BOYS & GIRLS CLUB OF PASADENA

Transcription

1 Financial Statements BOYS & GIRLS CLUB OF PASADENA June 30, 2017

2 HENSIEK & CARON CERTIFIED PUBLIC ACCOUNTANTS BARRY B. HENSIEK, CPA 650 SIERRA MADRE VILLA, SUITE 303 SUSAN E. CARON, CPA PASADENA, CALIFORNIA TELEPHONE (626) Fax (626) INDEPENDENT AUDITOR S REPORT To The Board of Directors Boys & Girls Club of Pasadena We have audited the accompanying financial statements of Boys & Girls Club of Pasadena (a nonprofit organization), which comprise the statement of financial position as of June 30, 2017, and the related statements of activities and changes in net assets, cash flows, and functional expenses 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. Auditor s 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 of 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 auditor s 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. Page 1

3 Board of Directors Boys & Girls Club of Pasadena Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Boys & Girls Club of Pasadena as of June 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. Other Matters Report on Summarized Comparative Information The financial statements of the Boys & Girls Club of Pasadena s as of June 30, 2016, and for the year then ended were audited by other auditors. Those auditors expressed an unqualified opinion on the financial statements in their report dated January 4, Pasadena, CA November 16, 2017 Page 2

4 STATEMENT OF FINANCIAL POSITION WITH SUMMARIZED INFORMATION AT JUNE 30, Temporarily Permanently Unrestricted Restricted Restricted Total Total Assets Cash and cash equivalents $ 332,189 $ - $ - $ 332,189 $ 132,047 Accounts receivable, net of allowance of doubtful accounts of $0 in 2017 and $0 in , ,638 31,366 Grants receivable, net of allowance of doubtful accounts of $0 in 2017 and $0 in , ,701 5,000 Prepaid expenses 22, ,891 7,142 Investments 4,217,855 25,991 51,197 4,295,043 4,091,065 Unemployment insurance reserve 24, ,124 25,551 Land, property, and equipment, net 3,564, ,564,765 3,499,192 Total Assets $ 8,223,163 $ 25,991 $ 51,197 $ 8,300,351 $ 7,791,363 Liabilities Accounts payable $ 319,908 $ - $ - $ 319,908 $ 6,863 Accrued salaries 101, ,556 68,354 Deferred revenue 56, ,566 39,512 Deposits ,068 Notes payable 22, ,125 29,112 Total Liabilities 500, , ,909 Net Assets Unrestricted 7,723, ,723,008 7,485,155 Temporarily restricted - 25,991-25, ,102 Permanently restricted ,197 51,197 51,197 Total Net Assets 7,723,008 25,991 51,197 7,800,196 7,637,454 Total Liabilities and Net Assets $ 8,223,163 $ 25,991 $ 51,197 $ 8,300,351 $ 7,791,363 The accompanying notes are an integral part of these statements. Page 3

5 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED WITH SUMMARIZED INFORMATION AT JUNE 30, Temporarily Permanently Unrestricted Restricted Restricted Total Total Support and Revenue Donations $ 756,625 $ 25,000 $ - $ 781,625 $ 1,041,483 Rental income 330, , ,049 Program fees 120, , ,405 Membership fees 43, ,543 44,509 Special events, net of direct expenses of $114,582 for 2017 and $61,837 for 2016, respectively 171, , ,634 Investment returns 677,851 3, ,890 (188,151) Net assets released from program restrictions 103,150 (103,150) Total Support and Revenue 2,203,453 (75,111) - 2,128,342 1,423,929 Expenses Program services 1,432, ,432,234 1,324,919 Management and general 482, , ,195 Fundraising 51, ,228 95,726 Total Expenses 1,965, ,965,600 1,795,840 Change in Net Assets 237,853 (75,111) - 162,742 (371,911) Net Assets, Beginning of Year 7,485, ,102 51,197 7,637,454 8,009,365 Net Assets, End of Year $ 7,723,008 $ 25,991 $ 51,197 $ 7,800,196 $ 7,637,454 The accompanying notes are an integral part of these statements. Page 4

6 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED WITH SUMMARIZED INFORMATION AT JUNE 30, Cash Flows from Operating Activities Change in net assets $ 162,742 $ (371,911) Adjustments to reconcile the change in net assets to net cash provided by operating activities: Depreciation 267, ,533 Realized and unrealized gains on investments (597,754) 268,304 Gifts in kind (4,850) - (Increase) Decrease in: Accounts receivable 20,728 (8) Grants receivable (45,701) 11,000 Prepaid expenses (15,749) (4,034) Unemployment insurance reserve 1,427 2,145 Increase (Decrease) in: Accounts payable and accrued expenses 313,045 (50,201) Accrued salaries 33,202 4,561 Deferred revenue 17,054 16,185 Deposits (10,068) - Net Cash Provided by Operating Activities 141, ,574 Cash Flows from Investing Activities Proceeds from sale of investments 476,921 - Purchase of investments (83,145) (78,313) Purchase of property and equipment (327,804) (215,427) Net Cash Provided by (Used in) Investing Activities 65,972 (293,740) Cash Flows from Financing Activities Payments on notes payable (6,987) (5,823) Net Increase (Decrease) in Cash 200,142 (161,989) Cash and Cash Equivalents, Beginning 132, ,036 Cash and Cash Equivalents, Ending $ 332,189 $ 132,047 Supplemental Disclosure Noncash investing transaction Additions to property and equipment $ 332,654 $ - Less gift in kind 4,850 - Cash Used to Purchase of Property and Equipment $ 327,804 $ - Interest received $ 83,136 $ 80,153 The accompanying notes are an integral part of these statements. Page 5

7 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED WITH SUMMARIZED INFORMATION AT JUNE 30, Management Program and General Fundraising Total Total Salaries $ 585,277 $ 332,251 $ 25,078 $ 942,606 $ 761,259 Benefits 39,170 27,419 2,594 69,183 57,527 Payroll taxes 43,971 23, ,710 58,733 Pension 11,911 9, ,257 19, , ,982 28,445 1,100, ,128 Depreciation 267, , ,533 Utilities 158,463 7, , ,845 Repairs and maintenance 109,285 2,360 3, , ,636 Travel and transportation 91,660 10, , ,871 Insurance 24,067 15,300 2,664 42,031 45,649 Program supplies 28,358 3,234 2,912 34,504 47,835 Contract and professional services 6,940 16, ,810 27,861 Dues and subscriptions 11,965 7,931 3,317 23,213 18,629 Bad debts 21, ,725 - Miscellaneous 3,588 13,864-17,452 34,482 Taxes and licenses 15, ,703 19,581 Office supplies 5,475 6,148 1,186 12,809 12,035 Printing 4,493 1,081 3,670 9,244 8,369 Employee development 4,042 3,711 1,249 9,002 9,734 Postage and shipping ,912 3,748 5,063 Advertising ,975 Scholarship ,500 Bank charges $ 1,432,234 $ 482,138 $ 51,228 $ 1,965,600 $ 1,795,840 The accompanying notes are an integral part of these statements. Page 6

8 NOTES TO THE FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies Nature of the Organization The Boys & Girls Club of Pasadena ( the Club ) is a non-profit corporation organized in The Club promotes the health, social, education, vocational and character development of boys and girls between the ages of six and eighteen. The Club helps young people improve their lives by building self-assurance, developing skills, reinforcing positive value systems and by providing and financing opportunities for education and self-improvement. Method of Accounting The Club accounts for financial transactions on the accrual basis of accounting. To ensure observance of limitations and restrictions placed on the use of resources available, the Club s accounts are maintained in accordance with the principles of fund accounting. Public Support and Revenue Donations are recorded as made. All donations are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received or promised that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily or permanently restricted support that increases those net asset classes. When a temporary restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction. Permanently restricted support is reported when a donor-imposes a restriction that stipulates that funds be maintained permanently but permits the Club to expend part or all of the income derived from the donated assets. Accounts and Grants Receivable The Club uses the direct write off method to determine uncollectible receivables. The annual write off is based on prior years experience and management s analysis of specific receivables. Management has determined that all receivables are collectible. Land, Property and Equipment Land, property and equipment is stated at cost or, if donated, at the approximate fair market value at the date of donation. It is the Club s policy to capitalize expenditures for these items in excess of $1,000. Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows: Building and improvements Furniture, fixtures and equipments Transportation equipment years 5 15 years 7 years Page 7

9 NOTES TO THE FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies (continued) Investments Investments, comprised primarily of equity securities, corporate debt securities and U.S. government obligations are valued at fair value, with realized and unrealized gains and losses reflected in the statements of activities. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Statement of Cash Flows For the purpose of the statement of cash flows, the Club includes all cash in banks and other financial institutions, and certain highly liquid money market accounts designated for temporary cash investment. Income Taxes The Club is qualified under Section 501(c)(3) of the Internal Revenue Code and is not classified as a private foundation. Nonprofit organizations are not generally liable for taxes on income; therefore, no provision is made for such taxes in the financial statements. The accounting standard on accounting for uncertainty in income taxes provides guidance on how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. Examples of tax positions include the tax-exempt status of the Club and various positions related to the potential sources of unrelated business taxable income (UBIT). The Club believes that it has no uncertain tax positions that impact its financial statements. The Club files form 990 with the Internal Revenue Service, and files related exempt organization returns in the State of California. The returns are generally no longer subject to examination by the Internal Revenue Service after three years, or by the State of California after four years. Comparative Financial 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 Club s financial statements for the year ended June 30, 2016, from which the summarized information was derived. Page 8

10 NOTES TO THE FINANCIAL STATEMENTS Note 2 - Concentration of Credit Risk The Organization maintains its cash balances at a single financial institution. These accounts are insured by the Federal Deposit Insurance Corporation or are backed by a federal or state government agency. At June 30, 2017, the Club s uninsured cash balance totaled $105,657. Note 3 - Investments As of June 30, 2017 and 2016, investments consist of the following: 2017 Aggregate Fair Value Cost Money market accounts $ 20,459 $ 20,459 Mutual funds 4,274,584 3,546,716 Total $ 4,295,042 $ 3,567, Aggregate Fair Value Cost Money market accounts $ 70,219 $ 70,219 Mutual funds 4,020,846 3,660,633 Total $ 4,091,065 $ 3,730,852 Investment returns are summarized as follows: Interest and dividends $ 83,136 $ 80,153 Net realized and unrealized gains 597,754 (268,304) $ 680,890 $ 188,151 Note 4 - Land, Building and Equipment Land, building and equipment consists of the following: Land $ 512,654 $ 512,654 Building and building improvements 7,189,098 7,158,414 Furniture, fixtures and equipment 1,249,044 1,245,347 Transportation equipment 193, ,428 Construction in progress 298,274-9,442,498 9,109,843 Less accumulated depreciation 5,877,733 5,610,651 $ 3,564,765 $ 3,499,192 Page 9

11 NOTES TO THE FINANCIAL STATEMENTS Note 5 - Pension Plan The Club has a money purchase pension plan ( the Plan ) for the benefit of employees who have been employed longer than one year and who work more than 1,000 hours per year. Vesting of a participant s interest in the plan begins after one year and fully vests in seven years. Contributions to the Plan for the years ended June 30, 2017, and 2016, respectively, were $21,257 and $19,609. Note 6 Net Assets Net assets consist of the following: Temporarily Restricted Net Assets Programs $ - $ 20,000 Building improvements 25,000 81,102 Investment return on permanently restricted net assets not yet appropriated for expenditure Total Temporarily Restricted Net Assets $ 25,991 $ 101,102 Permanently Restricted Net Assets General $ 51,197 $ 51,197 Note 7 Fair Value Measurements Fair values of assets measured on a recurring basis at June 30, 2017 are as follows: Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Mutual Funds Fixed Income Mid-term $ 1,181,720 $ 1,181,720 $ - $ - Fixed Income Short-term 346, , U.S. Equity 1,450,160 1,450, Non-U.S. Equity developing markets 953, , Non-U.S. Equity Emerging markets 343, , $ 4,274,584 $ 4,274,584 $ - $ - Page 10

12 NOTES TO THE FINANCIAL STATEMENTS Note 7 Fair Value Measurements (continued) Fair values of assets measured on a recurring basis at June 30, 2016 are as follows: Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Mutual Funds Fixed Income Mid-term $ 1,241,666 $ 1,241,666 $ - $ - Fixed Income Short-term 341, , U.S. Equity 1,403,764 1,403, Non-U.S. Equity developing markets 745, , Non-U.S. Equity Emerging markets 288, , $ 4,020,846 $ 4,020,846 $ - $ - Fair values for investments are determined by reference to quoted market prices and other relevant information generated by market transactions. Note 8 Note Payable Note payable consists of a loan for the purchase of a vehicle. The note is non-interest bearing with monthly payments of $582, due September This is secured by the vehicle. Future minimum note payments are as follows: Years ending June 30, 2018 $ 6, , , ,164 Note 9 Endowment The Club s endowment consists of two individual funds established for a variety of purposes. Its endowment includes only donor-restricted funds. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Page 11

13 NOTES TO THE FINANCIAL STATEMENTS Note 9 Endowment (continued) The Board of Directors of the Club has interpreted the State Prudent Management of Institutional Funds Act (SPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Club classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Club in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Club considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donor-restricted endowment funds, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, (6) other resources of the Club, and (7) the Club s investment policies. Investment Return Objectives, Risk Parameters and Strategies. The Club has adopted investment and spending policies, approved by the Board of Directors, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds while also maintaining the purchasing power of those endowment assets over the long-term. Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income as well as capital appreciation, which exceeds the annual distribution with acceptable levels of risk. Endowment assets are invested in mutual funds, that are intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make an annual distribution of equal to the lesser of 4% or the income generated by the underlying securities. The Club expects its endowment assets, over time, to produce an average rate of return of approximately 4% annually, over a full market cycle of 5-7 years. Actual returns in any given year may vary from this amount. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed to not expose the fund to unacceptable levels of risk. Spending Policy. The Club has a policy of appropriating for distribution each year an amount equal to the lesser of 4% or the income generated by the endowment assets for the prior yearend. In establishing this policy, the Club considered the long-term expected return on its investment assets, the nature and duration of the two endowment funds, which must be maintained in perpetuity because of donor-restrictions, and the possible effects of inflation. This is consistent with the Club s objective to maintain the purchasing power of the endowment assets. Page 12

14 NOTES TO THE FINANCIAL STATEMENTS Note 9 Endowment (continued) Changes in donor-restricted endowment net assets are as follows: Unrestricted Temporarily Restricted Permanently Restricted Total Net Endowment Assets Donor-restricted endowment net assets, June 30, 2015 $ - $ 1,675 $ 51,197 $ 52,872 Investment income - 1,430-1,430 Amounts appropriated for expenditure - (3,105) - (3,105) Donor-restricted endowment net assets, June 30, ,197 51,197 Investment income - 3,039-3,039 Amounts appropriated for expenditure - (2,048) - (2,048) Donor-restricted endowment net assets, June 30, 2017 $ - $ 991 $ 51,197 $ 52,188 A description of the amounts classified as permanently restricted net assets and temporarily restricted net assets (endowment only) are as follows: Permanently Restricted Net Assets The portion of perpetual endowment funds that are required to be retained permanently either by explicit donor stipulation or by SPMIFA $ 51,197 $ 51,197 Total Endowment Funds Classified as Permanently Restricted Net Assets $ 51,197 $ 51,197 Note 10 Subsequent Events Subsequent events were evaluated through November 16, 2017, which is the date the financial statements were available to be issued. There were no subsequent events that would require adjustments or disclosures in these financial statements. Page 13