MUSLIM ADVOCATES FINANCIAL STATEMENTS WITH AUDITOR S REPORT YEARS ENDED DECEMBER 31, 2011 AND 2010

Transcription

1 FINANCIAL STATEMENTS WITH AUDITOR S REPORT YEARS ENDED DECEMBER 31, 2011 AND 2010 GHAFFARI ACCOUNTANCY, INC. Certified Public Accountants

2 TABLE OF CONTENTS Page Independent Auditor s Report... 1 Statements of Financial Position... 2 Statements of Activities... 3 Statements of Cash Flows... 4 Statement of Functional Expenses Statement of Functional Expenses Notes to Financial Statements... 7

3 INDEPENDENT AUDITOR S REPORT Board of Directors Muslim Advocates San Francisco, California We have audited the accompanying statements of financial position of Muslim Advocates as of December 31, 2011 and 2010, and the related statements of activities, cash flows, and functional expenses for the years 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 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic 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 that our audits provide 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 Muslim Advocates as of December 31, 2011 and 2010, and the changes in its net assets and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Ghaffari Accountancy, Inc. April 18, 2013 Oakland, California 1

4 Statements of Financial Position At December 31, 2011 and Assets Current assets Cash and cash equivalents $ 582,613 $ 360,974 Grants and pledges receivable, net (Notes 3 and 4) 255, ,124 Prepaid expenses 6,050 18,685 Total Current Assets 844, ,783 Fixed assets, net (Note 5) 22,116 - Deposits 9,975 9,975 Total Assets $ 876,274 $ 898,758 Liabilities Current liabilities Accounts payable and accrued expenses $ 41,352 $ 24,678 Accrued vacation liability 13,859 6,819 Deferred income 2,700 - Total Current Liabilities and Total Liabilities 57,911 31,497 Net Assets Unrestricted 561, ,511 Temporarily restricted for use in future periods 257, ,750 Total Net Assets 818, ,261 Total Liabilities and Net Assets $ 876,274 $ 898,758 See notes to financial statements 2

5 Statements of Activities Year Ended December 31, 2011 Year Ended December 31, 2010 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Support and Revenue Grants $ 260,000 $ 248,000 $ 508,000 $ 120,000 $ 100,000 $ 220,000 Contributions 208,095 25, , ,439 43, ,089 In-kind contributions (Note 7) 189, , , ,487 Loss from uncollectable pledges (78,000) (78,000) Fundraising event income - 17,300 17, , ,100 Fundraising event expense (25,503) - (25,503) Fundraising event, net - 17,300 17, , ,597 Interest and other income Net assets released from restrictions: Purpose or time restrictions met 545,750 (545,750) - 396,191 (396,191) - Total Support and Revenue 1,203,177 (255,450) 947,727 1,063,714 (330,541) 733,173 Expenses Program services Racial Profiling 355, , , ,839 Anti-Muslim Hate 202, , Muslim Charity Works 178, , , ,530 Supporting services Management and general 139, , , ,930 Fundraising 120, , , ,173 - Total Expenses 996, ,625 1,031,472-1,031,472 Change in Net Assets 206,552 (255,450) (48,898) 32,242 (330,541) (298,299) Net Assets at the beginning of the year 354, , , , ,291 1,165,560 Net Assets at the end of the year $ 561,063 $ 257,300 $ 818,363 $ 354,511 $ 512,750 $ 867,261 See notes to financial statements 3

6 Statements of Cash Flows Cash flows from operating activities: Change in net assets $ (48,898) $ (298,299) Adjustments to reconcile change in net assets to net cash from operating activities: Depreciation 2,043 7,045 Change in allowance for uncollectible pledges (73,470) 75,250 (Increase) decrease in operating assets: Grants and pledges receivable 327, ,946 Prepaid expenses 12,635 (7,450) Deposits - (1,100) Increase (decrease) in operating liabilities: Accounts payable and accrued expenses 23,714 (30,958) Deferred income 2,700 - Net cash provided (used) by operating activities 245,798 (12,566) Cash flows from investing activities: Acquisition of fixed assets (24,159) - Net cash used by investing activities (24,159) - Net increase (decrease) in cash and cash equivalents 221,639 (12,566) Cash and cash equivalents at the beginning of the year 360, ,540 Cash and cash equivalents at the end of the year $ 582,613 $ 360,974 See notes to financial statements 4

7 Statement of Functional Expenses Year Ended December 31, 2011 Racial Profiling Program Services Anti- Muslim Hate Muslim Charity Works Supporting Services Management and General Fundraising Total Salaries $ 102,413 $ 112,261 $ 84,005 $ 44,759 $ 69,242 $ 412,680 Payroll taxes 8,446 9,885 6,813 3,345 5,900 34,389 Employee benefits (Note 8) 24,885 8,948 22,341 10,766 7,525 74,465 Professional fees 177,967 32,628 23,629 59,062 8, ,396 Occupancy 17,346 17,559 16,638 7,717 11,540 70,800 Travel 12,640 8,453 12,877 1,205 6,617 41,792 Printing and publications 3,206 4,844 3, ,951 16,702 Insurance 2,877 2,912 2,760 1,280 1,914 11,743 Telephone and internet 1,282 1,195 1,210 3, ,255 Website expenses 1,965 1,269 1, ,600 Dues and subscriptions 1, ,850 1, ,031 Supplies , ,563 Staff development and recruitment , ,243 Depreciation 239 1, ,043 Postage ,768 Bank charges and fees ,431-1,431 Equipment purchase ,427-1,427 Miscellaneous ,316 1,316 Meetings Total expenses $ 355,333 $ 202,818 $ 178,114 $ 139,848 $ 120,512 $ 996,625 See notes to financial statements 5

8 Statement of Functional Expenses Year Ended December 31, 2010 Program Services Muslim Racial Charity Profiling Works Supporting Services Management and General Fundraising Total Salaries $ 146,263 $ 136,113 $ 57,764 $ 61,082 $ 401,222 Payroll taxes 12,000 11,228 4,703 4,892 32,823 Employee benefits (Note 8) 27,747 27,791 12,140 11,715 79,393 Professional fees 232,691 38,122 49,996 24, ,335 Occupancy 23,219 23,153 9,668 9,735 65,775 Travel 21,794 15, ,254 41,115 Printing and publications 1,975 5, ,269 14,936 Insurance 3,446 3, ,533 Telephone and internet 2,986 2, ,596 Website expenses 2,720 2, ,094 Dues and subscriptions 2,376 2, ,079 Supplies , ,031 Staff development and recruitment Depreciation 2,819 2, ,045 Postage ,277 Bank charges and fees - - 2, ,338 Equipment purchase 1,043 1, ,762 Miscellaneous Meetings Event and facility rental 1,111 3, ,955 Advertising Total expenses $ 482,839 $ 278,530 $ 143,930 $ 126,173 $ 1,031,472 See notes to financial statements 6

9 Notes to Financial Statements Note 1 - Organization Muslim Advocates (the Organization) is a non-profit organization incorporated in Washington, DC on February 4, 2005 to promote and protect freedom, justice and equality for all, regardless of faith, using the tools of legal advocacy, policy engagement and civic education and by serving as a legal resource to promote the full and meaningful participation of Muslims in American public life. Located in San Francisco, California, the Organization supports its operations through private grants and contributions. Note 2 - Summary of Significant Accounting Policies Significant accounting policies are described below to enhance the usefulness of the financial statements to the reader. (a) (b) (c) (d) Method of Accounting The financial statements of the Organization have been prepared using the accrual method of accounting, which involves the recognition of revenue and gains when earned and expenses and losses when incurred. Cash and Cash Equivalents For purposes of the statement of cash flows, the Organization considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents. Grants and Pledges Receivable Grants and pledges receivable include unconditional commitments from various foundations and individuals that are recorded at the net realizable value of the amount expected to be collected by management, less an allowance for doubtful pledges. Grants receivable beyond one year are discounted to present value of expected future cash flow using a risk-based discount rate. Grants receivable are deemed to be collectible in its entirety. Allowance for uncollectible pledges from individuals is provided for at 50%-100% of pledges after months depending on the dollar amount. This allowance is then adjusted based on significant other information about the recoverability of the pledge. Fixed Assets and Depreciation The Organization records acquisitions of items with a cost of $1,000 or more as fixed assets. Fixed assets are recorded at cost when purchased and fair value when received as a donation. Depreciation is provided over the estimated useful lives of respective assets, using the straight-line method of depreciation. 7

10 Notes to Financial Statements (e) (f) Income Tax Status The Organization is recognized as a public charity exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code, whereby only unrelated business income, as defined by Section 512(a)(1) of the Internal Revenue Code and similar code section of the California Revenue and Taxation Code, is subject to income tax. The Organization does not have any uncertain tax positions that are material to the financial statements, as management believes all of its activities are related to its tax exempt purposes. The organization s annual informational returns are subject to examination by IRS, generally three years after they were filed. Basis of Presentation 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 represent net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets represent net assets subject to donor-imposed stipulations that may or will be met either by actions of the Organization and/or the passage of time. (g) Restricted Resources The Organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor 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. Gifts of fixed assets are recorded as unrestricted support unless explicit donor stipulations specify how the donated asset must be used. (h) In-Kind Services Contributed services are recognized at their fair value if such services a) create or enhance nonfinancial assets or b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not contributed. Due to the nature of the Organization s operations, pro bono legal services have been performed by a number of attorneys who have contributed their time to the Organization. The Organization has valued and recorded these contributed services as revenue and expenses at fair value based on the attorney s average billing rates. A substantial number of general volunteers also donated their time to the program services and fund raising campaigns of the Organization; such time is not reflected in the financial statements in as much as applicable recognition criteria are not met. 8

11 Notes to Financial Statements (i) (j) Allocation of Expenses Salaries and employee benefit expenses have been allocated to programs and supporting activities based on employees actual time spent in each activity. Common costs, i.e. costs primarily related to facility operations, are allocated based on the ratio of total staff time. 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. These estimates and assumptions 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 revenue and expenses during the reporting period. Significant accounting estimates reflected in the Organization s financial statements include valuation and collectability of grants and pledges receivable and the functional allocation of expenses. Actual result may differ form those estimates. Note 3 Concentrations of Credit Risk Approximately 82% of the grants and pledges receivable balance at December 31, 2011 was receivable from a single foundation. Note 4 Grants and Pledges Receivable Grants and pledges receivable were as follows: 12/31/ /31/2010 Receivable in less than one year $ 264,900 $ 591,974 Allowance for uncollectible pledges (9,380) (82,850) Grants and pledges receivable, net $ 255,520 $ 509,124 Note 5 Fixed Assets and Depreciation Fixed assets consisted of the following: 12/31/ /31/2010 Computers $ 14,674 $ 9,825 Website development 19,310 0 Total property and equipment 33,984 9,825 Accumulated depreciation (11,868) (9,825) Property and equipment, net $ 22,116 $ 0 9

12 Note 6 - Temporarily Restricted Net Assets MUSLIM ADVOCATES Notes to Financial Statements Temporarily restricted net assets were available for the following purposes: 12/31/ /31/2010 Future periods $ 240,000 $ 444,750 Racial profiling 0 68, fundraising event 17,300 0 Note 7 In-Kind Services $ 257,300 $ 512,750 In-kind services received and recorded as in-kind contributions in the statement of activities consisted of: 12/31/ /31/2010 Legal Services: Racial Profiling $ 140,959 $ 213,179 Management and General 19,732 15,395 Muslim Charity Works 14,169 18,660 Anti-Muslim Hate 14,169 0 Communications Advice: Racial Profiling 0 4,800 Muslim Charity Works 0 4,800 Note 8 Defined Contribution Plan $ 189,029 $ 256,834 The Organization has a defined contribution retirement plan under Section 401(k) of the Internal Revenue Code. The plan provides for voluntary salary deferrals for employees who have completed one month of service. The Organization may elect to make matching contributions to the plan at its discretion. During the year ended December 31, 2011 and 2010 employer contributions to the plan were $28,328 and $27,742, respectively. Note 9 Operating Lease 10

13 Notes to Financial Statements The Organization has a month-to-month arrangement for its office facility. Total rent expense under the arrangement were $70,800 and $65,775 for the year ended December 31, 2011 and 2010, respectively. 11

14 Note 10 Subsequent Events MUSLIM ADVOCATES Notes to Financial Statements Management has evaluated subsequent events through April 18, 2013, the date on which the financial statements were available to be issued. 12