SANTA BARBARA RESCUE MISSION FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2012 AND 2011

Transcription

1 FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2012 AND 2011

2 TABLE OF CONTENTS INDEPENDENT AUDITORS REPORT 1 Page FINANCIAL STATEMENTS: STATEMENT OF FINANCIAL POSITION 2 STATEMENTS OF ACTIVITIES 3 STATEMENT OF FUNCTIONAL EXPENSES 4 STATEMENTS OF CASH FLOWS

3 MAcFARLANE FALETTI CO. CERTIFIED PUBLIC ACCOUNTANTS Reed S. Spangler Jane E. Russell Gail H. Anikouchine William L. Jackson James W. Fischer Timothy A. O Keeffe Arjun S. McAvoy Howard B. Atkinson Kathy J. Scroggs Marilyn D. Parke Vanessa M. Garcia David E. Lehman David R. Duarte Richard L. Hunt Consultant Susan M. Frazier Consultant Santa Barbara 115 E. Micheltorena St. Suite 200 Santa Barbara California Phone (805) Fax (805) Los Olivos 2948 Nojoqui Ave. Suite 3 P.O. Box 336 Los Olivos California Phone (805) Fax (805) cpa@mfco.com Website Board of Directors Santa Barbara Rescue Mission INDEPENDENT AUDITORS' REPORT We have audited the accompanying statement of financial position of Santa Barbara Rescue Mission (a California nonprofit organization) as of September 30, 2012, and the related statements of activities and cash flows, for the years ended September 30, 2012 and 2011, and the statement of functional expenses for the year ended September 30, These financial statements are the responsibility of the Santa Barbara Rescue Mission's management. Our responsibility is to express an opinion on these financial statements based on our audits. The prior year summarized comparative information has been derived from the Santa Barbara Rescue Mission's September 30, 2011 financial statements and, in our report dated February 13, 2012, we expressed an unqualified opinion on those financial statements. We conducted our audits 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 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 audits provide 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 Santa Barbara Rescue Mission as of September 30, 2012, and the changes in its net assets and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Santa Barbara, California January 18,

4 STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Temporarily Permanently Total Unrestricted Restricted Restricted ASSETS Current Assets: Cash and cash equivalents $ 201,132 $ - $ 62,135 $ 263,267 $ 137,964 Prepaid expenses and other assets 55, ,015 27,260 Total Current Assets 256,147-62, , ,224 Other Assets: Restricted Cash - 70,000-70,000 - Investment (Note 3) 425, , ,085 Land, buildings and equipment, net (Note 5) 4,379, ,379,507 4,495,326 Due from (to) other fund (Note 9) (520,000) - 520, Total Assets $ 4,540,739 $ 70,000 $ 582,135 $ 5,192,874 $ 5,085,635 LIABILITIES AND NET ASSETS Current Liabilities: Accounts payable $ 65,711 $ - $ - $ 65,711 $ 72,331 Accrued payroll related liabilities 38, ,808 38,365 Other accrued liabilities 12, ,478 14,574 Deferred revenue 20, ,175 18,300 Line of credit (Note 6) ,000 Current portion of note payable (Note 7) 14, ,913 13,925 Total Current Liabilities 152, , ,495 Non-Current Liabilities: Note payable, net of current portion (Note 7) 921, , ,476 Total Liabilities 1,073, ,073,648 1,148,971 Net Assets (Note 9) 3,467,091 70, ,135 4,119,226 3,936,664 Total Liabilities and Net Assets $ 4,540,739 $ 70,000 $ 582,135 $ 5,192,874 $ 5,085,635 See accompanying notes - 2 -

5 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED SEPTEMBER 30, 2012 AND Unrestricted Net Assets: Revenue, Gains and Other Support Gifts and grants $ 1,340,287 $ 1,287,583 Special events (net of expenses of $39,226 and $44,510, respectively) 304, ,940 Bequests 259, ,995 Rental income (Note 10) 173, ,124 Non-cash contributions (Note 11) 165, ,610 Fee income 111, ,390 Miscellaneous income 3,502 6,650 Interest income Total Unrestricted Revenue, Gains, and Other Support 2,357,932 2,144,863 Expenses Program expenses: Men's recovery program 646, ,253 Women's recovery program 537, ,817 Homeless guest services 346, ,866 Learning center 59,436 64,368 Total program expenses 1,590,155 1,657,304 Management and general 325, ,014 Fundraising 329, ,448 Total Expenses 2,245,370 2,318,766 Change in Unrestricted Net Assets 112,562 (173,903) Temporarily Restricted Net Assets: Temporarily restricted donation 70,000 - Change in Temporarily Restricted Net Assets 70,000 - Permanently Restricted Net Assets: Change in Permanently Restricted Net Assets - - Change in Net Assets 182,562 (173,903) Net Assets at Beginning of Year 3,936,664 4,110,567 Net Assets at End of Year $ 4,119,226 $ 3,936,664 See accompanying notes - 3 -

6 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED SEPTEMBER 30, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2011 Program Services Supporting Services Men's Women's Homeless Management Recovery Recovery Guest Learning and General Total Total Program Program Services Center Total Expenses Fundraising Total Salaries $ 213,974 $ 218,169 $ 55,941 $ 30,068 $ 518,152 $ 119,573 $ 61,535 $ 181,108 $ 699,260 $ 785,900 Payroll taxes 15,222 15,520 3,980 2,139 36,861 8,506 4,377 12,883 49,744 57,616 Employee benefits 65,400 66,499 17,312 9, ,279 79,415 37, , , ,890 Total Salaries and Related Expenses 294, ,188 77,233 41, , , , ,503 1,023,795 1,075,406 Clothing 31,583 20,028 25,421-77, ,032 90,444 Donations to charities 6,272 3,920 5, , ,681 17,222 Donor appeals , , , ,124 Dues 2,464 1, ,696 8,624-8,624 12,320 13,344 Equipment ,365 Equipment maintenance 7,603 4,779 6, ,117 2, ,607 21,724 12,720 Expendable supplies 27,439 19,599 25,871 2,352 75,261 1,567 1,568 3,135 78,396 70,412 Food 94,944 59,340 78, ,613 2,373 2,374 4, , ,335 Information Technology 10,014 7,153 9, , ,145 28,612 26,793 Insurance 8,979 6,414 8, , ,026 25,655 27,851 Interest expense 22,919 16,371 21,609 1,964 62,863 1,309 1,310 2,619 65,482 66,351 Maintenance - building 1, , , ,069 2,518 Miscellaneous 714 1, ,785 1,784-1,784 3,569 8,859 Office supplies 1,848 1, ,430 1, ,845 5,275 4,880 Postage 2,941 1, ,042 1,680 1,681 3,361 8,403 8,991 Printing 4,037 2, ,340 3,670 1,223 4,893 12,233 14,507 Professional fees 3,554 1, ,331 82, ,515 88,846 94,107 Program supplies 15,854 12,863-1,197 29, ,914 36,247 Taxes Telephone 5,406 4, ,362 3,003 1,652 4,655 15,017 13,101 Training 3,572 1, ,084 1, ,785 6,869 8,592 Transportation 7,252 4, , ,511 7,835 Utilities 42,205 30,146 39,793 3, ,762 2,411 2,412 4, , ,522 Total Expenses Before Depreciation 595, , ,894 55,078 1,450, , , ,403 2,100,100 2,173,040 Depreciation Expense 50,844 36,317 47,939 4, ,458 2,906 2,906 5, , ,726 Total Expenses $ 646,439 $ 537,447 $ 346,833 $ 59,436 $ 1,590,155 $ 325,881 $ 329,334 $ 655,215 $ 2,245, Totals $ 675,253 $ 563,817 $ 353,866 $ 64,368 $ 1,657,304 $ 312,014 $ 349,448 $ 661,462 $ 2,318,766 See accompanying notes - 4 -

7 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2012 AND Cash Flows From Operating Activities: Change in net assets $ 182,562 $ (173,903) Adjustments to reconcile change in net assets to net cash used by operating activities: Contribution restricted for long-term purpose (70,000) - Depreciation 145, ,726 Gain on sale of contributed asset - (1,800) Changes in: Prepaid expenses and other assets (27,755) 5,834 Accounts payable (6,620) 14,578 Accrued payroll related liabilities 443 (5,589) Other accrued liabilities (2,096) 2,909 Deferred revenue 1,875 1,250 Net Cash Provided/(Used) by Operating Activities 223,679 (10,995) Cash Flows From Investing Activities: Assets restricted and for building improvements (70,000) - Proceeds on sale of contributed asset - 9,000 Purchase of fixed assets (29,451) (31,791) Net Cash Used by Investing Activities (99,451) (22,791) Cash Flows From Financing Activities: Contribution restricted for building improvements 70,000 - Payments on note payable (13,925) (13,002) Proceeds from borrowing on line of credit - 115,000 Payments on line of credit (55,000) (60,000) Net Cash Provided by Financing Activities 1,075 41,998 Net Increase in Cash and Cash Equivalents 125,303 8,212 Cash and Cash Equivalents at Beginning of Year 137, ,752 Cash and Cash Equivalents at End of Year $ 263,267 $ 137,964 Supplemental Disclosures: Cash paid for interest $ 65,562 $ 66,425 See accompanying notes - 5 -

8 NOTE 1: ORGANIZATION The Santa Barbara Rescue Mission (the Mission) is a Christian nonprofit corporation that has operated in Santa Barbara since The Mission s primary purpose is to provide a state-licensed recovery program for men and women who are addicted to drugs and alcohol. A second purpose is to provide emergency services such as food, clothing and shelter to the homeless. A significant portion of the funding for the Mission is provided by contributions from the general public. These contributions vary in amount from year to year. The Mission also receives bequests which can be significant. Program Services The Mission has four primary programs: Men s Recovery Program The state-licensed Men's Recovery Program is a voluntary, one-year, residential program for male alcoholics and drug abusers that offers counseling, spiritual guidance, education and career development classes, recovery meetings and relapse prevention therapy. This program may not be voluntary for court ordered participants. Assistance in finding employment is provided upon completion of the program. Women s Recovery Program Bethel House is a home for women in a voluntary one-year, state licensed residential drug and alcohol recovery program. The program offers counseling, spiritual guidance, education and career development classes, recovery meetings and relapse prevention therapy. Assistance in finding employment is provided upon completion of the program. Homeless Guest Services The Mission provides emergency services for the community s homeless men, women and children by offering hot nourishing meals, a safe place to stay, clean clothes, showers, temporary storage, as well as spiritual nourishment and Christian love. Learning Center The Learning Center is an integral component of the overall recovery program. It offers to participants educational and career development classes in the areas of computer training, literacy and math, and job acquisition skills under the guidance of a professional learning specialist

9 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements have been presented on an accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities. Basis of Presentation The Mission reports its financial statements in accordance with the principles of fund accounting, whereby the financial position and activities are classified into three categories of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Unrestricted net assets represent resources available without restriction for the support of the Mission s operations. Temporarily restricted net assets represent resources subject to donor-imposed restrictions which will be met either by the Mission s actions or the passage of time. Permanently restricted net assets represent resources subject to the restrictions of gift instruments requiring the principal to be maintained intact and only the investment income to be used for the operations of the Mission. Restricted and Unrestricted Revenues and Support Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. Support that is restricted by the donor is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or the purpose for a restriction is accomplished) temporarily restricted net assets are reclassified as unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Temporarily restricted assets that are received in the same period for which the restrictions are met are recorded as unrestricted. Cash and Cash Equivalents Cash and equivalents consist of cash on hand and highly liquid investments with an original or remaining maturity of three months or less. Promises to Give Unconditional promises to give are reported as assets and as revenues or gains in the period in which the promise is received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. There were no promises to give at September 30, 2012 and

10 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investment As explained more fully in Note 3, the Mission's investment in an equity-share arrangement is reported at estimated current market value. Unrealized gains and losses are included in the change in net assets in the accompanying Statement of Activities. Land, Buildings and Equipment Land, buildings and equipment are recorded at cost or, if donated, at estimated fair market value at the date of gift. The Mission s policy is to capitalize individual assets which cost more than $1,000 and have a useful life of greater than one year. Depreciation on these assets, except for land and construction-in-progress, is provided on a straight-line basis over their estimated useful lives, which range from 3-40 years. The Mission has self-constructed two of the buildings it now occupies. Fair Value of Financial Instruments The carrying amount of financial instruments including cash, prepaid expenses and other assets, accounts payable and accrued expenses approximated fair value as of September 30, 2012 and 2011 because of the short-term nature of these items. The carrying value of both the current and noncurrent note payable approximates fair value as of September 30, 2012, based on the current borrowing rates for loans with similar maturities. Deferred Revenue Deferred revenue consists of funds received in advance for certain events. Once the Mission fulfills its obligation, the Mission will recognize the revenue. Gifts-in-Kind The Mission receives contributions of substantial amounts of food, clothing, equipment, miscellaneous supplies and professional services which are used in the operation of Mission programs. These contributions are reported in the financial statements as both support and as program expense. The values reported for in-kind donations are determined by using fair market values of comparable goods. The Mission also receives the support of numerous non-professional volunteers. However, no amounts have been reported for these services as they do not meet the criteria set forth under accounting principles generally accepted in the United States of America (GAAP) for nonprofit organizations

11 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Functional Expenses The costs of providing various programs have been summarized by function in the Statement of Functional Expenses. Direct costs are charged directly to the appropriate program. Other costs are allocated based upon direct costs, occupancy and time spent as appropriate. The allocation is based upon current data. Tax Exempt Status The Mission is exempt from taxation under Internal Revenue Code Section 501(c)(3) and California Revenue and Taxation Code Section 23701(d). The Mission is not considered a private foundation. The Mission is not aware of any uncertain tax positions requiring disclosure at September 30, 2012 and 2011, or in years for which the tax statute is open. Use of Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Estimates and assumptions include, but are not limited to: Useful lives of capitalized assets Functional expense allocation Value of in-kind contributions received Value of contributions to others Fair market value of property held as investment It is at least reasonably possible that the estimates used will change within the next year. Summarized 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 GAAP. Accordingly, such information should be read in conjunction with the organization's financial statements for the year ended September 30, 2011, from which the summarized information was derived

12 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Reclassifications Certain reclassifications have been made to the September 30, 2011 amounts as reported in the prior year financial statements to make them comparable to the amounts reported for the year ended September 30, NOTE 3: INVESTMENT During the year ended September 30, 2007, the Mission entered into an equity-share arrangement with the Mission s Executive Director to purchase a home in the Santa Barbara County area. Under the terms of the agreement, the Mission contributed $520,000 towards the purchase of the home and retained pro rata equity in the property (see Note 9). The Mission will transfer portions of its share of any appreciation on the property to the Executive Director according to a vesting schedule laid out in the agreement, beginning in the year the property shows appreciation above its initial purchase price. At September 30, 2012 and 2011, the Mission s equity ownership in the house was 54.7%. At September 30, 2012 and 2011, the value of the real estate investment was determined to be below the Mission s original investment. As of September 30, 2012 and 2011, the Mission has reported its share of the equity in the investment at $425,085, reflecting a cumulative unrealized loss of $94,915, based on the Santa Barbara County property tax assessor s determination. NOTE 4: ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS The Mission categorizes its investments according to the fair value hierarchy as either: Level 1, based on observable inputs that are derived from quoted prices (unadjusted) for identical assets or liabilities in an active market; Level 2, based on quoted prices in nonactive markets or in active markets for similar assets or liabilities, inputs other than quoted prices that are observable, and inputs that are not directly observable, but are corroborated by external market data; or Level 3, based on unobservable inputs, which cannot be corroborated by external market data. As of September 30, 2012 and 2011, the equity share investment arrangement with the Mission s Executive Director (see Note 3) was considered a Level 2 investment. The fair market value of the equity share investment is based on comparable market sales

13 NOTE 5: LAND, BUILDINGS AND EQUIPMENT A summary of land, buildings and equipment at September 30, 2012 and 2011 is as follows: Estimated Useful Lives Land -- $ 1,435,600 $ 1,435,600 Building and improvements 40 years 5,306,689 5,300,330 Furniture and fixtures 7 years 407, ,000 Office equipment 3-5 years 155, ,117 Vehicles 5 years 38,740 38,163 Total land, buildings and equipment 7,344,661 7,315,210 Less: accumulated depreciation (2,965,154) (2,819,884) Net land, buildings and equipment $ 4,379,507 $ 4,495,326 Depreciation expense for the years ended September 30, 2012 and 2011 was $145,270 and $145,726, respectively. NOTE 6: LINE OF CREDIT The Mission has a line of credit with Montecito Bank & Trust with a fixed interest rate of 5.50%. The line of credit allows for borrowings up to $250,000 and has a maturity date of August 5, 2013, at which time the entire amount of unpaid principal and interest are due if the line is not renewed. The line is collateralized by the Mission s deposit account at Montecito Bank & Trust. The balance on the line of credit as of September 30, 2012 and 2011 was $0 and $55,000, respectively. The line is expected to be renewed. Interest on the line of credit was $655 and $596 for the years ended September 30, 2012 and 2011, respectively. NOTE 7: NOTE PAYABLE The Mission has a note payable to Santa Barbara Bank & Trust due in monthly installments of $6,569 including fixed interest at 6.875%, amortized over 30 years. The note is due in June 2037 and is secured by a first trust deed on the 24 West Arrellaga property. $ 936,476 $ 950,401 Less Current Portion (14,913) (13,925) Note Payable non-current portion $ 921,563 $ 936,

14 NOTE 7: NOTE PAYABLE (Continued) Future principal payment requirements are as follows: September 30, Principle Payment 2013 $ 14, , , , ,618 Thereafter 850,552 Total $ 936,476 NOTE 8: TEMPORARILY AND PERMANENTLY RESTRICTED NET ASSETS Temporarily restricted net assets at September 30, 2012 consist of $70,000 restricted for capital improvements of the Mission s chapel. There were no temporarily restricted net assets at September 30, Permanently restricted net assets consist of an endowment of $582,135 for the years ended September 30, 2012 and 2011, the income from which is unrestricted (see Note 14). NOTE 9: INTER-FUND BORROWING In 2007, the Mission authorized the borrowing of $520,000 from its endowment fund and secured an investment in a second deed of trust. The Mission will repay its endowment fund upon the close of sale or other termination of its current investment. NOTE 10: RENTAL INCOME The Mission offers sober living facilities for graduates of the Men s and Women s recovery programs. This facility has 30 beds for rent at $600 per month. Rental income received from these facilities was $151,100 and $95,822 for the years ended September 30, 2012 and 2011, respectively. The Mission leases space to a wireless company in which it has installed and is operating a wireless tower. The lease is on a quarter to quarter basis with annual increases. Rental income received was $21,970 and $21,302 for the years ended September 30, 2012 and 2011, respectively

15 NOTE 11: NON-CASH CONTRIBUTIONS Non-cash contributions consist of the following for the years ending September 30: Contributed clothing and household items, valued at estimated thrift store value $ 93,455 $ 110,345 Contributed food 71, ,265 Total $ 165,234 $ 212,610 Any unused items are donated to other nonprofit organizations, and have been recorded as donations in the amount of $15,681 and $17,222 for the years ended September 30, 2012 and 2011, respectively. NOTE 12: CONCENTRATION OF CREDIT RISK At September 30, 2012, the Federal Deposit Insurance Corporation (FDIC) insured only the first $250,000 on deposit at any one financial institution. During the current year, the Rescue Mission has had at various times more than $250,000 on deposit with one financial institution. At September 30, 2012, the Mission held a balance in excess of the federally insured deposit limit in the amount of $68,200. NOTE 13: EMPLOYEE BENEFIT PLAN The Mission offers all its employees the benefits of a tax sheltered annuity plan as described in Section 403(b) of the Internal Revenue Code. The Mission can make discretionary contributions for those who have completed one year of continuous employment. The annual contribution is generally a percentage of the employee s salaries. The Mission contributed $52,338 and $0 to the plan for the years ended September 30, 2012 and 2011, respectively. NOTE 14: DONOR RESTRICTED ENDOWMENTS Santa Barbara Rescue Mission s endowment consists of funds permanently restricted by the donor. As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Directors to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. The Board of Directors of the Mission 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

16 NOTE 14: DONOR RESTRICTED ENDOWMENTS (Continued) As a result of this interpretation, the Mission 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 Mission in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Mission 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 Mission, and (7) the Mission s investment policies. Investment Return Objectives, Risk Parameters and Strategies The Mission has adopted investment and spending policies for the endowment assets and these policies have been approved by the Board of Directors. The Board has decided to invest permanently restricted funds in residential real estate in the Santa Barbara area. In 2007 the Mission entered into an equity-share agreement with the Mission s Executive Director. The Mission invested $520,000 for 54.7% ownership of a residential property. All market appreciation and depreciation is split proportionally based on ownership. As an incentive for continued employment, the Executive Director will get an increasing percentage interest in any appreciation on the investment beginning in August 2010 (see Note 8). From time to time, the fair value of assets associated with donor-restricted funds may fall below the level that current law requires the Mission to retain for a fund of perpetual duration. These deficiencies are reported in the combined financial statements as a reduction in unrestricted net assets. During the year ended September 30, 2009, the investment in real estate was impaired due to widespread declines in the real estate market. The estimated value of the investment at September 30, 2012 was $425,085, which reflected a cumulative impairment loss of $94,915. The board expects the condition to be temporary, with restoration occurring through market recovery. NOTE 15: SUBSEQUENT EVENTS Management has evaluated subsequent events through January 18, 2013, which is the date the financial statements were available to be issued pending final approval by the Board of Directors. Management has determined no subsequent events requiring disclosure or significantly impacting existing disclosures have occurred