COMMUNITY ASSISTED AND SUPPORTED LIVING, INC. AND SUBSIDIARY SARASOTA, FLORIDA CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2015

Transcription

1 COMMUNITY ASSISTED AND SUPPORTED LIVING, INC. AND SUBSIDIARY SARASOTA, FLORIDA CONSOLIDATED FINANCIAL STATEMENTS

2 COMMUNITY ASSISTED AND SUPPORTED LIVING, INC. AND SUBSIDIARY SARASOTA, FLORIDA CONSOLIDATED FINANCIAL STATEMENTS CONTENTS PAGE Independent Auditors Report 1 Consolidated Statement of Financial Position 3 Consolidated Statement of Activities 4 Consolidated Statement of Cash Flows 5 Notes to Consolidated Financial Statements 6 Supplementary Information: Consolidated Schedule of Functional Expenses 17

3 INDEPENDENT AUDITORS REPORT To the Board of Directors of Community Assisted and Supported Living, Inc. and Subsidiary Sarasota, Florida We have audited the accompanying consolidated financial statements of Community Assisted and Supported Living, Inc. and subsidiary (the Organization ) (a non-profit corporation), which comprise the consolidated statement of financial position as of December 31, 2015, and the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. -1-

4 To the Board of Directors of Community Assisted and Supported Living, Inc. and Subsidiary Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Community Assisted and Supported Living, Inc. and subsidiary as of December 31, 2015, and the changes in their net assets and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matter Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidated schedule of functional expenses on page 17 is presented for purposes of additional analysis and is not a required part of the consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole. Tampa, Florida June 22,

5 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS Current Assets: Cash $ 54,321 Beneficial interest in assets held by others 98,021 Accounts receivable 132,401 Prepaid expenses and other current assets 97,327 Total current assets 382,070 Property and Equipment, net 9,810,072 Other Assets: Due from officer 87,015 Loan costs, net 2,514 Deposits and other assets 37,776 Note receivable 91,799 Total other assets 219,104 Total Assets $ 10,411,246 LIABILITIES AND NET ASSETS Current Liabilities: Current portion of long-term debt $ 135,505 Accounts payable and other current liabilities 184,428 Accrued payroll and taxes 278,540 Deferred revenue 24,814 Other current liabilities 95,758 Total current liabilities 719,045 Long-Term Debt, Less Current Portion 7,626,251 Total Liabilities 8,345,296 Net Assets: Unrestricted 2,065,950 Total Liabilities and Net Assets $ 10,411,246 The accompanying notes are an integral part of these consolidated financial statements. -3-

6 CONSOLIDATED STATEMENT OF ACTIVITIES YEAR ENDED Changes in Unrestricted Net Assets: Support and Revenues: Program fees $ 2,080,380 Grants and contracts 1,245,169 Contributions 293,141 Gain on sale of property and equipment 131,040 Other income 32,459 Total support and revenues 3,782,189 Expenses: Program services 3,089,520 Supporting services - General and administration 501,498 Fundraising 65,364 Total supporting services 566,862 Total expenses 3,656,382 Losses: Excess of long-term debt assumed over fair value of property acquired 277,724 Total expenses and losses 3,934,106 Change in Net Assets (151,917) Net Assets at Beginning of Year 2,217,867 Net Assets at End of Year $ 2,065,950 The accompanying notes are an integral part of these consolidated financial statements. -4-

7 CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED Cash Flows From Operating Activities: Change in net assets $ (151,917) Adjustments to reconcile change in net assets to net cash provided by operating activities: Bad debt expense 12,720 Depreciation and amortization 452,876 Gain on sale of property and equipment (131,040) Excess of long-term debt assumed over fair value of property acquired 277,724 Forgiveness of long-term debt (75,000) Change in value of beneficial interest in assets held by others (2,081) Changes in: Accounts receivable (45,041) Prepaid expenses and other current assets (7,432) Deposits and other assets (6,168) Accounts payable (9,385) Accrued payroll and taxes (102,812) Deferred revenue (970) Other current liabilities 19,261 Net cash provided by operating activities 230,735 Cash Flows From Investing Activities: Loan to officer (9,235) Purchases of property and equipment (611,447) Proceeds from sale of property and equipment 386,993 Distribution of beneficial interest in assets held by others 151,283 Increase in note receivable (91,799) Net cash used in investing activities (174,205) Cash Flows From Financing Activities: Repayment of long-term debt (237,473) Proceeds from long-term debt 221,600 Loan costs (2,524) Net cash used in investing activities (18,397) Net Increase in Cash 38,133 Cash at Beginning of Year 16,188 Cash at End of Year $ 54,321 Supplemental Disclosures of Cash Flow Information: Cash paid during the year for interest $ 89,517 Supplemental Schedule of Noncash Investing and Financing Activities: Long-term debt incurred for purchase of property and equipment $ (867,853) The accompanying notes are an integral part of these consolidated financial statements. -5-

8 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Purpose: Community Assisted and Supported Living, Inc. (the Manor ), a non-profit corporation, was incorporated in the State of Florida on October 31, 1998, for the purpose of providing and operating assisted living facilities for mentally impaired persons in southwest Florida. The Manor is primarily funded through private donations, fees, and grants from various municipalities, including Lee County and Sarasota County. Community Affordable Supported Living, Inc. ( CASL ) is a wholly owned subsidiary of the Manor. CASL is a Florida non-profit corporation which purchases residential real estate within the state of Florida and rents the homes at affordable rates to individuals with low to moderate income and one or more developmental disabilities. The largest portion of funding for the real estate purchases comes from various municipalities. The Manor and CASL have common board membership and share a common purpose. Basis of Consolidation: The consolidated financial statements include the accounts of the Manor and its wholly owned subsidiary, CASL, collectively, the Organization. All significant inter-company balances and transactions have been eliminated in consolidation. Basis of Presentation: The accompanying consolidated financial statements are presented on the accrual basis of accounting. Net assets, revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Organization and changes therein are classified and reported as follows: Unrestricted net assets are not subject to donor-imposed stipulations, or the donor-imposed restrictions have expired. Unrestricted net assets may be designated for specific purposes by the action of the Board of Directors, or may otherwise be limited by contractual agreements with outside parties. Temporarily restricted net assets are subject to donor-imposed stipulations that can be fulfilled by actions of the Organization pursuant to those stipulations or that expire by the passage of time. The Organization has no temporarily restricted net assets. Permanently restricted net assets are subject to donor-imposed stipulations that the assets be maintained permanently by the Organization. The Organization has no permanently restricted net assets. -6-

9 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Use of Estimates: The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Contributions: The Organization records contributions received as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Support that is restricted by a donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets depending on the nature of the restriction. When the restrictions expire, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statement of activities as net assets released from restriction. Non-cash contributions are recorded at fair market value at the time of donation. A loss is recognized if the fair market value of the donated property is less than the associated deferred mortgage. Contributions of cash restricted for the purpose of acquiring or constructing long-lived assets are recorded as temporarily restricted net assets until the long lived asset is acquired or constructed, at which time the net assets are released from restriction and reclassified to unrestricted net assets. Beneficial Interest in Assets Held by Others: The Organization holds investments with the Community Foundation of Sarasota County, Inc. and the Gulf Coast Community Foundation, Inc. (the Foundations ). These funds are held by the Foundations for the benefit of the Organization. The Foundations have been granted variance power. The Organization may receive distributions of investment earnings of these dollars, based on the results of the pooled funds held at both of the Foundations. If the Organization elects not to receive the earnings distributions, the distributions will be applied to the principal of the funds. The Organization may make requests for other distributions from the funds, which are subject to approval by the Board of Directors of the Foundations. Accounts Receivable: The Organization bills for program services provided to clients, and the Organization is reimbursed by its various funding sources. None of the accounts receivable at December 31, 2015 are deemed to be uncollectible. Therefore, no provision for uncollectible accounts has been made in the accompanying consolidated financial statements. -7-

10 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Equipment: Property and equipment are stated at cost. Donated property and equipment are recorded at their estimated fair value on the date of contribution. All acquisitions of property and equipment in excess of $500 are capitalized. Disbursements for repairs and maintenance are charged to expense. Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows: Buildings and improvements Furnishings and equipment Vehicles 5-30 years 4-10 years 5-7 years Loan Costs: Loan costs are amortized ratably over the life of the loan. Amortization expense for the year ended December 31, 2015 was $10. Note Receivable: The Organization has a note receivable from a non-profit organization with no stated interest rate or repayment term. The collectability of the loan is reviewed periodically, and the loan is carried at its estimated collectible amount. Income Taxes: The Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. In addition, the Organization qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an organization that is not a private foundation under Section 509(a)(2). Allocation of Expenses: The costs of providing the Organization s various programs and supporting services have been reported on a functional basis in the consolidated statement of activities and in the consolidated schedule of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services based on estimates made by management. Subsequent Events: Management has evaluated subsequent events through June 22, 2016, which is the date the consolidated financial statements were available to be issued. -8-

11 NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment consists of the following: Land $ 1,921,630 Buildings and improvements 10,349,635 Furnishings and equipment 308,983 Vehicles 442,551 13,022,799 Less accumulated depreciation 3,212,727 $ 9,810,072 Depreciation expense was $452,866 for the year ended December 31, NOTE 3 - FAIR VALUE MEASUREMENT Accounting Standards Codification ( ASC ) 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The guidance establishes a fair value hierarchy about the assumptions used to measure fair value and clarifies assumptions about risk and the effect of a restriction on the sale or use of an asset. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. -9-

12 NOTE 3 - FAIR VALUE MEASUREMENT (Continued) Three levels of inputs may be used to measure fair value: Level 1: Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a company s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The financial instrument s fair value measurement within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The fair value of the beneficial interest in assets held by others is based on the fair values of the underlying investments as reported by the Foundations that manage the funds (see Note 6). The following table presents the financial instruments carried at fair value as of December 31, 2015 reported in beneficial interest in assets held by others on the consolidated statement of financial position and by ASC 820 valuation hierarchy (as described above): Total Level 1 Level 2 Level 3 Beneficial interest in assets held by others $ 98,021 $ - $ 98,021 $

13 NOTE 4 - LONG-TERM DEBT Long-term debt consists of the following: Note payable to bank bearing interest at 4.25%, secured by property, matures in December 2018 $ 81,600 Note payable to non-profit organization, interest at 2.61%, secured by property, matures in September ,000 Notes payable to bank and finance companies bearing interest up to 8.95%, secured by vehicles, maturities through October ,787 Mortgages payable to various municipalities pursuant to the State Housing Initiative Program, non-interest bearing, principal to be forgiven 2016 through 2035, secured by properties 6,666,162 Mortgage payable to municipality, non-interest bearing, principal to be paid October 2040, secured by property 185,000 Mortgages payable to Florida Housing Finance Corporation, non-interest bearing, remaining principal to be paid upon maturity, maturities through 2038, secured by properties 472,207 7,761,756 Less current maturities 135,505 $ 7,626,

14 NOTE 4 - LONG-TERM DEBT (Continued) The future scheduled maturities of long-term debt are as follows: 2016 $ 135, , , , ,749 Thereafter 5,922,916 $ 7,761,756 In conjunction with facility acquisitions, the Organization received the following deferred payment purchase money mortgages from Manatee County, Alachua County, Collier County, Lee County, Sarasota County, the City of Cape Coral and the City of Sarasota: Property Location Maturity Date Amount th Street June 2027 $ 195,000 Fundy Road July ,334 Sevilla Street October ,119 San Souci Drive #1 February ,543 San Souci Drive #2 October ,000 Broadway #1 August ,109 Broadway #2 June ,500 Broadway #3 April ,219,992 SW 2nd Court January ,000 Nutmeg Avenue May ,381 Center Road September ,291 Danley Drive September ,879 Sunshine Boulevard June ,569 Santa Barbara Boulevard July ,569 Velarde Lane May ,885 Sea Grape Road May ,795 Chisholm Drive May ,986 Waterside Lane May ,334 Duncanwood Place December ,

15 NOTE 4 - LONG-TERM DEBT (Continued) Property Location Maturity Date Amount Duncanwood Place June ,851 Beneva Road #203 March ,502 Pauma Court April ,800 Prudence Drive May ,146 Tamisola Street May ,595 Java Plum Avenue May ,740 Tamisola Street June ,000 Glen Oak Road June ,195 60th Avenue Terrace West Indefinite 70,000 27th Street West Indefinite 70,000 59th Avenue West, #4037 Indefinite 70,000 Live Oak Circle Indefinite 46,581 Novus Court May ,580 Mohawk Road August ,556 Ramblewood Circle March ,796 Indus Road August ,464 Hidden Lake Boulevard March ,456 Swift Road March ,267 59th Avenue West #4149 Indefinite 80,000 Tarpon Avenue February ,027 Beneva Road, #104 June ,475 Colonial Oaks Boulevard June ,942 Scarlet Oaks Court June , th Terr SW February , th Terr SW February ,764 Albee Road May ,724 Various June ,782 $ 6,666,

16 NOTE 4 - LONG-TERM DEBT (Continued) Repayment of these loans is deferred until the maturity date specified, as long as the Organization continues to use the properties for activities stipulated in the individual contracts. During the deferment period, these loans do not accrue interest. If the Organization operates the applicable facility in accordance with the agreement, the debt is forgiven and contribution income is recognized upon maturity. During the year ended December 31, 2015 the mortgage associated with 3109 NW 75 th Terrace matured and $75,000 was recognized as contribution income. The Broadway #2 mortgage is forgiven ratably over the ten-year life of the mortgage. Contribution income was recognized in the amount of $75,000 for the portion of the long-term debt forgiven during the year ended December 31, NOTE 5 - GRANTS AND CONTRACTS The Organization receives a significant portion of its revenues from various grants and contracts. The following is a summary of the amounts received during the year ended December 31, 2015: Lee County $ 168,905 Sarasota County 144,371 Central Florida Behavioral Health Network 324,263 State of Florida 375,772 U.S. Department of Housing and Urban Development 231,858 $ 1,245,169 NOTE 6 - ENDOWMENTS The Board of Directors of the Organization has designated the funds held by the two Foundations (see Notes 1 and 3) to function as an endowment (quasi-endowment). As required by accounting principles generally accepted in the United States of America, net assets associated with endowment funds, including quasi-endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. Interpretation of Relevant Laws: The Board of Directors of the Organization has interpreted the Florida Uniform Management of Institutional Funds Act ( FUMIFA ) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted or board designated endowment funds absent explicit donor stipulations to the contrary. -14-

17 NOTE 6 - ENDOWMENTS (Continued) As of December 31, 2015, endowment net assets consisted of the following: Unrestricted Temporarily Restricted Permanently Restricted Total Board designated quasi-endowment funds $ 98,021 $ - $ - $ 98,021 Changes in the endowment net assets for the year ended December 31, 2015 are as follows: Unrestricted Temporarily Restricted Permanently Restricted Total Endowment net assets, January 1, 2015 $ 247,223 $ - $ - $ 247,223 Endowment investment return: Interest and dividends 3, ,145 Realized and unrealized gains (504) - - (504) Investment fees (560) - - (560) Total endowment investment return 2, ,081 Distributions (151,283) - - (151,283) Endowment net assets, December 31, 2015 $ 98,021 $ - $ - $ 98,021 Return Objectives and Risk Parameters: Because the quasi-endowment funds are held at the Foundations and the funds will be invested according to each of the Foundations policies, the Organization has indirectly established an investment policy for endowment assets. The policy attempts to provide a predictable stream of funding to programs supported by its endowments while seeking to maintain the purchasing power of the endowment assets. The endowment assets held at the Community Foundation of Sarasota County, Inc. are invested in a manner that is intended to produce a long-term rate of return on assets of at least 8% while assuming a moderate level of investment risk. Additionally, the endowment assets held at Gulf Coast Community Foundation, Inc. are invested in a manner that is intended to produce a long-term rate of return on assets of at least 5% while assuming a moderate level of investment risk. Actual returns in any given year may vary from this amount. -15-

18 NOTE 6 - ENDOWMENTS (Continued) Strategies Employed for Achieving Objectives: To satisfy their long-term rate-of-return objectives, the Foundations rely on a total return strategy in which returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundations target a diversified asset allocation that places a greater emphasis on equity-based investments to achieve long-term return objectives within prudent risk constraints. Spending Policy: The Community Foundation of Sarasota County, Inc. has a fixed percentage payout policy which attempts to provide donors and grantees with projected income while still preserving the original gift. No formal spending policy has been established at Gulf Coast Community Foundation, Inc. NOTE 7 - CONCENTRATION OF ACCOUNTS RECEIVABLE - MAJOR CUSTOMERS The Organization s customer base consists of a diverse mix of residential customers and governmental entities. At December 31, 2015, amounts due from six major customers comprised 78% of total accounts receivable. NOTE 8 - RELATED PARTIES The Organization leases the facility located at th Street in Sarasota from the Executive Director and his spouse under a month-to-month lease. Total rent expense under this lease amounted to $60,948 for the year ended December 31, At December 31, 2015, the Organization had an outstanding loan due from the Executive Director in the amount of $87,015. The loan has no stated repayment terms. Accounts payable as of December 31, 2015 include $11,587 due to the Executive Director. The Organization has been granted use of various facilities under a verbal agreement with an entity managed by the Executive Director. The Organization has recognized contributions and a corresponding rent expense based on the fair market rental value of donated facilities. The amount of donated rent recognized during the year ended December 31, 2015 is $87,084. A member of the Board of Directors holds a key position with a vendor used by the Organization. Total expenditures paid to this vendor were $13,666 for the year ended December 31, Accounts payable totaled $1,911 at December 31,

19 SUPPLEMENTARY INFORMATION

20 CONSOLIDATED SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED Program General and Services Administration Fundraising Total Advertising $ 2,809 $ 496 $ - $ 3,305 Association fees 54, ,114 Bad debt expense 12, ,720 Bank charges 2,663 3,064-5,727 Cable television 9, ,827 Depreciation and amortization 412,117 33,966 6, ,876 Food in facilities 94, ,412 Fringe benefits 21,372 6, ,121 Grant fees Insurance 102,063 8,412 1, ,157 Interest 67,138 22,379-89,517 Investment expense Legal fees 20,673 6,528-27,201 Licenses and permits 4, ,072 Miscellaneous 4, ,229 Office supplies 26,760 9,696 2,327 38,783 Other equipment 15, ,232 Other payroll expenses 135,931 10,673 1, ,235 Postage and delivery 1, ,412 Professional fees 115, ,060 12, ,196 Property taxes 52,204 7,119-59,323 Rent 165,216 13,536 6, ,427 Repairs and maintenance 256,348 19, ,643 Salaries-management and administrative 326,221 76,259 21, ,663 Supplies 9, ,638 Telephone 12,396 4, ,708 Travel and meals 3, ,569 Utilities 218,029 9,278 4, ,946 Vehicle expense 52,412 9,301 6,178 67,891 Wages 889,504 37, ,567 $ 3,089,520 $ 501,498 $ 65,364 $ 3,656,