W.S.O.S. Community Action Commission, Inc. 403(b) Tax Sheltered Annuity Plan

Transcription

1 W.S.O.S. Community Action Commission, Inc. Fremont, Ohio Financial Statements and Supplemental Schedule December 31, 2011

2 Financial Statements and Supplemental Schedule December 31, 2011 Table of Contents Independent Auditor s Report... 1 Financial Statements Statements of Net Assets Available for Benefits... 2 Statement of Changes in Net Assets Available for Benefits Supplemental Schedule Schedule H, Part IV, Line 4(i) Schedule of Assets (Held at End of Year)... 18

3 Independent Auditor s Report Board of Directors W.S.O.S. Community Action Commission, Inc. Fremont, Ohio We were engaged to audit the accompanying Statements of Net Assets Available for Benefits of W.S.O.S. Community Action Commission, Inc. as of December 31, 2011 and 2010, and the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2011, and the supplemental schedule (Schedule of Assets [Held at End of Year]) as of December 31, These financial statements and the supplemental schedule are the responsibility of the Plan s management. As permitted by Section 29 CFR of the Department of Labor s Rules and Regulations for Reporting and Disclosure Under the Employee Retirement Income Security Act of 1974 (ERISA), the plan administrator instructed us not to perform, and we did not perform, any auditing procedures with respect to the information summarized in Note 5, which was certified by Great-West Life & Annuity Insurance Company, the custodian of the Plan, except for comparing such information with the related information included in the financial statements and supplemental schedule. We have been informed by the plan administrator that the custodian holds the Plan s investment assets and executes investment transactions. The plan administrator has obtained a certification from the custodian as of December 31, 2011 and 2010, and for the year ended December 31, 2011, that the information provided to the plan administrator by the custodian is complete and accurate. Because of the significance of the information that we did not audit, we are unable to, and do not, express an opinion on the accompanying financial statements and schedule taken as a whole. The supplemental schedule is presented for the purpose of additional analysis and is not a required part of the financial statements but is required by the Department of Labor s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of The form and content of the information included in the financial statements and schedule, other than that derived from the information certified by the custodian, have been audited by us in accordance with auditing standards generally accepted in the United States and, in our opinion, are presented in compliance with the Department of Labor s Rules and Regulations for Reporting and Disclosure under ERISA. Wipfli LLP August 10, W. Beltline Hwy., Ste. 401 Madison, Wisconsin

4 Statements of Net Assets Available for Benefits December 31, 2011 and Assets: Investments, at fair value $ 9,310,498 $ 9,097,142 Notes receivable from participants 95,597 77,496 Net assets reflecting investments at fair value 9,406,095 9,174,638 Adjustment from fair value to contract value for fully benefit-responsive investment contracts (13,194) (20,396) Net assets available for benefits $ 9,392,901 $ 9,154,242 See accompanying notes to financial statements. 2

5 Statement of Changes in Net Assets Available for Benefits Year Ended December 31, 2011 Investment income (loss): Net depreciation in fair value of pooled separate accounts ($ 175,197) Interest and dividend income 27,714 Total investment loss ( 147,483) Interest income on notes receivable from participants 3,638 Contributions: Participant 421,114 Employer 582,987 Rollover 113,340 Total contributions 1,117,441 Deductions: Benefits paid to participants 733,300 Administrative expenses 1,637 Total deductions 734,937 Net increase in net assets available for benefits 238,659 Net assets available for benefits - Beginning of year 9,154,242 Net assets available for benefits - End of year $ 9,392,901 See accompanying notes to financial statements. 3

6 Note 1 Description of the Plan The following description of the W.S.O.S. Community Action Commission, Inc. 403(b) Tax Sheltered Annuity Plan (the Plan ) provides only general information. The W.S.O.S. Community Action Commission, Inc. (the Employer ) is a not-for-profit organization as described in Section 501(c)(3) of the Internal Revenue Code (IRC). Participants should refer to the plan agreement for a more complete description of the Plan s provisions. General The Plan is a defined contribution plan covering substantially all employees of the Employer, as long as they regularly work over 20 hours per week. Upon hire, employees are immediately eligible to make salary deferral contributions. Employees are eligible to receive Employer matching contributions and discretionary Employer nonelective contributions after 1 or 2 years of service depending upon their employment category as defined by the Plan. A year of service is defined as 1,000 hours of service over the course of one year. The Plan is subject to the provisions of ERISA. Contributions Each year, participants may contribute up to 100 percent of pretax annual compensation, as defined in the Plan, not to exceed the maximum annual deferral amount allowed by the Internal Revenue Code (IRC). Catch-up contributions are available to participants over age 50. Participants may contribute rollovers from other qualified plans, which do not count against the IRC maximum. Participants may change their contribution deferral election at the beginning of each quarter. Participants contributions are 100% matched by the Employer up to 4% of compensation. In addition, the Employer may elect to make discretionary nonelective contributions to the Plan as determined by the Employer. During 2011, the Employer elected to make discretionary nonelective contributions equal to 100% of the first 3% of compensation contributed by each eligible participant. 4

7 Note 1 Description of the Plan (Continued) Participant Accounts Each participant s account is credited with the participant s contribution and allocations of (a) the Employer s contributions, (b) plan earnings/losses, and is charged with an allocation of administrative expenses. Allocations are based on participant compensation or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Vesting Participants are immediately vested in all contributions to their account balance plus actual earnings thereon. Notes Receivable from Participants Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50 percent of their account balance. The loans are secured by the balance in the participant s account and bear interest at rates that range from 5.25 percent to percent, which are commensurate with local prevailing rates as determined quarterly by the plan administrator. Payment of Benefits Upon termination of service, death, retirement, or disability, a participant may elect to receive either (a) a lump-sum amount equal to the value of the participant s vested interest in his or her account, (b) annual installments (over a period not to exceed the life expectancy of the participant), or (c) in the case of death, lump-sum, or installment payments to the participant s beneficiary (over a period not to exceed the life expectancy of the beneficiary). Hardship withdrawals are allowed upon meeting certain criteria. 5

8 Note 2 Summary of Significant Accounting Policies Basis of Accounting The financial statements of the Plan are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. Accounting principles generally accepted in the United States require investment contracts held by a defined contribution plan to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. The Statement of Net Assets Available for Benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis. Use of Estimates The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States requires the plan administrator to make certain estimates and assumptions that directly affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. 6

9 Note 2 Summary of Significant Accounting Policies (Continued) Investment Valuation and Income Recognition The Plan's investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 4 for discussion of fair value measurements. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Realized gains and losses and unrealized appreciation and depreciation of plan assets are reported in the statement of changes in net assets available for benefits as net appreciation in fair value of investments. Notes Receivable From Participants Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant loans are reclassified as distributions based upon the terms of the plan document. Payment of Benefits Benefits are recorded when paid. Administrative Expenses A portion of the administrative expenses, investment advisory fees, and other expenses incurred in conjunction with the Plan are paid out of the Plan s assets. The Employer pays for the remaining expenses of the Plan. 7

10 Note 2 Summary of Significant Accounting Policies (Continued) Subsequent Events Subsequent events have been evaluated through, which is the date the financial statements were available to be issued. Note 3 Investments Investments that represent five percent or more of the Plan s net assets available for benefits at December 31 are as follows: Maxim Moderately Aggressive Profile Portfolio Fund $ 1,474,842 $ 1,627,616 Maxim Aggressive Profile Portfolio Fund 544, ,456 Maxim Moderate Profile Portfolio Fund 1,209,662 1,210,505 Maxim Stock Index Portfolio Fund 825, ,559 Maxim Money Market Portfolio Fund 954,172 1,055,963 Great-West Guaranteed Certificate Fund * 562, ,251 * Presented at contract value 8

11 Note 4 Fair Value Measurements The accounting literature establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access. Level 2 - Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. 9

12 Note 4 Fair Value Measurements (Continued) Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2011 and Pooled Separate Accounts: Stated at net asset value as determined by the issuer based on the fair value of the underlying investments. Guaranteed interest accounts: Valued by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the creditworthiness of the issuer. The method described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. 10

13 Note 4 Fair Value Measurements (Continued) The following tables set forth by level, within the fair value hierarchy, the Plan's assets at fair value as of December 31: 2011 Level 1 Level 2 Level 3 Total Pooled separate accounts: Equity $ - $ 4,251,027 $ - $ 4,251,027 Allocation - 1,666,489-1,666,489 Bond - 745, ,282 Foreign - 912, ,238 Money Market - 954, ,172 Total pooled separate accounts: - 8,529,208-8,529,208 Guaranteed interest accounts - 781, ,290 Total assets at fair value $ - $ 9,310,498 $ - $ 9,310, Level 1 Level 2 Level 3 Total Pooled separate accounts: Equity $ - $ 4,254,053 $ - $ 4,254,053 Allocation - 1,591,922-1,591,922 Bond - 585, ,330 Foreign - 693, ,595 Money Market - 1,055,963-1,055,963 Total pooled separate accounts: - 8,180,863-8,180,863 Guaranteed interest accounts - 916, ,279 Total assets at fair value $ - $ 9,097,142 $ - $ 9,097,142 11

14 Note 4 Fair Value Measurements (Continued) The table below sets forth additional disclosures for investments for which fair value is estimated using net asset value per share (or its equivalent) as of December 31, 2011: Investment type Pooled separate accounts: Fair value Unfunded commitments Redemption frequency Redemption notice period Equity (a) $4,251,027 $ - Daily N/A Allocation (b) 1,666,489 - Daily N/A Bond (c) 745,282 - Daily N/A Foreign (d) 912,238 - Daily N/A Money Market (e) 954,172 - Daily N/A (a) These investments are generally comprised of publicly traded U.S. common stocks. They seek appreciation of stock price, and are generally of higher risk than most other investments. (b) These investments seek to be diversified, and are built to mimic the gains of the overall market. The securities comprising the funds include bond, income, money market, and equity funds/securities. (c) These investments seek to provide income. Although the rate of return on these investments is generally lower, they generally carry lower risk. 12

15 Note 4 Fair Value Measurements (Continued) (d) These investments are primarily comprised of publicly traded non-u.s. common stocks. They seek appreciation of stock price, and are generally of higher risk than most other investments. (e) These investments seek to be of the lowest risk possible in the open market. Those invested in them can expect steady income and stability of principal. Note 5 Information Certified by Custodian The plan administrator has elected the method of annual reporting compliance by 29 CFR of the Department of Labor s Rules and Regulations for Reporting and Disclosure Under the Employee Retirement Income Security Act of The Plan s custodian, Great-West Life & Annuity Insurance Company, has certified that the following data included in the accompanying financial statements and supplemental schedule is complete and accurate: a. Investments as shown in the Statements of Net Assets Available for Benefits b. Net depreciation in fair value of investments and investment earnings as shown in the Statement of Changes in Net Assets Available for Benefits c. Investment information as disclosed in Note 3 and on Schedule H, Part IV, Line 4(i) - Schedule of Assets (Held at End of Year) The Plan s independent auditors did not perform auditing procedures with respect to this information, except for comparing such information to the related information included in the financial statements and supplemental schedule. 13

16 Note 6 Guaranteed Interest Accounts The Plan maintains investment options in guaranteed interest contracts with Great-West Life and Annuity Insurance Company. Per ASC 962, the contracts underlying these investment options are considered to be fully benefit-responsive. The accounts are credited with contributions and earnings on the underlying investments and charged for participant withdrawals and administrative expenses. Certain events limit the ability to transact at contract value with the issuer. The Plan Administrator does not believe that the occurrence of any such value event, which would limit the Plan s ability to transact at contract value with participants, is probable. Although Great-West Life and Annuity Insurance Company may credit a higher interest rate, a lifetime minimum of 4% is guaranteed. The crediting interest rate for the plan year ending December 31, 2011 was 4%. Note 7 Transactions With Parties-in-Interest Fees paid during the year for administrative services rendered by parties-in-interest were based on customary and reasonable rates for such services. Certain legal, accounting, and administrative expenses relating to the maintenance of the Plan are paid by the Employer. Certain plan investments are guaranteed interest accounts managed by Great- West Life & Annuity Insurance Company, the custodian. Transactions involving the custodian s managed funds are considered transactions with parties-in-interest. Note 8 Plan Termination Although it has not expressed any intent to do so, the Employer has the right under the Plan s provisions to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participants will become 100 percent vested in their accounts. 14

17 Note 9 Income Tax Status The Plan terms have been drafted in reliance on the sample language provided by the Internal Revenue Service. The Plan is required to operate in conformity with the Code to maintain the exclusion from tax for plan participants. Plan management believes the Plan is currently designed and operated in compliance with the applicable requirements of the Code. Therefore, no provision for income tax has been included in the Plan's financial statements. Accounting principles generally accepted in the Unites States require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the organization has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2011 and 2010, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The administrator believes it is no longer subject to income tax examinations for years prior to Note 10 Risks, Uncertainties, and Concentration of Credit Risk The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risks associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants account balances and the amounts reported in the Statements of Net Assets Available for Benefits. 15

18 Note 11 Commitments The Notes Receivable from Participants reported on the Statements of Net Assets Available for Benefits are loans made to participants from their plan accounts. Prior to 2010, the Plan also provided for collateral loans. Under this form of loan, participants may borrow from the Plan s custodian, Great West Life & Annuity Insurance Company ( Great West ) a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 80% of their account balance subject plan provisions. Loan terms range from one to five years in one year increments (up to ten years for the purchase of a primary residence). These collateral loans are not from Plan asset dollars, but rather loaned directly from Great West and therefore, are not recorded as an asset on the Statement of Net Assets Available for Benefits. The loans are secured by the participants vested account balances in an amount equal to 125% of the outstanding loan balances. Loans bear interest at rates that may be fixed or variable depending upon the plan. Principal and interest is paid ratably by participants to Great West and each payment will reduce amounts secured by the participant s account. The amount of such outstanding loans was $25,474 and $40,108 as of December 31, 2011 and 2010, respectively. 16

19 Supplemental Schedule

20 Schedule H, Part IV, Line 4(i) - Schedule of Assets (Held at Year-End) Employer ID # , Plan #001 December 31, 2011 (a) (b) (c) (d) (e) Identity of Issuer, Borrower, Lessor, or Similar Party Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value Cost Current Value GUARANTEED INTEREST ACCOUNTS * Great West Banded Portfolio Fund (at Contract Value) ** $ 2,790 * Great West Daily Interest Guaranteed Fund (at Contract Value) ** 202,750 * Great West Guaranteed Certificate Fund (at Contract Value) ** 562,556 TOTAL GUARANTEED INTEREST ACCOUNTS 768,096 POOLED SEPARATE ACCOUNTS Alger American Balanced Portfolio Fund ** 1,137 Alger American Mid Cap Growth Portfolio Fund ** 34,193 American Century Equity Income Fund ** 24,303 American Funds Growth Fund ** 45,813 Artisan International Fund ** 30,519 Columbia Mid Cap Value Fund ** 165,582 Davis New York Venture Fund ** 5,622 Federated Capital Appreciation Fund ** 11,848 Fidelity VIP Growth Portfolio Fund ** 206,544 Fidelity VIP Contrafund Fund ** 81,153 Invesco Dynamics Fund ** 8,231 Invesco Large Cap Growth Fund ** 5,290 Invesco Small Cap Growth Fund ** 91 Invesco Van Kampen American Value Fund ** 62,200 Invesco Van Kampen Comstock Fund ** 32,530 Janus Twenty Fund ** 910 Janus Worldwide Fund ** 1,437 Jensen R Fund ** 4,280 Lord Abbett Value Opportunities Fund ** 28,967 Maxim Aggressive Profile Portfolio Fund ** 544,238 Maxim Ariel Mid Cap Value Portfolio Fund ** 122,717 Maxim Ariel Small Cap Value Fund ** 61,910 Maxim Bond Index Portfolio Fund ** 379,083 Maxim Conservative Portfolio Profile Fund ** 175,199 See Independent Auditor's Report 18

21 Schedule H, Part IV, Line 4(i) - Schedule of Assets (Held at Year-End) Employer ID # , Plan #001 December 31, 2011 (a) (b) (c) (d) (e) Identity of Issuer, Borrower, Lessor, or Similar Party Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value Cost Current Value POOLED SEPARATE ACCOUNTS (Continued) Maxim Index 600 Portfolio Fund ** 143,246 Maxim Invesco ADR Portfolio Fund ** 144,478 Maxim Lifetime 2015 Portfolio Fund ** 15,927 Maxim Lifetime 2025 Portfolio Fund ** 406 Maxim Lifetime 2045 Portfolio Fund ** 6,607 Maxim Lifetime 2055 Portfolio Fund ** 29,795 Maxim Loomis Sayles Bond Portfolio Fund ** 80,376 Maxim Loomis Sayles Small Cap Value Fund ** 59,291 Maxim MFS International Value Fund ** 176,448 Maxim Moderate Profile Portfolio Fund ** 1,209,662 Maxim Moderately Aggressive Profile Portfolio Fund ** 1,474,842 Maxim Moderately Conservative Profile Fund ** 227,756 Maxim Money Market Portfolio Fund ** 954,172 Maxim Small Cap Growth Portfolio Fund ** 25,687 Maxim Stock Index Portfolio Fund ** 825,190 Maxim T. Rowe Price Equity Income Fund ** 78,376 Maxim T. Rowe Price Mid Cap Growth Portfolio Fund ** 84,172 Maxim US Government Securities Fund ** 96,137 Oppenheimer Capital Appreciation Fund ** 8,632 Oppenheimer Global Fund ** 404,457 PIMCO Total Return Fund ** 189,482 Putnam High Yield Advantage Fund ** 204 Putnam International Capital Opp R Fund ** 154,899 Ridgeworth Small Cap Growth Stock Fund ** 39,836 Royce Total Return Fund ** 63,587 RS Select Growth A Fund ** 200 RS Small Cap Growth A Fund ** 1,546 TOTAL POOLED SEPARATE ACCOUNTS 8,529,208 See Independent Auditor's Report 19

22 Schedule H, Part IV, Line 4(i) - Schedule of Assets (Held at Year-End) Employer ID # , Plan #001 December 31, 2011 (a) (b) (c) (d) (e) Identity of Issuer, Borrower, Lessor, or Similar Party Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value Cost Current Value PARTICIPANT LOANS * Participant loans Interest rates at 5.25% to 10.25% 0 95,597 TOTAL ** $ 9,392,901 * Party-in-interest ** Not applicable for participant-directed investments See Independent Auditor's Report 20