American Counseling Association. Financial Report June 30, 2011

Transcription

1 American Counseling Association Financial Report June 30, 2011

2 Contents Independent Auditor s Report On The Financial Statements 1 Financial Statements Balance Sheet 2 Statement Of Activities 3 Statement Of Cash Flows Independent Auditor s Report On The Supplementary Information 16 Supplementary Information Schedule Of Functional Expenses 17

3 Independent Auditor s Report To the Governing Board American Counseling Association Washington, D.C. We have audited the accompanying balance sheet of American Counseling Association (the Association) as of June 30, 2011, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the Association s management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year s summarized comparative information has been derived from the 2010 financial statements before they were restated for the matter discussed in Note 12, and in our report dated February 14, 2011, we expressed an unqualified opinion on those financial statements. 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 examining, on a test basis, evidence supporting the amounts and disclosures in the 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 audit provides a reasonable basis for our opinion. In our opinion, the 2011 financial statements referred to above present fairly, in all material respects, the financial position of the Association as of June 30, 2011, 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. As discussed in Note 12 to the financial statements, the Association s financial statements have been restated for an error in the application of lease accounting principles and to record the assets and liabilities for a deferred compensation plan. Vienna, Virginia March 12,

4 Balance Sheet June 30, 2011 (With Comparative Totals For 2010) Assets * Cash And Cash Equivalents $ 3,014,857 $ 1,529,107 Investments 3,524,755 3,327,755 Accounts Receivable, net 148, ,211 Prepaid Expenses 266, ,252 Due From Affiliates 246, ,207 Deferred Rent 129, ,851 Publication Inventory 245, ,251 Notes Receivable, net 552, ,805 Property And Equipment, net 274,717 57,367 $ 8,403,023 $ 6,934,806 Liabilities And Net Assets Liabilities Accounts payable and accrued expenses $ 807,666 $ 605,263 Due to affiliates 55,784 83,771 Deferred revenue 4,043,938 3,421,258 Deferred compensation obligation 126, ,337 Postretirement benefit obligation 1,760,070 1,397,570 Deferred rent 174, ,027 6,968,299 5,805,226 Commitments And Contingencies (Notes 7 and 8) Net Assets Unrestricted Undesignated 933, ,577 Designated 158, ,176 Temporarily restricted 342, ,827 1,434,724 1,129,580 * As Restated Note 12 $ 8,403,023 $ 6,934,806 See. 2

5 Statement Of Activities Year Ended June 30, 2011 (With Comparative Totals For 2010) 2011 Temporarily Unrestricted Restricted Total 2010 Revenue and support: Membership dues $ 5,446,905 $ - $ 5,446,905 $ 5,237,569 Subscriptions 1,626,429-1,626,429 1,776,792 Conferences 1,424,260-1,424,260 1,076,690 Royalties 860, , ,052 Investment income 782,233 52, , ,981 Adminstrative, data processing, and service fees 269, , ,751 Workshops and seminars 255, , ,128 Other 143, , ,213 Rental income 53,809-53,809 8,584 Regions 41,192-41,192 37,948 Contributions - 29,150 29,150 22,025 Gain on sale of property held for lease ,415 Loss on sale of property and equipment (121) - (121) - Net assets released from restriction 28,621 (28,621) - - Total revenue and support 10,932,361 53,099 10,985,460 10,203,148 Expenses: Program services: Journals, publications, and newspapers 1,798,844-1,798,844 2,117,617 Annual conference 1,357,413-1,357,413 1,139,036 Member programs 1,265,527-1,265,527 1,523,940 Professional development 953, , ,898 Marketing and product development 443, , ,443 Public policy and information 219, , ,435 Regions 38,593-38,593 40,049 6,076,440-6,076,440 5,987,418 Support services: General and administrative 4,227,190-4,227,190 3,335,743 Governance 376, , ,656 Total expenses 10,680,316-10,680,316 9,894,817 Change in net assets 252,045 53, , ,331 Net assets: Beginning 839, ,827 1,129, ,249 Ending $ 1,091,798 $ 342,926 $ 1,434,724 $ 1,129,580 See. 3

6 Statement Of Cash Flows Year Ended June 30, 2011 (With Comparative Totals For 2010) Cash Flows From Operating Activities Change in net assets $ 305,144 $ 308,331 Adjustments to reconcile change in net assets to net cash provided by operating activities: Unrealized and realized gain on investments (579,008) (290,681) Depreciation 68,695 53,376 Gain on sale of building - (30,415) Loss on sale of property and equipment Impairment loss on notes receivable 400, ,695 Bad debt expense 159, ,574 Write-off of obsolete inventory 7,358 10,809 Deferred rent 24,797 20,176 Changes in assets and liabilities: (Increase) decrease in: Accounts receivable (147,693) (198,740) Due from affiliates (11,344) 95,527 Publication inventory (32,158) 837 Prepaid expenses 8,566 73,035 Increase (decrease) in: Accounts payable and accrued expenses 202,403 (12,726) Due to affiliates (27,987) (2,810) Postretirement benefit obligation 362, ,768 Deferred revenue 622, ,165 Net cash provided by operating activities 1,363, ,921 Cash Flows From Investing Activities Purchases of investments (1,710,781) (150,300) Proceeds from sale of investments 2,119, ,980 Purchases of property and equipment (286,169) (47,788) Net cash provided by investing activities 122,328 8,892 Net increase in cash and cash equivalents 1,485, ,813 Cash And Cash Equivalents Beginning 1,529, ,294 Ending $ 3,014,857 $ 1,529,107 See. 4

7 Note 1. Nature Of Activities And Significant Accounting Policies Nature of activities: The American Counseling Association (the Association) is a not-for-profit corporation established to promote confidence and trust in the counseling profession by informing the public about human development concerns and advancing the counseling and human development profession by influencing standards and promoting ethical and responsible professional practice. A summary of the Association s significant accounting policies follows: Basis of accounting: The Association prepares its financial statements on the accrual basis of accounting, whereby, revenue is recognized when earned and expenses are recognized when incurred. Basis of presentation: The financial statement presentation follows the recommendations of the Financial Accounting Standards Board Accounting Codification (the Codification). As required by the Non-Profit Entities topic of the FASB Accounting Standards Codification, the Association is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. The Association does not have any permanently restricted net assets at June 30, Cash and cash equivalents: For the purposes of reporting cash flows, the Association considers all money market funds and highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Financial risk: The Association maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Association has not experienced any losses in such accounts. The Association believes it is not exposed to any significant credit risk on cash. The Association invests in a portfolio that contains equity and fixed income securities based exchange traded funds. Such investments are exposed to various risks such as market and credit. Due to the level of risk associated with such investments and the level of uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment balances and the amounts reported in the financial statements. Investments: Investments with readily determinable fair values are reflected at fair market value. Unrealized gains and losses on investments are reported in the statement of activities as part of investment income. Advertising costs: The Association expenses all advertising costs as incurred. Advertising expense for the year ended June 30, 2011, was $118,710. Receivables: Receivables are carried at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. The provision for doubtful accounts, based on management s evaluation of the collectability of receivables, was $507,400 at June 30, Inventory: Inventory consists of publications held for sale stated at the lower of cost, determined by the first-in, first-out method, or market. The provision for obsolescence is based on management s evaluation of the salability of inventory. The provision for obsolescence, based on management s evaluation of the salability of inventory, was $7,358 at June 30,

8 Note 1. Nature Of Activities And Significant Accounting Policies (Continued) Property and equipment: The Association capitalizes all property with a cost of $500 or more. Property and equipment are recorded at costs and depreciated using the straight-line method over their estimated useful lives of three to ten years. Valuation of long-lived assets: The Association accounts for the valuation of long-lived assets in accordance with the Codification. As required by the Non-Profit Entities Topic of the Codification, Accounting for the Impairment or Disposal of Long-Lived Assets, it is required that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. Deferred rent: The Association leases office space under a non-cancelable lease which expires in November The lease requires minimum annual rents, provides for an annual increase based on increases in the Consumer Price Index (CPI), and includes a rent concession of $200,209 all of which are required to be recognized ratably over the lease term in accordance with accounting principles generally accepted in the United States of America. Accordingly, the amount of rent expense does not coincide with cash payments. This gives rise to a deferred rent receivable and liability, which are being amortized over the term of the lease. The deferred rent receivable was $129,042 and the related deferred rent liability was $174,015 at June 30, Net assets: The Association has established the following unrestricted net asset categories: Undesignated This fund is used for the general operations of the Association. Designated These funds have been appropriated by the Governing Council of the Association for designated programs and consist of the following: Long-Term Reserve Fund Fund was established to provide a reserve for any expenditures that may arise in future years including emergencies and to address the postretirement benefit obligation associated with the Association s plan. Regions The balance consists of the net activity of the ACA regions and allocations made by ACA. Replacement Reserve Fund This fund was established to fund the replacement of property and equipment in future years. 6

9 Note 1. Nature Of Activities And Significant Accounting Policies (Continued) Temporarily Restricted Temporarily restricted net assets consist the following: Dorothy Ross Trust The fund is to be used primarily for scholarships. Legal Action Program Its purpose is to provide assistance to eligible ACA members to enable them to resolve legal disputes in matters relating to their primary responsibilities or interests in the area of counseling and human development. This fund is increased by contributions and interest earned on the fund s beginning balance. Human Concerns Fund The purpose of this fund is to help alleviate human suffering by providing financial assistance to programs which address the needs of the less fortunate persons in society. This fund is increased by contributions and interest earned on the fund s beginning balance. Professional Counseling Advocacy This fund is utilized to train members on how to advocate reform needed to provide counselors with the same rights and opportunities as other helping professionals at the state and federal level. Revenue recognition: Membership dues are recognized over the members dues year. Nonmember subscriptions and conferences are recognized as revenue over the subscription period or in the case of the conference at completion of the event. Amounts received in advance are recognized as deferred revenue. Income taxes: The Association is generally exempt from federal income taxes under the provisions of Section 501(c)(3) of the Internal Revenue Code and is not considered to be a private foundation. Income, which is not related to exempt purposes, less applicable deductions, is subject to income taxes. The Association had no material net unrelated business income for the year ended June 30, The Association follows the accounting standard on accounting for uncertainty in income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, the Association may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification, interest and penalties on income taxes, and accounting in interim periods. Management evaluated the Association s tax positions and concluded that the Association had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. Generally, the Association is no longer subject to income tax examinations by the U.S. federal, state or local tax authorities for years before Functional allocation of expenses: The cost of providing for various programs and special projects has been summarized on the functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs benefited. Use of estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 7

10 Note 1. Nature Of Activities And Significant Accounting Policies (Continued) Recently adopted accounting standard: In January 2010, the Financial Accounting Standards Board (FASB) released Accounting Standards Update No (ASU ), which provided accounting guidance that requires new fair value measurement classification disclosures and clarifies existing disclosures. The guidance requires: (i) separate disclosures of significant transfers between Levels 1 and 2 and reasons for transfers; (ii) disclosure, on a gross basis, of purchases, sales, issuances and net settlements within Level 3 measurements; (iii) disclosures by class of assets and liabilities; and (iv) a description of the evaluation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. The guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disaggregation of the Level 3 activity, which is effective for interim and annual periods beginning after December 15, The Association adopted ASU during the year ended June 30, Subsequent events: The Association evaluated subsequent events through March 12, 2012, which is the date the financial statements were available to be issued. Prior year information: The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Association s financial statements for the year ended June 30, 2010, from which the summarized information was derived. Note 2. Investments The Association s investments at June 30, 2011, consist of the following: Equity based exchange traded funds $ 1,902,478 Fixed income based exchange traded funds 1,495,451 Deferred compensation investments $ 126,826 3,524,755 Investment income for the year ended June 30, 2011, consists of the following: Realized and unrealized gain on investments $ 579,008 Interest and dividends 255,795 $ 834,803 Note 3. Property And Equipment Property and equipment and accumulated depreciation at June 30, 2011, and depreciation expense for the year ended June 30, 2011, was as follows: Estimated Accumulated Depreciation Asset Category Lives Cost Depreciation Expense Computer equipment 3 5 years $ 1,155,097 $ 893,579 $ 63,976 Leasehold improvements 5 9 years 532, ,649 1,780 Furniture and equipment 3 7 years 73,360 66,523 2,939 $ 1,760,468 $ 1,485,751 $ 68,695 8

11 Note 4. Retirement Plan Defined contribution All employees of the Association are eligible to participate in a contributory, defined contribution retirement plan. Employer and employee contributions are applied to the purchase of individual annuities from Teachers Insurance Annuity Association and College Retirement Equities Fund. Participation is voluntary, and employer contributions are based on salary and length of service. Employer contributions for the year ended June 30, 2011, were $137,098. Post retirement health benefit plan The Association sponsors a retiree health plan providing voluntary continuation of health insurance of retirees and dependents on a cost reimbursement basis. The plan covers employees hired on or before April 30, 1994, who retire on or after July 1, 1985, at age 55 or older and with a minimum of ten continuous years of full-time service immediately preceding retirement. The plan is unfunded. The following table sets forth the accrued post retirement benefit obligation of the plan as of June 30, 2011: Change in the Accumulated Benefit Obligation Accrued post retirement benefit obligation, June 30, 2010 $ 1,397,570 Service cost 28,799 Interest cost 75,875 Actuarial loss 312,255 Benefits paid (54,429) Accrued post retirement benefit obligation June 30, 2011 $ 1,760,070 The net periodic postretirement benefit cost for the year ended June 30, 2011, included the following components: Service cost $ 28,799 Interest cost 75,875 Recognized actuarial loss 3,463 Net periodic postretirement benefit cost $ 108,137 The accumulated post retirement benefit obligation at June 30, 2011, was determined using a discount rate of 5.5% for the net periodic benefit cost and the benefit obligation and a health care cost trend starting of 7% and adjusting down by a flat 0.5% each year until it reaches the assumed long-term trend of 5%. A 1% increase each year in the health care cost trend rate used would result in increases of $286,303 in the accumulated postretirement benefit obligation at June 30, 2011, and a $21,021 increase in the aggregate for the service and interest components of the 2011 benefit cost. Employer contributions were $54,429 for the year ended June 30, Employer contributions are estimated to be $70,654 for the year ended June 30,

12 Note 4. Retirement Plan (Continued) Based on current data and assumptions, estimated future benefits expected to be paid from the plan are as follows: Years Ending June 30, 2012 $ 70, , , , , $ 453, ,120 Note 5. Sale Leaseback Arrangement During October 1999, the Association entered into an agreement for the sale and leaseback of its Alexandria, Virginia facility. The lease was classified as an operating lease. As of June 30, 2000, the land and building with book values totaling $3,952,231 were removed from the balance sheet. As required under generally accepted accounting principles, the remaining gain of the sale in excess of the present value of future minimum lease payments, which totaled $30,415, was recognized as income during the year ended June 30, Note 6. Related Party Transactions The Association administers all or part of the accounting and financial functions of its affiliated divisions and most of its organizational and corporate affiliates. Because they are governed by independent boards of directors and are not under the Association s control, the organizational affiliates, divisions and corporate affiliates are excluded from these financial statements. The affiliated divisions include the following entities: American College Counseling Association (ACCA) American Counseling Association Foundation (ACAF) American Counseling Association Insurance Trust (ACA Trust) Association for Creativity in Counseling (ACC) American Rehabilitation Counseling Association (ARCA) American School Counselors Association (ASCA) Association for Adult Development and Aging, Inc. (AADA) Association for Assessment in Counseling and Education (AACE) Association for Counselor Education and Supervision (ACES) Association for Counselors and Educators in Government (ACEG) Association for Lesbian, Gay, Bisexual and Transgender Issues in Counseling (ALGBTIC) Association for Multicultural Counseling and Development (AMCD) Association for Specialists in Group Work (ASGW) Association for Spiritual, Ethical, and Religious Values in Counseling (ASERVIC) Counseling Association for Humanistic Education and Development (CAHEAD) Counselors for Social Justice (CSJ) International Association of Addictions and Offender Counselors (IAAOC) International Association of Marriage and Family Counselors (IAMFC) National Career Development Association (NCDA) National Employment Counseling Association (NECA) 10

13 Note 6. Related Party Transactions (Continued) The Association provides accounting and other services to the above affiliated divisions which totaled $207,892 for the year ended June 30, 2011, and amounts due from divisions generally represented these management services unpaid as of fiscal year-end. The Association collects the majority of the cash receipts for the affiliates and amounts due to divisions generally represent cash receipts not disbursed to the affiliates as of fiscal year-end. In addition, the Association holds funds for another organization, Council for Accreditation of Counseling and Related Educational Programs (CACREP), which is not a division of the Association. The following summarizes the amounts due to/from the Association and affiliates as of June 30, 2011: Due From Due To Affiliates Affiliates AACE $ 655 $ 1,035 AADA 1, ACA Trust 186,071 - ACAF 11,589 3,298 ACC 788 2,723 ACCA 1,596 5,915 ACEG ACES 3,234 11,483 ALGBTIC 607 1,949 AMCD 3,767 4,334 ARCA 613 2,631 ASERVIC 1,055 2,888 ASGW 932 2,996 CACREP 22,248 - CAHEAD CSJ 536 1,213 IAAOC 2,518 2,106 IAMFC 2,735 5,333 NCDA 5,402 5,327 NECA 288 1,233 $ 246,551 $ 55,784 11

14 Note 7. Leasing Arrangements The Association entered into a ten-year office lease on January 1, In October 2008, the Association extended the original lease for a five-year term to expire on November 30, Rent expense charged to operations for the year ended June 30, 2011, is $597,496. The lease also includes $200,209 of incentives the Association may use either as rent concessions or tenant improvements. The Association has other various warehouse and operating equipment leases. Future minimum lease payments under these operating lease agreements at June 30, 2011, are as follows: Years Ending June 30, 2012 $ 585, , , , ,294 $ 2,240,555 Note 8. Commitments And Contingencies The Association has contracted with hotels for convention and hotel space for its future annual meetings. In the event the Association cancels or reduces its contracted room nights, the Association may be liable for cancellation fees for all rooms that the hotel will not be able to resell. The ACA Insurance Trust (the Trust) operates in cooperation with the American Counseling Association as an independent corporation. The Trust assists Association members with insurance questions and provides a risk management helpline to provide some guidance to members on professional liability insurance issues. ACA Insurance Trust also develops other tools, such as workshops aimed at instructing counselors in how to avoid professional liability claims. The Trust maintains other insurance programs administered by outside brokers, such as life, health, auto and homeowners. ACA Insurance Trust, Inc. is a licensed insurance agency. It is managed by a separate board of directors and the financial statements of ACAIT are not consolidated with the Association. The Trust dissolved on December 31, The Association has a contract with HPSO, which compensates the Association for the sponsorship and provides a royalty for use of their name, logo and mailing lists. The contract between the Association and HPSO has a provision that agrees to hold the Association harmless for the actions of HPSO in administering the program. The Association has an employment agreement with its executive director that expires in June Under the terms of the agreement the executive director is entitled to 240 days of compensation should his employment be terminated without cause during the contract period or if the contract is not renewed at its date of expiration. 12

15 Note 9. Fair Value Measurements The Association follows the Codification topic, Fair Value Measurements. The Codification applies to all assets and liabilities that are being measured and reported on a fair value basis. The Codification requires disclosure that establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. The Codification enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Codification requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. In determining the appropriate levels, the Association performs a detailed analysis of the assets and liabilities that are subject to fair value measurements. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. There were no Level 3 inputs for any assets held by the Association at June 30, The table below presents the balances of assets measured at fair value on a recurring basis by level within the hierarchy. Investments: Exchange traded funds: Total Level 1 Level 2 Level 3 Multi-strategy equities $ 1,902,478 $ 1,902,478 $ - $ - Multi-strategy fixed income 1,495,451 1,495, Deferred compensation: Pooled investments 126, ,826 - $ 3,524,755 $ 3,397,929 $ 126,826 $ - Deferred compensation obligation $ (126,826) $ - $ (126,826) $ - $ (126,826) $ - $ (126,826) $ - The Association s equity and fixed income based exchange traded funds are publicly traded on the New York Stock Exchange and are considered Level 1 items. The fair values of pooled investments are determined based on inputs other than quoted prices. This includes the use of models or other valuation methodologies, which are corroborated by other market data in order to determine their value; thus, they are categorized as Level 2. The deferred compensation liability is based on the fair market value of the deferred compensation plan assets that are observable inputs, but the liability is not publicly traded and is therefore classified as Level 2. The pooled investments category includes investments in mutual funds to include bond funds, foreign funds and consumer cyclical that are publicly traded. The Association investments are included in a pool with other investors in these funds and are therefore allocated their fair value based on units invested. The Association has no unfunded commitments to this investment. There is no restriction on the Association s ability to redeem its investment on the measurement date. 13

16 Note 10. Net Assets Board-designated net assets have been set aside for the following programs at June 30, 2011: Long-Term Reserve Fund $ 63,353 Replacement Reserves 54,494 Regions $ 40, ,229 The Association s temporarily restricted net assets and the related activity during the year ended June 30, 2011, are as follows: Balance Balance June 30, 2010 Contributions Releases June 30, 2011 Dorothy Ross Trust $ 141,280 $ 48,919 $ (14,706) $ 175,493 Legal Defense 67,364 13,457-80,821 Human Concerns 62,537 14,105 (2,656) 73,986 Professional Counselor Advocacy 18,646 5,239 (11,259) 12,626 $ 289,827 $ 81,720 $ (28,621) $ 342,926 Note 11. Notes Receivable During the year ended June 30, 2009, the Association issued two separate notes receivable to the Heritage of America, LLC (HOA) to help establish a counseling program for veterans. In August 2008, a note of $300,000 was made with repayment to be received by August 19, 2009, and in November 2008, the second note of $1,200,000 was made with repayment to be received by October 31, According to the terms of both agreements, HOA pays 10% interest per annum on the loans through the due date. As of June 30, 2011, HOA has paid a portion of the interest incurred on the loans but has not repaid the actual note balances. During 2011, HOA filed for reorganization under the bankruptcy code. The Association has filed a claim for appeal and has entered into litigation with HOA for funds due to repay the loan. With the delay in repayment terms and the reorganization proceedings, the loan has been determined to be further impaired. Accordingly, an accumulated bad debt of $947,195 has been recorded to date through June 30, 2011, with a bad debt loss of $400,000 recorded for the year ended June 30, The bad debt represents the difference between the note s principal balance and an estimate of its net collectable amount. 14

17 Note 12. Prior Period Adjustment The Association s financial statements have been restated at June 30, 2010, to record a deferred rent receivable for $176,851 and increase the deferred rent liability for $176,851, which is comprised of the unused rent concession at June 30, 2010, which was previously not recorded. The prior period restatement had no effect on net assets at June 30, 2010, or change in net assets for the year ended June 30, The Association has restated the balance sheet at June 30, 2010, to increase investments (deferred compensation asset) and the deferred compensation liability by $100,337, which is comprised of deferred compensation from certain employees under a 457 deferred compensation plan, and which was previously not reported. The restatement had no effect on net assets or change in net assets for the year ended June 30, The Association makes no contributions to the plan. Elective deferrals can be made to the plan by the employee up to the maximum amount permitted by law. A select number of key officers are eligible to participate in the plan. The cumulative employee contributions and investment income for the plan totals $126,826 at June 30, 2011, and is reported in investments and as a liability in the accompanying balance sheet. 15

18 Independent Auditor s Report On The Supplementary Information To the Governing Board American Counseling Association Washington, D.C. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information which follows is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Vienna, Virginia March 12,

19 Schedule Of Functional Expenses Year Ended June 30, 2011 Journals, Publications, And Newspapers Annual Conference Member Programs Professional Development Marketing And Product Development Public Policy And Information Regions General And Administrative Governance Total Salaries $ 601,452 $ 448,818 $ 738,578 $ 466,035 $ 135,613 $ 154,022 $ - $ 1,261,346 $ 101,250 $ 3,907,114 Benefits and payroll taxes 151, , , ,824 34,239 38, ,596-1,322,709 Rent - 93, , , ,337 Meeting 46, ,028 50,253 17, , ,563 14,833 49, ,941 Professional fees 21,019 36,427 43, ,794 45,249 6, ,057 20, ,093 Bad debt expense 7, , ,703 Printing and production 401,249 29,358 64,350 6,802 40, , ,141 Postage and shipping 279,690 8, ,727 1,391 21, ,078 2, ,129 Transportation, lodging, and meals 11, ,848 7,827 27,751 2,533 6,574 36,256 65, , ,853 Equipment rental and maintenance ,749 4,080 56, ,961 16, ,199 Publication and royalty expense 135,289 1,678 3,015 28,668 4,492 6,176-7,261 3, ,230 Service fees , ,919 Cost of publication sales 133,921-5, , ,494 Telephone ,402 14,883 3,659 3,829 3, ,779 3, ,519 Awards - 18,268 3, ,086 48, ,546 Depreciation ,695-68,695 Insurance ,949-61,978 Recruiting ,577-41,577 Office supplies 2,866 1,958 4,499 1,693 2, ,158 1,022 23,159 Miscellaneous 1, , ,514 Utilities 662 5, ,340-12,672 Taxes 2, ,312-11,794 Total expenses $ 1,798,844 $ 1,357,413 $ 1,265,527 $ 953,110 $ 443,908 $ 219,045 $ 38,593 $ 4,227,190 $ 376,686 $ 10,680,316 17