USA WATER POLO, INC. Financial Statements For the Year Ended December 31, 2016

Transcription

1 USA WATER POLO, INC. Financial Statements For the Year Ended December 31, 2016

2 TABLE OF CONTENTS Independent Auditors' Report Statement of Financial Position Statement of Activities and Changes in Net Assets Statement of Cash Flows Notes to Financial Statements

3 INDEPENDENT AUDITORS' REPORT Board of Directors USA Water Polo, Inc. Huntington Beach, California We have audited the accompanying financial statements of USA Water Polo, Inc. (a nonprofit corporation) which comprise the statement of financial position as of December 31, 2016, and the related statements of activities and changes in net assets 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. Auditors' 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 United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 Garden of the Gods Road, Suite 150 Colorado Springs, CO (719) Fax: (719)

4 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Basis for Qualified Opinion As discussed in Note C to the financial statements, the Corporation has not consolidated its financial statements with the United States Water Polo Foundation (the Foundation), an entity over which USA Water Polo, Inc. has control. In our opinion, accounting principles generally accepted in the United States of America require that a reporting entity consolidates the financial statements of a separate non-profit entity for which it controls, as defined by ASC As described in auditing standards generally accepted in the United States of America, it was not practicable to quantify the effect of consolidating the financial statements of the United States Water Polo Foundation with USA Water Polo, Inc. Qualified Opinion In our opinion, except for the effects of not consolidating the Foundation, as discussed in the Basis for Qualified Opinion paragraph, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of USA Water Polo, Inc. as of December 31, 2016, 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 USA Water Polo, Inc.'s 2015 financial statements, and our report dated February 20, 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 December 31, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived. Waugh & Goodwin, LLP Colorado Springs, Colorado February 28,

5 USA WATER POLO, INC. Statement of Financial Position December 31, 2016 (With Comparative Amounts for 2015) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,017,260 $ 2,525,818 Accounts receivable, net 294, ,796 Grants receivable 71,600 Investments 294,295 Prepaid expenses 107,486 85,898 Other assets 11,443 71,183 Total current assets 2,796,851 2,943,695 PROPERTY AND EQUIPMENT, at cost: Weight training building 99,932 National training center equipment 66,682 76,682 Training equipment 153, ,620 Office equipment 181, ,645 Total property and equipment, at cost 401, ,879 Less accumulated depreciation (301,421) (398,166) Property and equipment - net 99, ,713 OTHER INVESTMENTS 125,856 85,612 TOTAL ASSETS $ 3,022,373 $ 3,166,020 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable $ 164,791 $ 453,710 Accrued liabilities 581, ,968 Funds held in trust 14,103 14,103 Deferred revenue 1,238,179 1,409,932 Total current liabilities 1,998,558 2,412,713 OTHER LIABILITIES 115,260 75,026 Total liabilities 2,113,818 2,487,739 NET ASSETS: Unrestricted 566, ,708 Unrestricted - Board designated 280, ,171 Temporarily restricted 50,404 51,941 Permanently restricted 10,461 10,461 Total net assets 908, ,281 TOTAL LIABILITIES AND NET ASSETS $ 3,022,373 $ 3,166,020 See Notes to Financial Statements 3

6 USA WATER POLO, INC. Statement of Activities and Changes in Net Assets For the Year Ended December 31, 2016 (With Comparative Totals for 2015) Temporarily Permenently Unrestricted Restricted Restricted Totals Totals SUPPORT AND REVENUE: Membership registrations $ 3,309,756 $ $ $ 3,309,756 $ 3,340,074 Event income 2,208,126 2,208,126 1,666,511 Olympic development program 1,565,902 1,565,902 1,465,927 USOC grants 1,421,463 1,421, ,720 Corporate sponsorship 893, , ,859 Contributions 776,980 93, , ,416 Junior/youth fundraising 457, , ,222 Fundraising events 309, , ,941 Event merchandise sales and royalties, net 129, , ,681 USWPF grants 71,600 71,600 85,000 USOC value-in-kind support 60,000 60,000 56,280 Other income 35,346 35,346 23,105 Rights fees 10,000 10,000 10,000 Interest 5,080 5,080 1,533 Magazine 4,384 4,384 10,016 National development - other Unrealized loss on investments (5,803) (5,803) Loss on disposal of assets (13,324) (13,324) Olympic ticket sales, net (95,423) (95,423) Cost of other merchandise sold (110,542) (110,542) (64,287) Net assets released from restrictions 94,805 (94,805) Total support and revenue 11,129,074 (1,537) 11,127,537 9,836,298 EXPENSES: Program services: Membership and sport development services 2,332,710 2,332,710 2,211,789 Women's international 2,077,861 2,077,861 1,889,946 Men's international 1,977,233 1,977,233 1,882,219 Other programs 1,610,151 1,610, ,450 Olympic development 1,384,402 1,384,402 1,285,032 Total program services 9,382,357 9,382,357 8,153,436 Supporting services: Fundraising and sponsor development 799, , ,091 General and administrative 703, , ,086 Board of Directors 11,904 11,904 4,486 Total supporting services 1,514,906 1,514,906 1,536,663 Total expenses 10,897,263 10,897,263 9,690,099 CHANGE IN NET ASSETS 231,811 (1,537) 230, ,199 NET ASSETS, beginning of year 615,879 51,941 10, , ,082 NET ASSETS, end of year $ 847,690 $ 50,404 $ 10,461 $ 908,555 $ 678,281 See Notes to Financial Statements 4

7 USA WATER POLO, INC. Statement of Cash Flows For the Year Ended December 31, 2016 (With Comparative Amounts for 2015) CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 230,274 $ 146,199 Adjustments to reconcile changes in net assets to net cash provided (used) by operating activities: Depreciation 76,491 73,451 Loss on disposal of assets 13,324 (Increase) decrease in assets: Accounts receivable, net (33,971) (17,662) Grants receivable (71,600) Contributions receivable 4,470 Inventory 2,881 Prepaid expenses (21,588) (3,825) Other assets 59,740 (61,837) Increase (decrease) in liabilities: Accounts payable (288,919) 126,774 Accrued liabilities 46, ,195 Other liabilities 40,234 75,026 Deferred revenue (171,753) 247,481 Total adjustments (351,525) 553,954 Net cash provided (used) by operating activities (121,251) 700,153 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (52,768) (58,868) Proceeds from sale of equipment 588 Increase in investments (294,295) Increase in other investments (40,244) (85,612) Net cash used by investing activities (387,307) (143,892) NET INCREASE (DECREASE) IN CASH (508,558) 556,261 CASH AND CASH EQUIVALENTS, beginning of year 2,525,818 1,969,557 CASH AND CASH EQUIVALENTS, end of year $ 2,017,260 $ 2,525,818 See Notes to Financial Statements 5

8 USA WATER POLO, INC. Notes to Financial Statements For the Year Ended December 31, 2016 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization USA Water Polo, Inc. (the Corporation), is the national governing body for water polo, making it responsible for the conduct and administration of the sport in the United States. Income Taxes The Corporation qualifies as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code and, accordingly, is not subject to federal income tax. Accordingly, no income tax provision has been recorded. The Corporation's Forms 990, Return of Organization Exempt from Income Tax are subject to examination by various taxing authorities, generally for three years after the date they were filed. Management of the Corporation believes that it does not have any uncertain tax positions that are material to the financial statements. Cash and Cash Equivalents Cash and cash equivalents consist of the Corporation's checking accounts and money market accounts. The Corporation maintains its cash and cash equivalents at a commercial bank. In the event of a bank failure, the Corporation could suffer a loss to the extent its deposits exceeded the respective bank insurance limits. Accounts and Grants Receivable Accounts receivable past due days are considered delinquent. Delinquent receivables are determined to be uncollectible on a case by case basis and are written off to bad debt expense at such point of determination. As of December 31, 2016 and 2015, the Corporation has recorded an allowance for doubtful accounts of $7,500 and $0, respectively. 6

9 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Property and Equipment As of December 31, 2016, property and equipment consists of training equipment and office equipment used in the operations of the Corporation. Property and equipment are recorded at cost or, if donated, at the estimated fair market value at the date of donation. The Corporation's lease of the property where its weight training facility was constructed expired during the year ended December 31, Therefore, fixed assets that were not removable from that property were removed from the Corporation's recorded fixed assets. Depreciation is recorded using the straight-line method over an estimated life of fifteen years for the weight training building and three to five years for training and office equipment. Depreciation expense for the years ended December 31, 2016 and 2015, was $76,491 and $73,451, respectively. In-kind Revenue Corporate sponsorship income in the form of in-kind goods, such as clothing and balls, are reported as revenue and expense in the fiscal year they are received. For the years ended December 31, 2016 and 2015, in-kind goods received amounted to $412,068 and $319,046, which is included in corporate sponsorship in the accompanying statement of activities. The Corporation receives pro bono professional advice on legal and management matters. However, the Corporation has not recorded any amounts for these services, since the conditions necessary for recognition under generally accepted accounting principles were not met. The Corporation also receives donated services from other contributors and volunteers that are not measurable and, therefore, are excluded from the financial statements. Contributions Gifts of cash and other assets are reported as restricted support if they are received with donor stipulations that limit the use of donated assets unless such restrictions are satisfied in the same period that the contribution is received. 7

10 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Contributions - continued When a restriction expires, that is, when a stipulated time restriction ends or a purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Functional Allocation of Expenses Certain costs and expenses are allocated among the various programs and supporting service expenses based on salary and related expenses. For the years ended December 31, 2016 and 2015, the Corporation's supporting service expenses amounted to 13.61% and 15.62%, respectively, of total support and revenue. Use of Estimates in Preparation of Financial Statements 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 amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Prior-Year Comparisons 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 accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Corporation's financial statements for the year ended December 31, 2015, from which the summarized information was derived. Certain reclassifications may have been made to the prior-year amounts in order to conform to the current year financial statement presentation. 8

11 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Supplemental Cash Flow Disclosures During the years ended December 31, 2016 and 2015, cash flows from operating activities contained no amounts paid for interest or income taxes. Date of Management's Review In preparing the financial statements, the Corporation has evaluated events and transactions for potential recognition or disclosure through February 28, 2017, the date that the financial statements were available to be issued. B. UNITED STATES OLYMPIC COMMITTEE The United States Olympic Committee (USOC) provides grants to the Corporation for sports development, international competition, and team preparation. Support provided during the years ended December 31, 2016 and 2015, consisted of the following program categories: Performance funding $ 1,428,400 $ 938,000 Equipment purchase grant 33,063 International relations grant 20,000 Trainer grant 25,000 $ 1,481,463 $ 963,000 During the years ended December 31, 2016 and 2015, the Corporation received $60,000 and $56,280, respectively, in value-in-kind support from the USOC. The Corporation is economically dependent on the grants from the USOC in order to maintain its national team programs at current levels. C. UNITED STATES WATER POLO FOUNDATION The United States Water Polo Foundation (USWPF) is an exempt entity whose purpose is to extend financial and other aid and assistance for the benefit of, and to carry out the purposes of the Corporation. 9

12 C. UNITED STATES WATER POLO FOUNDATION - Continued During the years ended December 31, 2016 and 2015, the Foundation provided grants to the Corporation of $71,600 and $85,000, respectively. The 2016 grant was unpaid as of December 31, However, management believes the grant is fully collectible. During the year ended December 31, 2016, it was determined that the Corporation has control over the Foundation, based on a review of the Foundation bylaws. According to ASC , control of a related (but separate) non-profit entity through a majority voting interest in the Board and an economic interest in the other non-profit entity requires consolidation, unless control does not rest with the holder of the majority voting interest. Several provisions of the Foundation bylaws indicate that these conditions exist between the Corporation and the Foundation. However, the Corporation has not consolidated the financial statements of the Foundation. D. ZONES The Corporation has eleven separate zones that function as regional administrative authorities for USA Water Polo, Inc. across the United States of America. The Corporation's net assets managed by all eleven zones are Board designated for expenditures in their regions and are reflected in Note I. E. DEFERRED REVENUE Deferred revenue consists of the following at December 31, 2016 and 2015: One-year memberships $ 1,121,454 $ 952,891 Olympic development program 46,825 93,125 Sponsorship 42,300 25,000 Other 17,600 10,853 Deferred donation 10,000 Deferred USOC PPA revenue 295,000 Deferred USOC donation 33,063 $ 1,238,179 $ 1,409,932 10

13 F. LEASES During 2011, the Corporation signed a forty-two month operating lease on a postage machine that expired December 20, 2014, the lease was extended in 2014 through September 18, The lease requires monthly payments of $76. During 2016, the Corporation amended an operating lease for office space. The amended lease for the Huntington Beach office space is effective October 1, 2016, through January 31, 2019, at $8,740 per month, increasing each year. The Corporation also entered into a lease for a warehouse effective March 1, 2016, through February 28, 2018, at $1,650 per month. The Corporation also leases a storage unit in Colorado Springs on a month-to-month basis. Minimum future payments on these leases for each of the years ended December 31 are as follows: 2017 $ 130, , ,422 Total rent expense amounted to $112,199 and $109,624 for the years ended December 31, 2016 and 2015, respectively. G. LOS ALAMITOS POOL On January 11, 1996, the Corporation entered into a sublicense agreement for a twenty-year period with the Military Department of the State of California for the use of the Los Alamitos Armed Forces Swimming Facilities as a training center. Since the Corporation incurred all of the refurbishing costs and is responsible for the ongoing maintenance and upkeep on the pool, there are no rental payments. This sublicense agreement can be canceled by mutual agreement of the parties with ninety days written notice. During the years ended December 31, 2016 and 2015, payments totaling $5,074 and $20,694, respectively, were made to the City of Los Alamitos to offset maintenance expenses. 11

14 G. LOS ALAMITOS POOL - Continued During the year ended December 31, 2004, the Corporation constructed a building for weight training and coaches' offices at the Los Alamitos facility. Total construction costs of the building were $99,932. Because the building was constructed on military property, the Corporation does not own the building, but intends to use the building in subsequent years. Accordingly, management had adopted a 15-year life over which the cost of the weight training facility will be depreciated. During the year ended December 31, 2016, the sublicense agreement expired and the corporation removed the capitalized portion of building from its books, recording a loss of $13,324 for the remaining net book value. H. RETIREMENT PLAN During the year ended December 31, 2015, the Corporation adopted a 401 (k) retirement plan effective January 1, The plan covers all employees over twenty-one years of age with six months of service. The Corporation matches 100% of the elective contributions of its employees up to 5% of the employee's compensation for the calendar year. Pension expense amounted to $98,612 and $86,693 for the years ended December 31, 2016 and 2015, respectively. During the year ended December 31, 2015, the Corporation entered into a deferred compensation agreement under Section 457(f) of the Internal Revenue Code with its Chief Executive Officer. The purpose of the plan is to provide retirement benefits for this individual. Contributions to this non-qualified account will not be vested until the earliest of employee's 65 th birthday, death, disability, involuntary termination without cause, or termination of employment for good reason. During the year ended December 31, 2016, the Corporation contributed a total of $37,500 to the plan. As of December 31, 2016, the unvested balance in the non-qualified account was $115,260, which includes earnings on the account balance and is presented in other investments and other liabilities in the accompanying statement of financial position. 12

15 I. FUNDS HELD IN TRUST At December 31, 2016 and 2015, funds held in trust consist of the following: American Water Polo Coaches Association $ 12,167 $ 12,167 New York Athletic Club 1,214 1,214 Irvine Water Polo Club Administration J. UNRESTRICTED NET ASSETS - BOARD DESIGNATED $ 14,103 $ 14,103 At December 31, 2016 and 2015, Board designated net assets consist of the following: Central California Zone $ 30,031 $ 30,271 Coastal California Zone 7,733 32,004 Midwest Zone 8,804 9,541 Mountain Zone (32) (2,444) Northeast Zone 2,100 2,100 Pacific Northwest and Hawaii Zone 15,804 12,422 Pacific Southwest Zone 29,552 (1,253) Pacific Zone 5,165 5,165 Southeast Zone 10,237 11,018 Southern Pacific Zone 160, ,513 Southwest Zone 10,725 6,834 K. TEMPORARILY RESTRICTED NET ASSETS $ 280,767 $ 262,171 Temporarily restricted net assets at December 31, 2016 and 2015, are available for the following purposes: Hall of Fame $ 5,100 $ 5,100 LA Project 2,207 2,207 Regional development 39,667 40,860 Toring memorial 3,162 3,162 NTSC Scholarships 268 Referee development 612 $ 50,404 $ 51,941 13

16 K. TEMPORARILY RESTRICTED NET ASSETS - Continued Net assets are released from donor restrictions by incurring expenses that satisfy the restricted purpose. During the years ended December 31, 2016 and 2015, respectively, temporarily restricted net assets were released from restrictions for the following programs: Referee development $ 13,612 $ 12,388 Regional development 81,193 34,935 $ 94,805 $ 47,323 L. PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets at December 31, 2016 and 2015, consist of the Corporation's endowment fund in the amount of $10,461 for both years. These net assets are subject to donor restrictions that stipulate that the original principal of the gift is to be held and invested by the Corporation indefinitely. The Corporation has adopted investment and spending policies based on the California Uniform Prudent Management of Institutional Funds Act (UPMIFA). As a result of the Corporation's interpretation of UPMIFA, and in accordance with donor restrictions, contributions to this fund are classified as permanently restricted net assets. The historic dollar value of those contributions must be maintained intact. Income from the fund is classified with unrestricted net assets. These funds are invested in cash and cash equivalents, pursuant to the Corporation's spending objectives of subjecting the fund to low investment risk. The Corporation expends this fund's investment earnings for the restricted purpose in the year of receipt. Temporarily Permanently Restricted Restricted Total - Endowment net assets, January 1, 2015 $ $ 10,461 $ 10,461 Investment income 2 2 Program expenditures (2) (2) Endowment net assets, December 31, ,461 10,461 14

17 L. PERMANENTLY RESTRICTED NET ASSETS - Continued Investment income Program expenditures (10) (10) Endowment net assets, December 31, 2016 $ $ 10,461 $ 10,461 M. CONTINGENCIES Occasionally, in the ordinary course of business, the Corporation is named defendant in a lawsuit or other form of legal action. In the opinion of management, any pending or threatened claims against the Corporation, as of December 31, 2016, are either without merit or will not exceed insurance limits. N. USA WATER POLO FOUNDATION During the year ended December 31, 2015, the Corporation established USA Water Polo Foundation, a 501(c)(3) organization with the sole purpose of supporting USA Water Polo, Inc. The entity's Board of Directors will be appointed by USA Water Polo. The entity did not have any activity during the year ending December 31,