INTERNATIONAL RELIEF TEAMS

Transcription

1 FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011

2 TABLE OF CONTENTS Page Independent Auditor's Report... 1 Financial Statements Statement of Financial Position... 2 Statement of Activities... 3 Statement of Functional Expenses - Year Ended June 30, Statement of Functional Expenses - Year Ended June 30, Statement of Cash Flows... 6 Notes to Financial Statements... 7

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4 Statement of Financial Position Assets Current assets: Cash and cash equivalents $ 731,372 $ 610,187 Miscellaneous receivables - 7,375 Medical supplies inventory 17,996 35,993 Prepaid expenses and deposits 6,630 6,624 Endowment fund earnings 177, ,233 Total current assets 933, ,412 Temporarily restricted cash 390, ,796 Property and equipment, net 20,979 10,325 Investments restricted for permanent endowment 187, ,667 Total assets $ 1,531,842 $ 1,487,200 Liabilities and Net Assets Current liabilities: Accounts payable and accrued expenses $ 23,369 $ 15,047 Total current liabilities 23,369 15,047 Net Assets: Unrestricted 930, ,690 Temporarily restricted 390, ,796 Permanently restricted 187, ,667 Total net assets 1,508,473 1,472,153 Total liabilities and net assets $ 1,531,842 $ 1,487,200 The accompanying notes are an integral part of these financial statements. Page 2

5 Statement of Activities For the Years Ended (Restated) Unrestricted Net Assets Revenue and public support: Public contributions $ 617,051 $ 867,458 Grants 238, ,876 Gifts-in-kind 16,068,890 14,244,776 Fundraising - special events 168, ,415 Investment income 27,441 23,541 Total unrestricted revenues and public support 17,119,826 15,468,066 Net assets released from restrictions 285, ,177 Total revenue and public support 17,405,806 15,749,243 Expenses Program services: Disaster response 3,938,174 1,567,612 Clinical and surgical services 45,971 24,437 Medical training 11, ,795 Disease prevention/ Health promotion 12,755,812 13,401,771 Public awareness 105,893 76,464 Total program services 16,857,281 15,228,079 Supporting services: General and administrative 207, ,071 Fundraising 217, ,869 Total supporting services 425, ,940 Total expenses 17,282,750 15,638,019 Increase (decrease) in unrestricted net assets 123, ,224 Temporarily Restricted Net Assets Donations received in advance of services provided 39,700 9,001 Grants received in advance of services provided 149,544 - Net assets released from restrictions - satisfied by payments (285,980) (281,177) Inc. (dec.) in temporarily restricted net assets (96,736) (272,176) Permanently Restricted Net Assets Endowment 10,000 10,000 Increase in permanently restricted assets 10,000 10,000 Increase (decrease) in net assets 36,320 (150,952) Net assets at beginning of year 1,472,153 1,623,105 Net assets at end of year $ 1,508,473 $ 1,472,153 The accompanying notes are an integral part of these financial statements. Page 3

6 Statement of Functional Expenses Year Ended June 30, 2012 Program Services Supporting Services Clinical Disease and prevention/ Total General Total Disaster Surgical Medical Health Public Program and Fund Functional Response Services Training promotion Awareness Services Administrative Raising Expenses Salaries 35,506 19,801 6,954 61,509 41,439 $ 165, ,833 70,739 $ 359,781 Payroll taxes 3,320 1, ,640 3,831 15,192 11,523 6,663 33,378 Employee benefits 5,684 3,418 1,145 10,266 7,113 27,626 20,559 11,650 59,835 44,510 24,966 8,753 77,415 52, , ,915 89, ,994 Volunteer services 22, ,168-36, ,674 Medical supplies 1,683,086 1,123-12,050,390-13,734, ,734,599 Travel, meals and lodging 48,750 9, ,981 1,210 63, ,314 65,290 Donations to nonprofits 40, ,300-82, ,076 Rent 12,908 2,943 1,047 8,822 5,945 31,665 17,047 10,804 59,516 Other supplies 2,052, ,471 3,942 2,447,783 3,227 2,066 2,453,076 Telephone ,630 1, ,153 Postage and shipping , ,006 1,056 4,333 54,395 Printing and video services 2, ,162 10, ,358 27,580 Special events ,123 60,123 Business meetings ,284 1, ,327 Utilities , ,297 Newsletter ,880 14, ,880 Janitorial and security service ,430 1, ,037 Insurance 709 1, ,797 1,869 1,482 6,148 Professional fees 4,740 3,017 1,190 67,719 15,446 92,112 19,858 22, ,812 Processing handling fees 16, ,630-65, ,630 Construction supplies 6, , ,743 Equipment ,672 (298) 264 1,638 Depreciation expense ,854 1, ,862 Miscellaneous ,908 1,908 5,084 8,900 $ 3,938,174 $ 45,971 $ 11,431 $ 12,755,812 $ 105,893 $ 16,857,281 $ 207,933 $ 217,536 $ 17,282,750 The accompanying notes are an integral part of these financial statements. Page 4

7 Statement of Functional Expenses Year Ended June 30, 2011 (Restated) Program Services Supporting Services Clinical Disease and prevention/ Total General Total Disaster Surgical Medical Health Public Program and Fund Functional Response Services Training promotion Awareness Services Administrative Raising Expenses Salaries $ 35,144 $ 1,453 $ 39,415 $ 46,798 $ 29,214 $ 152,024 $ 105,988 $ 75,209 $ 333,221 Payroll taxes 3, ,384 4,432 2,644 13,927 10,023 7,015 30,965 Employee benefits 6, ,394 10,135 5,791 30,334 20,772 14,108 65,214 45,263 1,814 50,193 61,365 37, , ,782 96, ,399 Volunteer services 37,770-62,512 12, , ,978 Medical supplies 1,067, ,920 12,905,218-13,975, ,975,850 Travel, meals and lodging 67,882 7,897 21,887 1, , , ,903 Donations to nonprofits 162,000 13,000-6, , ,000 Rent 16, ,716 8,488 5,131 37,233 18,174 13,165 68,572 Other supplies 22, , , ,055 2,648 1, ,018 Telephone ,716 1, ,153 Postage and shipping 9, ,400 27, , ,660 43,744 Printing and video services (9) (10) 1, ,436 7, ,483 24,544 Special events ,080 61,118 Business meetings ,066 1, ,185 2,770 Utilities ,874 1, ,150 Newsletter ,890 16, ,890 Janitorial and security service ,569 1, ,413 Insurance , ,059 2, ,998 Professional fees 4, ,892 51,388 4,983 65,886 16,624 20, ,966 Processing handling fees 9, ,280-96, ,792 Construction supplies 121, , ,316 Equipment , , ,648 Depreciation expense , ,413 1, ,732 Miscellaneous ,866 1,561 4,637 9,064 $ 1,567,612 $ 24,437 $ 157,795 $ 13,401,771 $ 76,464 $ 15,228,079 $ 186,071 $ 223,869 $ 15,638,019 The accompanying notes are an integral part of these financial statements. Page 5

8 Statement of Cash Flows For the Years Ended Cash flow from Operating Activities Increase (decrease) in net assets $ 36,320 $ (150,952) Adjustments to reconcile increase (decrease) in net assets to net cash flow from operating activities: Depreciation 3,862 4,732 Contributions of investments for permanent endowment (10,000) (10,000) Contribution of fixed assets (6,008) - Net unrealized investment appreciation (24,904) (21,000) Effect of change in: Miscellaneous receivable 7, Medical supplies inventory 17,997 - Prepaid expenses and deposits (6) 82 Accounts payable and accrued expenses 8,321 (96,353) Net cash flow from operating activities 32,957 (273,344) Cash flow from Investing Activities Purchase of marketable securities - (200,000) Purchase of fixed assets (8,508) (1,092) Proceeds from sale of marketable securities - 200,000 Net cash flow from investing activities (8,508) (1,092) Net increase (decrease) in cash 24,449 (274,436) Cash, beginning of year 1,096,983 1,371,419 Cash, end of year $ 1,121,432 $ 1,096,983 Cash consists of: Unrestricted $ 731,372 $ 610,187 Temporarily restricted 390, ,796 Total $ 1,121,432 $ 1,096,983 The accompanying notes are an integral part of these financial statements. Page 6

9 Notes to Financial Statements 1. NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of organization International Relief Teams, formerly known as Southwest Medical Teams, (the Organization) was incorporated on May 21, It is a non-profit organization dedicated to alleviating human suffering by providing critical assistance to victims of disaster, profound poverty and neglect worldwide. Basis of accounting The financial statements of the Organization have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables and other liabilities. Financial statement presentation follows the recommendations of the American Institute of Certified Public Accountants in its industry audit guide, Audits of Voluntary Health and Welfare Organizations. The financial statements have been prepared in conformity with generally accepted accounting principles, which require the use of management estimates. Actual results could differ from those estimates. Cash and cash equivalents For purposes of the statement of cash flows, the Organization considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Inventory-medical supplies Inventory consists of purchased and donated medical products and supplies. Purchased inventory is stated at the lower of cost or market. Cost is determined using the average cost method. Donated inventory is stated at its estimated fair value on the date of receipt as disclosed below in gifts-in-kind. Thereafter it is stated at the lower of cost or market. Inventory cost is expensed when goods are shipped. Management periodically evaluates the net realizable value of all inventory to ensure that any impairments are recognized in the period in which they are incurred. Page 7

10 Notes to Financial Statements 1. NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Property and equipment It is the Organization s policy to capitalize property and equipment over $500. Lesser amounts are expensed. Expenditures for property and equipment are stated at cost. Donated assets are recorded at their estimated fair market values at dates of contribution. Depreciation of property and equipment is calculated on the straightline basis over the estimated useful life of five years. Investments Investment are recorded at fair market value at date of purchase and thereafter. Gifts-in-kind The Organization encourages and receives substantial contributions in the form of inkind services, medicines and supplies. Its programs could not survive without volunteer staff. Experienced staff could not be hired on short notice and funds are not available to provide them with full-time positions. Likewise, the program could not operate without donated medicines and supplies. Donated medicines and supplies are currently recorded as contribution revenue and donated medicines and supplies expense at their estimated fair value as determined by Wholesale Acquisition Cost (WAC) at the date of the donation and in the geographic market it was acquired. The Organization relies on estimates of fair value as determined by the WAC calculated by the donor, but has the ability to independently determine WAC when not provided by the donor. Donated services by medical professionals and others have been valued at amounts comparable to industry averages for the service provided, on a conservative basis. Page 8

11 Notes to Financial Statements 1. NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In-kind suppliers The Organization utilizes the services of several agencies in its efforts to obtain medicines and medical supplies. Under formal and informal agreements, these agencies provide donated medicines and medical supplies for a minimal processing fee. Donated medicines and medical supplies are recorded as public support (gifts-inkind), and an offsetting program expense (medical supplies). Under this agreement, the Organization received a total of $13,619,374 and $13,877,558 of medicines and medical supplies during the years ended, respectively, for processing fees of $65,630 and $96,792 respectively. Functional allocation of expenses Expenses are charged to each program based on direct expenditures incurred. Any program expenditures not directly charged are allocated to a program based on the percentage of salary expense incurred compared to total program salary expense. All expenses incurred in connection with fund raising appeals are charged as fund raising expenses. Expenses incurred in connection with the newsletter are charged as program awareness expenses since the fund raising aspect of the newsletter is considered incidental. Recognition of donor restrictions Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Receivables The Organization uses the reserve method for uncollectible receivables, however, all accounts are considered fully collectible by management at ; thus no allowance for doubtful receivables is required. Page 9

12 Notes to Financial Statements 1. NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Concentrations The Organization relies significantly on public donations, including donations generated by those who participate in fund raising events. The Organization is subject to business risks associated with the economy which affects the donor s ability to contribute. The Organization s cash balances in financial institutions at times may exceed federally insured limits. At, the Organization had $428,300 and $390,100, respectively, over the FDIC and SIPC insurance level. The Organization has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. Income tax status International Relief Teams qualifies as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code and similar California law and generally is not subject to income taxes. The Organization s tax returns are subject to examination by tax authorities for three years after they are filed. Compensated absences The Organization has not recorded any amounts as liabilities for accrued vacation. Management has determined that such amounts are not material to the financial position of the Organization. Page 10

13 2. RESTATEMENT INTERNATIONAL RELIEF TEAMS Notes to Financial Statements The Organization has restated its previously issued Statement of Activities for the year ended June 30, 2011 to correct for an error in its presentation of gift-in-kind revenue and donated medical supplies expenses. Gift-in-kind revenue was previously recorded in the year ended June 30, 2011, based on estimates of the fair value as determined by the Average Wholesale Price (AWP) as provided by the donor. Through its own research and discussions with its donors, the organization has decreased gift-in-kind revenue and donated medical supplies expenses for the year ended June 30, 2011 by $18,178,500. This restatement had no effect on the net change in unrestricted assets. 3. FAIR VALUE MEASUREMENTS FASB ASC establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Organization has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. All of the investments restricted for permanent endowment are measured using significant unobservable inputs (level 3). See Note 5 for details. Investment return is comprised of: June 30, 2012 June 30, 2011 Interest and dividend income $ 2,240 $ 2,540 Unrealized investment income (loss) 25,201 21,001 $ 27,441 $ 23,541 Page 11

14 Notes to Financial Statements 4. PROPERTY AND EQUIPMENT Property and equipment is comprised of the following: June 30, 2012 June 30, 2011 Office equipment $ 48,786 $ 46,141 Medical equipment 19,713 19,713 Timeshare 8,000 3,000 Vehicle 8,340 8,340 84,839 77,194 Accumulated depreciation (63,860) (66,869) $ 20,979 $ 10, ENDOWMENT FUND The Organization s endowment fund consists of an ownership interest in a limited partnership that invests in mortgage-backed securities. The principal of the endowment fund must be held indefinitely in the partnership as required by the donor and is included in permanently restricted net assets. Income from the investment can be used to fund operating activities, and thus is recorded as unrestricted income. At this limited partnership investment is recorded using Level 3 hierarchy inputs as described in Note 3 based on information provided by the partnership. June 30, 2012 June 30, 2011 Beginning balance $ 177,667 $ 167,667 Contribution 10,000 10,000 Ending balance $ 187,667 $ 177, TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets at were comprised of contributions received for disaster response and food relief programs totaling $390,060 and $486,796, respectively. Page 12

15 Notes to Financial Statements 7. LEASE COMMITMENTS The Organization leases office space for its operations, this lease expires in The lease calls for monthly payments of $3,230 and will increase by 4% every year. Future minimum lease commitments are: Year ended June 30, 2013 $ 39,800 June 30, ,400 June 30, ,000 June 30, ,800 June 30, 2017 $ 15, , SUPPLEMENTAL CASH FLOW INFORMATION Non-cash operating activities include: June 30, 2012 June 30, 2011 (Restated) Donated services recorded as revenue and expense $ 36,674 $ 112,978 Donated medical supplies recorded as revenue and expense $ 13,618,470 $ 13,874,638 Donated supplies recorded as revenue and expense $ 2,405,373 $ 254,240 Page 13

16 Notes to Financial Statements 9. SALARY DEFERRAL PLAN In July 1999, the Organization initiated a 401K Retirement Plan. The Organization may contribute annually to the plan and also may match a portion of the employees salary reduction contributions. All employees with at least 3 months of continuous service are eligible for the plan. The Organization contributed $62,525 and $60,215 to the plan for the years ended, respectively. 10. SUBSEQUENT EVENT Subsequent events were evaluated through October 1, 2012, which is the date the financial statements were available to be issued. Page 14