GIRL SCOUTS OF NORTHERN ILLINOIS FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR S REPORT. For the Year Ended September 30, 2015

Transcription

1 FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR S REPORT For the Year Ended September 30, 2015

2 GIRLS SCOUTS OF NORTHERN ILLINOIS TABLE OF CONTENTS Page(s) INDEPENDENT AUDITOR S REPORT FINANCIAL STATEMENTS Statement of Financial Position... 5 Statement of Activities... 6 Statement of Functional Expenses... 7 Statement of Cash Flows... 8 Notes to Financial Statements

3 INDEPENDENT AUDITOR S REPORT Board of Directors Girl Scouts of Northern Illinois Sugar Grove, Illinois We have audited the accompanying financial statements of Girl Scouts of Northern Illinois (the Council), which comprise the statement of financial position as of September 30, 2015, and the related statements of activities, functional expenses, 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. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of United for Youth, NFP, the interest in net assets of which, as discussed in Note 5 to the financial statements, is accounted for by the equity method of accounting. The interest in net assets of United for Youth, NFP was $1,722,106 as of December 31, 2015, and the change in interest in net assets of United for Youth, NFP was $33,580 for the year then ended. The financial statements of United for Youth, NFP were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for United for Youth, NFP is based solely on the report of the other auditors. 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 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. 3

4 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 Girl Scouts of Northern Illinois as of September 30, 2015, 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. Emphasis of Matter As discussed in Note 19 to the financial statements, the 2014 financial statements have been restated to correct the interest in the net assets of United for Youth, NFP and an asset retirement obligation. Our opinion is not modified with respect to that matter. Naperville, Illinois March 1,

5 FINANCIAL STATEMENTS

6 STATEMENT OF FINANCIAL POSITION September 30, 2015 ASSETS CURRENT ASSETS Cash and cash equivalents $ 246,483 Accounts receivable, net 124,275 Pledges receivable, net 28,102 Inventories 274,813 Prepaid expenses 100,618 Investments 3,592,559 Land held for sale 435,000 Total current assets 4,801,850 NONCURRENT ASSETS Pledges receivable, net 15,009 Interest in net assets of United for Youth, NFP 1,722,106 Land, buildings, and equipment, net 4,690,502 Beneficial interests in trusts 597,532 Endowment investments 360,865 Total noncurrent assets 7,386,014 TOTAL ASSETS $ 12,187,864 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 109,472 Accrued liabilities 387,237 Line of credit 350,000 Asset retirement obligation 29,500 Total liabilities 876,209 NET ASSETS Unrestricted 10,109,022 Temporarily restricted 428,198 Permanently restricted 774,435 Total net assets 11,311,655 TOTAL LIABILITIES AND NET ASSETS $ 12,187,864 See accompanying notes to financial statements. 5

7 STATEMENT OF ACTIVITIES For the Year Ended September 30, 2015 Temporarily Permanently Unrestricted Restricted Restricted Total PUBLIC SUPPORT Grants $ 124,575 $ 153,571 $ $ 278,146 Contributions 76,619 5,000 81,619 Inkind contributions 89,590 89,590 Other special events 26,354 26,354 Total public support 317, ,571 5, ,709 PROGRAM REVENUE Net cookie sales 3,611,090 3,611,090 Net fall product sales 219, ,592 Net merchandise sales 265, ,812 Program services fees 234, ,082 Total program revenue 4,330,576 4,330,576 OTHER REVENUE Investment return 16,156 (11,632) 4,524 Change in value of beneficial interests in trusts 7,558 (21,385) (13,827) Change in interest in net assets of United for Youth, NFP 33,580 33,580 Gain on timber sales 321, ,235 Other income 91,676 91,676 Total other revenue 462,647 (4,074) (21,385) 437,188 Net assets released from restrictions Satisfaction of donor restrictions 186,274 (186,274) Total public support and revenue 5,296,635 (36,777) (16,385) 5,243,473 EXPENSES AND LOSSES Program services 4,510,264 4,510,264 Management and general 1,054,518 1,054,518 Fundraising 400, ,063 Total expenses and losses 5,964,845 5,964,845 CHANGE IN NET ASSETS (668,210) (36,777) (16,385) (721,372) NET ASSETS, BEGINNING OF YEAR, BEFORE RESTATEMENT 9,117, , ,820 10,373,116 RESTATEMENT OF NET ASSETS 1,659,911 1,659,911 NET ASSETS, BEGINNING OF YEAR, AFTER RESTATEMENT 10,777, , ,820 12,033,027 NET ASSETS, END OF PERIOD $ 10,109,022 $ 428,198 $ 774,435 $ 11,311,655 See accompanying notes to financial statements. 6

8 STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended September 30, Supporting Services Program Management Services and General Fundraising Total EMPLOYEE EXPENSES Salaries $ 1,983,219 $ 449,824 $ 193,481 $ 2,626,524 Payroll taxes 162,567 38,544 16, ,689 Employee benefits 560, ,876 55, ,538 Total employee expenses 2,706, , ,463 3,568,751 OTHER EXPENSES Professional service fees 152,015 83,809 4, ,140 Assistance to members 86,331 86,331 Supplies 396,330 6,897 8, ,640 Program events 32,337 32,337 Telephone 86,338 21, ,903 Postage and shipping 21,627 5,240 17,797 44,664 Occupancy 191,728 77,198 15, ,890 Repairs and maintenance 114,237 15,477 9, ,202 Equipment 47,801 9,601 14,460 71,862 Travel 126,236 14,372 7, ,330 Printing and publications 33,999 93,282 3, ,647 Insurance 114,225 28,411 2, ,081 Depreciation 321,485 62,339 40, ,899 Interest 39,554 7,691 4,944 52,189 Bank service charges 20,932 4,070 2,617 27,619 Training and education 12,629 21,235 1,666 35,530 Other 6,416 6,087 1,327 13,830 Total other expenses 1,804, , ,600 2,396,094 Total expenses before cost of sales 4,510,264 1,054, ,063 5,964,845 COST OF SALES Product cost 2,215,030 2,215,030 Troop commissions 1,132,182 1,132,182 Total cost of sales 3,347,212 3,347,212 TOTAL FUNCTIONAL EXPENSES $ 7,857,476 $ 1,054,518 $ 400,063 $ 9,312,057 See accompanying notes to financials statements. 7

9 STATEMENT OF CASH FLOWS For the Year Ended September 30, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (721,372) Adjustments to reconcile change in net assets to cash from operating activities Depreciation 423,899 Gain on timber sales (321,235) Contributions restricted for longterm purposes (5,000) Change in value of beneficial interests in trusts 13,827 Change in value of interest in United for Youth, NFP (33,580) Unrealized loss on investments 363,022 Realized gain on sale of investments (262,821) (Increase) decrease in Accounts receivable 13,320 Pledges receivable 21,095 Inventories 27,609 Prepaid expenses 23,866 Increase (decrease) in Accounts payable (89,380) Accrued liabilities 67,547 Total adjustments 242,169 Net cash from operating activities (479,203) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (4,950,154) Proceeds from sale of investments 6,930,429 Equity contribution to United for Youth, NFP (100,000) Purchases of land, buildings, and equipment (144,264) Proceeds from timber sales 337,496 Distributions from beneficial interests in trusts 14,368 Net cash from investing activities 2,087,875 CASH FLOWS FROM FINANCING ACTIVITIES Contributions restricted for longterm purposes 5,000 Proceeds from line of credit 1,595,000 Payments on line of credit (3,000,000) Net cash from financing activities (1,400,000) NET INCREASE IN CASH AND CASH EQUIVALENTS 208,672 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 37,811 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 246,483 SUPPLEMENTAL INFORMATION TO CASH FLOWS Cash paid during the year for interest $ 52,189 See accompanying notes to financial statements. 8

10 NOTES TO FINANCIAL STATEMENTS September 30, NATURE OF ACTIVITIES Girl Scouts of Northern Illinois (the Council) is a notforprofit organization with a mission of building girls of courage, confidence, and character, who make the world a better place. The Council provides the Girl Scout leadership experience for girls ages 517 residing within its jurisdiction, with service centers in Elgin, Freeport, Rock Falls, Rockford, and Sugar Grove, Illinois. As an organization exclusively devoted to the Girl Scout movement, the Council has been issued a Girl Scout Council charter by Girl Scouts of the USA (GSUSA), granting it the right to develop, manage, and maintain Girl Scouting in a specified area of jurisdiction, which is established by the National Board of Directors of GSUSA, and to call itself a Girl Scout Council. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents Cash and cash equivalents are defined as currency on hand, demand deposits, and highly liquid investments with original maturities of three months or less. Cash and cash equivalents of endowment funds held temporarily until suitable longterm investment opportunities are identified are included in the classification endowment investments. Accounts Receivable Accounts receivable are recorded at cost and consist of amounts owed to the organization for program service fees and grants that were awarded, but not yet paid. An allowance is provided based on historical collection experience, a review of the current status of receivables and management s judgment. Contributions All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. When donor restrictions expire, 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 statement of activities as net assets released from restrictions. Contributions whose restrictions are met in the same reporting period are recognized as unrestricted revenue. 9 1

11 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Unconditional Promises to Give Contributions are recognized when the donor makes a promise to give to the Council that is, in substance, unconditional. Unconditional promises to give that are receivable more than one year from their initial receipt are discounted to a net present value using an estimated riskadjusted rate of return. The estimated riskadjusted rate used for the fiscal year ended September 30, 2015 was 3%. Investments Gains and losses on investments and investment income are reported in the statement of activities as increases or decreases in unrestricted net assets unless their use is temporarily or permanently restricted by explicit donor stipulations or by law. Gains and investment income that are limited to specific uses by donorimposed restrictions are reported as increases in unrestricted net assets if the restrictions are met in the same reporting period as the gains and income are recognized. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible changes in the value of investment securities will occur in the near term and such change could be material in amount. Inventories Inventories are valued at the lower of cost or market using the firstin/firstout (FIFO) method and consist of supplies purchased for resale from GSUSA and other GSUSA licensed merchandise vendors. Land, Buildings, and Equipment Additions of land, buildings, and equipment in excess of $2,500 are recorded at cost if purchased or at fair market value as of the date donated. Depreciation is provided on the straightline method over the assets estimated useful lives. Contributions of property and equipment are recorded as unrestricted support, absent donor stipulations regarding how long the assets must be used. The following asset useful lives are used by the Council: 10 2 Years Buildings and improvements 2040 Equipment 315 Roads 40

12 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Asset Retirement Obligation The Council's asset retirement obligation primarily relates to the remediation of asbestos contained in a building the Council owns. Environmental regulations exist that require the Council to handle and dispose of asbestos in a special manner if a building undergoes major renovations or is demolished. Determination of the recorded liability is based on a number of estimates and assumptions, including discount rate, abatement cost estimates, and estimates of dates of abatement. Net Assets The Council classifies net assets as unrestricted, temporarily restricted, or permanently restricted. Unrestricted net assets of the Council are not subject to donorimposed stipulations. Temporarily restricted net assets of the Council are subject to donorimposed restrictions, either for a specific purpose or subject to the passage of time. Permanently restricted net assets are subject to donorimposed restrictions that neither expire by the passage of time nor can be fulfilled or otherwise removed by actions of the Council. Generally, the donors of these assets permit the Council to use all or a part of the income earned on related investments for general or specific purposes. Functional Allocation of Expenses Allocations of expenses to program, management and general, and fundraising are based on estimated time spent for compensation and benefits, specific cost when available for direct expenses, and management s estimates for allocable facilities and related costs by function. Use of Estimates The preparation of financial 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11 3

13 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes The Council is a notforprofit organization that is exempt from taxes under Section 501(c)(3) of the Internal Revenue Code. The Council is not classified as a private foundation. 3. ACCOUNTS RECEIVABLE The following summarizes accounts receivable as of September 30, 2015: Grants receivable $ 122,840 Accounts receivable 32,482 Allowance for doubtful accounts (31,047) TOTAL $ 124, UNCONDITIONAL PROMISES TO GIVE The following summarizes unconditional promises to give as of September 30, 2015: Receivable in less than one year $ 38,749 Allowance for uncollectible pledges (10,647) Current pledges receivable, net 28,102 Receivable in one to five years 27,097 Discount on promises to give (4,924) Allowance for uncollectible pledges (7,164) Longterm pledges receivable, net 15,009 TOTAL $ 43, INTEREST IN UNITED FOR YOUTH, NFP In 2007, the Council entered into a joint venture agreement with the Blackhawk Area Council of Boy Scouts of America (Boy Scouts), forming a new entity called United For Youth, NFP (UFY). The primary mission of UFY is to promote the collaborative planning, financing, constructing, and programming, of a shared facility for the mutual benefit of the Boy Scouts and the Council, their professional staffs, adult volunteers, and most importantly, the youth they serve. In connection with this agreement, the Council retains a 50% membership interest in UFY. The Council accounts for its interest in UFY using the equity method. 12 4

14 5. INTEREST IN UNITED FOR YOUTH, NFP (Continued) The following is a summary of the financial position and changes in net assets of UFY as of December 31, 2014, which is the most recent audited information available: Current assets $ 301,468 Noncurrent assets 3,199,406 TOTAL ASSETS $ 3,500,874 Liabilities $ 256,663 Unrestricted net assets 3,092,091 Temporarily restricted net assets 152,120 TOTAL LIABILITIES AND NET ASSETS $ 3,500,874 Total support and revenue $ 176,843 Total expenses (109,683) CHANGE IN NET ASSETS $ 67, INVESTMENTS AND FAIR VALUE MEASUREMENTS The Council follows the authoritative guidance issued by the Financial Accounting Standards Board (FASB) which defines fair value, establishes a framework for measuring fair value by providing a hierarchy used to classify the source of the information measuring fair value, and expands disclosures about fair value measurements. Assets and liabilities carried at fair value are classified and disclosed in one of the following categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market based inputs or unobservable inputs corroborated by market data. Level 3: Unobservable inputs not corroborated by market data. The fair value of investments in mutual funds is based on the net asset value of shares on the last trading day of the fiscal year. The fair value of investments in corporate and municipal bonds is estimated by a pricing service using inputs including yields currently available on comparable securities of issuers with similar credit ratings, recent market price quotations (where observable), bond spreads, and reference data. 13 5

15 6. INVESTMENTS AND FAIR VALUE MEASUREMENTS (Continued) The fair value of investments in equity securities, and other assets is based on quoted market prices in active markets. The fair value of the Council s beneficial interests in perpetual trusts is determined by using the Council s pro rata beneficial interest percentage of the total fair value of assets held by the trust as of the measurement date. The Council receives annual distributions from trusts held by third party trustees, but it will never receive the assets held in those trusts. The fair value of the Council s beneficial interests in nonperpetual trusts is measured as the present value of the payments expected to be received over the stated duration of the trusts. The fair value is remeasured at each fiscal year end, using updated interest rates and estimated cash flows to estimate fair value of the beneficial interests. At September 30, 2015 and 2014, the interest rate assumptions used were 5%, which is approximately equal to the expected return on the trust assets over their terms. Fair value measurements recorded on a recurring basis as of September 30, 2015 were as follows: Level 1 Level 2 Level 3 Total Investments Mutual funds $ 2,178,902 $ $ $ 2,178,902 Corporate and municipal bonds 1,229,663 1,229,663 Equity securities 534, ,173 Other assets (exchange traded) 10,686 10,686 Total investments 2,723,761 1,229,663 3,953,424 Beneficial interests in trusts 597, ,532 TOTAL FAIR VALUE MEASUREMENTS $ 2,723,761 $ 1,229,663 $ 597,532 $ 4,550,956 Changes in assets measured on a recurring basis using significant unobservable inputs (Level 3 inputs) for the year ended September 30, 2015 were as follows: BALANCE, SEPTEMBER 30, 2014 $ 625,727 Total gains (losses) (unrealized and realized) (13,827) Distributions (14,368) BALANCE, SEPTEMBER 30, 2015 $ 597,

16 6. INVESTMENTS AND FAIR VALUE MEASUREMENTS (Continued) Investment return for the year ended September 30, 2015 is as follows: Dividends and interest $ 152,825 Unrealized loss on investments (363,022) Realized gain on sale of investments 262,821 Investment fees (48,100) TOTAL $ 4, LAND, BUILDINGS, AND EQUIPMENT Land, buildings, and equipment and accumulated depreciation as of September 30, 2015 consist of the following: Land $ 1,840,089 Buildings and improvements 8,009,581 Equipment 2,063,601 Roads 720,432 12,633,703 Accumulated depreciation (7,943,201) TOTAL $ 4,690, BENEFICIAL INTERESTS IN TRUSTS The Council is a beneficiary of various charitable trusts. Beneficial interests in trusts as of September 30, 2015 are as follows: Annual payments of 5.56% of the trust s annual distributable income through the trust termination date of May 30, 2034, when the Council will receive its pro rata share of the trust s remaining principal. $ 13,266 Annual payments of 5.56% of the trust s annual distributable income and a $500 principal amount through the trust termination date of May 30, 2034, when the Council will receive its pro rata share of the trust s remaining principal. 37,433 Annual payments of 10% of the trust s annual distributable income through the trust termination date of March 10, 2026, at which time all trust assets are to be distributed to the principal beneficiary. 108,

17 8. BENEFICIAL INTERESTS IN TRUSTS (Continued) Annual payments of $500. Termination of the trust may, but need not, occur whenever the trustee determines the amount of income available for distribution to all beneficiaries is less than $25,000 annually. In the event the trust is terminated, the Council will receive its 1.69% pro rata share of the remaining trust principal. $ 24,947 Payments of 5% of the trust s annual distributable income in perpetuity. According to the trust agreement, pro rata payments are to be made at the discretion of the trustee, generally annually. 282,891 Payments of 5% of the trust s annual distributable income in perpetuity. According to the trust agreement, pro rata payments are to be made at the discretion of the trustee, generally annually. 76,678 Payments of 10% of the trust s annual distributable income in perpetuity. According to the trust agreement, pro rata payments are to be made at the discretion of the trustee, generally quarterly. 54,001 TOTAL $ 597,532 The Council has recorded a change in temporarily restricted net assets at September 30, 2015 representing the change in the present value of the estimated future cash flows over the remaining life of the non perpetual trusts. Distributions from perpetual trusts are included in the statement of activities as contributions. 9. LINE OF CREDIT The Council has an available revolving credit note with a bank dated April 15, 2015, in the amount of $3,000,000. Interest is payable monthly at the prime rate (3.25% as of September 30, 2015). The note matures on April 30, 2016, at which time the entire principal balance is due. There was an outstanding balance of $350,000 at September 30, The line of credit is collateralized by all of the Council s investment portfolio and substantially all other Council personal property and fixtures. The line is subject to various restrictive covenants, including a requirement to maintain a minimum of $4,500,000 of unrestricted cash and investments at March 31 and December 31 during the term of the agreement. The Council was in compliance with the restrictive covenants during the year ended September 30,

18 10. TEMPORARILY RESTRICTED NET ASSETS The Council had the following temporarily restricted net assets for time or specific purposes as of September 30, 2015: Time restrictions $ 102,257 Program restrictions 141,979 Beneficial interests in trusts 183,962 TOTAL $ 428, PERMANENTLY RESTRICTED NET ASSETS Net assets subject to donorimposed restrictions are required to be maintained permanently by the Council. The income associated with the permanently restricted net assets is available for the following purposes: Camperships $ 128,786 Gold Award scholarship 17,730 Financial assistance for girl events 8,605 Rent to UFY 55,000 General operations 564,314 TOTAL $ 774,435 Permanently restricted net assets at September 30, 2015 consist of the following: Investments $ 360,865 Beneficial interests in perpetual trusts 413,570 TOTAL $ 774, ENDOWMENT FUNDS The Council s endowment consists of individual funds established for a variety of purposes. Its endowment consists of donorrestricted funds. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donorimposed restrictions. The Council s management has interpreted the Illinois Uniform Prudent Management of Institutional Funds Act (IL UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donorrestricted endowment funds absent explicit donor stipulations to the contrary. 17 9

19 12. ENDOWMENT FUNDS (Continued) As a result of this interpretation, the Council classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donorrestricted endowment fund not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Council in a manner consistent with the standard of prudence prescribed by IL UPMIFA. In accordance with IL UPMIFA, the Council considers the following factors in making a determination to appropriate or accumulate donorrestricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donorrestricted endowment funds, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, (6) other resources of the Council, and (7) the Council s investment policies. Investment Return Objectives, Risk Parameters, and Strategies: The Council has adopted investment and spending policies, approved by the Board of Directors, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds. Endowment assets are invested in fixed income and equity mutual funds, exchangetraded real estate investment trusts, and exchangetraded commodities. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to not expose the fund to unacceptable levels of risk. Spending Policy: The Council has a policy of appropriating for distribution the current earnings on the funds. During the year ended September 30, 2015, the Council had the following endowmentrelated activities: Board Designated Unrestricted Temporarily Restricted Permanently Restricted ENDOWMENT ASSETS, BEGINNING OF YEAR $ $ $ 360,865 Net depreciation (17,834) Investment income 6,202 Amounts appropriated for expenditure 11,632 ENDOWMENT ASSETS, END OF YEAR $ $ $ 360,

20 13. PRODUCT PROGRAM SALES The following summarizes product sales for the year ended September 30, 2015: Cookie sales $ 6,167,509 Less cost of sales (1,520,904) Less troop proceeds (1,035,515) Net cookie sales 3,611,090 Fall product sales 591,906 Less cost of sales (275,647) Less troop proceeds (96,667) Net fall product sales 219,592 Merchandise sales 684,290 Less cost of sales (418,478) Net merchandise sales 265,812 TOTAL $ 4,096, RETIREMENT PLAN The Council participates in the National Girl Scout Council Retirement Plan (the Plan), a noncontributory defined benefit pension plan sponsored by GSUSA. The National Board of the GSUSA voted to freeze the Plan to new entrants and to freeze future benefit accruals for all current participants under the Plan effective July 31, The Plan covers substantially all of the employees of various Girl Scout councils who were eligible to participate in the Plan prior to the plan freeze. Accrued and vested benefits prior to July 31, 2010 are based on years of service and salary levels. The Council s pension expense and contribution to this plan for fiscal 2015 was $418,016. Due to the nature of the Plan, it is not practicable to determine the extent to which the assets of the Plan cover the actuarially computed value of vested benefits for the Council as a standalone operation. In addition, because the Plan is considered a multiemployer plan, it is only subject to certain minimum reporting requirements of FASB Accounting Standards Codification Subtopic 71580: Multiemployer Plans, Disclosures about an Employer s Participation in a Multiemployer Plan as amended by Accounting Standards Update No As of January 1, 2015, net plan assets available for plan benefits are less than the actuarial present value of accumulated plan benefits under the Plan

21 14. RETIREMENT PLAN (Continued) The Council sponsors a 401(k) profit sharing plan that covers eligible employees. The plan provides for voluntary salary deferrals for eligible employees. Additionally, the Council may make discretionary matching contributions. The amount of the Council s contribution to the plan was $37,874 for the year ended September 30, CONCENTRATIONS A significant portion of the Council s revenue is generated from cookies sales. The amount of net revenue from cookies sales was $3,611,090, which represents 69% of the total public support and revenue in In addition, all of the cookies are purchased from one vendor. The Council maintains its cash balance with its primary bank, which at times may exceed federally insured limits. As of September 30, 2015, the amount held in excess of federally insured limits was $61, INKIND CONTRIBUTIONS AND EXPENSES The Council received approximately $59,390 of donated advertising for cookie sales and approximately $21,300 of supplies for various program activities during the year ended September 30, The Council also received approximately $8,900 of donated services for training, technical assistance, and information technology work during the year ended September 30, The value of contributed materials and services provided is reflected in these financial statements at estimated fair value at date of receipt. Additionally, volunteers have donated significant time in support of the Council s activities. However, the value of these services is not reflected in the accompanying statements, as the criteria for recognition as set forth under accounting principles generally accepted in the United States of America has not been met. 17. LEASE COMMITMENTS The Council leases office equipment and facility space under operating leases. The leases expire between January 2017 and December Rent expense under operating leases for the year ended September 30, 2015 totaled $114,809. As described in Note 18, total rent expense paid to related parties for the year ended September 30, 2015 was $58,

22 17. LEASE COMMITMENTS (Continued) Future minimum lease payments are as follows for the year ending September 30: 2016 $ 29, , , , ,995 TOTAL $ 128, RELATED PARTY TRANSACTIONS The Council has guaranteed 50% of a note on behalf of UFY. The note is dated December 16, 2013 in the original amount of $600,000, with interest payable monthly at a fixed rate of 4.86%, with principal equal to 50% of pledges collected in the preceding calendar quarter payable quarterly beginning July 16, 2014, and matures on December 16, As of September 30, 2015 the outstanding balance on the note was $38,505. The Council entered into a lease agreement with UFY that expires December 31, 2034, and calls for monthly rent payments in the amount equal to 1/24 (4.17%) of the estimated annual expenses to maintain the building, plus an additional 10% of the annual $5,000 to be held in reserve until such a time when the reserve balance reaches $50,000. As of September 30, 2015, the board of directors of UFY has approved not charging the reserve amount. The lease allows for rent payments to be adjusted at any time during the year if it appears the actual expenses for the year will exceed the estimated expenses by more than a 10% buffer. The Council also entered into a lease agreement with UFY that expired on December 31, 2013, and is continuing on a monthtomonth basis. The lease calls for monthly rent payments in the amount equal to 1/24 (4.17%) of the annual expenses, plus $12,000 to be held in reserve. Total rent expense paid to UFY under both leases for the year ended September 30, 2015 was $58,620. Various Girl Scout troops and service units establish bank accounts under the Council s tax identification number. All funds are maintained for the benefit of the girls within the respective group. These funds are not under the financial control of the Council and have not been included in the financial statements

23 19. RESTATEMENT The beginning of the year net asset balances for the year ended September 30, 2015 have been restated to include the interest in the net assets of UFY and an asset retirement obligation as of October 1, The effect of this restatement adjusted beginning balance net assets by the following: Unrestricted Temporarily Restricted Permanently Restricted Total Record interest in UFY $ 1,688,526 $ $ $ 1,688,526 Record asset retirement obligation 28,615 28,615 TOTAL EFFECT OF RESTATEMENT ON BEGINNING NET ASSETS AND ASSETS $ 1,659,911 $ $ $ 1,659, SUBSEQUENT EVENTS The Council has evaluated subsequent events through March 1, 2016, which was the date these financial statements were available for issuance