DOOLITTLE INSTITUTE, INC.

Transcription

1 FINANCIAL STATEMENTS SEPTEMBER 30, 2016

2 TABLE OF CONTENTS SEPTEMBER 30, 2016 INDEPENDENT AUDITORS REPORT 1 FINANCIAL STATEMENTS Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to the Financial Statements 7 COMPLIANCE SECTION Schedule of Expenditures of Federal Awards 11 Notes to the Schedule of Expenditures of Federal Awards 12 Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 13 Independent Auditors Report on Compliance for Each Major Federal Program and on Internal Control over Compliance Required by Uniform Guidance 15 Schedule of Findings and Questioned Costs 17

3 INDEPENDENT AUDITORS REPORT To the Board of Directors Doolittle Institute, Inc. Report on the Financial Statements We have audited the accompanying financial statements of Doolittle Institute, Inc. (a nonprofit organization), which comprise the statements of financial position as of September 30, 2016, 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits 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 Doolittle Institute, Inc. as of September 30, 2016, 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 Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 29, 2017, on our consideration of Doolittle Institute, Inc. s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Doolittle Institute, Inc. s internal control over financial reporting and compliance. Fort Walton Beach, Florida June 29,

5 STATEMENT OF FINANCIAL POSITION SEPTEMBER 30, 2016 ASSETS CURRENT ASSETS Cash $ 432,050 Restricted cash 3,396,008 Refundable deposits 23,200 Total current assets 3,851,258 PROPERTY AND EQUIPMENT, NET 541,647 TOTAL ASSETS $ 4,392,905 LIABILITIES AND NET ASSETS LIABILITIES Accounts payable and accrued expenses $ 4,943 Accrued payroll and related liabilities 60,699 Advance funding 3,396,008 TOTAL LIABILITIES 3,461,650 UNRESTRICTED NET ASSETS 931,255 TOTAL LIABILITIES AND NET ASSETS $ 4,392,905 See notes to the financial statements. 3

6 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2016 REVENUES AND OTHER SUPPORT Grant revenues $ 4,933,049 Interest 3,266 Other income 1,794 Contributions 22,449 Total revenues and other support 4,960,558 EXPENSES Program services SOCOM 2,618,041 AFRL 2,081,743 Total program services 4,699,784 Support services Management and general 31,052 Total expenses 4,730,836 CHANGE IN UNRESTRICTED NET ASSETS 229,722 UNRESTRICTED NET ASSETS AT BEGINNING OF YEAR 701,533 UNRESTRICTED NET ASSETS AT END OF YEAR $ 931,255 See notes to the financial statements. 4

7 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED SEPTEMBER 30, 2016 Program Services Support Services Total Program Management SOCOM AFRL Services and General Total Direct travel $ 63,211 $ 56,622 $ 119,833 $ - $ 119,833 Direct materials 406,785 45, , ,950 Other direct costs 300,413 5, , ,916 Mini urban challenge - 45,850 45,850-45,850 STEM - 44,815 44,815-44,815 Direct donations 16,984 4,500 21,484-21,484 Indirect costs 80, , ,974 8, ,505 Onsite direct labor 398, , , ,628 Subcontractors 900, ,575 1,568,723-1,568,723 Carry forward funds 237, , , ,305 Indirect wages 19,222 28,817 48,039 2,029 50,068 Professional fees 39,294 58,910 98,204 4, ,351 Depreciation expense 48,135 72, ,299 5, ,379 General and administrative expenses 46,144 69, ,323 4, ,193 Co-wide fringe 60,596 90, ,441 6, ,836 TOTAL EXPENSES $ 2,618,041 $ 2,081,743 $ 4,699,784 $ 31,052 $ 4,730,836 See notes to the financial statements. 5

8 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Change in unrestricted net assets $ 229,722 Adjustments to reconcile change in unrestricted net assets to cash provided by operating activities: Depreciation 125,379 Changes in assets and liabilities: Accounts payable and accrued expenses (3,209) Accrued payroll and related liabilities 5,443 Advance funding 1,666,567 Net cash provided by operating activities 2,023,902 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (185,197) NET INCREASE IN CASH 1,838,705 CASH AT BEGINNING OF YEAR 1,989,353 CASH AT END OF YEAR $ 3,828,058 COMPOSITION OF CASH AT END OF YEAR Unrestricted $ 432,050 Restricted 3,396,008 TOTAL CASH $ 3,828,058 See notes to the financial statements. 6

9 NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DESCRIPTION OF ORGANIZATION Description of Organization The Doolittle Institute, Inc. (Doolittle) was organized as a not-for-profit corporation under the laws of the State of Florida on July 30, Doolittle is named in honor of James Jimmy Doolittle, commander of WWII s historic Doolittle Raid. Doolittle s mission is modelled after the rapid innovation and problem solving necessary to modify and deploy B-25 bombers from aircraft carriers, by providing Technology Transfer, Innovation and Collaboration and Workforce Development solutions for its clients. Doolittle seeks to fulfill its mission by creating an innovative environment for bringing together the best minds of industry, academia and government to collaborate and find solutions to science and technology challenges while supporting science, technology, engineering, and mathematics education for all levels of society. Doolittle is primarily funded by support from federal grants contracted through the AFRL and USSOCOM. Doolittle is headquartered in Fort Walton Beach, Florida with a second facility in Tampa, Florida with a STEM Education facility located on the Northwest Florida state College campus in Niceville, Florida. The Doolittle Institute Fort Walton Beach location supports clients such as the Air Force Research Laboratory Munitions Directorate at Eglin Air Force Base (AFRL), and the SOFWERX facility in Tampa supports United States Special Operation Command (USSOCOM) at MacDill Air Force Base. Basis of Accounting The financial statements of Doolittle have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. Financial Statement Presentation Financial statement presentation follows the recommendations of the Financial Accounting Standards Board Accounting Standards Codification. Doolittle 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. Net assets are classified based on donor restrictions, if any, that may or may not be met by actions of management or by the passage of time. For the year ended September 30, 2016, Doolittle only had unrestricted net assets. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statement of cash flows, Doolittle considers all highly liquid investments available for use with an original maturity of three months or less to be cash equivalents. Cash balances classified as restricted are restricted due to the balances being made up of advanced funding. 7

10 NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DESCRIPTION OF ORGANIZATION CONTINUED Property and Equipment Doolittle follows the practice of capitalizing all costs for property and equipment in excess of $500. If donated, property and equipment are recorded at fair market value at the date of the donation. Depreciation of property and equipment is computed using straight-line depreciation over the estimated useful lives of the assets as follows: Leasehold improvements 15 years Furniture, fixtures, and equipment 5 years Property and Equipment-Continued Property acquired with governmental funds is considered to be owned by Doolittle while used in the program for which it was purchased, or in future authorized programs. However, its disposition as well as the ownership of any proceeds from the sale of assets is subject to applicable regulations. Grant Revenues Grant revenues are recorded based upon the terms of the grantor agreement, which generally provides that revenue is earned when the allowable costs of the specific grant provisions have been incurred. The majority of these awards are received in advance of program implementation. Such advances are recorded as a liability until the allowable costs are incurred. Expense Allocation The costs of providing the various programs and other activities have been detailed in the statement of functional expenses and summarized on a functional basis on the statement of activities. Expenses directly related to a program or supporting service are charged to the individual program or supporting service. Indirect expenses are allocated between Doolittle s programs and supporting services based on an allocation to the program's total direct costs less federal funded capital asset purchases. Income Taxes Doolittle has been granted an exemption from income taxes under Internal Revenue Code, Section 501(c)(3) as a not-for-profit corporation. Doolittle is not aware of any uncertain tax positions that would require disclosure or accrual in accordance with generally accepted accounting principles. Subsequent Events Doolittle has evaluated events and transactions that occurred between September 30, 2016 and June 29, 2017, which is the date the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. 8

11 NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, PROPERTY AND EQUIPMENT Balances in property and equipment were as follows at September 30, 2016: Leasehold improvements $ 102,752 Equipment 485,278 Furniture and fixtures 187, ,363 Less accumulated depreciation (233,716) Property and equipment, net $ 541,647 Depreciation expense was $125,379 for the year ended September 30, ADVANCE FUNDING At September 30, 2016, Doolittle had cash advances totaling $3,396,008 from grantors. Subsequent to the advance receipt, Doolittle submits invoices (billings) to the grantors based on actual costs incurred pursuant to the program. The billings will be reimbursed to Doolittle provided the cumulative billings do not exceed the contract amount less the advances described above. 4. OPERATING LEASE On December 18, 2013, Doolittle entered into a lease agreement for office space located in Fort Walton Beach, Florida. The lease is for a period of three years, with an option to renew for two oneyear periods. Monthly rental payments are $8,393 and commenced upon completion of the build out of the space, which was completed in May On April 26, 2017, Doolittle extended the lease for an additional year, at the same monthly rate. The lease is set to expire on April 30, On September 1, 2016, Doolittle entered into a lease agreement for office space located in Tampa, Florida. The lease is for a period of one year, includes monthly rental payments are $15,711 and commenced on September 1, On December 10, 2015, Doolittle entered into a lease agreement for garage space located in Tampa, Florida. The lease is for a period of three years, with the option to extend the lease for an additional three years. Monthly rental payments are $4,066 and commenced on January 1,

12 NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, OPERATING LEASE (CONTINUED) At September 30, 2016, these amounts are included in the statement of financial position as current assets. Future minimum rental payments are as follows for the year ended September 30, 2016: 2017 $ 322, , ,198 Total $ 442,070 Upon execution of these leases, Doolittle remitted refundable security deposits totaling $23, CREDIT RISK Doolittle maintains its cash accounts in a local financial institution, the balances of which are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At September 30, 2016, Doolittle exceeded the federally insured limit by $2,991,791; however, approximately $2,600,000 of the cash balance in excess of the FDIC limit is held in brokered short-term certificates of deposit that are privately insured for losses up to $2,000,000 and Doolittle has not experienced any losses in such accounts, thus management and the board of directors believe there is little or no exposure to any significant credit risk. 10

13 COMPLIANCE SECTION

14 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2016 Federal/State Agency CFDA Contract/Grant Pass-Through Entity Number Number Expenditures U.S. Department of Defense Direct programs Innovation and Collaboration Program FA $ 2,081,743 Innovation and Collaboration Program H $ 2,618,041 Total U.S. Department of Defense 4,699,784 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 4,699,784 The accompanying notes are an integral part of this schedule. 11

15 NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal grant activity of the Doolittle Institute, Inc. (Doolittle) of the federal government for the year ended September 30, The information in this schedule is presented in accordance with the requirements of Uniform Guidance. Because the Schedule presents only a selected portion of the operations of Doolittle, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Doolittle. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. 3. INDIRECT COST RATE Indirect expenses are allocated between Doolittle s programs and supporting services based on an allocation to the program's total direct costs less federal funded capital asset purchases. 12

16 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Doolittle Institute, Inc. We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Doolittle Institute, Inc. (a nonprofit organization), which comprise the statement of financial position as of September 30, 2016, and the related statements of activities and functional expenses, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated June 29, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Doolittle Institute, Inc. s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Doolittle Institute, Inc. s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 13

17 Compliance and Other Matters As part of obtaining reasonable assurance about whether Doolittle Institute, Inc. s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Organization s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Fort Walton Beach, Florida June 29,

18 INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Directors Doolittle Institute, Inc. Report on Compliance for Each Major Federal Program We have audited Doolittle Institute, Inc. s (Doolittle) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Doolittle s major federal programs for the year ended September 30, Doolittle s major federal programs are identified in the summary of auditors results section of the accompanying Schedule of Findings and Questioned Costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs and state projects. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of Doolittle s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Doolittle s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Doolittle s compliance. Opinion on Each Major Federal Program In our opinion, Doolittle complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30,

19 Report on Internal Control over Compliance Management of Doolittle is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Doolittle s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Doolittle s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Fort Walton Beach, Florida June 29,

20 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2016 I. SUMMARY OF AUDITORS RESULTS Financial Statements Type of auditors report issued: Unmodified Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified that is/are not considered to be material weakness(es)? Yes X No Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major programs: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified that is/are not considered to be material weakness(es)? Yes X No Type of auditors report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Uniform Guidance? Yes X No 17

21 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2016 I. SUMMARY OF AUDITORS RESULTS CONTINUED Identification of major programs: CFDA Number Name of Federal Program or Cluster U.S. Department of Defense Air Force Defense Research Sciences Program Cluster Dollar threshold used to distinguish between type A and type B programs for federal awards: $750,000 Auditee qualified as a federal low-risk auditee? Yes X No II. FINANCIAL STATEMENT FINDING We noted no matters involving noncompliance that are required to be reported in accordance with the Uniform Guidance. III. FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS We noted no matters involving noncompliance that are required to be reported in accordance with the Uniform Guidance. IV. SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS The prior year s single audit disclosed no findings in the Schedule of Findings and Questioned Costs and no uncorrected or unresolved findings exist for the prior audit s Summary of Prior Audit Findings. 18