UNITED WAY OF NORTH CAROLINA. Financial Statements. December 31, (With Independent Auditors' Report Thereon)

Transcription

1 Financial Statements (With Independent Auditors' Report Thereon)

2 BATCHELOR, TILLERY & ROBERTS, LLP CERTIFIED PUBLIC ACCOUNTANTS POST OFFICE BOX RALEIGH, NORTH CAROLINA RONALD A. BATCHELOR ANN H. TILLERY FRANKLIN T. ROBERTS WM. JAMES BLACK, JR. SCOTT E. CABANISS 3605 GLENWOOD AVENUE, SUITE 350 RALEIGH, NORTH CAROLINA TELEPHONE! FACSIMILE! Independent Auditors' Report The Board of Directors United Way of North Carolina: We have audited the accompanying statement of financial position of United Way of North Carolina (a nonprofit organization) (the "Organization") as of, and the related statements of activities, functional expenses, and cash flows for the year then ended. These financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that 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 Organization as of, and the change 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. May 3, 2012

3 Statement of Financial Position Assets Cash and cash equivalents $ 744,692 Investments 35,723 Dues receivable, net 1,796 Administrative fee receivable 73,423 Accounts receivable 21,835 Prepaid expenses 14,044 Security deposits 3,809 Property and equipment, net 37,621 Total assets $ 932,943 Liabilities and Net Assets Accounts payable and accrued expenses 150,259 Deferred revenue 131,104 Liability for pension benefits 509,969 Total liabilities 791,332 Net assets: Unrestricted: Undesignated 477,608 Pension related changes (442,537) Designated 11,012 Total unrestricted 46,083 Temporarily restricted 95,528 Total net assets 141,611 Total liabilities and net assets $ 932,943 See accompanying notes to financial statements. 2

4 Statement of Activities Year ended Temporarily Unrestricted Restricted Total Support and revenue: Local United Way dues $ 391, ,493 Grants and contributions 22, , ,929 Investment income 1,886 1,886 Administrative fee-secc 445, ,708 Marketing sponsorships-secc 56,831 56,831 Conference registration fees 75,474 75,474 Gain on sale of property and equipment 6,753 6,753 1,000, ,643 1,152,074 Net assets released from restrictions 147,209 (147,209) Total support and revenue 1,147,640 4,434 1,152,074 Expenses: Program services: Member services 380, ,920 State Employees Combined Campaign 502, ,539 Government relations 178, ,475 "211" 93,869 93,869 Total program services 1,155,803 1,155,803 Management and general 68,944 68,944 Total expenses 1,224,747 1,224,747 Change in net assets from operating activities (77,107) 4,434 (72,673) Nonoperating- pension-related changes other than net periodic pension cost (138,510) (138,510) Change in net assets (215,617) 4,434 (211,183) Net assets, beginning of year (restated) 261,700 91, ,794 Net assets, end of year $ 46,083 95, ,611 See accompanying notes to fmancial statements. 3

5 UNITED WAY OF NORTH CAROUNA Statement of Functional Expenses Year ended Supporting Program Services Services State Employees Member Combined Government Management services Campaign relations "211" and general Total Salaries $ 167, ,372 66,275 61,085 31, ,982 Payroll taxes and employee benefits 62,442 75,608 31,516 20,110 16, ,652 Total salaries and related expenses 230, ,980 97,791 81,195 48, ,634 Professional fees 12,598 17,610 46,110 3,425 3,425 83,168 Conferences/meetings 57,940 6,141 2, ,150 69,635 Occupancy 11,638 25,537 5,875 3,164 3,164 49,378 Technology update - 38, ,568 Equipment rental/maintenance 7,658 21,356 5,779 2,222 2,082 39,097 Sponsored marketing costs - 36,148-36,148 Disaster fund allocations 32, ,853 Travel expenses 9,995 6,732 5, ,788 26,093 Department executive program - 16, ,055 Telephone/internet 2,480 6,862 3,549 1, ,690 Supplies and copying 1,523 5,994 1, ,333 Depreciation 4,035 2,009 2,037 1,097 1,097 10,275 Printing/publications 1,447 2,022 5, ,988 Postage/freight - 7, ,541 9,128 Bank account and merchant fees 643 5, ,241 ACC expenditures 7, ,000 Advertising - 4, ,918 Membership dues and fees 54-1, ,639 Liability insurance ,292 Solicitation and lobbying fees Miscellaneous Total expenses $ 380, , ,475 93,869 68,944 1,224,747 See accompanying notes to fmancial statements. 4

6 UNITED WAY OF NORTH CAROUNA Statement of Cash Flows Year ended Cash flows from operating activities: Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation Gain on sale of property and equipment Net gain on investments Changes in operating assets and liabilities: Dues receivable Administrative fee receivable Accounts receivable Prepaid expenses Accounts payable and accrued expenses Deferred revenue Liability for pension benefits Net cash provided by operating activities Cash flows from investing activities: Purchases of property and equipment Proceeds from sale of property and equipment Decrease in security deposits Net cash used in investing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year $ (211,183) 10,275 (6,753) (5) 36,509 32,390 1,722 1,960 48,355 5, , ,046 (33,519) 10, (23,403) 101, ,049 Cash and cash equivalents, end of year $ 744,692 See accompanying notes to financial statements. 5

7 Notes to Financial Statements (1) Nature of Activities and Summary of Significant Accounting Policies (a) Nature of Activities United Way of North Carolina (the "Organization") was incorporated in 1951 and serves local United Way agencies by providing technical assistance and consultation. The Organization is supported primarily through local United Way campaigns. (b) Basis of Presentation and Use of Estimates The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. 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 the reported amounts of changes in net assets during the reporting period. Actual results could differ from those estimates. (c) Contributions and Net Assets The Organization is required to report contributions of cash and other assets as increases in unrestricted, temporarily restricted, or permanently restricted net assets, depending on the existence or nature of any donor restrictions. When a restriction expires (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. There were no permanently restricted net assets as of. (d) Cash and Cash Equivalents Cash and cash equivalents include short-term investments with an original maturity of three months or less. The Organization may occasionally maintain deposits in excess of federally insured limits. In 2004, the Organization agreed to serve as the Relief Fund Administrative Organization of the Governor's North Carolina Relief Fund. Since that time, the Organization has received contributions through the Office of the Governor and distributed those contributions under the direction of the Office of the Governor. As of, there was $314 of funds held on behalf of the Governor's North Carolina Relief Fund. 6

8 (1) Nature of Activities and Summary of Significant Accounting Policies, Continued (e) Investments Investments in marketable securities are stated at fair market value, based on net asset value per share as provided by the fund manager of the investment, determined at the fmancial statement date. The Organization has applied a practical expedient and concluded that the net asset value reported by the underlying fund approximates the fair value of the investment. Investment income (including gains and losses on investments, interest and dividends) is included in the statement of activities as a change in unrestricted net assets. (f) Fair Value Measurements For determining fair value measurements, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Management follows an established framework for measuring fair value. That framework provides 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. The three levels of inputs that may be used to measure fair value are described below: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: one or more significant inputs or significant value drivers are unobservable or based on market assumptions (g) Dues Receivable Prior to January 1990, the Organization supported its operating budget through a request for funds from local United Ways based on their effective buying income and past campaign experience. The request was considered a part of the local United Ways' expected contribution to fund the package of agencies supported through the Organization. In January of 1990, the Organization began collecting dues from the local United Ways located in North Carolina. These dues in the amount of 0.35% in 2011 of all local campaign money raised are used to support the operating budget of the Organization. The local United Ways pay dues at their own discretion, therefore the amount actually collected may differ from the amount requested by the Organization. The management of the Organization reviews the collectability of dues receivable on a periodic basis and utilizes the allowance method. (h) Property and Equipment Depreciation of vehicles, office furniture and office equipment is provided on a straight-line basis over the estimated useful lives of the assets ranging from 3 to 30 years. 7

9 (1) Nature of Activities and Summary of Significant Accounting Policies, Continued (i) Deferred Revenue Amounts received in advance of providing services are deferred and recognized as revenue as the related services are performed. (j) Pension Benefits The Organization is a participant in a qualified retirement plan which is administered by the Mutual of America Life Insurance Company. The plan covers substantially all employees and provides for certain benefits. In the last quarter of 1989 the plan was changed, by Board action, from a defmed contribution plan based on employer contributions of 10% of gross annual salary to a defmed benefit plan. The funded status of the Organization's defmed benefit pension plan is recognized on the statement of financial position. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at the measurement date. The benefit obligation is the projected benefit obligation, which represents the actuarial present value of benefits expected to be paid upon retirement based on future compensation levels. The fair value of plan assets represents the current market value of cumulative Organization contributions. The Organization's contribution amounts are actuarially determined. (k) Donated Materials and Services Contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. Donated goods are reflected as contributions in the accompanying statements at their estimated values with an offsetting charge to expense. No in-kind contributions were recorded for The Organization receives a significant amount of donated services from unpaid volunteers who assist in fundraising, program activities, and special events. No amounts have been recognized in the statement of activities because the criteria for recognition have not been satisfied. (l) Income Taxes The Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code (the "Code") as a public charity. The Organization has also been classified as an entity that is not a private foundation within the meaning of Section 509(a) of the Code and qualifies for deductible contributions provided in the Code. Management of the Organization does not believe the financial statements include any uncertain tax positions. Tax years ended December 31, 2008 to remain open for examination by taxing authorities as of the date of this report. 8

10 (1) Nature of Activities and Summary of Significant Accounting Policies, Continued (m) Advertising The Organization expenses advertising production costs as they are incurred and advertising communication costs the first time the advertising takes place. (n) Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. (2) Restatement of Financial Statements During 2011, the Organization determined that it had not previously recorded the funded status of its defmed benefit pension plan in accordance with Accounting Standards Codification Topic 715, Compensation. As a result, the 2010 fmancial statements were restated. The effect of this correction as of December 31, 2010 was to increase the liability for pension benefits and pension related changes by $304,027. As a result of the restatement, ending net assets for 2010 changed as follows: Unrestricted Temporarily Restricted Net assets, as previously reported $ 565,727 91, ,821 Restatement adjustment (304,027) (304,027) Net assets, as restated $ 261,700 91, ,794 (3) Investments Investments as of are summarized below. The fair market value is determined using the net asset value of the fund, and as such the investment held is categorized as a level2. Cost Fair Market Value Mutual of America Money Market Fund $ 36,509 35,723 9

11 ( 4) Property and Equipment Property and equipment consist of the following: Vehicles Office furniture Office equipment $ 33,069 32, , ,243 Less accumulated depreciation (277,622) $ 37,621 It is the policy of the Board of Directors to review its plans for future acquisitions from time to time and to designate appropriate sums to assure adequate fmancing of such acquisitions, with such amounts included in unrestricted net assets. (5) State Employee Combined Campaign On September 1, 1982, the Organization entered into a contract with the State of North Carolina, Department of Administration and Office of State Budget and Management, to act as administrator for the North Carolina State Employee Combined Campaign. The current contract expires on December 31, Under the present agreement, the Organization maintains an account to receive state employee contributions of cash, credit card and payroll withholdings, which are received from various state payroll disbursing offices. The Organization distributes the funds based on statewide audited campaign results. Per the terms of the contract, the Organization recovers its expenses of administering the campaign from the gross receipts of the campaign in an amount up to, but not to exceed, 10% of the previous year's gross receipts. The Organization may secure additional revenue for campaign expenses from sponsorship and interest earnings. The 2011 fee is 9. 79% of the 2010 campaign. The Organization also provides Centralized Pledge Processing for the state. This cost is part of the total cost of the campaign. On, the related bank accounts had a balance of $521,170. Processed pledges payable were $952,661. A partial payment of the 2011 administrative fee in the amount of $372,285 had been paid to the Organization prior to year end. Additional prepaid amounts and accounts receivable totaled $60,247. These assets and liabilities are not shown on the accompanying fmancial statements since they are not owned or owed by the Organization. ( 6) Lease Commitments In December, 2010, United Way of North Carolina moved their office to a new location. The lease runs from December 16, 2010 to February 28, Rent expense for office space totaled $36,715 for

12 (6) Lease Commitments, Continued The Organization leases office equipment under operating lease agreements that expire at various dates through Equipment lease expense totaled $19,116 for Future minimum rental payments required under these operating leases are as follows: (7) Pension Benefits Year ending December $ 54, , , ,160 $ 152,454 Components of net periodic pension cost during 2011 are summarized below: Service cost $ 92,797 Interest cost 66,191 Actual return on plan assets (6,716) Amortization of initial unrecognized net obligation 18,426 Asset loss deferred (52,367) Net periodic pension cost $ 118,331 The net periodic pension cost was determined using the following weighted average assumptions: Discount rate on the benefit obligation Rate of expected return on plan assets Rate of employee compensation increase 5.25% 6.50% 4.50% The expected long-term rate of return on plan assets assumption of 6.5% was selected using the "building block" approach set forth by the Actuarial Standards Board. Based on the Organization's investment allocation for the pension plan in effect as of the beginning of the fiscal year, a best estimate range was determined for both the real rate of return (net of inflation) and for inflation based on historical 30 year period rolling averages. An average inflation rate within the range equal to 3. 75% was selected and added to the real rate of return range to arrive at a best estimate range of 5.79%- 7.39%. A rate of 6.50%, which is within the best estimate range, was selected. 11

13 (7) Pension Benefits, Continued As of, the accumulated benefit obligation was $1,074,106, which represents the actuarial present value of benefits owed for service to date if the employees continue in employment until normal retirement age at current wage rates. The changes in projected benefit obligation, plan assets and the net amount recognized on the statement of fmancial position for 2011 are as follows: Projected benefit obligation: Balance, beginning of year Service cost Interest cost Assumption changes Expense charges Benefits paid to participants Balance, end of year $ 1,174,670 92,797 66, ,569 (13,816) (18, 158) $ 1,406,253 Plan assets: Fair value, beginning of year Actual investment results Organization contributions Benefits paid to participants, including expense charges Fair value, end of year $ $ 870,643 6,716 50,899 (31,974) 896,284 Projected benefit obligation Fair value of plan assets Excess of benefit obligation over fair value of plan assets $ (1,406,253) 896,284 $ (509,969) As of, the following items included in unrestricted net assets had not yet been recognized as components of pension expense: Transition obligation Actuarial loss Total $ $ 285, , ,537 As of, $18,426 of the transition obligation will, through amortization, be recognized as components of pension cost in

14 (7) Pension Benefits, Continued The following is an analysis of plan assets by class as of : Equity $ 160, % Fixed income 44,930 5 % General account 690, % Total plan assets $ 896, % The Organization's overall strategy is to invest in high-grade securities and other assets with a minimum risk of market value fluctuation. The Organization's policy is to fund the plan in amounts consistent with the funding requirements of federal laws and regulations. The Organization anticipates that, at a minimum, it will make the minimum required contributions to its pension plan in 2012 of approximately $92,000. Benefit payments, which reflect future expected service, as appropriate, are expected to be paid as follows: (8) Atlantic Coast Conference Expenditures Year ending December 31, 2012 $ , , , ,000 $ 1,555,000 The Organization entered into a joint advertising venture with other state agencies covered by the collegiate Atlantic Coast Conference and with the Atlantic Coast Conference itself to promote United Way during broadcasts of Atlantic Coast Conference sporting events. In 2011, $9,000 was received from other state agencies and $7,000 was spent on updating advertisements. As of, $11,454 remained to be used to continue these updates, and is included in deferred revenue in the statement of financial position. 13

15 (9) Restrictions on Net Assets Temporarily restricted net assets as of were available for the following purposes: NC 211 expansion Disaster relief $ 84,737 10,791 $ 95,528 In 1998, the Organization began collecting fees for the tri-state conference. The excess of fees over expenses related to this conference are to be used for future tri-state conferences. As of December 31, 2011, the balance remaining as unrestricted designated net assets was $10,220. In 2004, the Organization received contributions for the John Walker Memorial Fund. The board voted to designate these funds to United Ways for training support. These contributions in the amount of $792 are unrestricted designated net assets. (10) Marketing Sponsorship- SECC During 2004, State Employees Combined Campaign began collecting sponsorships to fund future awards and other marketing costs. These sponsorships are reflected as marketing sponsorships SECC in the statement of activities. The related expenditures are included in the statement of functional expenses as a State Employees Combined Campaign expense. In 2011, an additional $60,000 was received. A total of $56,831 was expended in 2011, and therefore the same amount was also recognized as revenue. (11) Subsequent Events The date to which events occurring after, the date of the most recent statement of financial position, have been evaluated for possible adjustment to the financial statements or disclosure is May 3, 2012, the date the financial statements were available to be issued. 14