National Headquarters of Myasthenia Gravis Foundation of America, Inc. Independent Auditor s Report. December 31, 2006

Transcription

1 Independent Auditor s Report December 31, 2006

2 TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR S REPORT 1 STATEMENT OF FINANCIAL POSITION 2 STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETS 3 STATEMENT OF FUNCTIONAL EXPENSES 4 STATEMENT OF CASH FLOWS 5 NOTES TO FINANCIAL STATEMENTS 6-11 SUPPORTING SCHEDULE OF PROGRAM EXPENSES 12

3 Board of Directors National Headquarters of St. Paul, MN INDEPENDENT AUDITOR S REPORT We have audited the accompanying statement of financial position of the National Headquarters of (a not for profit corporation) as of December 31, 2006, and the related statements of activities and change in net assets, functional expenses, cash flows, and supporting schedule of program expenses for the year then ended. These financial statements are the responsibility of the Foundation s management. Our responsibility is to express an opinion on these financial statements based on our audit. Information for the year ended December 31, 2005 is presented for comparative purposes only and was extracted from the financial statements presented by fund for that year, on which an unqualified opinion dated February 28, 2006 was expressed. 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 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 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 the National Headquarters of as of December 31, 2006 and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. March 24,

4 Statement of Financial Position (with comparative totals as of December 31, 2005) Unrestricted Temporarily Permanently 2006 Total All Funds 2005 Memo Total All Funds Assets Cash and Cash Equivalents $ 609,453 $ 462,490 $ 130,323 $ 1,202,266 $ 910,433 Investments - 349, , ,440 Bequests Receivable 163,092-3,563,430 3,726,522 - Assessments Receivable from Affiliated Organizations - 21,835-21,835 39,476 Less: Allowance for Uncollectible Assessments - (17,000) - (17,000) (19,500) Unconditional Promises to Give 12,637 18,000-30,637 - Accounts Receivable ,577 Inventory 10, ,102 33,309 Prepaid Expenses 10, ,513 12,858 Total Assets $ 805,797 $ 834,496 $ 3,693,753 $ 5,334,046 $ 1,305,593 Liabilities and Net Assets Liabilities Accounts Payable $ 39,300 $ - $ - $ 39,300 $ 24,714 Fellowships Payable - 100, ,000 25,000 Deferred Revenue 10, ,500 - Interfund Payable 3,495 20,786 (24,281) - - Total Current Liabilities 53, ,786 (24,281) 149,800 49,714 Net Assets Beginning Net Assets 513, ,384 3,731 1,255, ,894 Change in Net Assets 238,739 (24,675) 3,714,303 3,928, ,985 Ending Net Assets 752, ,709 3,718,034 5,184,246 1,255,879 Total Liabilities and Net Assets $ 805,797 $ 834,496 $ 3,693,753 $ 5,334,046 $ 1,305,593 2

5 Statement Activities and Change in Net Assets (with comparative totals for the Year Ending December 31, 2005) Unrestricted Temporarily Permanently 2006 Total All Funds 2005 Memo Total All Funds Public Support and Revenue Public Support: Individuals $ 128,495 $ 15,090 $ 20,000 $ 163,585 $ 122,736 Corporations 33,573 11,600-45, ,927 Foundations 15, , ,672 Board 5, ,997 6,630 Legacies 413,192-3,693,320 4,106,512 87,503 Chapters 6, , , ,578 Public Agencies 47, ,108 50,207 Total Public Support 649, ,295 3,713,320 4,536, ,253 Revenue: Merchandise 4, ,431 6,768 Meetings and Conventions 26,432 2,030-28,462 32,307 Other ,184 Investment Income (Loss) 55, ,824 31,962 Total Revenue 86,704 2, ,717 81,221 Net Assets Released from Restrictions 200,000 (200,000) Total Support and Revenue 936,384 (24,675) 3,714,303 4,626, ,474 Expenses Program Expenses: Patient Services 110, , ,001 Annual Meeting 56,212 56,212 36,311 Scientific Session 3,125 3,125 5,489 Chapter Development 127, ,671 38,543 Public Information 18,894 18,894 6,048 Medical Advisory Board 12,107 12,107 1,310 Research 200, ,824 59,830 Total Program Expenses 529, , ,532 Supporting Services: Management and General 132, ,177 84,723 Fund Raising 35,764 35,764 33,234 Total Supporting Services Expenses 167, , ,957 Total Expenses 697, , ,489 Change in Net Assets $ 238,739 $ (24,675) $ 3,714,303 $ 3,928,367 $ 364,985 3

6 Statement of Functional Expenses (with comparative totals for the Year Ending December 31, 2005) Program Services Fund Raising Management 2006 Total 2005 Memo Total Research Funding $ 200,000 $ - $ - $ 200,000 $ 59,200 Management Fees 176,814 18,388 74, , ,588 Meeting Expenses 50,725-1,636 52,362 31,482 Printing and Copying 51,686 5,459 4,056 61,202 31,725 Postage and Shipping 11,556 9,380 1,095 22,031 30,599 Audit and Accounting ,527 22,527 10,371 Legal - - 7,659 7,659 4,449 Insurance 18,853-2,993 21,846 25,776 Supplies 3, ,180 5,043 Advertising ,325 Professional Services Bad Debt Contributions to Affiliates 9, ,695 11,869 Chapter Services 2, , Travel 2,730-1,891 4,621 6,781 Publications ,824 Office Supplies , Telephone 1, ,775 4,171 2,444 Registrations and Licenses - 2,258 5,330 7,588 3,403 Bank and Credit Card Fees - - 5,850 5,850 3,820 Other Total Expenses $ 529,704 $ 35,764 $ 132,177 $ 697,645 $ 452,489 4

7 Statement of Cash Flows (with comparative totals for the Year Ending December 31, 2005) Unrestricted Temporarily Permanently 2006 Total All Funds 2005 Total All Funds Operating Activities Change in Net Assets $ 238,739 $ (24,675) $ 3,714,303 $ 3,928,367 $ 364,985 Noncash items Included Above: Donation of Securities (1,505) Unrealized Market Gain - (31,966) - (31,966) (18,103) Changes in: Bequests Receivable (163,092) - (3,563,430) (3,726,522) - Accounts Receivable (19,343) Assessments Receivable ,223-17,642 (13,892) Allow. for Uncollectible Assessments - (2,500) - (2,500) 9,108 Unconditional Promises to Give 6,941 (18,000) - (11,059) - Inventory 23, ,207 (26,723) Prepaid Expenses 2, ,344 (11,746) Security Deposits (3,249) Accounts Payable 14, ,585 6,210 Fellowships Payable - 75,000-75,000 (12,500) Deferred Revenue 10, ,500 - Net Cash Provided by Operating Activities 133,643 15, , , ,242 Financing Activities Change in Interfund Balance (72,642) 93,192 (20,550) - - Net Cash Provided By Financing Activities (72,642) 93,192 (20,550) - - Investing Activities (Purchase) of Investments - (9,328) - (9,328) (289,700) Proceeds from Sale of Investments - 1,563-1,563 29,924 Net Cash Provided By Investing Activities - (7,765) - (7,765) (259,776) Net Increase (Decrease) in Cash 61, , , ,833 13,466 Beginning Cash Balance 548, , , ,967 Ending Cash Balance $ 609,453 $ 462,490 $ 130,323 $ 1,202,266 $ 910,433 5

8 Notes to the Financial Statements NOTE A Nature of Activities and Summary of Significant Accounting Policies The National Headquarters of (MGFA) is the national headquarters of a national not-for-profit organization whose purpose is to find a cure for Myasthenia Gravis and related disorders of the neuromuscular junction, and to improve the lives of all people affected, through programs of medical research, patient care, patient services, professional education, and public information. The following is a summary of the significant accounting principles of MGFA: Basis of Accounting: Assets, liabilities, revenue and expenses are recognized on the accrual basis of accounting using unrestricted, temporarily restricted and permanently restricted funds. Cash and Cash Equivalents: Cash and cash equivalents consist of funds on deposit in checking and money market accounts. All highly liquid investments with a maturity of less than one month are considered cash equivalents for purposes of the statement of cash flows. Inventory: Inventory, consisting primarily of resalable educational publications, is stated at the lower of cost or market value. Cost is determined by the first-in, first-out (FIFO) method. Income Taxes: MGFA has been determined to be exempt from income tax under Section 501(c)(3) of the Internal Revenue Code as a publicly supported not for profit voluntary health agency, and accordingly, no provision has been made for either federal or state income taxes. MGFA s annual information return is subject to examination for the statutory period. In addition, MGFA has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509(a) of the code. Contributions: All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Chapter Affiliates: These financial statements only report on the financial activities of the National Headquarters and do not include any of the chapter affiliates of Refer to Note I - Related Parties. 6

9 Notes to the Financial Statements NOTE A - Nature of Activities and Summary of Significant Accounting Policies - Continued Alllowance for Bad Debt: Assessments receivable are periodically evaluated for collectibility based upon length of time outstanding and financial condition of the particular chapter. Waivers and write-offs of assessments require the approval of the general membership. Donated Services: In accordance with SFAS 116, the estimated fair value of specialized donated services is reported as support and expense in the period in which the services were incurred and amounted to $7,659 for the year ended December 31, The donated services consist of legal services. No amounts have been reflected in the accompanying statements for donated services of an unspecialized nature although a substantial number of volunteers have donated significant amounts of their time to the Foundation s program services, administration and fundraising efforts. Fellowships Payable: Research fellowships are recorded as a payable and an expense at the time the fellowship is awarded to specific recipients. The fellowships are generally of a one year duration and paid within two years of approval. Following is a schedule of activity of fellowships payable and expense: Payable Expense Fellowships payable at Dec. 31, 2005 $ 25,000 n/a Research funding awarded in , ,000 Cash disbursements of research funding (125,000) n/a Fellowships payable at Dec. 31, 2006 $ 100,000 $ 200,000 Functional Expenses: Direct functional expenses have been classified according to the specifically identified purpose of expenditure. Indirect functional expenses have been allocated between program services and supporting services based on an analysis of personnel time. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 7

10 Notes to the Financial Statements NOTE B Unconditional Promises to Give The entire balance of Unconditional Promises to Give is expected to be received in the year There is no allowance for uncollectible contributions. NOTE C - Investments Investments, reported at market value, as of December 31, 2006 consist of the following: Unrestricted Temporarily Permanently US Equities $ - $ 189,971 $ - International Equities - 68,428 - Fixed Income - 90,772 - Total $ - $ 349,171 $ - Investment income (loss) for the year ending December 31, 2006 consists of the following: Unrestricted Temporarily Permanently Interest and dividends $ 19,067 $ - $ 983 Unrealized market gain 32, Realized market gain 4, Total $ 55,841 $ - $ 983 NOTE D - Management Contract Effective January 1, 2006 the Board of Directors agreed to a one year contract for management services which include administration of the National Headquarters, financial management, staffing, meeting planning, meeting services, patient services, fundraising, chapter services and public relations. This agreement expired on December 31, 2006 and a new contract is being negotiated. For the year 2006, payments made for management services totaled $269,550. 8

11 Notes to the Financial Statements NOTE E - Temporarily Funds Temporarily restricted funds represent gifts, bequests, chapter assessments or other receipts that can be used only for specific purposes as determined by the donor. The majority of temporarily restricted proceeds are restricted to support research endeavors. The Research and Grants Committee reviews proposals submitted by researchers and recommend projects to the Board of Directors for awarding of Postdoctoral fellowships. In addition, restricted funds are received for medical student fellowships and nurses fellowships. The postdoctoral fellowships are $50,000 each, student fellowships are $3,000 each and nurse fellowships are generally under $3,000 each. The temporarily restricted net assets as of December 31, 2006 are restricted for the following purposes: Research Funding $ 296,901 Continuing Medical Education 277,750 National Study of MG Patients 51,790 California 2,000 Literature 8,166 Nurses and Doctors Manual 33,772 Annual Meeting Scholarship 1,150 International Conference 2,180 Patient Related Programs 40,000 Total $ 713,709 NOTE F - Permanently Funds Permanently restricted funds represent endowments for which the corpus is held in perpetuity. The permanently restricted net assets as of December 31, 2006 are restricted for the following purposes: David Cummings Research Endowment $ 3,693,753 MGFA Research Endowment 24,281 Total $ 3,718,034 9

12 Notes to the Financial Statements NOTE F - Permanently Funds (continued) Distributions from the David Cummings Research Endowment are restricted for the purpose of funding research relating to the cause and/or cure of myasthenia gravis. Such distributions are limited on an annual basis to 5% of the average net fair market value and can begin once the funds are completely transferred to MGFA which is expected to occur during the year The David Cummings Research Endowment assets may be pooled only with other endowment assets, provided that the Cummings endowment assets are clearly calculable. NOTE G - Concentration Risks Bequests receivable include $3,563,430 from one estate. For the year ended December 31, 2006, MGFA received 99% of is permanently restricted public support from one bequest and 26% and 17% of its unrestricted public support and revenue from two bequests respectively. At December 31, 2006, cash on deposit at two financial institutions totaled $464,316 and $733,681 respectively, of which $100,000 is insured by Federal Deposit Insurance Corporation at each institution. NOTE H Significant Estimate The bequest receivable from the David Cummings estate in the amount of $3,563,430 has been estimated based upon information provided by the trustee for the estate. It is reasonably possible that this estimate could change in the near term and the change might be material. NOTE I - Related Parties Assessments and contributions are received from affiliated chapters. For 2006, these contributions and assessments totaled $152,751. As of December 31, 2006, contributions and assessments totaling $39,833 were due to MGFA. In addition, MGFA paid $9,695 to affiliated chapters, which represents a percentage of funds received from the Combined Federal Campaign. 10

13 Notes to the Financial Statements NOTE I - Related Parties (continued) A fellowship grant, totaling $50,000, was awarded to a student of a professor who is a member of the Foundation s Medical/Scientific Advisory Board. 11

14 Supporting Schedule of Program Expenses Patient Services Annual Meeting Scientific Session Chapter Development Public Information Medical Advisory Board Research Total Program Services Research Funding $ - $ - $ - $ - $ - $ - $ 200,000 $ 200,000 Management Fees 87, , ,814 Meeting Expenses - 48, ,481-50,725 Printing and Copying 16,833 2, ,239 15,725 10, ,686 Postage and Shipping 4,312 1, ,162 1, ,556 Insurance , ,853 Supplies , ,082 Advertising Contributions to Affiliates , ,695 Chapter Services , ,156 Travel - 1, ,730 Office Supplies Telephone 1, ,392 Other Total Expenses $ 110,871 $ 56,212 $ 3,125 $ 127,671 $ 18,894 $ 12,107 $ 200,824 $ 529,704 12