Audited Financial Statements and Supplementary Information BBB WISE GIVING ALLIANCE. December 31, 2013

Transcription

1 Audited Financial Statements and Supplementary Information BBB WISE GIVING ALLIANCE December 31, 2013

2 Contents Independent Auditor s Report on the Financial Statements 1 Financial Statements Statements of financial position 2 Statements of activities 3 Statements of cash flows 4 Notes to the financial statements 5-7 Supplementary Information Independent auditor s report on the supplementary information 8 Schedule of expenses by function 9

3 Independent Auditor s Report on the Financial Statements The Board of Directors BBB Wise Giving Alliance We have audited the accompanying financial statements of BBB Wise Giving Alliance (the Alliance) (a nonprofit organization), which comprise the statements of financial position as of December 31, 2013 and 2012, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility L S t r e e t, N W S u i t e Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BBB Wise Giving Alliance as of December 31, 2013 and 2012, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Washington, DC March 4,

4 Statements of Financial Position December 31, Assets Cash $ 1,026,452 $ 932,883 Accounts receivable 52,933 48,529 Prepaid expenses Computer software and equipment, net of accumulated depreciation of $74,406 in 2013 and $71,444 in ,026 11,988 Total assets $ 1,088,411 $ 993,778 Liabilities and Net Assets Liabilities Accounts payable $ 2,494 $ - Due to affiliated organizations, net 89,826 92,310 Deferred revenue 554, ,928 Total liabilities 646, ,238 Net assets - unrestricted 441, ,540 Total liabilities and net assets $ 1,088,411 $ 993,778 See notes to the financial statements. 2

5 Statements of Activities Temporarily Temporarily Year Ended December 31, Unrestricted Restricted Total Unrestricted Restricted Total Revenue and support Charity Seal license fees $ 1,489,375 $ - $ 1,489,375 $ 1,394,566 $ - $ 1,394,566 Contributions 288, , , ,818 Publications 15,923 15,923 8,835 8,835 Interest and other 9,537 9,537 2,550 2,550 Grants from Council of Better Business Bureaus, Inc , ,000 Net assets released from restrictions ,000 (70,000) - Total revenue and support 1,803,545-1,803,545 1,992,769 (70,000) 1,922,769 Expenses Program services Charity reporting activities 1,462,408 1,462,408 1,470,131 1,470,131 Supporting services Management and general 189, , , ,184 Fundraising 58,520 58,520 72,133 72,133 Total supporting services 247, , , ,317 Total expenses 1,710,201-1,710,201 1,736,448-1,736,448 Change in net assets 93,344-93, ,321 (70,000) 186,321 Net assets, beginning of year 348, ,540 92,219 70, ,219 Net assets, end of year $ 441,884 $ - $ 441,884 $ 348,540 $ - $ 348,540 See notes to the financial statements. 3

6 Statements of Cash Flows Year Ended December 31, Cash flows from operating activities Change in net assets $ 93,344 $ 186,321 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 2,962 33,457 Changes in assets and liabilities: Accounts receivable (4,404) (30) Prepaid expenses Accounts payable 2,494 - Due to affiliated organizations (2,484) 11,497 Deferred revenue 1,279 (4,888) Total adjustments ,684 Net cash provided by operating activities 93, ,005 Cash Flows From Investing Activities Computer, software, and equipment purchases, net - (13,615) Net increase in cash and cash equivalents 93, ,390 Cash, beginning of year 932, ,493 Cash, end of year $ 1,026,452 $ 932,883 4

7 Notes to the Financial Statements A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: BBB Wise Giving Alliance (the Alliance) (formerly the Council of Better Business Bureaus Foundation) was founded in The mission of the Alliance is to provide information to consumers and donors to assist them in making knowledgeable choices about their giving and buying practices. The Alliance issues charity standards, educates the public about making informed giving decisions, and produces reports on national charitable organizations. On March 23, 2001 the CBBB Foundation and NCIB (National Charities Information Bureau), a New York state not-for-profit membership organization founded in 1918, merged into the Council of Better Business Bureaus Foundation which housed the Philanthropic Advisory Service. Also effective March 23, 2001 the name of the newly merged entity was changed to the BBB Wise Giving Alliance. The Alliance is affiliated with Council of Better Business Bureaus, Inc. (the Council) and is presented in the Council s consolidated financial statements. The Council is a business membership organization tax exempt under section 501(c)(6) of the Internal Revenue Code. The Council serves as the national office of the Better Business Bureau system. Income tax status: The Alliance is a charitable organization that is exempt from the payment of federal income taxes, on its exempt activities, under Section 501(c)(3) of the Internal Revenue Code and is classified as an organization that is not a private foundation under section 509(a)(1). The Alliance believes that it has appropriate support for income tax positions taken. Therefore, management has not identified any uncertain income tax positions that are material to the financial statements. The Alliance s income tax returns are generally subject to examination by the Internal Revenue Service and state and local taxing authorities for three years after they are filed. Basis of accounting: The financial statements have been prepared on the accrual basis of accounting. Consequently, revenue is recognized when earned and expense when the obligation is incurred. Use of estimates: Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Accounts receivable: Accounts receivable consist primarily of amounts owed from customers for Charity Seal revenue. Accounts receivable are presented at the gross, or face, amount due to the Alliance. The Alliance's management periodically reviews the status of all accounts receivable balances for collectability. Each receivable balance is assessed based on management's knowledge of the customer, the Alliance's relationship with the customer, and the age of the receivable balance. Receivables deemed to be collectible are typically recorded in the allowance for doubtful accounts. If subsequent attempts to collect these outstanding balances are unsuccessful, the receivable and corresponding allowance is written off. Computer equipment and software: The cost of computer equipment and software purchased in excess of $1,000 is capitalized. Depreciation is calculated on the straight line basis over the useful life of the asset. 5

8 Notes to the Financial Statements A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED Deferred revenue: Deferred revenue consists of Charity Seal subscriptions received in advance of the period in which they are to be earned. The subscriptions are recognized in the period to which they apply based on expiration dates. Contributions: Contributions are recorded as unrestricted or temporarily restricted support depending upon the existence and/or nature of any donor-imposed restrictions. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires within the same reporting period. All other donor-restricted support is reported as an increase in temporarily restricted net assets and then reclassified to unrestricted net assets when the restriction expires. Functional allocation of expenses: The costs of providing 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. Subsequent events: Subsequent events have been evaluated through March 4, 2014, which is the date the financial statements were available to be issued. B. RELATED PARTY TRANSACTIONS The Alliance s salary and benefits expense, consisting of costs associated with employees allocated from the Council, totaled $930,237 and $920,829 for the years ended December 31, 2013 and 2012, respectively. In addition, the portion of the Council s headquarters office space allocated to the Alliance totaled $51,756 and $61,058 for the years ended December 31, 2013 and 2012, respectively. Indirect expenses attributed to the Alliance during the years ended December 31, 2013 and 2012 were $316,429 and $372,932 respectively. During the years ended December 31, 2013 and 2012, the Council awarded grants to the Alliance of $0 and $200,000, respectively. The Alliance reimbursed the Council $1,665,000 and $1,470,000, during the years ended December 31, 2013 and 2012, respectively. In total, the Alliance owed the Council $89,826 and $92,310 at December 31, 2013 and 2012, respectively. C. RETIREMENT PLAN EXPENSE The Council has a defined contribution retirement plan which covers all employees (including the Alliance) over 21 years of age. Employees become eligible for the retirement plan on the first day of the month following the date of hire. Employees are vested on a graduated scale based on years of service provided under the Employer Elective Contribution portion of the plan. Employees are fully vested in this portion at the earlier of age 55 or the completion of their fifth year of service. Employees are 100% vested at all times in the amount they contribute to the retirement plan, plus the amount of the employer s matching contribution. The Council s elective contribution is based upon the annual compensation of covered employees and is reduced by forfeitures of non-vested employees who terminate during the year. The Alliance's portion of retirement plan expense was $22,372 and $18,774 for the years ended December 31, 2013 and 2012, respectively. Retirement plan costs are funded currently. 6

9 Notes to the Financial Statements D. CONTRIBUTED SOFTWARE During the year ended December 31, 2010, the Alliance received contributed software valued at $66,535. The Alliance valued the software based on values provided by the donor. Depreciation associated with the assets totaled $0 and $30,495 for the years ended December 31, 2013 and 2012, respectively. 7

10 Independent Auditor s Report on the Supplementary Information To the Board of Directors BBB Wise Giving Alliance L S t r e e t, N W We have audited the financial statements of BBB Wise Giving Alliance as of and for the years ended December 31, 2013 and 2012, and our report thereon dated March 4, 2014, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of expenses by function is presented for the purposes of additional analysis and is not a required part of the 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 financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 financial statements as a whole S u i t e Washington, DC March 4,

11 Schedule of Expenses by Function Year ended December 31, 2013 with Comparative Totals for 2012 Program services Charity Reporting Supporting services Management Totals Activities and General Fundraising Salary and benefits $ 859,335 $ 39,129 $ 31,773 $ 930,237 $ 920,829 Professional services 166,733 11, ,262 92,638 Office expenses 92,958 31,100 3, , ,908 Printing and publications 102, , , ,007 Travel, meetings and conferences 21,054 10,195 31,249 21,677 Depreciation 2, ,962 33,457 1,244,915 92,838 56,019 1,393,772 1,363,516 Expense allocation reimbursed to the Council of Better Business Bureaus, Inc. 217,493 96,435 2, , ,932 Total expense $ 1,462,408 $ 189,273 $ 58,520 $ 1,710,201 $ 1,736,448 9