NORTHEASTERN MINNESOTA SYNOD OF THE EVANGELICAL LUTHERAN CHURCH IN AMERICA FINANCIAL STATEMENTS YEARS ENDED JANUARY 31, 2016 AND 2015

Transcription

1 FINANCIAL STATEMENTS YEARS ENDED JANUARY 31, 2016 AND 2015

2 DULUTH, MINNESOTA TABLE OF CONTENTS Page No. Independent Auditor s Report 1 FINANCIAL STATEMENTS Statements of Financial Position 2 Statements of Activities 3 Statements of Cash Flows 4 Statement of Functional Expenses (2016) 5 Statement of Functional Expenses (2015) 6 Notes to Financial Statements 7 9

3 Independent Auditor s Report March 14, 2016 To the Members of the Synod Council Northeastern Minnesota Synod of the Evangelical Lutheran Church in America Duluth, Minnesota We have audited the accompanying financial statements of Northeastern Minnesota Synod of the Evangelical Lutheran Church (a nonprofit organization), which comprise the statements of financial position as of January 31, 2016 and 2015, and the related statements of activities and cash flows for the years 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. Auditor s Responsibility 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 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. 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 Northeastern Minnesota Synod of the Evangelical Lutheran Church as of January 31, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. (1)

4 STATEMENTS OF FINANCIAL POSITION JANUARY 31, 2016 AND 2015 Assets Cash and cash equivalents $ 335,091 $ 309,031 Property and equipment, net of accumulated depreciation of $473,407 and $444,138 in 2016 and , ,622 Total Assets $ 591,444 $ 569,653 Liabilities And Net Assets Liabilities: Accounts payable and accrued expenses $ 569 $ 1,043 Total Current Liabilities 569 1,043 Net Assets: Unrestricted 330, ,859 Temporarily restricted 260, ,751 Total Net Assets 590, ,610 Total Liabilities And Net Assets $ 591,444 $ 569,653 See accompanying notes. (2)

5 STATEMENTS OF ACTIVITIES JANUARY 31, 2016 AND Unrestricted Net Assets: Revenues: Congregational support $ 1,051,224 $ 1,100,230 Synod assembly 34,264 32,035 Rent income 9,000 7,200 Interest 1, Miscellaneous 2,675 1,150 Shared staff 15,000 15,000 Total Revenues 1,113,229 1,156,246 Net assets released from restrict. 447, ,839 Total Public Support/Revenues 1,560,699 1,290,085 Expenses: Grant making to ministry partners program 677, ,689 Leadership support program 512, ,958 Congregational support program 121, ,805 Word and sacrament program 36,962 37,450 Management and general 211, ,656 Total Expenses 1,559,102 1,334,558 Increase (Decrease) In Unrestricted Net Assets $ 1,597 $ (44,473) Temporarily Restricted Net Assets: Congregational support 35,290 45,559 Gifts and contributions 128,350 22,490 Youth Ministry activities 304, ,747 Net assets released from restrictions, program restrictions expired (447,470) (133,839) Increase (Decrease) In Temporarily Restricted Net Assets 20,668 92,957 INCREASE IN NET ASSETS $ 22,265 $ 48,484 Net Assets: Beginning of year 568, ,126 End of year $ 590,875 $ 568,610 See accompanying notes. (3)

6 STATEMENTS OF CASH FLOWS JANUARY 31, 2016 AND Cash Flows From Operating Activities: Increase in net assets $ 22,265 $ 48,484 Adjustments to reconcile to net cash flows from operating activities: Depreciation 29,269 27,185 Increase (decrease) in: Accounts payable and accrued expenses (474) (617) Net Cash Flows From Operating Activities 51,060 75,052 Cash Flows From Investing Activities: Purchase of property and equipment (25,000) - Net Cash Flows From Investing Activities (25,000) - NET INCREASE IN CASH AND CASH EQUIV. $ 26,060 $ 75,052 Cash and cash equiv., beginning of year 309, ,979 Cash and cash equiv., end of year $ 335,091 $ 309,031 See accompanying notes. (4)

7 STATEMENTS OF FUNCTIONAL EXPENSES JANUARY 31, 2016 Grant Making Word to Ministry Leadership Congregation and Total Management Total Partners Support Support Sacrament Program And General 2016 Payroll $ 25,618 $ 61,483 $ 51,236 $ 15,371 $ 153,708 $ 102,473 $ 256,181 Payroll taxes 1,125 2,699 2, ,748 4,498 11,246 Tuition and other benefits 13,634 32,721 27,267 8,180 81,802 54, ,337 Total Compensation 40,377 96,903 80,752 24, , , ,764 Accounting/professional 315 1,575 1, ,780 2,520 6,300 Depreciation 1,463 7,317 7,317 1,463 17,560 11,709 29,269 Equipment , ,283 Financial support 617,137 9,000 6, , ,462 Insurance 291 1,456 1, ,494 2,330 5,824 Maintenance: Equipment , ,439 Office and grounds 278 1,391 1, ,338 2,224 5,562 Miscellaneous 737 3,683 3, ,840 5,891 14,731 Occupancy and utilities 742 3,712 3, ,908 5,937 14,845 Postage and shipping ,778 1,187 2,965 Printing and duplication Supplies and materials , ,777 Synod assembly - 7,432 7,432 7,432 22,296 7,431 29,727 Synod boards 14, ,700-14,700 Telephone 253 1,265 1, ,036 2,025 5,061 Travel 740 3,701 3, ,882 5,922 14,804 Youth Ministry activities - 372, , ,353 Total Functional Expenses $ 677,518 $ 512,213 $ 121,034 $ 36,962 $ 1,347,727 $ 211,375 $ 1,559,102 (5) See accompanying notes. (5)

8 STATEMENTS OF FUNCTIONAL EXPENSES JANUARY 31, 2015 Grant Making Word to Ministry Leadership Congregation and Total Management Total Partners Support Support Sacrament Program And General 2015 Payroll $ 26,660 $ 63,984 $ 53,320 $ 15,996 $ 159,960 $ 106,641 $ 266,601 Payroll taxes 1,047 2,513 2, ,282 4,187 10,469 Tuition and other benefits 14,910 35,784 29,820 8,946 89,460 59, ,102 Total Compensation 42, ,281 85,234 25, , , ,172 Accounting/professional 305 1,525 1, ,660 2,440 6,100 Depreciation 1,359 6,796 6,796 1,359 16,310 10,875 27,185 Equipment , ,720 Financial support 655,568 9,000 6, , ,281 Insurance 284 1,421 1, ,410 2,274 5,684 Maintenance: Equipment , ,017 Office and grounds 308 1,541 1, ,698 2,467 6,165 Miscellaneous 592 2,960 2, ,104 4,736 11,840 Occupancy and utilities 1,038 5,192 5,192 1,038 12,460 8,306 20,766 Postage and shipping ,028 1,265 3,293 Printing and duplication ,099 Supplies and materials ,087 Synod assembly - 6,388 6,387 6,388 19,163 6,387 25,550 Synod boards 18, ,012-18,012 Telephone 267 1,334 1, ,202 2,134 5,336 Travel 872 4,358 4, ,460 6,973 17,433 Youth Ministry activities - 83, ,818-83,818 Total Functional Expenses $ 721,689 $ 228,958 $ 125,805 $ 37,450 $ 1,113,902 $ 220,656 $ 1,334,558 (6) See accompanying notes. (6)

9 DULUTH, MINNESOTA NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2016 AND 2015 NOTE A NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES Nature of Activities Northeastern Minnesota Synod of the Evangelical Lutheran Church in America (Synod) was organized and is operated exclusively for religious purposes and specifically to promote the Christian religion according to the tenets of faith set forth in the constitution of the Evangelical Lutheran Church in America (ELCA). The Synod is affiliated with the ELCA and includes 148 Lutheran churches located in the following 13 countries in the State of Minnesota: Aitkin, Carlton, Cass, Cook, Crow Wing, Itasca, Kanabec, Koochiching, Lake, Mille Lacs, Morrison, Pine and St. Louis. Summary of Significant Accounting Policies The operations of the Synod are accounted for on an accrual basis of accounting. The Synod has adopted the provisions of Financial Accounting Standards for Not-for-Profit Organizations. Under these provisions net assets, revenue, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Synod and changes therein are classified and reported as follows: Unrestricted net assets Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Synod and/or the passage of time or can be fulfilled and removed by actions of the Organization pursuant to those stipulations. Temporarily restricted contributions whose restrictions are met in the same reporting period are reported as unrestricted support. Permanently restricted net assets Net assets subject to donor-imposed stipulations that they be maintained permanently by the Synod. The Synod did not have any permanently restricted net assets at January 31, 2016 and Cash and Cash Equivalents For purposes of the statements of cash flows, the Synod considers all short-term debt securities purchased with maturities of three months or less to be cash equivalents. There were no cash equivalents at January 31, 2016 and (7)

10 DULUTH, MINNESOTA NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2016 AND 2015 NOTE A NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and Equipment Property and equipment are capitalized at cost if purchased or at fair value if donated to the Synod. Depreciation is provided over the estimated useful lives of the assets on the straight-line method. Custodian Deposits Contributions which are remitted to the Synod but which are specifically designated for other organizations, missionaries, or purposes, are recorded as custodian deposits until the funds are disbursed by the Synod. These types of contributions are not recorded as support by the Synod, and the related disbursements are not recorded as expenses. Income Taxes The Synod is exempt from income taxes under Internal Revenue Code Section 501(c)(3) and a similar section of the State code. Use of Estimates The preparation of 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 PROPERTY AND EQUIPMENT The cost, accumulated depreciation, and carrying values of the Synod s property and equipment at January 31 are as follows: Real estate $ 626,255 $ 626,255 Office equipment 46,318 46,318 Furnishings 19,668 19,668 Vehicles 37,519 12, , ,760 Accumulated depreciation 473, ,138 $ 256,353 $ 260,622 (8)

11 DULUTH, MINNESOTA NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2016 AND 2015 NOTE C TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consisted of the following at January 31: Contributions and gifts for: Matters of the Heart $ 12,892 $ 13,878 EOCM-DEM Grant 4,802 8,648 Journey into Prayer 1,810 1,810 Bishops fund 482 1,632 Youth Ministry 63, ,523 ELCA Board of Pensions 25,894 25,211 Phebe Hospital Solar Project 115,840 12,490 Support received in January for subsequent year 35,290 45,559 $ 260,419 $ 239,751 NOTE D PENSION PLAN The Synod has a defined contribution pension plan, which covers all of its full-time employees and contributes 12 percent of covered employees compensation. Total pension expense for the years ended January 31, 2016 and 2015 was approximately $97,445 and $101,499. NOTE E FUNCTIONAL EXPENSES Expenses incurred for a program service or management and general are assigned directly to that function. Expenses that affect more than one program service or management and general are allocated between the functions by the staff of the Synod in a manner to reflect a fair breakdown of expense by function. No expenses have been allocated to fundraising as such amounts are immaterial and are included in the management and general category. NOTE F FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of financial instruments, including cash and cash equivalents and accounts payable approximate their fair market value due to the short term maturities of these instruments. NOTE G SUBSEQUENT EVENTS Management has evaluated subsequent events through March 14, 2016, the date on which the financial statements were available to be issued. (9)

12 NORTHEASTERN MINNESOTA SYNOD FOUNDATION FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2015 AND 2014

13 February 26, 2016 To the Board Northeastern Minnesota Synod Foundation Duluth, Minnesota We have reviewed and verified the activity in the Foundation accounts during 2015 and In addition we have verified the asset balances as of December 31, 2015 and The attached schedules indicate the transactions during the years referred to above and the detail investment balances as of December 31, 2015 and We believe the schedules represent the actual transactions and balances that have occurred during the period. Please let us know if you need any additional information. Sincerely, LICARI, LARSEN & CO., LTD (1)

14 NORTHEASTERN MINNESOTA SYNOD FOUNDATION SCHEDULES OF FINANCIAL POSITION DECEMBER 31, 2015 AND 2014 Assets Mission investment fund $ 1,811 $ 2,403 ELCA Endowment Fund Pooled Trust 85, ,003 Total Assets $ 87,167 $ 113,406 Liabilities And Net Assets Liabilities: Accounts payable $ - $ - Total Liabilities - - Net Assets: Unrestricted 87, ,406 Total Liabilities And Net Assets $ 87,167 $ 113,406 See Accountant's Report, Page (1). (2)

15 NORTHEASTERN MINNESOTA SYNOD FOUNDATION SCHEDULES OF ACTIVITIES YEARS ENDING DECEMBER 31, 2015 AND Revenues: Contributions $ - $ - Interest income 3,894 4,091 Investment gains (losses) (4,533) 3,052 Total Revenues (639) 7,143 Expenses: Accounting fee Distribution - NE MN Synod, ELCA 25,000 10,000 Total Expenses 25,600 10,600 INCREASE (DECREASE) IN NET ASSETS $ (26,239) $ (3,457) Net Assets: Beginning of year 113, ,863 End of year $ 87,167 $ 113,406 See Accountant's Report, Page (1). (3)