The Woodlands Religious Community, Inc. dba Interfaith of The Woodlands

Transcription

1 Financial Statements and Supplementary Information For the Years Ended December 31, 2015 and 2014

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3 Table of Contents Independent Auditor s Report... 1 FINANCIAL STATEMENTS Statements of Financial Position... 5 Statements of Activities... 6 Statements of Cash Flows Notes to Financial Statements SUPPLEMENTARY INFORMATION Schedule of Functional Expenses Indirect Cost Schedule Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by The Uniform Guidance Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs... 37

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5 1610 Woodstead Court, Suite 455 The Woodlands, Texas INDEPENDENT AUDITOR S REPORT To the Board of Directors of Report on the Financial Statements We have audited the accompanying financial statements of dba Interfaith of The Woodlands (a nonprofit organization), which comprise the statements of financial position as of December 31, 2015 and 2014, and the related statements of activities and cash flows for the years 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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

6 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of as of December 31, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses and indirect cost schedule are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is also not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepared the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 13, 2016, on our consideration of the Organization s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulation, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Organization s internal control over financial reporting and compliance. Seefeld Lawson Moeller LLP Seefeld Lawson Moeller LLP Certified Public Accountants The Woodlands, Texas May 13, 2016 Page 2

7 FINANCIAL STATEMENTS Page 3

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9 Statements of Financial Position December 31, 2015 and ASSETS Cash and Cash Equivalents $ 1,793,063 $ 1,208,650 Investments 2,518,282 2,407,329 Prepaid Expenses 222, ,788 Grants Receivable 795,457 1,473,329 Promises to Give, net 17, ,944 Accounts Receivable 72,108 59,728 Deposits on Leased Property 139, ,758 Inventory 24,171 24,796 Property and Equipment, net 2,447,774 2,428,666 Restricted Property and Equipment, net 635, ,144 Restricted Investments 558, ,889 TOTAL ASSETS $ 9,224,371 $ 9,348,021 LIABILITIES AND NET ASSETS LIABILITIES Accounts Payable $ 177,995 $ 192,862 Other Liabilities 304, ,077 TOTAL LIABILITIES 482, ,939 NET ASSETS Unrestricted 7,283,144 7,595,173 Temporarily Restricted 843, ,620 Permanently Restricted 614, ,289 TOTAL NET ASSETS 8,741,582 9,023,082 TOTAL LIABILITIES AND NET ASSETS $ 9,224,371 $ 9,348,021 The accompanying notes are an integral part of these financial statements Page 5

10 Statement of Activities For the Year Ended December 31, 2015 Unrestricted Temporarily Restricted REVENUES AND SUPPORT Contributions $ 830,163 $ - Federal Financial Assistance - 18,469,561 State and Other Grants 225,100 - Fees from Program Services 3,088,205 - Fundraising 1,015,122 - Communications and Publications Services 1,322,986 - Investment Loss (10,619) (5,991) Other 148,664 - TOTAL REVENUES AND SUPPORT 6,619,621 18,463,570 RECLASSIFICATIONS Net Assets Released From Restrictions Expiration of Time Restrictions 18,469,961 (18,469,561) TOTAL REVENUES, SUPPORT AND RECLASSIFICATIONS 25,089,582 (5,991) EXPENSES Program Services Workforce Services 17,756,750 - Child Development Center 2,549,078 - Families, Seniors, and Counseling Services 1,980,917 - Supporting Services General and Administrative 1,521,139 - Fundraising 650,525 - Communications and Publications Services 943,202 - TOTAL EXPENSES 25,401,611 - NET INCREASE (DECREASE) IN NET ASSETS (312,029) (5,991) NET ASSETS, BEGINNING OF YEAR 7,595, ,620 NET ASSETS, END OF YEAR $ 7,283,144 $ 843,629 The accompanying notes are an integral part of these financial statements Page 6

11 Permanently Restricted Total $ 36,920 $ 867,083-18,469, ,100-3,088,205-1,015,122-1,322,986 - (16,610) - 148,664 36,920 25,120,111 (400) - 36,520 25,120,111-17,756,750-2,549,078-1,980,917-1,521, , ,202-25,401,611 36,520 (281,500) 578,289 9,023,082 $ 614,809 $ 8,741,582 Page 7

12 Statement of Activities For the Year Ended December 31, 2014 Unrestricted Temporarily Restricted REVENUES AND SUPPORT Contributions $ 745,374 $ - Federal Financial Assistance - 17,254,760 State and Other Grants 195,493 - Fees from Program Services 2,966,010 - Fundraising 922,669 - Communications and Publications Services 1,526,869 - Investment Income 108,727 32,515 Other 161,562 - TOTAL REVENUES AND SUPPORT 6,626,704 17,287,275 RECLASSIFICATIONS Net Assets Released From Restrictions Expiration of Time Restrictions 17,268,201 (17,251,701) TOTAL REVENUES, SUPPORT AND RECLASSIFICATIONS 23,894,905 35,574 EXPENSES Program Services Workforce Services 16,487,511 - Child Development Center 2,377,439 - Families, Seniors, and Counseling Services 1,869,322 - Supporting Services General and Administrative 1,625,857 - Fundraising 532,337 - Publications and Residential Services 927,966 - TOTAL EXPENSES 23,820,432 - NET INCREASE (DECREASE) IN NET ASSETS 74,473 35,574 NET ASSETS, BEGINNING OF YEAR 7,520, ,046 NET ASSETS, END OF YEAR $ 7,595,173 $ 849,620 The accompanying notes are an integral part of these financial statements. Page 8

13 Permanently Restricted Total $ 12,970 $ 758,344-17,254, ,493-2,966, ,669-1,526, , ,562 12,970 23,926,949 (16,500) - (3,530) 23,926,949-16,487,511-2,377,439-1,869,322-1,625, , ,966-23,820,432 (3,530) 106, ,819 8,916,565 $ 578,289 $ 9,023,082 Page 9

14 Statements of Cash Flows For the Years Ended December 31, 2015 and CASH FLOWS FROM OPERATING ACTIVITIES Increase (Decrease) in Net Assets $ (281,500) $ 106,517 Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities: Loss on Disposal of Assets 3,900 21,289 Depreciation 446, ,402 Contributions Restricted for Long-Term Purposes (36,920) (12,970) Unrealized Loss on Investments (137,468) (47,531) Changes in Assets and Liabilities affecting operations: Prepaid Expenses (5,036) (30,751) Grants Receivable 677,872 (205,603) Promises to Give 84,752 61,519 Accounts Receivable (12,380) (33,550) Deposits on Leased Property 2,500 (2,806) Inventory 625 (1,399) Accounts Payable (14,867) (55,903) Other Liabilities 172,717 (15,838) Net Cash Provided by Operating Activities 900, ,376 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Investments (1,090,871) (714,177) Proceeds from Sale of Investments 1,064,037 1,449,841 Purchase of Restricted Investments (425,178) (277,735) Proceeds from Sale of Restricted Investments 434, ,404 Purchase of Property and Equipment (173,606) (345,839) Purchase of Restricted Property and Equipment (162,329) (237,930) Net Cash Provided (Used) by Investing Activities (353,340) 132,564 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Contributions Restricted for: Investment in Permanent Endowment 36,920 12,970 Net Cash Provided by Financing Activities 36,920 12,970 NET INCREASE IN CASH AND CASH EQUIVALENTS 584, ,910 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,208, ,740 CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,793,063 $ 1,208,650 The accompanying notes are an integral part of these financial statements. Page 10

15 Notes to Financial Statements December 31, 2015 and 2014 NOTE 1 Organization (Interfaith) is a Texas nonprofit corporation without capital stock, incorporated under the Texas Nonprofit Corporation Act on October 5, The principal purpose of Interfaith (the Organization ) is to aid, promote and provide for religious cooperation in The Woodlands, in conjunction with congregations that are developing therein. Interfaith s primary program services include: Workforce Services: One-stop career centers providing workforce program services such as job search assistance, job development and placement assistance at no cost to the clients served. The program is federally funded through its federal program monitor, Houston- Galveston Area Council (H-GAC). Child Development Center: Interfaith Child Development Center, a state-licensed nonprofit facility established in 1976, provides a loving, nurturing environment for pre-school children with emphasis on fostering social and emotional development. Tuition and fees fund the program. Families, Seniors, and Counseling Services: A multitude of services are provided to the community including enrichment programs for the aged and assisting families with special needs such as food and clothing. Programs are primarily funded by the support of the community through businesses, individuals, civic groups and churches, as well as, proceeds generated from operating a resale retail business. The Organization also publishes a directory in which it generates revenues from advertising sales. Approximately five percent of the Organization s revenues are derived from directory advertising sales. Beginning in January 2011, Interfaith entered into a management services agreement with South County Community Clinic dba Interfaith Community Clinic. In accordance with the agreement, Interfaith is to provide accounting, information technology, fundraising and other agreed upon services to Interfaith Community Clinic for a monthly fee of $10,833 in 2015 and NOTE 2 Summary of Significant Accounting Policies Basis of Presentation and Accounting In accordance with generally accepted accounting principles in the United States, the financial statements have been prepared on the accrual basis and, accordingly, reflect all significant receivables, payables and other liabilities. The Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Additionally, Interfaith is required to present a Statement of Activities and a Statement of Cash Flows. Page 11

16 Notes to Financial Statements December 31, 2015 and 2014 Contributed Services During the years ended December 31, 2015 and 2014, the value of contributed services meeting the requirements for recognition in the financial statements was not material and has not been recorded. In addition, many individuals volunteer their time and perform a variety of tasks that assist the Organization. Functional Allocation of Expenses The costs of providing Interfaith s programs and supporting services have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Use of Estimates The presentation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Property and Equipment Donations of property and equipment are recorded as support at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated that have an explicit restriction regarding their use and contributions of cash, that must be used to acquire property and equipment, are reported as restricted support. When donor stipulations are absent regarding how long those donated assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted net assets at that time. All acquisitions of property and equipment in excess of $1,500 and all expenditures for repairs, maintenance, renewals and betterments that materially prolong the useful lives of assets are capitalized. Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Interfaith capitalizes equipment purchased with federal funds as temporarily restricted assets. The temporary restriction on these assets expires over the useful life of the assets. As the equipment from federal funds is used in the programs, the amount of depreciation is reclassified to unrestricted net assets to show the release of the temporary restriction on these assets. These assets are normally donated to the Organization at the conclusion of the contract. Property and equipment are depreciated using the straight-line method over an estimated useful life of five to ten years for equipment and ten to forty years for property. Page 12

17 Notes to Financial Statements December 31, 2015 and 2014 Income Taxes Interfaith is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and is not treated as a private foundation. However, income from certain activities not directly related to Interfaith s tax-exempt purpose is subject to taxation as unrelated business income. Interfaith s unrelated business taxable income (UBTI) is from sales of advertising in its directory. Interfaith had no federal income tax expense for the years ended December 31, 2015 and 2014 on the unrelated business taxable income. Cash and Cash Equivalents For purposes of the Statements of Cash Flows, Interfaith considers all highly liquid investments available for current use, with an initial maturity of three months or less, to be cash equivalents. Restricted cash and cash equivalents are limited in use to donor imposed restrictions. At December 31, 2015 and 2014, respectively, Interfaith had $1,793,063 and $1,208,650 in cash and cash equivalents. Investments Interfaith carries investments in marketable securities with readily determinable fair values at their fair values in the Statement of Financial Position. Unrealized gains and losses are included in the change in net assets in the accompanying Statement of Activities. Interfaith is in compliance with its investment policy. Fair Values of Financial Instruments In estimating its fair value disclosures for cash and cash equivalents, investments, and receivables, the carrying amounts reported in the statement of financial position approximate fair values because of the short maturities of those instruments. Inventories The Organization accepts contributions of food items for distribution. These contributed items are recorded at their fair value at the date of receipt and are reflected as inventories in the Statement of Financial Position. Inventories are expensed on a first-in, first-out (FIFO) basis. Compensated Absences Interfaith s employees earn vacation pay depending on length of service and other factors. The Organization requires all vacation to be taken by the end of each employee s respective department s budget year. As such, vacation pay has not been accrued as it is not deemed material to the financial statements. The Organization s policy is to recognize these costs when actually paid. Page 13

18 Notes to Financial Statements December 31, 2015 and 2014 Revenue Recognition All contributions are considered available for the Organization s general programs unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor are reported as temporarily or permanently restricted support and increase the respective class of net assets. Contributions received with temporary restrictions that are met in the same reporting period are reported as unrestricted support and increase unrestricted net assets. Federal financial assistance revenues are reported as temporarily restricted and are released from restrictions to the extent the funds are used for items expendable during the current period. Federal financial assistance revenues used for capitalized equipment are classified as temporarily restricted assets, with the restriction expiring over the useful life of the assets. Investment income that is limited to specific uses by donor restrictions is reported as increases in unrestricted net assets if the restrictions are met in the same reporting period as the income is recognized. Grants and Accounts Receivable Interfaith s receivables primarily are comprised of grant receivables. Grant receivables are stated as reimbursable expenditures due from the Organization s grant monitor, H-GAC. The Organization s remaining accounts receivable primarily relates to its childcare, counseling, and publishing services and are stated as unpaid balances due. The Organization uses the direct write-off method to recognize bad debt expense when a receivable is deemed uncollectible as a result of management s periodic review. GAAP requires the allowance method be used to recognize bad debt. However, the effect of using the direct write-off method is not materially different from the results that would be obtained under the allowance method. Bad debt expense was $57,784 and $17,125 for the years ended December 31, 2015 and 2014, respectively. Promises to Give Promises to give consists of unconditional promises to give, less allowance for uncollectible promises, and is recognized in the period received. An allowance for uncollectible promises is recorded when the receivable is deemed uncollectible as a result of management s periodic review. Reclassifications Certain amounts for the year ending December 31, 2014 have been reclassified in these comparative financial statements to conform to their 2015 classification. These reclassifications had no effect on the change in net assets. Date of Management s Review The Organization has evaluated subsequent events through May 13, 2016 the date which the financial statements were available to be issued. Page 14

19 Notes to Financial Statements December 31, 2015 and 2014 NOTE 3 Cash and Cash Equivalents Cash and cash equivalents consist of the following: Demand Deposits $ 1,283,244 $ 334,966 Money Market Accounts and Cash Equivalents 509, ,684 Totals $ 1,793,063 $ 1,208,650 NOTE 4 Fair Value Measurements Fair values of assets measured on a recurring basis at December 31, 2015 and 2014 are as follows: December 31, 2015 Fair Value Fair Value Measurements at Reporting Date Using In Active Markets for Identical Assets (Level 1) Quoted Prices Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Certificates of Deposit $ 1,152,699 $ 1,152,699 $ - $ - Fixed Income 1,006,388 1,006, Mutual Funds 918, , Total $ 3,077,091 $ 3,077,091 $ - $ - December 31, 2014 Certificates of Deposit $ 1,102,782 $ 1,102,782 $ - $ - Fixed Income 897, , Mutual Funds 921, , Total $ 2,922,218 $ 2,922,218 $ - $ - All assets have been valued using a market approach. There were no changes in the valuation techniques during the current year. Page 15

20 Notes to Financial Statements December 31, 2015 and 2014 NOTE 5 Investments Investments are composed of fixed income and mutual funds investing in debt and equity securities and are carried at fair market value based on quoted prices in active markets (level 1 measurements). Investments as of December 31, 2015 and 2014 are summarized as follows: Cost Fair Value Cost Fair Value Unrestricted: $ 2,558,983 $ 2,518,282 $ 2,332,470 $ 2,407,329 Restricted: 567, , , ,889 $ 3,126,824 $ 3,077,091 $ 2,831,348 $ 2,922,218 The following schedule summarizes the investments return (loss) and its classification in the Statements of Activities for the years ended December 31, 2015 and Ordinary Dividends $ 25,788 $ 23,332 Interest Income 29,822 34,602 Realized Gain 65, ,129 Unrealized Loss (137,468) (47,531) Total Investment Return (Loss) $ (16,610) $ 153,532 NOTE 6 Net Assets Unrestricted net assets include $500,000 designated for emergency funds at December 31, 2015 and 2014 and board designated endowment funds of $1,652,905 and $1,638,642 at December 31, 2015 and 2014, respectively. Temporarily restricted net assets, consisting of equipment purchased with federal funds and pledges receivable totaled $843,629 and $849,620 at the end of 2015 and 2014, respectively. Permanently restricted net assets, consisting of restricted cash and investments totaled $614,809 and $578,289, respectively at the end of 2015 and 2014 due to donor imposed restrictions. NOTE 7 Endowment The Board of Directors established a board-designated endowment, specifying that the capital of the endowment would be retained and invested; that there would be no withdrawal of capital except upon approval of the Board; and that the earnings from the endowment s investments be retained except upon approval of the Board, whose approval shall allow the earnings to be used for the operations of the Organization. The Organization s endowment includes both donor-restricted funds and funds designated by the Board of Directors to function as endowments. As required by generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the Board of Directors to function as endowments, are classified and reported on the existence or absence of donor imposed restrictions. Page 16

21 Notes to Financial Statements December 31, 2015 and 2014 The Board of Directors of the Organization 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 Organization 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 Organization in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Organization considers the following factors in making a determination to appropriate or accumulate donorrestricted 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 Organization, and (7) the Organization's investment policies. Investment Return Objectives, Risk Parameters and Strategies The Organization 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 a well-diversified asset mix, which includes equity, that is intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make an annual distribution of 4%, while growing the funds if possible. Therefore, the Organization expects its endowment assets, over time, to produce an average rate of return equal to 4% above the Consumer Price Index. 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 Organization has a policy of appropriating for distribution each year 4% of its endowment funds as determined by a twelve quarter rolling average of the market value plus any planned liquidation of Term Endowments. In establishing this policy, the Organization considered the long-term expected return on its investment assets, the nature and duration of the individual endowment funds, many of which must be maintained in perpetuity because of donor-restrictions, and the possible effects of inflation. The Organization expects the current spending policy to allow its endowment funds to Page 17

22 Notes to Financial Statements December 31, 2015 and 2014 grow at a rate that is consistent with the Organization s objective. This is consistent with the Organization's objective to maintain the purchasing power of the endowment assets as well as to provide additional real growth through new gifts and investment return. Endowment net asset composition by type of fund as of December 31, 2015 and 2014 as follows: Temporarily Permanently December 31, 2015 Unrestricted Restricted Restricted Total Donor restricted endowment funds $ - $ 90,148 $ 614,809 $ 704,957 Board designated endowment funds 1,652, ,652,905 Total Funds $ 1,652,905 $ 90,148 $ 614,809 $ 2,357,862 Temporarily Permanently December 31, 2014 Unrestricted Restricted Restricted Total Donor restricted endowment funds $ - $ 96,139 $ 578,289 $ 674,428 Board designated endowment funds 1,638, ,638,642 Total Funds $ 1,638,642 $ 96,139 $ 578,289 $ 2,313,070 Changes in endowment net assets for the years ended December 31, 2015 and 2014 are as follows: Temporarily Permanently December 31, 2015 Unrestricted Restricted Restricted Total Endowment net assets, beginning of year $ 1,638,642 $ 96,139 $ 578,289 $ 2,313,070 Contributions 5,275-36,920 42,195 Investment income (loss) 56,650 (5,991) - 50,659 Net appreciation (depreciation) (72,056) - - (72,056) Board designations 100, ,000 Amounts appropriated for expenditure (25,606) - - (25,606) Allowance for uncollectible pledges (50,000) - (400) (50,400) Endowment net assets, end of year $ 1,652,905 $ 90,148 $ 614,809 $ 2,357,862 Temporarily Permanently December 31, 2014 Unrestricted Restricted Restricted Total Endowment net assets, beginning of year $ 1,514,693 $ 63,624 $ 581,819 $ 2,160,136 Contributions ,970 12,970 Investment income 37,248 10,784-48,032 Net appreciation 75,058 21,731-96,789 Board designations 105, ,533 Amounts appropriated for expenditure (23,229) - - (23,229) Allowance for uncollectible pledges 4,000 - (16,500) (12,500) Reclassification of net assets (74,661) - - (74,661) Endowment net assets, end of year $ 1,638,642 $ 96,139 $ 578,289 $ 2,313,070 Page 18

23 Notes to Financial Statements December 31, 2015 and 2014 NOTE 8 Property and Equipment Interfaith had the following unrestricted fixed assets: Land $ 224,890 $ 224,890 Buildings and Improvements 3,811,329 3,694,308 Furniture and Equipment 555, ,449 4,591,979 4,475,647 Accumulated Depreciation (2,144,205) (2,046,981) Totals $ 2,447,774 $ 2,428,666 Interfaith had the following temporarily restricted fixed assets: Furniture and Equipment $ 3,754,475 $ 3,866,808 Accumulated Depreciation (3,119,042) (3,097,664) Totals $ 635,433 $ 769,144 Depreciation expense for the years ended December 31, 2015 and 2014 amounted to $446,638 and $438,402, respectively. NOTE 9 Line of Credit In October 2015, the Organization signed an unsecured line of credit agreement for $500,000 at the prime interest rate to ensure adequate working capital. As of December 31, 2015, the Organization had not borrowed against the line of credit. NOTE 10 Leases The Organization leases a number of facilities to provide office space for various program services. The Organization paid $1,646,131 and $1,615,295 for the leases of office space in 2015 and 2014, respectively. As of December 31, 2015 the future operating lease obligations for the next five years for these leases are as follows: 2016 $ 1,417, ,153, ,063, , ,117 Total $ 5,032,110 Page 19

24 Notes to Financial Statements December 31, 2015 and 2014 NOTE 11 Defined Contribution Plan Interfaith provides a 403(b) plan for employees who have attained the age of twenty-one and have completed one year of eligible service. Interfaith matches each employee contribution up to 5% of the employee s annual salary. Total employer contributions for 2015 and 2014 totaled $258,477 and $245,689, respectively. NOTE 12 Concentration of Credit Risks Interfaith receives substantial amounts of funding for the purpose of administering federal assistance programs. In 2015 and 2014 the amount of funding for those programs totaled approximately $18.5 million and $17.3 million, respectively. Amounts due from the grant monitor for these programs are recorded as grants receivable and total $795,457 and $1,473,329 at December 31, 2015 and 2014, respectively. Interfaith also operates a state-licensed childcare facility, which generated $2.5 and $2.4 million in tuition revenue for the years ended December 31, 2015 and 2014, respectively. In addition, the Organization publishes a local telephone directory which produced approximately $1.3 and $1.5 million in revenues for the years ended December 31, 2015 and 2014, respectively. Amounts due relating to these activities are recorded as accounts receivables and at December 31, 2015 and 2014 totaled $53,870 and $32,847, respectively. Interfaith has financial instruments which potentially subject the Organization to concentration of credit risk consisting principally of cash deposited at banks and temporary cash investments. The Organization places its cash investments with various financial institutions in The Woodlands area to limit the amount of credit exposure to any one financial institution. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. In addition, Interfaith also had pledged securities of $3,750,000 at year end with their primary bank institution. Balances not fully secured with the FDIC insurance amounts and pledged securities at December 31, 2015 and 2014 were $11,745 and $102,448, respectively. Securities in accounts held in custody by various brokerage firms are protected by the Securities Investors Protection Corporation (SIPC) up to $500,000 including up to $250,000 in cash, in the event of the firm s liquidation. Additional protection (excess SIPC) is provided by Customer Asset Protection Company, making the combined protection equal to the total net equity of cash and securities held in custody for Interfaith s account. This coverage does not protect against market fluctuations. Raymond James Bank Deposit Program balances are insured by the FDIC (subject to FDIC limitations and guidelines), but are not eligible for SIPC or excess SIPC coverage. At December 31, 2015 and 2014 there were $1,424,392 and $1,319,436, respectively, of uninsured balances at various brokerage firms. Interfaith had approximately $-0- and $440,670 in cash and cash equivalents at December 31, 2015 and 2014, respectively and $1.1 million for both of the years ended December 31, 2014 and 2015 in fixed income securities held in certificate of deposits. Page 20

25 Notes to Financial Statements December 31, 2015 and 2014 NOTE 13 Unconditional Promises to Give Unconditional promises to give at December 31 are as follows: Endowment Campaign $ 56,000 $ 63,400 Foundation Grant 10,270 4,408 Other 10,012 43,226 Total $ 76,282 $ 111,034 Receivable in less than one year $ 76,282 $ 111,034 Less allowance for uncollectible promises receivable (59,090) (9,090) Net unconditional promises to give $ 17,192 $ 101,944 Page 21

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27 SUPPLEMENTARY INFORMATION Page 23

28 Schedule of Functional Expenses For the Year Ended December 31, 2015 (With Comparative Amounts for the Year Ended December 31, 2014) Program Services Families, Child Seniors, and Workforce Development Counseling Services Center Services Salaries and Wages $ 10,674,256 $ 1,602,175 $ 697,359 Benefits 2,008, , ,639 Payroll Taxes 796, ,284 51,352 Total Payroll and Related Expense 13,478,635 2,093, ,350 Advertising and Marketing - 11,136 13,945 Bad Debt - 1,095 - Depreciation 295,626 73,805 17,648 Direct Assistance ,339 Instructional Services - 40,091 - Insurance 85,517 35,515 12,027 Maintenance and Repairs 847,725 82,541 44,064 Office Equipment 200,743 6,839 6,240 Postage and Delivery 133,751 1,201 1,621 Printing and Copying 44,385 1,953 2,367 Professional Services 8,375 1,392 20,442 Property Rents 1,646, Special Events Staff Development 52,392 9,200 8,213 Supplies 228, ,892 32,422 Telecommunications 381,726 16,581 15,145 Transportation 150,810 14,876 9,806 Utilities 202,335 49,212 23,970 Other ,318 Total $ 17,756,750 $ 2,549,078 $ 1,980,917 Page 24

29 Supporting Services Communications and General and Publications Administrative Fundraising Services Total Total $ 1,017,384 $ 213,933 $ 468,998 $ 14,674,105 $ 13,272, ,750 34,276 45,900 2,681,423 2,230,244 66,664 16,219 34,459 1,084, ,745 1,204, , ,357 18,439,646 16,485,566 1,300 15,882 32,689 74,952 62,401-50,700 5,989 57,784 17,125 55,123 1,577 2, , , , , ,091 39,291 7,594 1,385 1, , ,261 32,519 3,367 7,839 1,018, ,354 9, , , ,681 4,078 3,025 23, , ,715 1, , , ,874 73,421 1,900 50, , , ,646,131 1,615, , , ,759 24,199 3,211 3, ,012 79,057 25,246 5,384 8, , ,102 21,800 2,608 5, , ,775 9,488 1,591 5, , ,458 18,964 1,703 4, , ,196 31,285 13,761 21,683 76,718 69,590 $ 1,521,139 $ 650,525 $ 943,202 $ 25,401,611 $ 23,820,432 Page 25

30 Indirect Cost Schedule For the Year Ended December 31, 2015 COST BY LINE ITEM: EXPENSE INDIRECT COST Salaries and Wages $ 679,831 Benefits 80,687 Payroll Taxes 44,546 Insurance 5,074 Maintenance and Repairs 21,730 Office Equipment 6,587 Postage and Delivery 2,725 Printing and Copying 980 Professional Services 49,061 Staff Development 16,170 Supplies 16,870 Telecommunications 14,567 Transportation 6,340 Utilities 12,672 Other 21,106 TOTAL $ 978,946 DESCRIPTION RATE Total personnel costs consisting of Salaries and Wages, Benefits, and Payroll Taxes for the Organization are used as a basis for allocation 8.85% Page 26

31 1610 Woodstead Court, Suite 455 The Woodlands, Texas INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors of We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of The Woodlands Religious Community, Inc. (a nonprofit organization), which comprise the statement of financial position as of December 31, 2015, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated May 13, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Organization s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the organization s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Page 27

32 Compliance and Other Matters As part of obtaining reasonable assurance about whether 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 financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Seefeld Lawson Moeller LLP Seefeld Lawson Moeller LLP Certified Public Accountants The Woodlands, Texas May 13, 2016 Page 28

33 1610 Woodstead Court, Suite 455 The Woodlands, Texas INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Directors of Report on Compliance for Each Major Federal Program We have audited The Woodlands Religious Community Inc. compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of The Woodlands Religious Community Inc. major federal programs for the year ended December 31, The Woodlands Religious Community Inc. major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of the Organization s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Organization s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Organization s compliance. Page 29

34 Opinion on Each Major Federal Program In our opinion, The Woodlands Religious Community Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, Report on Internal Control Over Compliance Management of The Woodlands Religious Community Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Organization s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Seefeld Lawson Moeller LLP Seefeld Lawson Moeller LLP Certified Public Accountants The Woodlands, Texas May 13, 2016 Page 30

35 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Page 31

36 Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2015 GRANTOR/ CONTRACT PERIOD PASS THROUGH Identifying CFDA ENTITY PROGRAM No. No. FROM TO U.S. DEPARTMENT OF AGRICULTURE H-GAC Supplemental Nutrition Assistance Program TOTAL U.S. DEPARTMENT OF AGRICULTURE SNE SNA SNE SNAPE&T SNAPABAWD SNAPE&T /1/2014 9/30/ /1/2015 9/30/2016 U.S. DEPARTMENT OF LABOR H-GAC Employment Service/Wagner-Peyser Act WPES /1/2014 9/30/ WPES /1/2015 9/30/ H-GAC Trade Adjustment Assistance TAA /1/2014 9/30/ TRADEACT /1/2015 9/30/2016 H-GAC Workforce Investment Act - Adult WIA WIA /1/2014 9/30/ WIOA /1/2015 9/30/2016 WIOA H-GAC Workforce Investment Act - Youth WIA WIA /1/2014 9/30/ WIOA /1/2015 9/30/2016 WIOA H-GAC Workforce Investment Act - Dislocated Worker WIA WIA /1/2014 9/30/ WIOA /1/2015 9/30/2016 WIOA H-GAC Disabled Veterans' Outreach Program TVC /1/2014 9/30/2015 VETERANS /1/2015 9/30/2016 TOTAL U.S. DEPARTMENT OF LABOR Page 32