BETTER BASICS, INC. (A NONPROFIT ORGANIZATION) FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011

Transcription

1 (A NONPROFIT ORGANIZATION) FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011

2 Better Basics, Inc. Table of Contents June 3D, 2012 and 2011 Page INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS Statements offinancial position Statements of activities Statements of cash flows Statements of functional expenses Notes to financial statements

3 Haynes IJU Downard LLP Ceniried Public ACCollntant~ and Business Advisors INDEPENDENT AUDITORS' REPORT To the Board of Directors Better Basics, Inc. Birmingham, Alabama We have audited the accompanying statements of financial position of Better Basics, Inc. (a nonprofit organization) as of June 30, 2012 and 2011 and the related statements of activities, cash flows, and functional expenses for the years then ended. These financial statements are the responsibility of the Organization's management. 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 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 audits provide 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 Better Basics, Inc. as of June 3D, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. ~(jj~~ Haynes Downard LLP August 29, 2012 Suile nd Avenue Nonh Birmingham, Alabam<l '/"me, ~()5/25 t 3380 f"flx: J 3ili7 ",,,,',.hnyne,,,o.wnn,,leom.

4 STATEMENTS OF FINANCIAL POSmON JUNE 30, 2012 AND 2011 ASSETS Current Assets Cash and cash equivalents $ 861,993 $ 835,940 Accounts receivable 4, Contributions and grants receivable 140, ,147 Inventory 85, ,577 Prepaid expenses 12,702 5,281 Total current assets 1,105,495 1,117,177 Property and Equipment, net 70,907 69,926 Other Assets 7,371 5,141 Total Assets $ 1,183,773 $ 1,192,244 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable $ 9,147 $ 35,775 Accrued payroll 30,641 21,627 Vacation payable 2,535 3,975 Deferred revenue 9,000 other liabilities Total current liabilities 52,033 61,774 Net Assets Unrestricted 742, ,994 Temporarily restricted 388, ,476 Total net assets 1,131,740 1,130,470 Total Liabilities and Net Assets $ 1,183,773 $ 1,192,244 5ee accompanying notes. 2

5 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2012 Temporarily Unrestricted Restricted Total Revenues, Support, and Other Income Special events $ 21,786 $ $ 21,786 Less: Direct expenses (4,379) (4,379) Total special event revenue 17,407 17,407 Contributions and grants 581, , ,617 Program service fees 189, ,280 United Way 41,174 41,174 82,348 In-kind contributions 99,732 99,732 Interest income 2,870 2,870 Other income 6,885 6, , ,882 1,328,139 Net assets released from restrictions 481,476 (481,476) Total revenues and support 1,420,733 (92,594) 1,328,139 Expenses Program 1,131,162 1,131,162 Management and general 101, ,448 Fundraising 94,259 94,259 Total expenses 1,326,869 1,326,869 Change in Net Assets 93,864 (92,594) 1,270 Net assets, beginning of year 648, ,476 1,130,470 Net assets, end of year $ 742,858 $ 388,882 $ 1,131,740 See accompanying notes. 3

6 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2011 Temporarily Unrestricted Restricted Total Revenues, Support, and Other Income Special events $ 20,185 $ $ 20,185 Less: Direct expenses (4,980) (4,980) Total special event revenue 15,205 15,205 Contributions and grants 619, , ,472 Program service fees 347, ,323 United Way 40,446 40,446 80,892 In-kind contributions 72,947 72,947 Interest income 2,602 2,602 Loss on disposal of equipment ,098, ,494 1,388,607 Net assets released from restrictions 280,209 (280,209) Total revenues and support 1,378,322 10,285 1,388,607 Expenses Program 1,036,050 1,036,050 Management and general 102, ,071 Fundraising 104, ,475 Totai expenses 1,242,596 1,242,596 Change in Net Assets 135,726 10, ,011 Net assets, beginning of year 513, , ,459 Net assets, end of year $ 648,994 $ 481,476 $ 1,130,470 See accompanying notes. 4

7 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2012 AND 2011 Cash Flows from Operating Activities Increase in net assets $ 1,270 $ 146,011 Adjustments to reconcile changes in net assets to net cash provided by operating activities: Depreciation 10,303 15,078 Loss on disposal of property and equipment 1,540 Changes in assets and liabilities that provided (used) cash: Accounts receivable (4,715) 24,404 Contributions and grants receivable 33,531 (41,320) Inventory 16,340 (20,812) Prepaid expenses (7,421) (5,141) Other assets (2,230) (5,141) Accounts payable (26,628) 4,528 Vacation payable (1,440) 37 Accrued payroll 9,014 3,825 Deferred revenue 9,000 Other liabilities 313 (618) Net cash provided by operating activities 38, ,851 Cash Flows from Investing Activities Purchase of property and equipment (18,272) (1,552) Proceeds from maturity of certificate of deposit 75,000 Net cash provided by (used in) investing activities (18,272) 73,448 Net Change in Cash 20, ,299 Cash, beginning of year 835, ,641 Cash, end of year $ 856,545 $ 835,940 See accompanying notes. 5

8 See accompanying notes. 6

9 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30/ 2011 Management Program and General Fundraising Total Salaries $ 596,620 $ 38,835 $ 17,910 $ 653,365 Payroll taxes 56,855 3,420 1,580 61,855 Employee benefits 13,435 1, ,617 Distribution of books and materials 49,567 49,567 Enrichment activities 91,140 91,140 Rent and utilities 58,628 16,971 1,543 77,142 Program supplies 49,043 49,043 Consulting 73,733 73,733 Travel 19, ,632 Depreciation 13,118 1, ,078 Insurance 7,864 2, ,791 Luncheons and seminars 7,022 1, ,068 Office supplies 12,642 1, ,575 Equipment rental and maintenance 7,493 1, ,281 Professional fees 8,493 20,812 2,044 31,349 Donated services 3,000 2,500 5,500 Payroll processing 1,343 3, ,958 Repairs and maintenance 1, ,924 Telephone and internet 3, ,130 Contract labor 9,165 9,165 Postage 2, ,756 Printing and reproduction 4, ,346 Background checks 2,471 2,471 Miscellaneous ,152 Moving expenses 16,018 4,065 1,875 21,958 $ 1,036,050 $ 102,071 $ 104,475 $ 1,242,596 See accompanying notes. 7

10 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Better Basics, Inc. (the "Organization") is a non-profit corporation whose mission is to make a positive difference in the lives of children and their families by advancing literacy through enrichment and intervention programs. Basis of Accounting The accounting and reporting policies of the Organization and the methods of applying those policies that materially affect the accompanying financial statements conform with accounting principles generally accepted in the United States ("GAAP"). In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the statement of financial position date and revenues and expenses for the period shown. Actual results could differ from the estimates used in the financial statements. Basis of Presentation The Organization reports information regarding its financial position and activities according to three classes of net assets: Unrestricted net assets represent revenues and expenses related to the operation and management of the Organization's primary programs and supporting services. Temporarily restricted net assets represent resources available for use, but expendable only for the purposes specifically stated by the donor. Permanently restricted net assets must be maintained in perpetuity. In accordance with donor instructions, the Organization may use the investment income earned on permanently restricted net assets for specified purposes. Unconditional promises to give are recognized as contributions at the net present value of the amounts expected to be collected. Contributions are considered available for unrestricted use unless specifically restricted by the donor. Amounts received that are restricted for future periods or by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increase those net asset classes. 8

11 NOTES TO FINANCIAL STATEMENTS JUNE 3D, 2012 AND 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Basis of Presentation - Continued When a donor 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 statements of activities and changes in net assets as net assets released from 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. If an expense is incurred for a purpose for which both unrestricted and temporary restricted net assets are available the Organization considers the donor-imposed restriction fulfilled unless the expense is for a purpose that is directly attributable to another specific external source of revenue. Revenue generated from programs is recognized upon the provision ofthe service. Cash and Cash Equivalents The Organization considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amount of the Organization's cash and cash equivalents approximates fair value due to the short maturity of these investments. Accounts Receivable The Organization reports trade receivables at net realizable value. Management determines the allowance for doubtful accounts based on historical losses and current economic conditions. On a continuing basis, management analyzes delinquent receivables and once these receivables are determined to be uncollectible, they are written-off through a charge against an existing allowance account or against earnings. Management has determined that no allowance is considered necessary. Contributions and Grants Receivable Contributions and grants receivable consist of unconditional promises to give in the form of grants and pledges. All contributions and grants receivable are to be received within one year; consequently, a present value discount has not been applied. The majority of contributions receivable are from corporations, foundations, and governmental agencies. 9

12 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Inventory Inventory consists primarily of donated and purchased books and materials and is recorded at cost on the date of purchase or receipt. Books and materials are expensed as they are distributed by the Organization. The cost of the donated books is estimated by management at $4,00 for new hardback books and $1.00 for new paperback books. Property and Equipment Property and equipment are stated at cost less accumulated depreciation, and consist of office furniture, office equipment, and a resource library containing books and materials used year after year in Better Basics programs. Donations of property and equipment are recorded as support at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. All acquisitions of property and equipment in excess of $500 and all expenditures for repairs, maintenance, renewals, and betterments that materially prolong the useful lives of assets are capitalized. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Furniture and equipment are generally depreciated over 3-7 years. Library books and materials are being depreciated over 10 years. Donated Goods and Services Donations of goods and services are recorded at their fair value at the date of donation. If donors stipulate restrictions in the usage of donated goods and services, the contributions are recorded as restricted support, In absence of such stipulation, contributions of goods and services are recorded as unrestricted support, In addition, the Organization received donated goods and services from other contributors and volunteers which are not measurable and, therefore, have been excluded from the financial statements. Functional Allocation of Expenses The costs of providing the various programs and activities have been summarized on a functional basis in the statement of functional expenses. Accordingly, certain costs have been allocated among programs and supporting services benefited based on management's estimate, 10

13 NOTES TO FINANCIAL STATEMENTS JUNE 3D, 2012 AND 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Income Taxes The Organization is a tax-exempt entity under Section SOl(c)(3) of the Internal Revenue Code. Concentration of Credit Risk The Organization has financial instruments, namely cash and cash equivalents that potentially subject it to a concentration of credit risk. The Organization places its cash with high credit-quality financial institutions. Estimates The preparation of financiai 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Uncertain Tax Positions As of June 3D, 2012, the Organization has no uncertain tax positions that qualify for recognition or disclosure in the financial statements. Subsequent Events The Organization evaluated subsequent events through August 29, 2012, which is the date the financial statements were available to be issued. 11

14 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 NOTE 2. PROPERTY AND EQUIPMENT Property and equipment consists of the following as of June 30: Resource library $ 84,531 $ 77,853 Office equipment 85,731 75,677 Office furniture 5,387 5, , ,917 Less: accumulated depreciation (104,742) (88,991) Property and equipment, net $ 70,907 $ 69,926 NOTE 3. IN-KIND CONTRIBUTIONS During the years ended June 3D, 2012 and 2011, the Organization recorded the following donated services as revenue and expenses in the accompanying statements of activities: Books $ 73,120 $ 35,651 Program supplies 20,282 8,441 Professional services 6,330 28,855 Total in-kind contributions $ 99,732 $ 72,947 NOTE 4. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes at June 3D, 2012 and 2011: Programs/Future operations 2012 $ 388, $ 481,476 12

15 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 AND 2011 NOTE 4. TEMPORARILY RESTRICTED NET ASSETS - Continued Net assets were released from restrictions during the years ended June 3D, 2012 and 2011 in satisfaction of the following purposes: Satisfaction of time and program restrictions 2012 $ 481, $ 280,209 NOTE 5. COMMITMENTS The Organization leases its facility under an operating lease agreement. The lease period ends on June 3D, The following is a schedule of future minimum lease payments under this lease obligation for the years ending June 30: Years ending June 3D, 2013 $ 63, , , ,432 $ 265,836 NOTE 6. CONCENTRATIONS Revenue received under contracts or grant agreements with the Alabama State Department of Education comprised approximately 43% and 37% of total revenue received for the years ended June 3D, 2012 and 2011, respectively. 13