The Maine Conference of the United Church of Christ

Transcription

1 The Maine Conference of the United Church of Christ Treasurer s Report For the twelve months ended December 31, 2013 Business Item Annual Meeting Plenary 1 October 17, 2013

2 This report is for internal management information purposes only, and is not to be released in whole or in part to any entity outside the Maine Conference of the United Church of Christ without express consent or permission of the Conference Treasurer or the Conference Business Manager. The statements included in this report are interpreted by the Conference Treasurer and Business Manager for the year ending December 31, This report is the work product of the Maine Conference of the United Church of Christ and in no way purports that it is the work of the Conference independent auditors whose work for the Maine Conference may only be found in whole or in part in their official reports. Independent Auditor s Reports, issued by Certified Public Accountants for the year ending December 31, 2013, for the Consolidated Trust (Conference operations is in process) have been approved by the Audit Committee and will be available as the Annual Meeting draws near through the Conference Office. There will also be a limited number of copies available for review at the 2014 Annual Meeting Registration Desk. Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 2

3 CONTENTS Section Page Overview 4 Budgeted Operations and 2013 Budget 4 Income 6 Our Church s Wider Mission (OCWM) 6 Fellowship Dues from Maine Conference Churches 6 Income from Invested Funds 6 Friends of the Maine Conference 6 Miscellaneous Income 6 Commission for Spiritual Life 6 Commission for Witness Life 6 Commission for Community Life 6 Resource Center 6 Pilgrim Lodge 6 Horton Center 6 Maine School of Ministry 6 Expenses 7 Commission for Spiritual Life 7 Maine School of Ministry 7 Commission for Witness Life 7 Commission for Community Life 7 Resource Center 7 Pilgrim Lodge 7 Horton Center 7 Ministries directed by the Coordinating Council 7 (Includes Annual Meeting, personnel and other ministries, Occupancy operations ) Income, Expenses, Net Assets and Financial Position 8 Financial Statements, Audit Reports, Controls and Accountability 12 TABLES and FIGURES Figure 1 Top Three Sources of Income 4 Figure 2 Increase in Net Assets 10 Table 1 Year 2013Summary of Budgeted Income 6 Table 2 Year 2013 Summary of Budgeted Expenses 7 Table 3 Comparative Statement of Financial Activities 8 Table 4 Analysis of Net Assets 10 Table 5 Comparative Statement of Financial Position 11 Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 3

4 Overview Budgeted Operations and 2013 Budget. Tables 1 and 2 below provide a summary of 2013 Budgeted Income and Budgeted Expenses as well as revisions to the 2013 budget that were approved by the Coordinating Council in early Budgeted Income. The 2013 actual income of $1,316,978 was about $114,000 below the 2013 budget of $1,430,900. The large budgeted contributors to income for the Conference (OCWM and Pilgrim Lodge) fell short of their budgeted income in 2013 while Fellowship Dues beat the budget by about $6,600, or 3%. OCWM was 2% short of budget and Pilgrim Lodge was 13% short of the income budget. In the past Friends of the Maine Conference made up some of the shortfall. But, this year the Friends of the Maine Conference fell about $16,900 or 64% short of budget. On the positive side, Income from Invested Funds generated $13,148, or 16% more than the budgeted $83,870. In Figure 1 the declining OCWM trend suggests the Conference will need to leverage assets, like Pilgrim Lodge, investments and fee-based programs to mitigate the long-term income trend in OCWM giving. Figure 1 Top Three Sources of Income Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 4

5 Budgeted Expenses. In the face of lower income, expenses were fortunately well contained. Actual expenses of $1,326,349 were $104,552 below budget. The decision to set the Conference s contribution to Basic Support to the UCC 1 as 20% of Maine s OCWM significantly reduced the Coordinating Council for Council Life s expenses. The Commission for Spiritual Life s actual expenses were $2,391, or 84% under budget. Lower expenses for the Commission for Witness Life, MESoM and Commission for Community Life also proved beneficial. Pilgrim Lodge s expenses were below budget, with those savings buffering the variance in income. Horton Center expense savings of about 2% created a net surplus for that program. While the original and revised budgets were balanced, income and expense variances nearly offset the other, close to a break even result of a $9,300, or 0.7% deficit. 1 National s share of OCWM often used interchangeably with Basic Support to the UCC. Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 5

6 Table 1 Summary of Budgeted Income 2013 Revised 2013 Actual $ Variance from Budget %Variance from Budget 2014 Budget 2014 Actual as of 6/30/2014 OCWM from Local Churches $ 470,000 $ 459,089 $ (10,912) -2% $ 475,000 $ 162,676 Fellowship Dues 249, ,391 6,584 3% 250, ,551 Income from Invested Funds 83,870 97,018 13,148 16% 98,875 39,703 Friends of the Maine Conference 26,250 9,371 (16,879) -64% 26,250 1,058 Miscellaneous Income 41,204 26,930 (14,274) -35% 53,416 1,046 Special Council Fundraising 9,992 11,505 1,513 15% 11,250 - Extraordinary Gifts, Bequests Commission for Spiritual Life 17, (16,651) -95% 17, Commission for Witness Life 1, (178) 1,000 - Commission for Community Life 4,372 3,142 (1,230) 4, Resource Center 3,510 5,501 1,991 57% 3,610 3,444 Pilgrim Lodge 401, ,403 (52,984) -13% 405, ,417 Horton Center 95,875 95,875 97,793 47,937 MESoM 26,033 1,983 (24,051) -92% 10,000 2,040 TOTAL INCOME $ 1,430,900 $ 1,316,978 $ (113,922) -8% $ 1,455,697 $ 591,662 Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 6

7 Table 2 Summary of Budgeted Expenses 2013 Revised 2013 Actual $ Variance from Budget %Variance from Budget 2014 Budget 2014 Actual as of 6/30/2014 Commission for Spiritual Life (1,2,3) $ 16,100 $ 2,391 $ (13,709) -85% $ 16,100 $ 1,405 MESoM (1,2) 26,033 - (26,033) -100% 10,000 3,200 Commission for Witness Life (1) 24,100 21,035 (3,065) -13% 24,500 6,406 Commission for Community Life (1,2) 25,100 14,517 (10,583) -42% 18,300 4,281 Resource Center (1,2) 49,577 58,402 8,825 18% 49,963 23,364 Pilgrim Lodge 401, ,948 (43,438) -11% 405, ,736 Horton Center 95,875 94,064 (1,811) -2% 97,793 46, Coordinating Council for Conference Life: 792, ,991 (14,737) -2% 833, ,715 TOTAL EXPENSES $ 1,430,900 $ 1,326,349 $ (104,552) -7% $ 1,455,697 $ 601,971 OPERATING SURPLUS (DEFICIT) $ - $ (9,371) $ (9,371) $ - $ (10,308) Notes (1) Includes offsetting fees and other revenue dedicated to this program or operational area. (2) Includes offsetting fees and other revenue dedicated to this program or operational area. For example, subscription fees for the Resource Center, or tuition fees to support the Maine School of Ministry (MESoM). (3) Spiritual Life budget originally comprehended MESoM. Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 7

8 Income, Expenses, Net Assets and Financial Position Introduction to Key Financial Statements. While Tables 1 and 2 above provide summaries of 2013 Budgeted Income and Budgeted Expenses as well as revisions to the 2013 budget, the following section highlights the entire Conference financial operation. First, Budgeted and non-budgetary income and expense activities are summarized together in the Comparative Statement of Financial Activities. Second, the Analysis of Net Assets identifies the major categories that comprise the Conference operation s beginning and ending balances of unrestricted, temporarily restricted and permanently restricted net assets, allowing the analysis of increase or decrease in those net asset categories. Finally, the Comparative Statement of Financial Position categorizes the nature of the Conference operation s asset, liabilities and net assets at a particular point in time. That statement is a snapshot measurement of cash, investments, debt given, debt owed and the effective net worth (net assets) of the Conference operation. Comparative Statement of Financial Activities. Income 2013 and (Please refer to Table 3.) Total Revenues of $2,109,211 represents an increase of about $537,000 from That increase is driven primarily by over a half-million in PL Capital Campaign Pledges. Other additional increases were driven by Fellowship Dues, Investment Income and Contract Reimbursements. There was no extraordinary income in Recurring revenues from OCWM declined by about $12,000, or 2.5% compared to Expenses 2013 and (Please refer to Table 3.) Total Expenses of $1,652,917 were about $171,332 more than 2012, primarily driven by Programs and Conference Ministry, in about equal measure. Decreased expenses in two major expense categories mission giving and depreciation slowed expense increases. Table 3 Comparative Statement of Financial Activities Revenues & Other Support Year 2013 Year 2013 Variance $ Variance % Our Churches Wider Mission $ 459,089 $ 471,033 (11,944) -2.5% Fellowship Dues 256, ,713 4, % Fees 496, ,704 61, % Investment Income 142, ,449 4, % Contributions 97, ,046 (94,317) Bequests - - Contract Reimbursements 95,875 50,580 45, % Capital Campaign Pledges 524, ,158 Other Income 36,586 33,554 3, % Net Assets Released from Restrictions - - Total Revenues & Other Support $ 2,109,211 $ 1,572, , % Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 8

9 Table 3 (continued) Comparative Statement of Financial Activities Year 2013 Year 2012 Variance $ Variance % Expenses Programs $ 627,142 $ 528,209 98, % Conference Ministry 855, ,365 99, % Mission 134, ,070 (18,316) -12.0% Depreciation 35,630 43,941 (8,311) -18.9% Total Expenses $ 1,652,917 $ 1,481, , % Excess of Support & Revenues Over Expenses $ 456,294 $ 90, , % Net Realized & Unrealized Investment Gains (Losses) 200, ,867 72, % Extraordinary Items: Sale of Assets, Net of $138,055 Expenses 146,945 - Changes in Net Assets $803,476 $ 218, , % Net Assets at Beginning of Year 5,171,415 4,953, , % Net Assets at End of Year $5,974,891 $ 5,171, , % Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 9

10 Analysis of Net Assets 2013 and (Please refer to Table 4.) A larger increase in Revenues than increase in Expenses, plus Net Realized & Unrealized Investment Gains and Extraordinary Items (Sale of Assets, Net of $138,055 Expenses) resulted in about an $803,476 increase in Net Assets, to $5,974,891, for Table 4 Analysis of Net Assets Composition of Net Assets - at Beginning of Year Year 2013 Year 2012 Variance $ Variance % Unrestricted $ 2,826,849 $ 2,806,357 $ 20,492 1% Temporarily Restricted 296, ,171 (3,781) -1% Permanently Restricted 2,048,176 1,846, ,650 11% Total Net Assets $ 5,171,415 $ 4,953,054 $ 218,361 4% Composition of Net Assets - at End of Year Unrestricted $ 2,967,849 $ 2,826,849 $ 141,150 5% Temporarily Restricted 801, , , % Permanently Restricted 2,205,302 2,048, ,126 8% Total Net Assets $ 5,974,891 $ 5,171,415 $ 803,476 16% Composition of Net Assets Changes Unrestricted $ 141,150 $ 20,492 $ 120, % Temporarily Restricted 505,200 (3,781) 508, % Permanently Restricted 157, ,650 (44,524) -22% Total Changes in Net Assets $ 803,476 $ 218,361 $ 585, % Figure 2 Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 10

11 Comparative Statement of Financial Position 2013 and (Please refer to Table 4.) The Comparative Statement of Financial Position shows a 14% increase of Total Assets by about $773,000 to $6,168,656 primarily due to increases in capital campaign pledges, investments and endowment-related assets. Offsetting the Assets are Total Liabilities decreasing by $30,519 to $193,764 because of decreased agency accounts in Held for Others and paying down Current and Long Term Notes Payable. Table 5 Comparative Statement of Financial Position Years Ended December 31 st $ Change %Change ASSETS (Unaudited) 2 (Audited) Cash $ 1,697,527 $ 1,749,202 $ (51,675) -3% Accounts Receivable (Includes capital campaign pledges) 615, , , % Bequest Receivable Prepaid Expenses 61,108 51,634 9,474 18% Inventory 21,473 22,226 (753) -3% Investments: Available for Current Operations 709, , ,676 42% Notes Receivable 95,000 96,000 (1,000) -1% Land 253, ,600 (20,353) -7% Net Depreciable Assets 418, ,128 4,501 1% Leasehold Improvements 15,957-15,957 Contributions Receivable from Remainder Trusts 75, ,250 (28,537) -27% Investments in the Consolidated Trust Held for Endowment Purposes 1,574,756 1,462, ,551 8% Beneficial Interest in Trust 630, ,971 44,575 8% TOTAL ASSETS $ 6,168,656 $ 5,395,698 $ 772,958 14% LIABILITIES Accounts Payable $ 104,195 $ 102,858 $ 1,337 1% Accrued Expenses 9,379 1,451 7, % Prepaid Fees 321 1,251 (930) -74% Held for Others 48,259 55,398 (7,139) -13% Current Portion of Long Term Debt 10,805 16,856 (6,051) -36% Line of Credit Long Term Portion of Notes Payable 20,805 46,469 (25,664) -55% TOTAL LIABILITIES $ 193,764 $ 224,283 $ (30,519) -14% - NET ASSETS - Unrestricted $ 2,967,999 $ 2,826,849 $ 141,150 5% Temporarily Restricted 801, , , % Permanently Restricted 2,205,302 2,048, ,126 8% TOTAL NET ASSETS $ 5,974,891 $ 5,171,415 $ 803,476 16% - TOTAL LIABILITIES AND NET ASSETS $ 6,168,656 $ 5,395,698 $ 772,958 14% 2 Conference operation audit is currently in process and will not be complete until later this fall. Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 11

12 Financial Statements, Audit Reports, Controls and Accountability Independent Audit of the Conference Operation and the Consolidated Trust Fund. The financial audit of the Consolidated Trust has been completed. The financial audit of the Conference operation is currently in process. Regarding the Consolidated Trust, Conference auditors expressed an opinion regarding the Conference s internal control over financial statements for the calendar years 2013 and An audit is conducted to provide credibility to the financial statements prepared by an organization. An audit of financial statements is an examination designed to provide an opinion, the CPA s highest level of assurance that the financial statements follow generally accepted accounting principles. 3 The auditor s responsibility is to detect misstatement in management s financial statements. Misstatement can be from various causes, including errors, fraud, and certain illegal acts. The auditors noted no significant audit findings or misstatements in performing and completing their audits. Conference auditors expressed an unqualified 4 opinion regarding the Consolidated Trust s financial statements for the calendar years 2013 and Auditors did not identify any deficiencies in our internal controls that they considered material weaknesses which would prevent them from expressing an opinion. According to the Independent Auditor s Report (September 2013) issued by Smith and Associates, CPAs, the Trust financial statements referred to present fairly, in all material respects, the financial position as of December 31, 2013 and 2012, and the changes in net assets and cash flows of the Maine Conference for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Consolidated Trust Financial Statements (December 31, 2013 and 2012) and the Independent Auditor s Report issued by Smith and Associates, CPAs for the Consolidated Trust, are available through the Conference Office. There will be a limited number of copies available for review at the 2014 Annual Meeting Registration Desk. High quality stewardship of special support and donor-restricted funds continues. Because good systems and procedures are implemented and operated, funds entrusted to the Maine Conference UCC are forwarded to the following national special support appeals in a timely manner: One Great Hour of Sharing, Neighbors in Need, Strengthen the Church, The Christmas Fund and other directed support (miscellaneous and special appeals: hurricanes, floods, fires). In addition, careful oversight of donor-restricted funds ensures that a house is built as a mission project in Honduras or that funds from the Pilgrim Lodge capital campaign are stewarded toward projects like the boardwalk and chapel accessibility, for example. Reporting systems provide essential oversight and encourage a high level of effective and responsible stewardship. The Conference Treasurer and Business Manager make frequent and timely reports of the Conference operations to the Coordinating Council and to the Finance Committee and also to the Trust s Board of Trustees. The Coordinating Council created an Audit Committee in an effort to follow best practices. The Audit Committee follows a charter of involvement and oversight in the audit processes of the Conference and Consolidated Trust, meeting with both the independent auditors, if necessary, and those in management roles during the audit processes, and discussing and reporting the outcomes. 3 Principles of Auditing and Other Assurance Services. 17 th Edition. 2010). 4 An unqualified opinion is better than a qualified opinion. While counterintuitive, qualified means the auditor may have established findings of fraud, financial report misstatement or violations of laws, regulations, or ordinances, for example, that materially affect the veracity of the financial statements. Treasurer s Report: Annual Meeting Plenary 1 October 17, 2014 Page 12