FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT FLORIDA 4-H CLUB FOUNDATION, INC. GAINESVILLE, FLORIDA MARCH 31, 2012

Transcription

1 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT FLORIDA 4-H CLUB FOUNDATION, INC. GAINESVILLE, FLORIDA MARCH 31, 2012

2 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT FLORIDA 4-H CLUB FOUNDATION, INC. GAINESVILLE, FLORIDA MARCH 31, 2012 TABLE OF CONTENTS Independent Auditors' Report Management s Discussion and Analysis Statement of Net Assets... 6 Statement of Revenues, Expenses, and Changes in Net Assets Statement of Cash Flows... 9 Notes to Financial Statements Additional Elements of Report Prepared in Accordance with Government Auditing Standards, Issued by the Comptroller General of the United States Report on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards... 16

3 INDEPENDENT AUDITORS' REPORT Board of Directors Florida 4-H Club Foundation, Inc. Gainesville, Florida We have audited the accompanying statement of net assets of Florida 4-H Club Foundation, Inc. (the Foundation), a component unit of the University of Florida, as of March 31, 2012, and the related statements of revenues, expenses, and changes in net assets, and cash flows for the year then ended. These financial statements are the responsibility of the Foundation's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Foundation s 2011 financial statements, and in our report dated June 8, 2011, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Foundation as of March 31, 2012, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 5, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the Unites States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 1

4 Board of Directors Florida 4-H Club Foundation, Inc. Gainesville, Florida INDEPENDENT AUDITORS' REPORT (Concluded) In accordance with Government Auditing Standards, we have also issued a report dated June 8, 2012, on our consideration of Foundation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and important for assessing the results of our audit. June 8, 2012 Gainesville, Florida 2

5 MANAGEMENT S DISCUSSION AND ANALYSIS The Florida 4-H Club Foundation, Inc. s (the Foundation) discussion and analysis is designed to assist the reader in focusing on an overview of financial activities, identify changes in the financial position, identify any material deviations from the financial plan, and identify issues and concerns. Since the Management Discussion and Analysis is intended to focus on the current year s activities, resulting changes, and currently known facts, it should be read in conjunction with the financial statements attached. Incorporated in 1963, the Foundation is a tax-exempt non-profit foundation approved under Section 501(c) (3) of the Internal Revenue Code 170(b) (1). The Foundation is governed by a Board of Directors comprised of volunteer members and appointed University administration. Designated a Direct Support Organization, the Foundation is operated according to State University System rules, pursuant Florida Statutes It maintains a separate not-for-profit status and is authorized to receive, hold, invest, and administer property and make expenditures benefiting the University of Florida s 4-H Youth Development Program. The Foundation relies on contributions from the public and serves as fiscal agent for the Florida 4-H program activities. The Foundation manages funds for four residential camps and many state-level educational programs, competitive events, and recognition functions. The Foundation s Mission: We build upon county 4-H programs by developing and managing financial resources supporting educational and public awareness activities for Florida 4-H youth. The Foundation s Vision: Promote the development of Florida s youth and tomorrow s citizens through the basic principles of citizenship and achievement by providing programs designed to instill a sound understanding of the balance between life value, agriculture and the environment. OVERVIEW OF THE FINANCIAL STATEMENTS The annual report consists of a series of financial statements: The Balance Sheet and the Statement of Revenues, Expenses and Changes in Net Assets provide information about the activities of the Foundation and present a longer-term view of the Foundation s financial position. The Statement of Cash Flows provides information regarding net cash from and used in 4-H programs and activities. FINANCIAL ANALYSIS Operating revenues were $2,078,531 for the fiscal year ending March 31, 2012 and $1,581,293 for the fiscal year ending March 31, 2011, generating an operating (loss)/income of $84,412 and ($329,309) respectively. Net cash flows from operations were ($59,019) and ($266,799) respectively. The following select information was derived from the Foundation s complete set of financial statements. It is presented to support management s analysis of the financial position and the results of operations that follow this information. 3

6 MANAGEMENT S DISCUSSION AND ANALYSIS (Continued) The Foundation's Net Assets Amount of Change Total Assets $ 2,418,537 $ 2,088,522 $ 330,015 Total Liabilities 200, ,231 61,489 Net Assets Unrestricted 811, , ,138 Restricted Expendable 1,148,195 1,090,129 58,066 Restricted Nonexpendable 258, ,171 5,322 Total Liabilities and Net Assets $ 2,418,537 $ 2,088,522 $ 330,015 The Foundation's Operations Operating Revenue Contributions $ 113,695 $ 126,747 $ (13,052) Other Operating Income 1,964,836 1,454, ,290 Total Operating Revenues 2,078,531 1,581, ,238 Non-operating Revenues 79, ,153 (46,711) Total Revenues 2,157,973 1,707, ,527 Operating Expenses 4-H Camping 1,048,532 1,041,521 7,011 4-H Programs 873, ,248 83,499 Scholarships 19,150 8,150 11,000 Management and General 49,394 57,254 (7,860) Fundraising Expenses 3,296 13,429 (10,133) Total Operating Expenses $ 1,994,119 $ 1,910,602 $ 83,517 Net Transfers in $ 104,672 $ 89,992 $ 14,680 Net Change $ 268,526 $ (113,164) $ 381,690 4

7 MANAGEMENT S DISCUSSION AND ANALYSIS (Concluded) There are several areas that have changed significantly from 2011 to The following will explain these changes: Unrestricted Net Assets showed a significant increase due to greater usage of the four 4-H camps by outside user groups, as well as county 4-H program groups. Other Operating Income increased significantly due to several program-specific awards, as well as an increase in registration fees corresponding to the above mentioned increase in usage of the four 4-H camps by county 4-H program groups. Non-operating Revenue decreased as returns on the Foundation s long-term investments declined with the economy. Scholarship expenses increased due to several scholarships awarded in the previous fiscal year being claimed in the current year. Fundraising Expenses decreased due to the Foundation discontinuing its annual golf tournament fundraiser. HOW THE FOUNDATION IMPACTS THE 4-H PROGRAM The Foundation impacts nearly every facet of the Florida 4-H Youth Development Program through its fundraising efforts and fiscal agent responsibilities. The Foundation is guided by a strategic plan that includes the following: Continue to exercise the fiduciary responsibility of the Foundation to responsibly manage and invest the Foundation s assets to maximize support for the 4-H program. Continue to conduct fundraising efforts on behalf of the organization. Work to improve brand recognition and overall image of 4-H and the Foundation with all constituencies. Continue to supervise and ensure the sustainability of all operational activities of the organization. CONTACTING THE FOUNDATION S FINANCIAL MANAGEMENT This financial report is designed to provide the Foundation s Board of Directors, creditors, and the Board of Trustees of the University of Florida with a general overview of the Foundation s finances. If you have questions regarding this report or need additional information, please contact the Foundation s Office at (352)

8 STATEMENT OF NET ASSETS MARCH 31, 2012, WITH COMPARATIVE TOTALS FOR MARCH 31, 2011 ASSETS Operating Permanent Total Total Assets Current Assets Cash and Cash Equivalents $ 483,092 $ 0 $ 483,092 $ 405,247 Certificates of Deposit 600, , ,361 Prepaid Expenses 8, ,296 7,324 Accounts Receivable 334, , ,991 Inventory 21, ,444 19,299 Total Current Assets 1,447, ,447, ,222 Noncurrent Assets Restricted Certificates of Deposits ,309 Restricted Investments - Other 712, , , ,991 Total Noncurrent Assets 712, , ,724 1,343,300 Total Assets 2,160, ,493 2,418,537 2,088,522 LIABILITIES AND NET ASSETS Liabilities Accounts Payable 118, ,065 82,738 Camp Deposits 10, ,657 7,599 Deferred Revenue 71, ,998 48,894 Total Liabilities - All Current 200, , ,231 Net Assets Unrestricted 811, , ,991 Restricted: Expendable 1,148, ,148,195 1,090,129 Nonexpendable 0 258, , ,171 Total Net Assets 1,959, ,493 2,217,817 1,949,291 Total Liabilities and Net Assets $ 2,160,044 $ 258,493 $ 2,418,537 $ 2,088,522 See accompanying notes. 6

9 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS FOR THE YEAR ENDED MARCH 31, 2012 WITH COMPARATIVE TOTALS FOR MARCH 31, Operating 2011 Unrestricted Restricted Permanent Total Total Operating Revenue Contributions $ 56,123 $ 54,471 $ 3,101 $ 113,695 $ 126,747 Sponsorships 8, ,600 10,750 Registration Fees 1,018, , ,368,323 1,204,854 Canteen 26, ,750 29,521 Contracts and Grant Revenues , , ,421 Total Operating Revenue 1,110, ,806 3,101 2,078,531 1,581,293 Operating Expenses Program Expenses: Camp Operations 191,264 25, , ,688 Salary and Related Expenses 481, , , ,484 Insurance 12,582 1, ,482 12,739 General Program Expenses 97, , , ,054 Canteen 36, ,716 31,388 General and Administrative 28,357 12, ,239 28,652 Repairs and Maintenance 105,210 13, , ,541 Office Supplies 13,007 6, ,569 42,664 Awards 2,981 28, ,728 67,865 Scholarships 4,000 15, ,150 8,150 Stipends 0 39, ,284 35,198 Consulting/Judging 2,300 98, ,850 25,742 Miscellaneous 53,656 57, ,215 93,713 Donations 23, ,653 24,041 Management and General: Salary and Related Expenses 26, ,088 31,414 Insurance Meetings and Seminar Expense 2, ,118 1,794 General and Administrative ,171 Repairs and Maintenance Office Supplies 1, , Awards Auditing and Accounting 16, ,500 18,500 Miscellaneous 2, ,637 2,627 Fund-raising Expenses 3, ,296 13,429 (Total Operating Expenses) (1,105,222) (888,897) 0 (1,994,119) (1,910,602) Operating (Loss) Income 5,402 75,909 3,101 84,412 (329,309) See accompanying notes. 7

10 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS FOR THE YEAR ENDED MARCH 31, 2012, WITH COMPARATIVE TOTALS FOR MARCH 31, 2011 (Concluded) 2012 Operating 2011 Unrestricted Restricted Permanent Total Total Nonoperating Revenues Investment Income $ 63,824 $ 0 $ 0 $ 63,824 $ 110,157 Other Income 10,379 5, ,618 15,996 Total Nonoperating Revenues 74,203 5, , ,153 Income (Loss) Before Transfers 79,605 81,148 3, ,854 (203,156) Transfers in 403, ,558 2, , ,596 Transfers (out) (353,420) (236,436) 0 (589,856) (413,596) Transfer from University of Florida 75,876 28, ,672 89,992 Change in Net Assets 205,138 58,066 5, ,526 (113,164) Net Assets, Beginning of the Year 605,991 1,090, ,171 1,949,291 2,062,455 Net Assets, End of the Year $ 811,129 $ 1,148,195 $ 258,493 $ 2,217,817 $ 1,949,291 See accompanying notes. 8

11 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2012 WITH COMPARATIVE TOTALS FOR MARCH 31, Cash Flows from Operating Activities Contributions Received $ 113,695 $ 126,747 Cash Received for Registration Fees 1,169,578 1,214,928 Cash Received from Canteen 26,750 29,521 Cash Received from Sponsorships 8,600 10,750 Cash Received from Contracts and Grants 584, ,824 Payments to Vendors (1,258,078) (1,239,486) Payments for Salaries and Benefits (703,831) (659,083) Net Cash Provided by (Used in) Operating Activities (59,019) (266,799) Cash Flows from Investing Activities Purchase of Certificates of Deposit (300,000) (196,000) Proceeds from the Maturity of Certificate of Deposit 288, ,000 Transfers from UFF Investments 104,672 89,992 Interest and Dividend Income 13,990 17,851 Purchase of Securities (119,380) (102,052) Proceeds from Sale of Securities 133, ,126 Other Revenue 15,618 15,996 Net Cash Provided by (Used in) Investing Activities 136, ,913 Net Increase (Decrease) in Cash and Cash Equivalents 77,845 (44,886) Cash and Cash Equivalents, Beginning of the Year 405, ,133 Cash and Cash Equivalents, End of the Year $ 483,092 $ 405,247 Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities Operating Income (Loss) $ 84,412 $ (329,309) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Change in Assets and Liabilities: Accounts Receivable (201,803) 6,893 Prepaid Expenses (972) 1,165 Inventory (2,145) 1,082 Accounts Payable 35,327 9,786 Camp Deposits 3,058 3,181 Deferred Revenues 23,104 40,403 Net Cash Provided by (Used in) Operating Activities $ (59,019) $ (266,799) Shown in the Financial Statements as Cash $ 483,092 $ 326,633 Restricted Cash 0 78,614 Cash and Cash Equivalents, End of the Year $ 483,092 $ 405,247 See accompanying notes. 9

12 NOTES TO FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies Reporting Entity The Florida 4-H Club Foundation, Inc. (the Foundation) is a direct support organization as provided for in Section , Florida Statutes, and is considered a component unit of the University of Florida. The Foundation was incorporated in 1963 as a not-for-profit organization in the State of Florida. Its primary goal is to promote the educational objectives of the State 4-H program, which is a component of the Florida Cooperative Extension Service at the University of Florida. Basis of Accounting The Foundation's financial statements are prepared on the accrual basis of accounting in which transactions are recognized when they occur, regardless of related cash flows. These financial statements are entirely those of the Foundation alone and, accordingly, are not intended to present the financial position or the results of operations of the University of Florida. The Foundation was determined to be "governmental" under guidance provided by the Governmental Accounting Standards Board (GASB) Statement No. 29. The accounting policies of the Foundation conform to generally accepted accounting policies for governmental entities and follows standards established by GASB. All activities of the Foundation are accounted for in a single major enterprise fund which uses the accrual basis of accounting. Also, pursuant to GASB Statement No. 20, the Foundation has elected not to apply Financial Accounting Standards Board (FASB) Accounting Standards Codification sections issued after November 30, 1989, to its activities. Fund Accounting The accounts of the Foundation are maintained in accordance with the principles of fund accounting. This is the procedure whereby resources are classified for accounting and reporting purposes into funds established for various purposes. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group, i.e., unrestricted funds and restricted funds. Net assets restricted by outside sources are so indicated and are distinguished from unrestricted funds. Externally restricted net assets may only be utilized in accordance with the purposes established by the source of such funds. In contrast, the Governing Board retains full control to use unrestricted funds (including those designated for specific purposes by that Governing Board) to achieve the purposes of the Foundation. Classification of Revenues The Foundation classifies its revenues as operating or nonoperating according to the following criteria: Operating revenues include contributions and activities that have characteristics of exchange transactions, such as registration fees, canteen revenue, and sponsorships. Nonoperating revenues include activities that have characteristics of nonexchange transactions, such as investment income. Net Assets The Foundation s net assets are classified as follows: 10

13 NOTES TO FINANCIAL STATEMENTS (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) Net Assets (Concluded) Unrestricted Net Assets Unrestricted net assets represent resources derived from unrestricted contributions, registration fees, and canteen revenue. These resources are used for transactions relating to the general operation of the Foundation, they are not restricted by outside sources and may be used at the discretion of the Governing Board to meet current expenses for any purpose. Restricted Expendable Net Assets Restricted expendable net assets include resources in which the Foundation is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties. These amounts include the unexpended amounts of the restricted contributions, subsequent income earned on restricted contributions and unexpended income earned on endowment accounts. Restricted Nonexpendable Net Assets Restricted nonexpendable net assets consist of endowments in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income. Donated Services The Foundation occupies office space at the University of Florida and is assisted by employees of the University of Florida. Since there is no clearly measurable basis to value these contributed services, no value for such services is recorded in the accompanying financial statements. Inventories Inventories consist of food used for the camps operated by the Foundation and merchandise sold in its gift shops. Inventories are carried at cost using the first-in, first-out (FIFO) method. Accounts Receivable Accounts receivable are recorded at cost. The direct write-off method is used for bad debts, which is not materially different from the allowance method. Capital Assets All capital assets are owned by the University of Florida and recorded by the University of Florida Plant Fund. The Foundation does not include fixed assets on their statement of net assets and the costs of additions incurred by the Foundation are expensed as incurred. Income Taxes The Foundation is exempt from tax under Section 501(c)(3) of the Internal Revenue Code of 1986 and, therefore, has made no provision for income taxes. Revenue Recognition Revenues from general sources are recognized as services are provided or as contract and grant funds are earned. Restricted revenues are recognized only to the extent that they are expended in accordance with donor or grantor restrictions. Any restricted revenues which have been received, but not expended, are shown as deferred revenue in the liability section of the accompanying statement of net assets. 11

14 NOTES TO FINANCIAL STATEMENTS (Continued) Note 1 - Summary of Significant Accounting Policies (Concluded) Accounting 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 reported period. Actual results could differ from those estimates. Reclassification Certain prior year amounts have been reclassified to conform to current year financial reporting and to facilitate comparison of financial data. Prior Year Comparative Totals The financial statements include certain prior year summarized comparative information in total. Such information does not contain sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Foundation s financial statements for the year ended March 31, 2011, from which the summarized information was derived. Note 2 - Cash and Cash Equivalents Cash Cash represents cash in checking and money market accounts with original maturities of less than three months, which are held in banks that qualify as public depositories pursuant to Chapter 280, Florida Statutes. The carrying amount of all cash deposits at March 31, 2012, was $483,092 and the related bank balance was $536,447. Under Chapter 280, Florida Statutes, every qualified public depository is required by this law to deposit with the State Treasurer eligible collateral equal to or in excess of the required collateral for the depository. The State Treasurer, by rule, shall establish minimum required collateral pledging levels and shall notify each qualified public depository of its required pledging level. Each qualified public depository shall calculate the amount of its required collateral based upon certain formulas. The Public Deposit Security Trust Fund has a procedure to allocate and recover losses in the event of default or insolvency. When public deposits are made in accordance with Chapter 280, no public depositor shall be liable for any loss thereof. Any losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as collateral and, if necessary, assessments against other qualified public depositories of the same type as the depository in default. Certificates of Deposit A summary of certificates of deposit follows: Interest Maturity Principal Rate Date Balance 2.35% September 10, 2012 $ 96, % April 16, , % December 12, , % May 28, , % June 10, , % October 28, ,204 Total $ 600,187 12

15 Note 3 - Investments NOTES TO FINANCIAL STATEMENTS (Continued) Investments - University of Florida Foundation In 1993, the Florida 4-H Club Foundation transferred management of its endowments fund investments to the University of Florida Foundation, Inc. These investments have been included in the financial statements through March 31, 2009, as Investments - University of Florida Foundation. As of April 1, 2009, all endowment funds held by the University of Florida Foundation on behalf of the 4-H Club Foundation were transferred to the University of Florida. The total amount of endowment assets held by the University of Florida for the benefit of the 4-H Club Foundation that has not been included in the accompanying financial statements as of March 31, 2012, was $3,057,913. The composition of these funds at March 31, 2012, was as follows: Principle Temporarily Balance Restricted Unrestricted Total Beginning Balance, April 1, 2011 $ 2,578,422 $ 465,309 $ 26,329 $ 3,070,060 Gifts 12, ,987 15,704 Investment Earnings 0 110, ,784 Administrative Expenses 0 (33,109) (318) (33,427) Transfer to Unrestricted 0 (101,874) 101,874 0 Transfer to Operating 0 0 (104,672) (104,672) Other Expenses 0 (453) (83) (536) Ending Balance, March 31, 2012 $ 2,591,139 $ 440,657 $ 26,117 $ 3,057,913 Other Investments The Foundation follows the investment policy of the University of Florida as stated in the Florida Statutes. Section (5), Florida statutes authorizes universities to invest funds with the State Treasury and State Board of Administration and requires that universities comply with the statutory requirements governing investments of public funds by local governments. Accordingly, universities are subject to the requirements of Chapter 218, Part IV, Florida Statutes. Pursuant to Section (16), Florida Statutes, the Foundation is authorized to invest in the Local Government Surplus Funds Trust Fund investment pool, administered by the State Board of Administration; interest-bearing time deposits and savings accounts in qualified public depositories, as defined in Section , Florida Statutes; direct obligations of the United States Treasury; obligations of Federal agencies and instrumentalities; securities of, or interest in, certain open-end or closed-end management-type investment companies; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; and other investments approved by the University s Board of Trustees, as authorized by law. The following information, as required by GASB Statement No. 40, is presented by the Foundation for other investments as follows: Investment Type Fair Value U.S. Agencies $ 51,492 Domestic Bonds 261,148 Domestic Equities 281,473 International Equities 15,277 Mutual Funds 361,334 Total $ 970,724 13

16 NOTES TO FINANCIAL STATEMENTS (Continued) Note 3 - Investments (Concluded) Other Investments (Concluded) The above investments are presented on the statement of net assets as restricted investments - Other, $970,724. Interest Rate Risk The Foundation s exposure to interest rate risk is as follows: Investment Investment Type Maturity Years Fair Value U.S. Government and Federally Guaranteed Obligations 1-5 $ 1,037 U.S. Government and Federally Guaranteed Obligations More than 10 43,674 Bonds and Notes 1-5 8,004 Bonds and Notes ,081 Bonds and Notes More Than 10 90,006 Total $ 177,802 Credit Quality Risk The Foundation s exposure to credit quality risk is as follows: Quality Rating Investment Type S&P Fair Value U.S. Government and Federally Guaranteed Obligations AAA $ 40,518 U.S. Government and Federally Guaranteed Obligations Unrated 14,074 Bonds and Notes AAA 5,118 Bonds and Notes AA+ 115,085 Bonds and Notes A 10,003 Bonds and Notes Unrated 127,841 Total $ 312,639 Foreign Currency Risk The Foundation s exposure to foreign currency risk is as follows: Investment Type Currency Type Fair Value Cash British Pound $ 7,200 Cash Various 8,077 Total $ 15,277 Note 4 - Risk Management The Foundation is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the Foundation carries commercial insurance through various commercial insurance carriers. Insurance against losses are provided for the following types of risk: General Liability Real and Personal Property Damage Employee Dishonesty Coverage 14

17 NOTES TO FINANCIAL STATEMENTS (Concluded) Note 5 - Related Party Transactions During the year ended March 31, 2012, the Foundation received $104,672 from the University of Florida Foundation. This amount represents earnings from Endowments that have been released from restrictions and were transferred to the operating account appropriated for current operations. Note 6 - Subsequent Events The Foundation evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through June 8, 2012, the date the financial statements were available to be issued. 15

18 ADDITIONAL ELEMENTS OF REPORT PREPARED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS, ISSUED BY THE COMPTROLLER GENERAL OF THE UNITED STATES

19 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors Florida 4-H Club Foundation, Inc. Gainesville, Florida We have audited the financial statements of Florida 4-H Club Foundation, Inc. (the Foundation) for the year ended March 31, 2012, 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Foundation s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Foundation s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Foundation s internal control over financial reporting. 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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Foundation s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Foundation s financial statements are free of 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 the 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 the Government Auditing Standards. This report is intended solely for the information and use of management and the Board of Directors, and is not intended to be and should not be used by anyone other than these specified parties. June 8, 2012 Gainesville, Florida 16