LOS ANGELES COUNTY BAR FOUNDATION

Transcription

1 LOS ANGELES COUNTY BAR FOUNDATION FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2010

2 FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2010 CONTENTS Page Independent Auditors Report... 1 Statement of Financial Position... 2 Statement of Activities... 3 Statement of Functional Expenses... 4 Statement of Cash Flows... 5 Notes to Financial Statements... 6

3 INDEPENDENT AUDITORS REPORT To the Board of Directors Los Angeles County Bar Foundation We have audited the accompanying statement of financial position of the Los Angeles County Bar Foundation (the Foundation) as of, and the related statements of activities, functional expenses 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 2009 financial statements and, in our report dated September 23, 2009, 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. 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 statements 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, and the changes in its net assets and its cash flows for the year ended, in conformity with accounting principles generally accepted in the United States of America. Green Hasson & Janks LLP September 8, 2010 Los Angeles, California An Independent Member of HLB HLB International A world-wide organization of accounting firms and business advisers Wilshire Boulevard Sixteenth Floor Los Angeles, CA TEL: (310) FAX: (310)

4 STATEMENT OF FINANCIAL POSITION With Summarized Totals at June 30, 2009 ASSETS 2010 Temporarily Permanently 2009 Unrestricted Restricted Restricted Total Total Cash and Cash Equivalents $ 44,172 $ - $ - $ 44,172 $ 38,441 Investments 245, ,550 1,180,868 1,059,732 Pledges Receivable (Net) - 102, ,431 93,741 Accounts Receivable 1, ,800 - TOTAL ASSETS $ 291,290 $ 102,431 $ 935,550 $ 1,329,271 $ 1,191,914 LIABILITY AND NET ASSETS LIABILITY: Due to Los Angeles County Bar Association $ 9,119 $ - $ - $ 9,119 $ 18,934 NET ASSETS: Undesignated 103, ,129 (26,218) Quasi-Endowment Funds 179, , ,042 Temporarily Restricted - 102, ,431 93,741 Permanently Restricted , , ,415 TOTAL NET ASSETS 282, , ,550 1,320,152 1,172,980 TOTAL LIABILITY AND NET ASSETS $ 291,290 $ 102,431 $ 935,550 $ 1,329,271 $ 1,191,914 The Accompanying Notes are an Integral Part of These Financial Statements -2-

5 STATEMENT OF ACTIVITIES Year Ended With Summarized Totals for the Year Ended June 30, Temporarily Permanently 2009 Unrestricted Restricted Restricted Total Total REVENUE AND SUPPORT: Contributions $ 252,956 $ 44,275 $ 9,135 $ 306,366 $ 262,653 Investment Income (Loss) (Net) 137, ,662 (191,291) In-Kind Contributions 14, ,000 14,071 Special Event Income (Net) 19, ,212 1,701 Art Sale Income (Net) 1, ,593 - Net Assets Released from Program Restrictions 35,585 (35,585) TOTAL REVENUE AND SUPPORT 461,008 8,690 9, ,833 87,134 EXPENSES: Program Services 197, , ,352 Management and General 72, ,978 63,039 Fundraising 61, ,460 46,775 TOTAL EXPENSES 331, , ,166 CHANGE IN NET ASSETS 129,347 8,690 9, ,172 (220,032) Net Assets - Beginning of Year 152,824 93, ,415 1,172,980 1,393,012 NET ASSETS - END OF YEAR $ 282,171 $ 102,431 $ 935,550 $ 1,320,152 $ 1,172,980 The Accompanying Notes are an Integral Part of These Financial Statements -3-

6 STATEMENT OF FUNCTIONAL EXPENSES Year Ended With Summarized Totals for the Year Ended June 30, Program Management 2009 Services and General Fundraising Total Total Salaries $ 14,601 $ 38,935 $ 43,802 $ 97,338 $ 66,801 Employee Benefits and Payroll Taxes 1,971 5,257 5,913 13,141 14,272 TOTAL PERSONNEL COSTS 16,572 44,192 49, ,479 81,073 Grants Expense 179, , ,795 In-Kind Expense - 14,000-14,000 14,071 Audit Fees - 11,500-11,500 11,120 Outside Printing ,743 4,679 7,882 Bank Service Fees - - 2,623 2,623 1,791 Postage and Delivery ,169 1,949 2,433 General Office ,214 1, Insurance ,583 1,095 In-House Duplication ,470 1,107 Professional Fees - - 1,440 1,440 - Other Expenses ,826 TOTAL 2010 FUNCTIONAL EXPENSES $ 197,223 $ 72,978 $ 61,460 $ 331,661 TOTAL 2009 FUNCTIONAL EXPENSES $ 197,352 $ 63,039 $ 46,775 $ 307,166 The Accompanying Notes are an Integral Part of These Financial Statements -4-

7 STATEMENT OF CASH FLOWS Year Ended With Summarized Totals for the Year Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES: Change in Net Assets $ 147,172 $ (220,032) Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities: Realized and Unrealized (Gain) Loss on Investments (116,334) 218,014 Donations Restricted for Long-Term Investment (9,135) (6,080) (Increase) Decrease in: Pledges Receivable (8,690) 8,671 Accounts Receivable (1,800) - Increase (Decrease) in Due to Los Angeles County Bar Association (9,815) 3,266 NET CASH PROVIDED BY OPERATING ACTIVITIES 1,398 3,839 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Investments (475,660) (205,230) Proceeds from Sales of Investments 470, ,333 NET CASH USED IN INVESTING ACTIVITIES (4,802) (30,897) CASH FLOWS FROM FINANCING ACTIVITIES: Donations Restricted for Long-Term Investment 9,135 6,080 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,731 (20,978) Cash and Cash Equivalents - Beginning of Year 38,441 59,419 CASH AND CASH EQUIVALENTS - END OF YEAR $ 44,172 $ 38,441 The Accompanying Notes are an Integral Part of These Financial Statements -5-

8 NOTE 1 - ORGANIZATION AND BUSINESS PURPOSE The Los Angeles County Bar Foundation (the Foundation), a nonprofit organization, was established by and receives administrative services from the Los Angeles County Bar Association (the Association) through an administrative agreement that is currently being revised and will be called a Memorandum of Understanding (MOU). The Foundation is principally funded by charitable contributions from members of the Los Angeles County legal community and other individuals, corporations and foundations interested in advancing the Foundation s mission. At the request of the Foundation, the Association incorporates in the dues statements to its members a solicitation (via a check off box) for a voluntary contribution (suggested amount of $35 per member) on behalf of the Foundation. The funds collected by the Association are remitted to the Foundation. The Foundation received $67,096 of dues-related contributions from the Association during the year ended. The Mission of the Los Angeles County Bar Foundation is to improve the administration of justice and the delivery of legal services, to cultivate understanding of and respect for the rule of law, and to render assistance to the poor, the neglected, and the discriminated against. The Foundation distributes these funds in the form of grants to law-related charitable organizations including project programs of the Los Angeles County Bar Association. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies applied in the preparation of the accompanying financial statements is as follows: (a) BASIS OF ACCOUNTING The financial statements of the Foundation have been prepared on the accrual basis of accounting. (b) ACCOUNTING To ensure observance of certain constraints and restrictions placed on the use of resources, the accounts of the Foundation are maintained in accordance with the principles of net assets accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into net asset classes that are in accordance with specified activities or objectives. Accordingly, all financial transactions have been recorded and reported by net asset class as follows: Unrestricted. These generally result from revenues generated by receiving unrestricted contributions, providing services, and receiving income from investments less expenses incurred in providing program related services, raising contributions, and performing administrative functions. -6-

9 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) ACCOUNTING (continued) Temporarily Restricted. The Foundation reports gifts of cash and other assets as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or the purpose of the restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from program restrictions. At June 30, 2010, the Foundation has $102,431 of temporarily restricted net assets, which consist of pledges receivable. Permanently Restricted. These net assets are received from donors who stipulate that resources are to be maintained permanently, but permit the Foundation to expend all of the income (or other economic benefits) derived from the donated assets. At, the Foundation has $935,550 of permanently restricted net assets, which consist of endowment funds. (c) CASH AND CASH EQUIVALENTS The Foundation has defined cash and cash equivalents as cash in banks and other financial instruments with an original maturity of three months or less. The carrying value of cash and cash equivalents at approximates its fair value. The Foundation maintains its cash and cash equivalents in bank deposit accounts and other investment accounts which, at times may exceed federally insured limits. The Foundation has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. (d) INVESTMENTS Investments in equity and debt securities with readily determinable market values are reported at fair value. The fair value of investments is valued at the closing price on the last business day of the fiscal year. Securities are generally held in custodial investment accounts administered by financial institutions. Investment purchases and sales are accounted for on a trade-date basis. Interest and dividend income is recorded when earned. Gains or losses (including investments bought, sold, and held during the year), and interest and dividend income are reflected in the statement of activities as increases or decreases in unrestricted net assets unless their use is temporarily restricted by donor stipulations or by law. -7-

10 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) INVESTMENTS (continued) Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain long-term investments, it is reasonably possible that changes in the values of these investments will occur in the near term and that such changes could materially affect the amounts reported in the statement of financial position. (e) CONTRIBUTIONS AND PLEDGES RECEIVABLE Unconditional contributions, including pledges recorded at estimated net realizable value, are recognized as revenues in the period received. The Foundation reports unconditional contributions as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose of the restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from program or capital restrictions. At, the Foundation evaluated the collectability of pledges receivable. An allowance of $500 for uncollectible pledges receivable was deemed necessary based on historical collection rates. (f) ACCOUNTS RECEIVABLE Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash. The carrying value of receivables, net of the allowance for doubtful accounts, if any, represents their estimated net realizable value. The allowance for doubtful accounts, if any, is estimated based on historical collection trends, type of debtor, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectibility of those balances and the allowance is adjusted accordingly. Past due receivable balances are written-off when internal collection efforts have been unsuccessful in collecting the amount due. All receivables are deemed fully collectible; therefore, no allowance for doubtful accounts has been established. (g) DONATED SERVICES Contributions of donated non-cash assets are recorded at fair value in the period received. Contributions of donated services that create or enhance non-financial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at fair value in the period received. -8-

11 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (g) DONATED SERVICES (continued) The Foundation recorded total unrestricted contributions of $14,000 for donated administration services from the Association for the year ended. (h) INCOME TAXES The Foundation is exempt from taxation under Internal Revenue Code Section 501(c)(3) and California Revenue and Taxation Code Section 23701d. (i) GRANTS Unconditional grants are charged against operations when authorized by the Foundation's Board of Directors. The actual payment of the grant may not necessarily occur in the year of authorization. Cancellations of grants occur when the grantees do not meet the terms under which the grants were awarded. (j) FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing the Foundation s programs and other activities have been presented in the statement of functional expenses. During the year, such costs are accumulated into separate groupings as either direct or indirect. Indirect or shared costs are allocated among program and support services by a method that best measures the relative degree of benefit. The Foundation uses direct salary dollars to allocate indirect costs. (k) MANAGEMENT'S USE OF 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 reported amounts of assets, liabilities, revenues and expenses as of the date and for the period presented. Actual results could differ from those estimates. (l) COMPARATIVE TOTALS 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 accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Foundation s financial statements for the year ended June 30, 2009, from which the summarized information was derived. -9-

12 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (m) FASB ACCOUNTING STANDARDS CODIFICATION In June 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (the ASC). The ASC has become the single source of non-governmental accounting principles generally accepted in the United States (GAAP) recognized by the FASB in preparation of financial statements. The Foundation adopted the ASC as of. The ASC does not change GAAP and did not have an effect on the Foundation s financial position, results of operations or cash flows. (n) SUBSEQUENT EVENTS The Foundation has evaluated events and transactions occurring subsequent to the statement of financial position date of for items that should potentially be recognized or disclosed in these financial statements. The evaluation was conducted through September 8, 2010, the date these financial statements were available to be issued. No material events or transactions were noted to have occurred. NOTE 3 - INVESTMENTS The Foundation implemented the fair value measurement accounting standard for those assets and liabilities that are re-measured and reported at fair value at each reporting period. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value based on inputs used, and requires additional disclosures about fair value measurements. This standard applies to fair value measurements already required or permitted by existing standards. In general, fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset and include situations where there is little, if any, market activity for the asset. -10-

13 NOTE 3 - INVESTMENTS (continued) The following table presents information about the Foundation s assets that are measured at fair value on a recurring basis at and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value: Year Ended June 30, 2010 Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Identical Observable Assets Inputs (Level 1) (Level 2) Significant Unobservable Inputs (Level 3) Stocks $ 611,954 $ 611,954 $ - $ - Bonds 540, , Money Market 28,452 28, TOTAL INVESTMENTS $ 1,180,868 $ 1,180,868 $ - $ - The fair values of stocks, bonds and marketable securities within Level 1 inputs were obtained based on quoted market prices at the closing of the last business day of the fiscal year. Net investment income consists of the following for the year ended : Dividends and Interest $ 28,113 Unrealized Gains 152,992 Realized Losses (36,658) Investment Management Fees (6,785) INVESTMENT INCOME (NET) $ 137,662 NOTE 4 - PLEDGES RECEIVABLE Pledges receivable consist of the following pledge programs at : Honor Roll Programs $ 62,730 Fellows Programs 42,645 Other Pledges Receivable 640 GROSS PLEDGES RECEIVABLE $ 106,

14 NOTE 4 - PLEDGES RECEIVABLE (continued) Pledges receivable are recorded as revenue when pledged. Additionally, all pledges are valued at their estimated fair value at. Pledges receivable are expected to be collected as follows: Year Ending June $ 44, , , ,470 Thereafter 6,605 GROSS PLEDGES RECEIVABLE 106,015 Less: Allowance for Uncollectible Amounts (500) Less: Discount on Present Value - Interest Rate of 3% (3,084) PLEDGES RECEIVABLE (NET) $ 102,431 NOTE 5 - DUE TO LOS ANGELES COUNTY BAR ASSOCIATION The Association pays operating expenses of the Foundation as they are incurred, and the Foundation reimburses the Association for those expenses. At, the Foundation owes the Association $9,119 for these operating expenses. NOTE 6 - QUASI-ENDOWMENT FUNDS The Board of Directors has established two funds whereby the principal will be retained and the future investment income earned is available for use. In the accompanying financial statements, the two funds have been combined and reported as quasi-endowment funds. The following summarizes the components of the quasi-endowment funds of unrestricted net assets at : General $ 153,500 Stockel 25,542 TOTAL QUASI-ENDOWMENT FUNDS $ 179,042 Investment income earned on the Stockel quasi-endowment fund is used to provide funding for the Harriett Buhai Center for Family Law. -12-

15 NOTE 7 - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consist of pledges receivable which are time restricted and to be received in future periods. NOTE 8 - PERMANENTLY RESTRICTED NET ASSETS Based on donor restrictions, the Foundation maintains endowment funds, whereby the principal is retained and the investment income earned is used for current operations. In the accompanying financial statements, the endowment funds have been combined and reported as permanently restricted net assets. The following summarizes the components of the permanently restricted net assets at : General Endowment $ 774,320 Charles English 58,150 Donald Baker 38,880 Roy Aaron 19,700 John Brinsley 11,700 Joseph Taback 11,505 Joseph Ball Memorial 10,500 R. Gerald Markle 4,945 Vincent Townsend 4,450 Roderick W. Leonard 1,400 TOTAL ENDOWMENT FUNDS $ 935,550 NOTE 9 - ENDOWMENTS The Foundation's endowments consist of funds established for a variety of purposes. Endowment funds are established by donor-restricted gifts to provide a permanent endowment, which is to provide a permanent source of income to the Foundation. The Foundation s management understands California State law as (1) requiring the preservation of the fair market value of the original gifts as of the gift date of the donor restricted endowment funds, and (2) allowing the spending of income and gains on permanently restricted endowments, absent explicit donor stipulations that all or a portion of such gains be maintained in perpetuity. The primary long-term financial objective for the Foundation s endowments is to preserve the real (inflation-adjusted) purchasing power of endowment assets and income after accounting for endowment spending, annual growth percentage and costs of portfolio management. -13-

16 NOTE 9 - ENDOWMENTS (continued) The Foundation s Board of Directors is in the process of developing a spending policy that will distribute a specific payout rate of the endowment base to support the Foundation s programs. The endowment base will be defined as a three-year moving average of the market value of the total endowment portfolio (calculated as of the last day of June for the prior three years). The distribution or payout rate will be calculated at a specific fixed percentage of the base. Such a policy will allow for a greater predictability of spendable income for budgeting purposes and for gradual steady growth for the support of operations by the endowment. In addition, this policy will minimize the probability of invading the principal over the long term. At times, the fair value of assets associated with these endowment funds may fall below the level that the donor requires the Foundation to retain as a fund of perpetual duration. Deficiencies may result from unfavorable market fluctuations. In accordance with generally accepted accounting principles, deficiencies of this nature that are reported in unrestricted net assets were $116,334 at. Endowment Net Asset Composition by Type of Fund at Unrestricted Temporarily Restricted Permanently Restricted Total Donor-Restricted $ (38,206) $ - $ 935,550 $ 897,344 Changes in Endowment Net Assets for the Year Ended Endowment Net Assets - Beginning of Year $ (135,763) $ - $ 926,415 $ 790,652 Contributions - - 9,135 9,135 Investment Return: Investment Income 21, ,391 Realized and Unrealized Gains 81, ,376 Investment Fees (5,210) - - (5,210) ENDOWMENT NET ASSETS - END OF YEAR $ (38,206) $ - $ 935,550 $ 897,344 NOTE 10 - CONTRIBUTION REVENUE Contributions were received from the following sources for the year ended : Law Firms $ 111,375 Individuals 109,604 Dues-Related Contributions 67,096 Other 16,224 Corporations 2,067 TOTAL CONTRIBUTION REVENUE $ 306,

17 NOTE 10 - CONTRIBUTION REVENUE (continued) Unconditional promises to give (pledges) are recorded as receivables and contribution income when the pledge is made. Accordingly, contributions collected in cash from individuals differ from the amount recorded in the statement of activities of the Foundation. Actual contributions collected by the Foundation from individual donors amounted to $100,265 for the year ended. NOTE 11 - GRANTS EXPENSE The Board of Directors authorized grants for the following programs during the year ended : Los Angeles County Bar Association Programs $ 135,071 Harriett Buhai Center for Family Law 7,739 Mental Health Advocacy Services, Inc. 6,100 Levitt & Quinn Family Law Center, Inc. 5,100 Jenesse Center, Inc. - Legal Services Program 3,600 Central American Resource Center - Legal Services Project 2,000 Inner City Law Center 2,000 L.A. Gay & Lesbian Center - Legal Services Department 2,000 Disability Rights Legal Center - Pro Bono Program 1,500 El Rescate Legal Services 1,500 My Friend s Place - Legal Services Program 1,500 Sunday Free Legal Clinic 1, Family Crisis Center - Legal Services Project 1,000 Catholic Charities of Los Angeles - Esperanza Immigrant Rights 1,000 Centinela Youth Services - Victim Offender Restitution Service 1,000 Christian Legal Aid of Los Angeles 1,000 Coalition to Abolish Slavery & Trafficking 1,000 Healthcare & Elder Law Programs Corp. - Better Endings Project 1,000 International Rescue Committee 1,000 Long Beach Bar Foundation - SHORTSTOP Program 1,000 Los Angeles Center for Law & Justice - Housing Unit 1,000 Loyola Law School - Center for Juvenile Law and Policy 1,000 TOTAL GRANTS EXPENSE $ 179,

18 NOTE 11 - GRANTS EXPENSE (continued) Grants authorized to projects operated by the Los Angeles County Bar Association consist of the following for the year ended June, 30, 2010: Dispute Resolution Services, Inc. School Peer Mediation and Conflict Resolution Program $ 38,950 Los Angeles County Bar Association Projects, Inc. - Domestic Violence Project 37,279 Immigration Legal Assistance Project 36,633 Barristers AIDS Legal Services Project 22,209 $ 135,