Unitarian Church of All Souls. Financial Statements. June 30, 2014

Transcription

1 Financial Statements

2 Independent Auditors' Report The Board of Trustees Unitarian Church of All Souls We have audited the accompanying financial statements of Unitarian Church of All Souls (the Church ) which comprise the statement of financial position as of, and the related statements of activities 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 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 auditors 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. 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 Unitarian Church of All Souls as of, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. O CONNOR DAVIES, LLP 665 Fifth Avenue, New York, NY I Tel: I Fax: I O Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

3 The Board of Trustees of Unitarian Church of All Souls Page 2 Report on Summarized Comparative Information We have previously audited Unitarian Church of All Souls June 30, 2013 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated November 4, In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2013 is consistent, in all material respects, with the audited financial statements from which it has been derived. Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supplementary schedule of operating expenses on pages 13 to 14 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole. September 17, 2014

4 Statement of Financial Position (with comparative amounts at June 30, 2013) ASSETS Cash and cash equivalents $ 433,746 $ 254,459 Grants and pledges receivable 199, ,762 Bequests receivable 176,329 - Rent receivable 54,620 - Prepaid expenses 46,957 74,822 Investments 6,734,092 6,473,475 Property and equipment, net 2,089,967 1,882,324 $ 9,735,702 $ 8,955,842 LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 41,583 $ 113,694 Deposits received and other 41,515 - Total Liabilities 83, ,694 Net Assets Unrestricted Operating 582, ,343 Investment in property and equipment 2,089,967 1,882,324 Board Designated - Endowment Fund 6,214,446 5,742,986 Board Designated - The Forrest Church Fund 482, ,655 Total Unrestricted Net Assets 9,369,399 8,568,308 Temporarily restricted 283, ,840 Total Net Assets 9,652,604 8,842,148 $ 9,735,702 $ 8,955,842 See notes to financial statements 3

5 Statement of Activities (with summarized totals for the year ended June 30, 2013) 2014 Unrestricted Board Board Investment in Designated Designated Property and Endowment The Forrest Temporarily Operating Equipment Fund Church Fund Total Restricted Total Total REVENUE AND OTHER SUPPORT Annual giving $ 1,396,222 $ - $ - $ - $ 1,396,222 $ - $ 1,396,222 $ 1,308,720 Contributions - Outreach , , ,850 Contributions - Sandy/Oklahoma Relief ,706 19,706 17,376 Gifts and bequests , , ,902 99,107 Collections at church services 70, ,676-70,676 71,251 Use of buildings All Souls School 412, , , ,019 Other 448, , , ,980 Weddings and memorials, net of expenses 35, ,874-35,874 43,356 Miscellaneous income 2, ,029-2,029 5,793 Allocation of investment income per spend rate for operations 287, , , ,166 Net assets released from restriction, including outreach 220, ,323 (220,323) - - Total Revenue and Other Support 2,873, ,902-3,237,606 (27,078) 3,210,528 2,851,618 EXPENSES Staff expenses 1,955, ,955,825-1,955,825 1,935,896 Building operations and maintenance 273, , , ,780 Program expenses 131, , , ,116 Outreach expenses 162, , , ,558 UU related expenses 39, ,303-39,303 63,094 Communication expenses 138, , , ,999 Uncollectible pledges 15, ,527-15,527 11,905 Miscellaneous expenses 119, , , ,972 Depreciation - 195, , , ,280 Total Expenses 2,836, , ,031,799-3,031,799 3,034,600 Excess (Deficiency) of Operating Revenue Over Operating Expenses 37,415 (195,510) 363, ,807 (27,078) 178,729 (182,982) NON-OPERATING ACTIVITIES Allocation of investment income per spend rate for capital expenditures - 28, ,751-28,751 28,417 Non-operating investment income ,337 66, ,533 36, , ,599 Interest on loan from Board Designated Endowment Fund (13,721) - 13, Grants (50,000) (50,000) - (50,000) (50,000) Transfer to fund capital expenditures 374,402 (374,402) Transfer to increase available working capital 82,098 - (82,098) Change in Net Assets 105, , ,460 16, ,091 9, , ,034 NET ASSETS Beginning of year 476,343 1,882,324 5,742, ,655 8,568, ,840 8,842,148 8,702,114 End of Year $ 582,135 $ 2,089,967 $ 6,214,446 $ 482,851 $ 9,369,399 $ 283,205 $ 9,652,604 $ 8,842,148 See notes to financial statements 4

6 Statement of Cash Flows (with comparative amounts for the year ended June 30, 2013) CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 810,456 $ 140,034 Adjustments to reconcile change in net assets to net cash from operating activities Net realized (gain) loss on investments (299,266) 151,693 Net unrealized gain on investments (534,314) (653,802) Uncollectible pledges 15,527 11,905 Depreciation 195, ,280 Changes in operating assets and liabilities: Grants and pledges receivable 55,244 (150,199) Bequest receivable (176,329) - Rent receivable (54,620) - Prepaid expenses 27,865 10,799 Accounts payable and accrued expenses (72,111) (6,189) Deposits received and other 41,515 - Net Cash from Operating Activities 9,477 (310,479) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments 2,526,819 2,142,464 Purchase of investments (1,953,856) (1,930,609) Purchases of property and equipment (403,153) (68,478) Net Cash from Investing Activities 169, ,377 Change in Cash and Cash Equivalents 179,287 (167,102) CASH AND CASH EQUIVALENTS Beginning of year 254, ,561 End of year $ 433,746 $ 254,459 See notes to financial statements 5

7 Notes to Financial Statements 1. Organization and Tax Status The Unitarian Church of All Souls (the Church ) was founded in 1819 and organized as an open-minded religious community to conduct worship, foster spiritual formation, encourage fellowship, and serve the larger community. As a religious organization, the Church is exempt from federal income tax under section 501(c)(3) of the U.S. Internal Revenue Code and from state and local taxes under comparable law. 2. Summary of Significant Accounting Policies Basis of Accounting The accompanying financial statements have been prepared using the accrual basis of accounting and conform to accounting principles generally accepted in the United States of America ( U.S. GAAP ) as applicable to not-for-profit organizations. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount 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. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents consist of cash held in checking, money market accounts and certificates of deposit with maturities of three months or less from the date of purchase. Grants and Pledges Receivable Unconditional promises to give are recorded when a pledge is made. Unconditional pledges to be received in future years are discounted to present value using a risk-adjusted rate. Fair Value Measurements The Church follows U.S. GAAP guidance on Fair Value Measurements which defines fair value and establishes a fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets. Level 1 inputs have the highest reliability and are related to assets with unadjusted quoted prices in active markets. Level 2 inputs relate to assets with other than quoted prices in active markets which may include quoted prices for similar assets or liabilities or other inputs which can be corroborated by observable market data. Level 3 inputs are unobservable inputs and are used to the extent that observable inputs do not exist. 6

8 Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) Investments Valuation Investments are carried at fair value, except for temporary cash investments, which are carried at cost. Property and Equipment Property and equipment with a cost of $1,000 or higher are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 10 to 25 years. Net Assets Presentation Unrestricted net assets are not subject to donor-imposed stipulation and may be expended at the discretion of the Church. Included in unrestricted net assets are the board-designated Endowment Fund and The Forrest Church Fund. Temporarily restricted net assets are subject to donor-imposed stipulations that will be met by the actions of the Church or the passage of time. Permanently restricted net assets are subject to donor-imposed stipulations that neither expire with the passage of time nor can be fulfilled or removed by the action of the Church. Contributions Contributions are considered available for unrestricted use unless specifically restricted by the donor or subject to other legal restrictions. Contributions that are received with donor stipulations that limit the use of donated assets, or which will be received over time are recorded as temporarily restricted support. When a donor stipulation 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. Investment Income Recognition Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date. Realized and unrealized gains and losses are included in the determination of changes in net assets. Accounting for Uncertainty in Income Taxes The Church recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Management has determined that the Church had no uncertain tax positions that would require financial statement recognition or disclosure. 7

9 Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) Subsequent Events Evaluation by Management Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued, which date is September 17, Concentration of Credit Risk The Church s financial instruments that are potentially exposed to concentrations of credit risk consist primarily of cash, money market funds, pledges receivable and investments. The Church places its cash and money market funds in what it believes to be quality financial institutions. The investment portfolio is managed by professional investment advisors and managers and is diversified by type of investments and industry concentrations so that no individual investment or group of investments represents a significant concentration of market risk. Concentrations of credit risk with respect to pledges receivable are generally diversified due to the large number of individuals comprising the Church s donor database. The Church performs ongoing collectability evaluations and writes off uncollectible amounts as they become known. 4. Grants and Pledges, Bequests and Rent Receivables All grants and pledges, bequests and rent receivables at are due within one year. The Church considers all grants and pledges, bequests and rent receivables at June 30, 2014 to be fully collectible. Accordingly, there is no allowance for doubtful accounts recorded. 5. Investments Investments carried at fair value consist of the following at : Mutual Funds Money market $ 501,391 Intermediate term bond fund 1,567,054 Short term bond fund 351,874 International large blend fund 1,624,815 Domestic large blend fund 2,688,958 $ 6,734,092 Investments at are held in the board designated and donor restricted funds as follows: Board Designated Endowment Fund $ 5,989,402 Board Designated The Forrest Church Fund 501,391 Temporarily restricted for Music Fund 177,107 Temporarily restricted for Oscar Miller Fund for Annual Giving 66,192 $ 6,734,092 At, all of the Church s investments held were valued using Level 1 inputs. 8

10 Notes to Financial Statements 5. Investments (continued) Investment income consisted of the following at : Dividends and interest $ 154,342 Realized gains on investment sales 299,266 Unrealized appreciation 534,314 Investment advisory fees $ (18,683) 969,239 Allocation of investment income Allocation of investment income per spend rate for operations $ 287,512 Allocation of investment income per spend rate for capital expenditures 28,751 Non-operating investment income $ 652, , Property and Equipment At, property and equipment consist of the following: Land $ 355,000 Church building 1,015,141 Building improvements from capital campaign 2,876,271 Wiggen House and addition 1,503,781 Church restoration 828,254 Church organ 928,430 Memorial garden 4,916 Church equipment 373,355 Office equipment 441,547 8,326,695 Accumulated depreciation $ (6,236,728) 2,089, Board Designated Endowment Funds Endowment Fund The Endowment Fund (the Fund ) was established to provide long-term support for the operations of the Church. The investment objectives of the Fund are to provide a stable source of current income and to earn long-term returns in excess of inflation and expenditures so as to enhance the purchasing power of the Fund. The investment of the Fund s assets is guided by the following principles: (1) investments consistent with a long-term investment horizon and sound investment principles, (2) investments maintained in marketable securities and (3) investments that yield both capital appreciation and current income. The Church targets a diversified asset allocation to achieve its long-term objectives within prudent risk constraints. 9

11 Notes to Financial Statements 7. Board Designated Endowment Funds (continued) Endowment Fund (continued) The Board approved a "total return concept to be used for the support of operations whereby a set percentage (5.5%) of average invested assets over the prior twelve quarters is transferred to the operating fund each year. For the year ended, the Board designated a 5% draw from the Fund for operating expenses and a 0.5% draw for capital expenditures. The amounts transferred from the Fund during the year ended for operations and capital expenditures were $287,512 and $28,751. During 2014, the Church drew an additional $374,402 and $82,098 in excess of the spend rate to fund capital expenditures and increase available working capital, respectively. The total additional transfers of $456,500 in 2014 and $100,000 in 2013 are considered loans payable to the Endowment Fund from the Operating Fund. Interest on outstanding unpaid amounts will be charged at 3.6%. Total interest for the year ended is $13,721. The Forrest Church Fund The Board designated a portion the Church s unrestricted net assets for The Forrest Church Fund for the Advancement of Liberal Religion ( The Forrest Church Fund ) in Decisions about investing and dispersing the monies in The Forrest Church Fund are made by a fivemember oversight committee, whose members were appointed by the All Souls Board of Trustees. This endowment fund is designed to honor Rev. Church s legacy and to support Unitarian Universalism (UU) by funding programs in public theology, independent scholarship, lectureships, radio and media outreach and conferences designed to expand the audience and enhance the public voice for UU. Activity in the Board Designated Endowment Funds for the year ended is as follows: The Forrest Endowment Church Fund Fund Total Balance, July 1, 2013 $ 5,747,808 $ 485,850 $ 6,233,658 Contributions 147, ,757 Interest and dividends 139,117 9, ,201 Realized gains 151, , ,572 Unrealized appreciation (depreciation) 592,378 (81,859) 510,519 Investment advisory fees (16,699) (1,452) (18,151) Appropriation per spend rate for operations (287,512) - (287,512) Appropriation per spend rate for capital expenditures (28,751) - (28,751) Appropriation for grants - (50,000) (50,000) Transfer to fund capital expenditures (374,402) - (374,402) Transfer to increase available working capital (82,098) - (82,098) Balance, $ 5,989,402 $ 501,391 $ 6,490,793 10

12 Notes to Financial Statements 8. Temporarily Restricted Net Assets The following is a summary of the activity in the temporarily restricted net assets for the year ended : Temporarily Restricted Net Assets Addition Net Assets and Net Released Balance Investment From Balance July 1, 2013 Activity Restriction Outreach Programs Monday Night Hospitality $ 19,150 $ 55,650 $ (63,185) $ 11,615 Friday Lunch - 79,744 (69,820) 9,924 God Revised - 25,250 (24,635) 615 G. Guengerich Support - 5,000 (2,349) 2,651 Hurricane Sandy/Oklahoma 2,476 13,979 (13,979) 2,476 Girl Scouts 10,460 12,895 (15,959) 7,396 Total Outreach Programs 32, ,518 (189,927) 34,677 Unitarian Church of All Souls Historical Society 4, ,178 Music Fund 178,155 26,797 (27,794) 177,158 Oscar Miller Fund for Annual Giving 59,148 9,646 (2,602) 66,192 Total $ 273,840 $ 229,688 $ (220,323) $ 283, Pension Plan A qualified pension plan called the Multiple Employer Defined Contribution Plan (the Plan ) was adopted on January I, The Plan is administered by the Unitarian Universalist Association (UUA) in Boston. A contribution is made each year for qualified participating employees equal to 12% of their compensation. Total pension expense for fiscal 2014 was $112, Rental Revenue Under Operating Leases The Church as a lessor has noncancelable operating leases at, which expire in varying years through August 31, Rent receivable of $22,667 in the accompanying Statement of Financial Position results from the straight-line recognition of rent income over the term of the lease agreements. The following is a schedule of minimum annual future lease amounts to be received: 2015 $ 727, , , , ,907 11

13 Notes to Financial Statements 11. Functional Expenses The Church s expenses are allocated among program and supporting services as follows: Program services $ 2,532,530 Supporting services 499,269 $ 3,031,799 * * * * * 12

14 Supplementary Information

15 Schedule of Operating Expenses (Over) Budget Actual Under STAFF EXPENSES Minister salaries including parsonage allowance $ 188,494 $ 188,494 $ - Other ministerial and program salaries and expenses 503, ,971 3,649 Operational and support salaries 411, ,545 2,790 Building and custodial salaries 293, ,076 (9,021) Staff development 2,000 1, Pension 118, ,109 6,328 Payroll taxes 124, ,068 16,050 Medical, unemployment and insurances 331, ,596 23,800 Book tour expense - 24,635 (24,635) Staff grant expense - 2,349 (2,349) Total Staff Expenses 1,972,455 1,955,825 16,630 BUILDING OPERATIONS AND MAINTENANCE Heat and light 115, ,016 (10,016) Maintenance and repair 92,000 85,308 6,692 Insurance 38,000 36,708 1,292 General supplies 30,000 26,562 3,438 Total Building Operations and Maintenance 275, ,594 1,406 PROGRAM EXPENSES Music 54,000 51,806 2,194 Religious education for children and youth 19,000 15,061 3,939 Adult education and lifelines 15,400 14, Congregational groups 6,100 5, Hospitality 30,000 32,528 (2,528) Sundays at sundown 8,000 6,583 1,417 Miscellaneous worship 5,675 5, Diversity Task Force Total Program Expenses 138, ,487 7,438 OUTREACH EXPENSES Friday lunch 82,000 59,820 22,180 Monday night hospitality 55,000 53,185 1,815 Girl Scouts 10,000 15,959 (5,959) Earmarked collections for relief (Inc. Sandy relief/other) 5,000 13,979 (8,979) Social Worker expense 15,000-15,000 Staff and supply cost 20,000 20,000 - Total Outreach Expenses 187, ,943 24,057 See independent auditors' report 13

16 Schedule of Operating Expenses (continued) (Over) Budget Actual Under UU RELATED EXPENSES UUA program fund $ 23,145 $ 23,145 $ - Metro district dues 10,415 10,415 - Chalice lighters 1,000-1,000 UU Service Committee 1,000 1,000 - GA expenses 5,000 3,391 1,609 UU Expenses - other (352) UU-UNO office 1,000 1,000 - Total UU Related Expenses 41,560 39,303 2,257 COMMUNICATION EXPENSES Communication, web technology and database 61,000 65,861 (4,861) Printing 18,000 14,359 3,641 Advertising and publicity (426) Postage 11,000 11,663 (663) Communication materials and equipment maintenanc 41,000 45,767 (4,767) Total Communication Expenses 131, ,316 (7,076) MISCELLANEOUS EXPENSES Annual giving 20,000 21,120 (1,120) Auditing and accounting 60,645 62,661 (2,016) Bank, credit card and payroll processing charges 17,000 20,433 (3,433) Dues and subscriptions 10,000 3,055 6,945 Chancel flowers - 2,948 (2,948) Uncollectible pledges - 15,527 (15,527) Other miscellaneous expenses 15,000 9,077 5,923 Total Miscellaneous Expenses 122, ,821 (12,176) Total Operating Expenses $ 2,868,825 $ 2,836,289 $ 32,536 See independent auditors' report 14