Girl Scout Commonwealth Council of Virginia, Inc. Financial Statements

Transcription

1 Girl Scout Commonwealth Council of Virginia, Inc. Financial Statements Year Ended September 30, 2017, with Comparative Totals for 2016

2 Table of Contents Independent Auditors' Report... 1 Financial Statements: Statement of Financial Position... 3 Statement of Activities... 4 Statement of Functional Expenses... 5 Statement of Cash Flows

3 Independent Auditors Report Board of Directors Girl Scout Commonwealth Council of Virginia, Inc. Richmond, Virginia Report on the Financial Statements We have audited the accompanying financial statements of the Girl Scout Commonwealth Council of Virginia, Inc. (a nonprofit organization), which comprise the statement of financial position as of September 30, 2017, and the related statements of activities, functional expenses and cash flows for the year 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 auditors 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 the Girl Scout Commonwealth Council of Virginia, Inc. as of September 30, 2017, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1

4 Report on Summarized Comparative Information We have previously audited the Girl Scout Commonwealth Council of Virginia, Inc. s 2016 financial statements and, our report dated February 21, 2017 expressed an unmodified opinion on those financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended September 30, 2016, is consistent, in all material respects, with the audited financial statements from which it has been derived. Richmond, Virginia February 8,

5 Statement of Financial Position September 30, 2017, with Comparative Totals for ASSETS Current assets: Cash and cash equivalents $ 2,411,328 $ 2,856,216 Accounts receivable, net 124, ,323 Investment income receivable 6,849 6,849 Inventory 104, ,147 Prepaid expenses 109, ,578 Total current assets 2,755,997 3,228,113 Investments 2,947,554 2,813,007 Property and equipment, net 2,028,391 1,785,636 Total assets $ 7,731,942 $ 7,826,756 LIABILITIES AND NET ASSETS Current liabilities: Accounts payable $ 68,563 $ 385,685 Accrued liabilities 253, ,198 Deferred income 28,153 43,953 Total current liabilities 349, ,836 Deferred rent incentive 97,114 96,178 Custodian funds 31,761 27,355 Total liabilities 478, ,369 Net assets: Unrestricted: Undesignated 1,737,897 2,127,730 Board designated, reserve 3,486,885 3,181,021 Land, buildings and equipment 2,028,391 1,785,636 Total net assets 7,253,173 7,094,387 Total liabilities and net assets $ 7,731,942 $ 7,826,756 See accompanying notes. 3

6 Statement of Activities Year Ended September 30, 2017, with Comparative Totals for 2016 V02 Total Public Support: Annual giving $ 53,403 $ 49,167 Foundations, corporations 26,500 7,000 Girl Scout USA 1,522 3,916 Donated property and services 4,000 8,036 Total public support 85,425 68,119 Revenue: Program revenue: Cookie program, net: Gross revenue $ 4,529,237 $ 4,115,514 Direct cost $ (1,272,044) $ (1,183,120) 3,257,193 2,932,394 Fall product program, net: Gross revenue $ 375,456 $ 454,151 Direct cost $ (171,479) $ (197,389) 203, ,762 Program service fee: Council events 67,366 55,976 Camping fees and related income 224, ,616 Other revenue: Sale of merchandise, net: Gross receipts $ 400,182 $ 405,370 Direct costs $ (247,672) $ (244,467) 152, ,903 Interest and dividend income 78,749 68,607 Gain on sale of investments 114, ,383 Unrealized gain on investments 135,925 90,441 Gain on disposal of property and equipment Insurance proceeds - 58,594 Miscellaneous 23,979 20,907 Total revenue 4,258,273 3,972,883 Total public support and revenue 4,343,698 4,041,002 Expenses: Program services 3,197,379 3,079,004 Supporting services: Management and general 877, ,770 Fundraising 110,526 91,052 Total supporting services 987, ,822 Total expenses 4,184,912 4,020,826 Change in net assets 158,786 20,176 Net assets, beginning of year 7,094,387 7,074,211 Net assets, end of year $ 7,253,173 $ 7,094,387 See accompanying notes. 4

7 Statement of Functional Expenses Year Ended September 30, 2017, with Comparative Totals for 2016 Program Services Supporting Services Total Management Total and Supporting Programs General Fundraising Services Salaries $ 1,188,614 $ 402,887 $ 82,000 $ 484,887 $ 1,673,501 $ 1,671,460 Employee health and retirement benefits 354, ,103 11, , , ,228 Payroll taxes and related insurance 63,872 62,192 6,147 68, , ,386 Total salaries and related expenses 1,606, ,182 99, ,595 2,292,214 2,342,074 Occupancy 498, , ,677 Supplies 316,753 12, , , ,985 Professional fees 109, , , , ,115 Depreciation 120,797 31,166-31, , ,337 Specific assistance to individuals 102, , ,053 Rental, repair and maintenance of equipment 27,209 15, ,452 42, ,230 Printing and promotions 57,207-6,225 6,225 63, ,781 Travel 72,804 15, ,333 88,137 83,156 Insurance 53,900 23, ,745 77,645 74,462 Internet and cloud server system 79, ,836 45,954 Telephone 25,959 1,579-1,579 27,538 35,300 Conferences, conventions, meetings and training courses 18,002 18,438-18,438 36,440 29,182 Postage and shipping 12,664 1,466 3,673 5,139 17,803 14,431 Membership dues (in other organizations) - 2,283-2,283 2,283 2,895 Miscellaneous 95,190 42,620-42, ,810 70,194 Total expenses $ 3,197,379 $ 877,007 $ 110,526 $ 987,533 $ 4,184,912 $ 4,020,826 See accompanying notes. 5

8 Statement of Cash Flows Year Ended September 30, 2017, with Comparative Totals for Cash flows from operating activities: Change in net assets $ 158,786 $ 20,176 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 151, ,337 Amortization of deferred rent incentives (8,223) (8,223) Bad debt expense 75,926 24,461 Gain on disposal of property and equipment - (300) Net realized investment gain (114,539) (125,383) Net unrealized investment gain (135,925) (90,441) Change in assets and liabilities: Accounts receivable (67,858) (132,412) Inventory 953 (3,175) Prepaid expenses 18,207 (36,799) Accounts payable (317,122) 329,360 Accrued liabilities 73,980 (16,623) Deferred revenue (15,800) (168) Deferred rent incentives 9,159 12,933 Custodian funds 4, Net cash provided (used) by operating activities (166,087) 121,681 Cash flows from investing activities: Proceeds from sale of investments 394, ,314 Purchase of investments (278,397) (557,790) Change in investment income receivable - (2,839) Purchase of property and equipment (394,718) (134,578) Proceeds from sale of property and equipment Net cash used by investing activities (278,801) (300,593) Net decrease in cash and cash equivalents (444,888) (178,912) Cash and cash equivalents, beginning of year 2,856,216 3,035,128 Cash and cash equivalents, end of year $ 2,411,328 $ 2,856,216 See accompanying notes. 6

9 1. Organization and Nature of Business The Girl Scout Commonwealth Council of Virginia, Inc. (Council) is a not-for-profit, non-stock, tax-exempt corporation, chartered by the Girl Scouts of the United States of America. The current charter expires on December 31, The purpose of the Council is to assist young girls and women in developing skills, values and a sense of self-worth that will enable them to live in a changing world and become participating citizens; to subscribe to the principles of Girl Scouting as stated in the Girl Scout promise and law; and to foster the Girl Scout movement within Central Virginia, according to the policies set forth by the Girl Scouts of the United States of America. The Council is supported primarily through product sales programs, program fees, and the United Way. Approximately 80% and 79% of the Council's support for the years ended September 30, 2017 and 2016, respectively, came from product sales. 2. Summary of Significant Accounting Policies Basis of presentation The Council reports 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 net asset classes are summarized as follows: Unrestricted net assets include the Undesignated, Board designated, and Land, buildings and equipment funds. The Undesignated and Board designated funds account for the revenue and expenses of the Council's daily operations. The Land, buildings and equipment fund is used to account for asset additions, related debt, and depreciation charges. Temporarily restricted net assets amounts are those stipulated by donors for specific purposes. When a donor restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donor restricted contributions that are received and expended in the same fiscal year are reported as unrestricted support on the statement of activities. Permanently restricted net assets include net assets subject to donor imposed stipulations that they be maintained permanently by the Council. The Council currently has no temporary or permanently restricted net assets. Cash and cash equivalents For the purposes of the statement of cash flows, all highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. Accounts receivable The Council will routinely extend credit in connection with its activities to parties located primarily in Central Virginia. Accounts receivable are generally extended on a short-term basis and do not bear interest. Accounts receivable are reported at their estimated realizable value, net of an allowance for doubtful accounts. The allowance is based on management s estimate of the amount of receivables that will actually be collected. As of September 30, 2017 and 2016, the allowance for doubtful accounts was $121,914 and $49,500, respectively. 7

10 Pledges receivable Contributions are recognized when the donor makes a promise to give to the Council that is, in substance, unconditional. Inventory Inventories, consisting of merchandise sold through the Council's retail outlets, are valued at the lower of average cost or net realizable value. Land, buildings and equipment Property and equipment are recorded at cost (or fair market value at the date of donation for donated assets) and depreciated primarily by the straight-line method over estimated useful lives which range as follows: Vehicles Furniture, fixtures and equipment Buildings and improvements 5 years 3 to 12 years 5 to 39 years Maintenance, repairs, and items deemed to have no extended useful life are expensed as incurred. Betterments and renewals greater than $1,000 are capitalized. When property and equipment are sold or otherwise disposed, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in current year s operations. Investments Investments in securities are carried at fair value. Donated securities are recorded at their estimated fair value at the date contributed. Investment securities are exposed to several risks, such as interest rate, currency, market and credit risks. Due to the level of risk 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 such changes could materially affect the amounts reported in the Council s financial statements. Income taxes The Council is exempt from federal and state income taxes under Section 501(c)(3) of the Internal Revenue Code and the tax statutes of the Commonwealth of Virginia. The Council has determined that it does not have any material unrecognized tax benefits or obligations as of September 30, 2017 and Concentration of credit risk Cash and cash equivalents are invested with several institutions and the Council monitors their credit ratings in order to mitigate the concentration of credit risk. Credit risk with regard to investments is mitigated by not concentrating in any one industry or company. At September 30, 2017 and 2016, balances of cash accounts at financial institutions used by the Council exceeded the Federal Deposit Insurance Corporation (FDIC) limit by $1,573,278 and $2,324,753, respectively. 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 that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. 8

11 Summarized comparative 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 generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Council's financial statements for the year ended September 30, 2016, from which the summarized information was derived. Subsequent events In preparing these financial statements, the Council has evaluated events and transactions for potential recognition or disclosure through February 8, 2018, the date the financial statements were available to be issued. 3. Investments The Council's investments as of September 30, 2017 and 2016 are recorded at fair market value based upon quoted market prices and consist of the following: 2017 Estimated Unrealized Market Cost Appreciation Value Common stocks $ 1,075,280 $ 1,126,843 $ 2,202,123 Fixed income 745, ,431 $ 1,820,527 $ 1,127,027 $ 2,947, Estimated Unrealized Market Cost Appreciation Value Common stocks $ 1,090,167 $ 977,631 $ 2,067,798 Fixed income 741,940 3, ,209 $ 1,832,107 $ 980,900 $ 2,813,007 The following schedule summarizes the investment return at September 30: Interest and dividends $ 74,138 $ 62,999 Net realized gains 114, ,383 Net unrealized gains 135,925 90, , ,823 Investment expenses (18,958) (17,645) Net investment income $ 305,644 $ 261,178 9

12 4. Fair Value Measurements Accounting standards establish 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 are described below: Level 1 Level 2 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Council has the ability to access. Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; 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. 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 September 30, 2017 and Common stocks and bonds Valued at the closing price reported on the active market on which the individual securities are traded. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Council 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 The following table sets forth by level, within the fair value hierarchy, the Council s assets at fair value: Assets at Fair Value as of September 30, 2017 Level 1 Level 2 Level 3 Total Investments: Common stocks: Consumer staples $ 201,824 $ - $ - $ 201,824 Consumer discretionary 229, ,970 Health care 327, ,263 Information technology 441, ,653 Telecommunication services 54, ,439 Industrials 259, ,867 Materials 74, ,899 Energy 142, ,450 Utilities 57, ,698 Financial services 412, ,060 Fixed income: Treasury bonds 49, ,987 Taxable bonds 26, ,389 Corporate bonds 669, ,055 Total $ 2,947,554 $ - $ - $ 2,947,554 Assets at Fair Value as of September 30, 2016 Level 1 Level 2 Level 3 Total Investments: Common stocks: Consumer staples $ 190,283 $ - $ - $ 190,283 Consumer discretionary 236, ,701 Health care 389, ,728 Information technology 437, ,306 Telecommunication services 36, ,386 Industrials 218, ,657 Materials 54, ,237 Energy 125, ,977 Utilities 55, ,702 Financial services 322, ,821 Corporate bonds 745, ,209 Total $ 2,813,007 $ - $ - $ 2,813,007 11

14 5. Property and Equipment Property and equipment consisted of the following at September 30: Land $ 528,227 $ 528,227 Buildings and improvements: Council office building and service centers 57,718 57,718 Camp Kittamaqund 1,222,752 1,157,387 Camp Pamunkey Ridge 1,717,356 1,353,913 Total buildings and improvements 2,997,826 2,569,018 Furniture, fixtures, equipment and vehicles 963, ,560 Construction in progress - 70,020 4,489,543 4,094,825 Accumulated depreciation (2,461,152) (2,309,189) Property and equipment, net $ 2,028,391 $ 1,785, Retirement Plans Defined benefit pension plan The Council participates in the National Girl Scout Council Retirement Plan (NGSCRP), a noncontributory defined benefit pension plan sponsored by Girl Scouts of the USA. The National Board of Girl Scouts of the USA voted to freeze the plan to new entrants and to freeze future benefit accruals for all current participants under the Plan effective July 31, The plan covers substantially all of the employees of various Girl Scout councils who were eligible to participate in the plan prior to the Plan freeze. Accrued and vested benefits prior to July 31, 2010 are based on years of service and salary levels. Although net Plan assets grew during the year, net Plan assets available for Plan benefits continue to be less than the actuarial present value of accumulated Plan benefits as of January 1, Based on the April 18, 2014 conditional approval by the Internal Revenue Service (IRS), all existing amortization bases in the Plan s funding standard account as of January 1, 2013 were combined into one base and the resulting amortization period for that single base was extended to 10 years. Approval applies as long as at a minimum, beginning with the January 1, 2013 calendar year, $30,000,000 is remitted. The $30,000,000 calendar year minimum applies for each succeeding calendar year until the Plan is fully funded based upon the requirements of the Pension Protection Act of 2006 (PPA). In addition, on April 8, 2014, President Obama signed H.R into law, a relief package unanimously passed by Congress that gives NGSCRP the flexibility to adopt the Pension Protection Act (PPA) funding requirements immediately or not at all. NGSCRP has elected to adopt this relief and not be subject to PPA. Aggregate annual contributions made in fiscal years 2016 and 2017 were $34.3 million and $33.1 million, respectively. The aggregate annual contributions decreased from 2016 to 2017 due to the reduction in the Plan s total annual aggregate contributions from $34.3 million to $32.5 million effective May 1, Aggregate contributions made in fiscal 2018 are expected to continue to be $32.5 million. Council contributions made in fiscal year 2017 and 2016 were $306,030 and $307,203, respectively. Council contributions expected to be made in fiscal year 2018 total $303,

15 403(b) Retirement savings plan In addition, the Council maintains a 403(b) retirement savings plan for its employees. The retirement savings plan is an individual account plan. If a participant elects to make voluntary contributions on a pretax basis, the Council will also make a matching contribution to the participant's account. The matching contribution will be the first 4% of eligible pay contributed by the participant. The Council may make a 2% discretionary contribution to all staff employed at December 31 each year. The Council's contributions to the plan for years ended September 30, 2017 and 2016 were $34,317 and $39,606, respectively. 7. Commitments The Council leases space for its headquarters in Richmond, Virginia. Minimum future payments under noncancellable operating leases for years ending September 30 are as follows: 2018 $ 196, , , , ,566 Thereafter 293,897 Rental expense for 2017 and 2016 was $198,366 and $197,248, respectively. $ 1,315,857 The Council also has service agreements in place related primarily to software maintenance and support and commitments for future events. Minimum future payments under such agreements for years ending September 30 are as follows: 2018 $ 11, , , , ,183 $ 34, Donated Services and Materials A substantial number of unpaid volunteers have made significant contributions of their time to the Council s programs. The value of this contributed time is not reflected in these statements since the recognition criteria under accounting principles generally accepted in the United States of America were not met. 9. Related Party Transactions The Council purchases merchandise inventory from the Girl Scouts of the United States of America throughout the year. Included in accounts payable at September 30, 2017 and 2016 were $5,136 and $6,516, respectively, owed to the Girl Scouts of the United States of America, which are expected to be paid in full within the next fiscal year. 13

16 During 2016, the Council entered into an agreement under which the Girl Scouts of the United States of America will provide membership management systems support to the Council. The agreement automatically renews on September 30, 2018, unless the Council chooses not to renew. The Council paid $80,645 and $74,130 under this agreement for 2017 and 2016, respectively. Commitments under this agreement total $3,052 for