A CHANCE TO CHANGE FOUNDATION Financial Statements and Independent Auditor s Report For the Years Ended June 30, 2012 and 2011

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1 Financial Statements and Independent Auditor s Report For the Years Ended June 30, 2012 and 2011

2 A CHANGE TO CHANGE FOUNDATION JUNE 30, 2012 and 2011 CONTENTS Independent Auditor s Report 3 Financial Statements Statement of Financial Position 4 Statement of Activities 5 Statement of Functional Expenses 6 Statement of Cash Flows 7 Notes to the Financial Statements 8-11 Supplemental Information Schedule of Expenditures of State Awards 12 Report on Internal Control Over Financial Reporting And on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

3 KEITH E. STINGLEY, CPA 5100 N. Brookline, Suite 715 Oklahoma City, Oklahoma (405) INDEPENDENT AUDITORS REPORT To the Board of Directors of A Chance to Change Foundation We have audited the accompanying statements of financial position of A Chance to Change Foundation (an Oklahoma not-for-profit corporation) as of June 30, 2012 and 2011 and the related statements of activities, functional expenses, and cash flows for the year then ended. These financial statements are the responsibility or the Organization s management. 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of A Chance to Change Foundation as of June 30, 2012 and 2011 and its changes in net assets and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2012, on our consideration of A Chance to Change Foundation s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of the audits. Our audits were conducted for the purpose of forming an opinion on the basic financial statements of A Chance to Change Foundation taken as a whole. The accompanying schedule of expenditures of state awards is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Keith Stingley Oklahoma City, Oklahoma December 21,

4 STATEMENTS OF FINANCIAL POSITION JUNE 30, 2012 and 2011 ASSETS CURRENT ASSETS Cash 169, ,625 Short term investments 787, ,157 Pledges receivable 13,080 17,900 Grants receivable 7,838 8,336 Accounts receivable, net of estimated uncollectible accounts of $8,549 ; $4,638 23,620 19,544 Prepaid expenses 24,317 18,123 TOTAL CURRENT ASSETS 1,025, ,685 PROPERTY AND EQUIPMENT, NET 17,357 20,338 OTHER ASSETS Investments 3,208 2,738 Refundable deposits TOTAL OTHER ASSETS 3,458 2,988 TOTAL ASSETS 1,046, ,011 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable 10,073 4,328 Accrued payroll tax liabilities 7,930 1,600 Accrued vacation 16,152 14,966 Deferred revenue 254, ,000 TOTAL CURRENT LIABILITIES 288, ,894 NET ASSETS Unrestricted 744, ,217 Temporarily restricted 13,080 17,900 TOTAL NET ASSETS 757, ,117 TOTAL LIABILITIES AND NET ASSETS $ 1,046,578 $ 937,011 See accompanying notes and auditors report 4

5 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2012 and 2011 Temporarily Permanently Unrestricted Restricted Restricted Total Total PROGRAM SUPPORT & REVENUE Counseling services $ 491,358 $ 491,358 $ 386,155 Sublease Income 11,040 11,040 11,040 Tests and assessments 4,750 4,750 2,834 Grants 272, , ,966 Donations 467,399 13, , ,038 Interest and royalties investment revenue 25,326 25,326 29,787 Workshop revenue 23,399 23,399 4,198 In-Kind donations 1,980 1,980 1,628 Net assets released from restrictions 17,900 (17,900) - - 1,315,718 (4,820) - 1,310,898 1,186,645 EXPENSES Counseling services 936, , ,678 Education & prevention 150, , ,025 Management & general 83,227 83,227 63,862 Fundraising 139, , ,679 1,309, ,309,025 1,134,243 CHANGES IN NET ASSETS 6,693 (4,820) - 1,873 52,402 NET ASSETS AT BEGINNING OF YEAR 738,217 17, , ,715 NET ASSETS AT END OF YEAR $ 744,910 $ 13,080 $ 757,990 $ 756, See accompanying notes and auditors report 5

6 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED JUNE 30, 2012 and PROGRAM SUPPORTING Education and Management Counseling Prevention and General Fundraising Total Total Salaries $ 559,453 $ 105,484 $ 49,840 $ 51,707 $ 766,484 $ 688,788 Benefits 69,721 10,805 5,252 7,981 93, ,550 Payroll Taxes 43,281 8,147 3,971 3,922 59,321 - Bad Debts 15, ,347 19,415 Consulting & Contract Labor 51,061 2,444 2,845 2,826 59,176 38,218 Continuing Professional Education 6, ,206 9,998 Contract Services Affilliates 2, ,912 - Dues, Subscriptions & Publications 1, ,773 2,694 Equipment 3, ,761 2,798 Insurance 8,588 1,548 1,971 1,971 14,078 13,656 Marketing 6,927 1,001 1,274 1,274 10,476 9,367 Postage 1, ,216 4,760 10,343 Rent & Utilities 47,505 12,166 10,852 10,903 81,426 83,621 Supplies & Materials 23,534 3,105 3,547 52,120 82,306 91,171 Telephone 3, ,359 5,637 Transportation 6,475 3, ,961 8,325 Workshop Expenses 14, ,126 - Write-off 27, ,176 13,537 Non-billable Service 33, ,216 - Miscellaneous 2, ,141 2,391 In-Kind Donations Expense 1, ,980 1,628 Depreciation/Amortization 5,661 1,022 1,299 1,299 9,281 10,107 $ 936,022 $ 150,528 $ 83,227 $ 139,248 $ 1,309,025 $ 1,134,243 See accompanying notes and auditors report 6

7 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2012 and 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Increase in net assets $ 1,873 $ 52,402 Adjustments needed to reconcile change in net assets to net cash provided by operating activities: Depreciation and Amortization 9,281 10,107 Allowance for doubtful accounts increase (decrease) 3,912 (11,742) Unrealized (gains)/losses (546) (277) (Increase) decrease in: Pledges receivable 4,820 24,980 Grants receivable 498 6,194 Accounts receivable (7,988) 4,109 Prepaid expenses (6,194) 920 Increase (decrease) in: Accounts payable 5,745 (1,835) Accrued payroll tax liabilities 6,330 (5,620) Accrued vacation 1,186 7 Deferred revenue 94, ,700 Net cash provided by (used in) operating activities 113, ,945 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of depreciable assets (6,300) (5,490) Purchase of certificates of deposits (72,792) (217,668) Net cash provided by (used in) investing activities (79,092) (223,158) Net increase (decrease) in cash 34,258 14,787 Cash - Beginning of year 135, ,838 Cash - End of year $ 169,883 $ 135,625 NON CASH INVESTING AND FINANCING ACTIVITY: Increase (decrease) in fair value of investments $ 546 $ 277 See accompanying notes and auditors report 7

8 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2012 and 2011 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities A Chance to Change Foundation (the Organization ) provides prevention, education, and behavioral counseling services to children and adults whose lives have been affected by addictions and related disorders. The Organization s support and revenues come from federal and state grants, individual and corporate contributions, fundraising activities, and counseling fees. The Organization provides school based prevention, education and early intervention programs for youth and families. It provides counseling and education for substance abuse, problem gambling, trauma, and other issues. Revenue Recognition Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. All donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or 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. Investment earnings from permanently restricted investments are recorded in unrestricted net assets; unrealized gains/losses from these investments are recorded in permanently restricted net assets. Donated Services The Organization receives a significant amount of donated services from unpaid volunteers who assist in fundraising and program services. No amounts have been recognized in the statement of activities because the criteria for recognition under Statement of Financial Standards No. 116 have not been satisfied. Cash Flows For purposes of the statements of cash flows, the Organization considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents. Investments The Organization has adopted SFAS No. 124, Accounting for Certain Investments Held by Notfor-Profit Organizations. Under SFAS No. 124, investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position. Unrealized gains and losses are included in the change of net assets. Investment income and gains restricted by a donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or by use) in the reporting period in which the income and gains are recognized. 8

9 NOTES TO FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED JUNE 30, 2012 and 2011 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and equipment It is the Organization s policy to capitalize property and equipment over $1,500. Lesser amounts are expensed. Purchased property and equipment is capitalized at cost. Donations of property and equipment are recorded as contributions at their estimated fair market value. Such donations are reported as unrestricted contributions unless the donor has restricted the donated asset to a specific purpose. Property and equipment are depreciated using the straight line method. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited based on an analysis of personnel time and space utilized for the related activities. 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 and classified by the Internal Revenue Service as other than a private foundation. There was no unrelated business income for the year ended June 30, Estimates Preparing 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. NOTE B - INVESTMENTS Investments as of June 30, 2012 are summarized as follows: Unrealized Fair Appreciation Cost Value (Depreciation) Microsoft Corp (100 shares) $ 4,280 3,059 (1,221) Amer Intl Group Inc. (85 shares) 5, (4,872) $ 9,301 3,208 (6,093) NOTE C SHORT TERM INVESTMENTS The Organization held certificates of deposit at June 30, 2012 with original maturity date of greater than three months. Short-term investments are carried at cost that approximates fair value. 9

10 NOTES TO FINANCIAL STATEMENTS (Continued) FOR YEAR ENDED JUNE 30, 2012 and 2011 NOTE D PROPERTY AND EQUIPMENT The following is a summary of property and equipment as of June 30, 2012: Furniture and fixtures $ 74,555 Less: Accumulated Depreciation (72,359) $ 2,196 Leasehold improvements $ 32,054 Less: Accumulated Amortization (16,893) $ 15,161 NOTE E OBLIGATIONS UNDER OPERATING LEASES Minimum future rental payments under a real estate operating lease for next year ending June 30, 2013 is $64,200. NOTE F NET ASSETS RELEASED FROM RESTRICTIONS Net assets of $17,900 were released from program or donor restrictions by incurring expenses satisfying the restricted purposes specified by the donor: NOTE G OTHER MATTERS The Organization has a designated fund at the Oklahoma City Community Foundation ( OCCF ) from which they receive earnings annually. The Organization does not have access to these funds; therefore, no recognition of this account is on the accompanying financial statements. The fair market value of this fund as of June 30, 2012 was $154,472. NOTE H BOARD DESIGNATED ASSETS In June, 2008, the Board of Directors established the following reserve accounts: Operating and Emergency Reserve Fund and Capital Development Fund. As of June 30, 2012, the balances of these reserves are: Operating and Emergency-$300,000; Capital Development-$315,391. NOTE I CONCENTRATION OF CREDIT RISK The Organization maintains five bank accounts at various banks. The Federal Deposit Insurance Corporation (FDIC) up to $250,000 insures accounts at an institution. 10

11 SUPPLEMENTAL INFORMATION 11

12 SCHEDULE OF STATE AWARDS FOR THE YEAR ENDED JUNE 30, 2012 Contract Audit Revenue Program State Grantor Period Period Recognized Expenditures Oklahoma Department of Mental Health Gambling 07/01/11 07/01/11 Through Through 06/30/12 06/30/12 94,532 94,532 Note A - Basis of Presentation The accompanying schedule of expenditures of state awards includes the state grant activity of A Chance to Change Foundation and is presented on the accrual basis of accounting. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. 12

13 KEITH E. STINGLEY, CPA 5100 N. Brookline, Suite 715 Oklahoma City, Oklahoma (405) REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors of A Chance to Change Foundation We have audited the financial statements of A Chance to Change Foundation as of and for the year ended June 30, 2012 and 2011, and have issued our report thereon dated December 21, We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting In planning and performing our audit, we considered A Chance to Change Foundation s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the A Chance to Change Foundation s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Organization s internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the organization s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles, such that there is more than a remote likelihood that a misstatement of the organization s financial statements that is more than inconsequential will not be prevented or detected by the organization s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the organization s internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 13

14 Compliance and Other Matters As part of obtaining reasonable assurance about whether A Chance to Change Foundation s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, 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 our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, others within the entity, the Board of Trustees, federal awarding agencies and pass-through entities, potential funders, and other organizations as required by law, and is not intended to be and should not be used by anyone other than these specified parties. Keith Stingley, CPA Oklahoma City, Oklahoma December 21,