, equipment, and vehicles and from seven to thirty-nine years for single-dwelling homesteads and furnishings. Expenditures for normal maintenance and repairs are charged to operations. Expenditures for major renewals and betterments that materially extend the life of assets are capitalized. Grant agreements that funded construction of singledwelling homesteads include restrictions to make properties available for low-income families for twenty years after placed in service. Concentration of revenue sources Approximately 24% of total revenues and support was derived from one organization in the year ended February 28, 2015, and 40% of total revenues and support was derived from one organization and one governmental grant in the year ended February 28, Income taxes The Organization is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes has been reflected in the financial statements. The Organization is generally no longer subject to Federal and State audit for tax years prior to the year ended February 29, Events occurring after reporting date Management has evaluated events and transactions that have occurred through May 1, 2015, which is the date that the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. No subsequent events have been recognized or disclosed. Use of estimates in the preparation of financial statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 7

10 Notes to the Financial Statements February 28, 2015 and 2014 Note 3 Grants receivable Grants receivable are due as follows as of February 28, 2015 and 2014: Less than one year $ 6,242 $ 37,706 One to five years - 16,667 $ 6,242 $ 54,373 During the year ended February 28, 2015, the Organization was notified that the grant receivable would not be paid in its entirety. As a result, $22,917 was written off as bad debt expense in the year ended February 28, Note 4 - Property and equipment Property and equipment consists of the following as of February 28, 2015 and 2014: Furniture, equipment, and vehicle $ 36,631 $ 32,486 Single-dwelling homesteads and furnishings 1,665,684 1,665,684 Construction in progress 600, ,048 2,302,363 2,293,218 Less accumulated depreciation and amortization (201,726) (153,560) Property and equipment, net $ 2,100,637 $ 2,139,658 Depreciation expense $ 48,166 $ 38,611 Note 5 Related party transactions The Organization is a supporting ministry partner of Hope Presbyterian Church. Under this arrangement, the Organization receives contributions from its members through the Church and pays for any shared office expenses. Total contributions received amounted to $174,400 in each of the years and shared office expenses amounted to $14,398 and $12,114 for the years ended February 28, 2015 and 2014, respectively. The Organization made $4,861 and $17,000 in contributions to Oasis Appliance, Inc. in the years ended February 28, 2015 and 2014, respectively, and made purchases of $300 from Hope Again, a related ministry, in the year ended February 28, Amounts due to related parties on the accompanying statement of financial position represent advances from Hope Presbyterian Church and receivables from related parties represent advances to Oasis Appliance, Inc. Note 6 Temporarily restricted net assets Temporarily restricted net assets at February 28, 2015 and 2014, relate to grant received for operations in future fiscal years. 8

11 Notes to the Financial Statements February 28, 2015 and 2014 Note 7 - Retirement plan Oasis of Hope, Inc. participates in Hope Presbyterian Church s retirement program administered through a third party administrator. Full time staff members are eligible to participate after one year of service. The Organization contributes 12 percent of the executive staff s salary. Employees may contribute to the plan. Employer contributions to the plan for the years ended February 28, 2015 and 2014, was $14,410 and ($747), respectively. Note 8 Concentrations of credit risks Cash The Organization has concentrated its credit risk for cash by maintaining bank deposits which may periodically exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation. The Organization has not experienced any losses of such funds, and management believes the Organization is not exposed to significant credit risk to cash. 9