FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS A WIDER CIRCLE, INC. December 31, 2012 and 2011

Transcription

1 FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS A WIDER CIRCLE, INC. December 31, 2012 and 2011

2 TABLE OF CONTENTS Page Independent Auditors' Report 1 Financial Statements: Statements of Financial Position 2 Statements of Activities 3 Statements of Functional Expenses 5 Statements of Cash Flows 7 Notes to Financial Statements 8

3 Farmer & First, P.C. CERTIFIED PUBLIC ACCOUNTANTS Grow Your Business With Us INDEPENDENT AUDITORS' REPORT June 3, 2013 Board of Directors A Wider Circle, Inc. Silver Spring, Maryland We have audited the accompanying statements of financial position of A Wider Circle, Inc. (a nonprofit corporation), as of December 31, 2012 and 2011 and the related statements of activities, functional expenses and cash flows for the years then ended. These financial statements are the responsibility of the Organization s management. Our responsibility is to express an opinion on the financial statements based on our audits. 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 audits 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 A Wider Circle, Inc. as of December 31, 2012 and 2011, and the changes in net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Warren, RI -1- Six State Street, Warren, RI Ottawa Place, Silver Spring, MD (401) Phone (401) Fax (877) Toll Free

4 STATEMENTS OF FINANCIAL POSITION As of December 31, ASSETS As Restated CURRENT ASSETS: Cash and cash equivalents $ 524,310 $ 469,759 Certificate of deposits 160, ,378 Accrued interest receivable Investment in marketable securities 1,091 - Grants receivable and promises to give 111,473 74,750 Inventory of donated clothes and household furniture 40,782 27,570 Prepaid expenses 31,231 10,909 Total current assets 869, ,404 PROPERTY AND EQUIPMENT: Leasehold improvements 161,454 86,454 Furniture, fixtures and equipment 38,350 27,721 Truck 137,743 96, , ,072 Less: accumulated depreciation 71,913 44,115 Property and equipment, net 265, ,957 OTHER ASSETS Grants receivable, net of current portion 10,000 50,000 Deposits 5,258 4,258 Total other assets 15,258 54,258 TOTAL $ 1,150,023 $ 963,619 The accompanying notes are an integral part of these statements. -2-

5 STATEMENTS OF FINANCIAL POSITION (continued) As of December 31, LIABILITIES AND NET ASSETS As Restated CURRENT LIABILITIES: Accounts payable - trade $ 16,133 $ 37,544 Construction payable 75,000 - Total current liabilities 91,133 37,544 NET ASSETS: Temporarily restricted 26,631 66,679 Unrestricted 1,032, ,396 Total net assets 1,058, ,075 TOTAL $ 1,150,023 $ 963,619 The accompanying notes are an integral part of these statements. -3-

6 STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 SUPPORT & REVENUE: Temporarily Unrestricted Restricted Total Grants and contribution income $ 875,819 $ 70,000 $ 945,819 Government grant income 123, ,108 Special event revenue, net of expenses 185, ,599 In-kind support 5,126,554-5,126,554 Interest income 1,119-1,119 Loss on sale of marketable securities (331) - (331) Unrealized gain on marketable securities Rental income 9,000-9,000 Other income 6,420-6,420 Net assets released from restrictions 110,048 (110,048) - Total unrestricted support and reclassifications 6,437,358 (40,048) 6,397,310 EXPENSES: Program services 6,162,545-6,162,545 Supporting services: Management and general 36,638-36,638 Fundraising 65,312-65,312 Net expenses 6,264,495-6,264,495 Change in net assets 172,863 (40,048) 132,815 Net assets, January 1, ,396 66, ,075 Net assets, December 31, 2012 $ 1,032,259 $ 26,631 $ 1,058,890 The accompanying notes are an integral part of these statements. -4-

7 STATEMENT OF ACTIVITIES - AS RESTATED For the Year Ended December 31, 2011 SUPPORT & REVENUE: Temporarily Unrestricted Restricted Total Grants and contribution income $ 843,249 $ 5,000 $ 848,249 Government grant income 209, ,276 Special event revenue, net of expenses 115, ,393 In-kind support 3,649,199-3,649,199 Interest income 1,722-1,722 Loss on sale of marketable securities (143) - (143) Other income 2,058-2,058 Net assets released from restrictions 210,384 (210,384) - Total unrestricted support and reclassifications 5,031,138 (205,384) 4,825,754 EXPENSES: Program services 4,535,632-4,535,632 Supporting services: Management and general 28,318-28,318 Fundraising 93,064-93,064 Net expenses 4,657,014-4,657,014 Change in net assets 374,124 (205,384) 168,740 Net assets, January 1, , , ,335 Net assets, December 31, 2011 $ 859,396 $ 66,679 $ 926,075 The accompanying notes are an integral part of these statements. -5-

8 STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended December 31, 2012 Supporting Services Program Mgmt & Fund- Total Functional Services General Raising Support Expenses Salaries $ 653,471 $ 13,474 $ 12,306 $ 25,780 $ 679,251 Payroll taxes 61,315 1,264 1,155 2,419 63,734 Benefits 3, ,000 Total payroll-related costs 718,634 14,817 13,534 28, ,985 Furniture and household supplies 4,961, ,961,632 Rent & occupancy expenses 305,129 4,660 1,580 6, ,369 Community outreach and supplies 86,817 1,134 11,594 12,728 99,545 Printing and reproduction 11, ,271 23,532 35,111 Depreciation 20,915 6, ,884 27,799 Fees 14, ,326 5,664 20,349 Telephone 15, ,173 16,385 Insurance 12,744 3,186-3,186 15,930 Postage and delivery 6, ,707 8,830 15,151 Legal and accounting 2,000 3,900-3,900 5,900 Technology, internet & web expenses 4, ,242 5,357 Dues and membership 1, ,160 Travel Staff development Miscellaneous Totals $ 6,162,545 $ 36,638 $ 65,312 $ 101,950 $ 6,264,495 The accompanying notes are an integral part of these statements. -6-

9 STATEMENT OF FUNCTIONAL EXPENSES - AS RESTATED For the Year Ended December 31, 2011 Supporting Services Program Mgmt & Fund- Total Functional Services General Raising Support Expenses Salaries $ 480,986 $ 7,933 $ 28,741 $ 36,674 $ 517,660 Payroll taxes 44, ,643 3,373 47,611 Benefits 4, ,288 Total payroll-related costs 530,137 8,744 31,678 40, ,559 Furniture and household supplies 3,354, ,354,336 Rent & occupancy expenses 253,347 3,688 1,295 4, ,330 Project expenses 206, ,771 Community outreach and supplies 60, ,896 9,396 69,707 Fees 12, ,670 27,020 39,797 Professional fees 37, ,084 Printing and reproduction 16, ,630 18,023 34,855 Depreciation 15,049 4, ,953 20,002 Insurance 11,818 2,955-2,955 14,773 Postage and delivery 6, ,212 5,334 11,544 Legal and accounting 5,950 4, ,350 11,300 Telephone 10, ,295 Technology, internet & web expenses 9, ,572 Dues and membership 1, ,270 Emergency assistance 1, ,162 Travel Staff development Miscellaneous 1, ,873 Totals $ 4,535,632 $ 28,318 $ 93,064 $ 121,382 $ 4,657,014 The accompanying notes are an integral part of these statements. -7-

10 STATEMENTS OF CASH FLOWS For the Years Ended December 31, As Restated CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 132,815 $ 168,740 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 27,798 20,003 Non-cash contributions (13,212) (107,570) Contribution of marketable securities (11,654) - Realized loss on sale of marketable securities Unrealized (gain) on marketable securities (22) - Decrease (increase) in operating assets: Prepaid expenses (20,342) 3,710 Grants receivable and promises to give 3, ,240 Accrued interest receivable 9 33 Deposits (1,000) (270) Increase (decrease) in operating liabilities: Accounts payable - trade (21,411) (1,051) Net cash provided by operating activities 96, ,835 CASH FLOWS USED BY INVESTING ACTIVITIES: Purchases of property and equipment (51,475) (45,847) Proceeds from sale of marketable securities 10,276 - Net purchase of certificate of deposit (839) (1,654) Net cash provided used by investing activities (42,038) (47,501) NET INCREASE IN CASH AND CASH EQUIVALENTS 54, ,334 Cash and cash equivalents, January 1 469, ,425 Cash and cash equivalents, December 31 $ 524,310 $ 469,759 The accompanying notes are an integral part of these statements. -8-

11 NOTES TO FINANCIAL STATEMENTS December 31, 2012 and 2011 NOTE A - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES 1. Nature of Activities A Wider Circle, Inc. (a non-profit organization), was incorporated in the state of Maryland on October 1, The Organization's mission is to help children and adults lift themselves out of poverty. Each day, A Wider Circle provides basic need items to families transitioning out of shelters or simply living without life's necessities. The Organization furnishes the homes of more than 1,000 children and adults every single month, all free of charge. The Organization also goes into low-income schools and shelters to lead educational workshops on topics ranging from job skills and financial planning to stress management, nutrition, and healthy parenting. 2. Basis of Accounting The Organization recognizes income on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America. 3. Basis of Presentation The financial statements are presented in accordance with FASB Accounting Standard Codification (FASB ASC) 958, Not-for-Profit Entities. Under FASB ASC 958, the Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. The Organization had no permanently restricted net assets as of December 31, 2012 and Cash and Cash Equivalents For purposes of the statements of financial position and cash flows, the Organization considers all unrestricted highly liquid investments, with an initial maturity of three months or less, to be considered cash. -9-

12 NOTES TO FINANCIAL STATEMENTS December 31, 2012 and 2011 NOTE A - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued) 5. Property and Equipment Property and equipment are stated at cost. Depreciation is calculated for financial statement purposes using the straight-line method based on the property's estimated life. Additions and improvements that add materially to productive capacity, or extend the life of an asset, are capitalized. Normal repairs and maintenance are charged against income. When facilities are retired or sold, their cost and accumulated depreciation are removed from the accounts and related gains or losses are included in income. In case of trade items, any remaining book value increases the basis of the new acquisitions. 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. The estimated lives used in determining depreciation are: Leasehold improvements Furniture and fixtures Computer equipment Truck 5 20 years 3 10 years 5 years 7 years 6. Income Taxes The Organization is a not-for-profit organization that is generally exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. In addition, the Organization has been classified as an organization that is not a private foundation under Section 590(a)(1). Income that is not related to exempt purposes, less applicable deductions, is subject to Federal and state corporate income taxes. The Organization did not have any unrelated business income for the years ended December 31, 2012 and

13 NOTES TO FINANCIAL STATEMENTS December 31, 2012 and 2011 NOTE A - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued) 7. Donated Material and Contributed Services During the years ended December 31, 2012 and 2011, the Organization was a recipient of various pieces of furniture and household supplies to hand out to various families in need in the amount of $4,974,844 and $3,381,906, respectively. Additionally, the Organization received 6,000 square feet of storage space in 2012 and 2011 valued in the amount of $148,210 and $143,893, respectively, donated computer consultant services in 2011 in the amount of $36,400, and legal and professional services in 2012 and 2011 in the amounts of $3,500 and $7,000, respectively. Additionally, in 2011, a local construction company donated its construction staff valued at the amount of $80,000 to construct leasehold improvements at the Organization s location. Numerous other unpaid volunteers have made significant contributions of their time to the management of the Organization and to the delivery of its program services. The value of this donated time is not determinable and, as such, is not reflected in these financial statements. The total volunteer time in 2012 and 2011 were approximately 56,250 and 45,000 hours and intern time was approximately 43,125 and 62,500 hours, respectively. 8. Restricted and Unrestricted Revenue Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. All donor-restricted support 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 purpose 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 restrictions. -11-

14 NOTES TO FINANCIAL STATEMENTS December 31, 2012 and 2011 NOTE A - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued) 9. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the Statement of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. 10. Grants and Contract Awards The Organization receives grants from private grantors for various purposes. Grants and contract awards not yet received are accrued. The Organization defers grants and contract revenues received under approved awards from grantors to the extent they exceed expenses incurred for the purposes specified under the grant restrictions. 11. Promises to Give Unconditional promises to give are recognized as revenue or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. All promises to give are due in less than one year. 12. Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. -12-

15 NOTES TO FINANCIAL STATEMENTS December 31, 2012 and 2011 NOTE A - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued) 13. Uncertain Tax Provisions Accounting for uncertain income tax positions, relating to both federal and state income taxes, are required when a more likely than not threshold is attained. If such positions result in uncertainties, then the unrecognized tax liability is estimated based on a cumulative probability assessment that aggregates the estimated tax liability for all uncertain tax positions. With the adoption of these new rules, the Organization assessed its tax positions in accordance with the guidance. The Organization has determined that its tax status as a MD non-profit corporation is its only tax position and is highly certain. Therefore, these new rules had no impact on the Organization s financial statements. 14 Subsequent Events Management has evaluated subsequent events through June 7, 2013, the date which the financial statements were available to be issued. NOTE B TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets at the end of the year represent grants that have been received and designated as temporarily restricted by each respective grantor. As these funds are expended, the temporary restrictions expire and the temporarily restricted net assets are reclassified to unrestricted net assets on the statement of activities. -13-

16 NOTES TO FINANCIAL STATEMENTS December 31, 2012 and 2011 NOTE B TEMPORARILY RESTRICTED NET ASSETS (continued) As of December and 2011, temporarily restricted net assets are comprised of the following funds: Spring Jobs Skills $ 15,000 $ -0- Truck purchase and on-going expenses 6, Sponsorships Gala 5, Sibley Plaza beautification project -0-36,679 Neighbor-to-Neighbor -0-30,000 $ 26,631 $66,679 NOTE C CERTIFICATE OF DEPOSIT The Organization maintains a portion of its operating funds in a secure income producing investments. As of December 31, 2012 and 2011, these cash investments of $160,217 and $159,378 respectively, include certificates of deposit stated at cost, which approximates market value. The certificates of deposit as of December 31, 2012 bear interest at.40% to.50% and mature in NOTE D INVESTMENT IN SECURITIES The Organization classifies investment in securities as available-for-sale securities. All securities are carried at their fair market values in the statement of financial position. Unrealized gains and losses are included in the net assets section of the accompanying statement of financial position. As of December 31, 2012, details of the unrealized gains and losses are as follows: Amortized Cost Gross Unrealized Gain Gross Unrealized Losses Fair Market Value Available-for-sale securities: Equity securities $1,070 $21 $ -0- $1,

17 NOTE E COMMITMENTS A Wider Circle, Inc. NOTES TO FINANCIAL STATEMENTS December 31, 2012 and 2011 The Organization is obligated under the following rental leases: Lessor Location Term / Exp. Date Terms Brookville LLC Warehouse 9159 Brookville Rd, Suite #9159-C Silver Spring, MD 5 year September 1, 2013 $3,688/month thru 9/09, 4% increase per year thereafter Brookville LLC Brookville LLC Warehouse Warehouse 9159 Brookville Rd, Suite #9159-A & B Silver Spring, MD 9153 Brookville Rd Silver Spring, MD 2.75 year September 30, 2013 $600/month thru 12/11, $900/month thru 9/13. 3 year $2,868/month thru 9/13, 2% increase per year thereafter The future minimum rental commitments under operating leases as of December 31, 2012 are as follows: For the year ending December 31, 2013 $77,200 December 31, ,280 December 31, NOTE F GRANTS INCOME GOVERNMENT The organization for the years ended December 31, 2012 and 2011 was awarded government grant income that covered periods subsequent to December 31, 2012 and The unearned portion of these grants amounted to $52,327 and $44,674 as of December 31, 2012 and 2011, respectively. -15-

18 NOTES TO FINANCIAL STATEMENTS December 31, 2012 and 2011 NOTE G UNCONDITIONAL PROMISES TO GIVE Unconditional promises to give are as follows: Net unconditional promises to give $ 121,473 $ 124,750 Receivables due in less than one year $ 111,473 $ 74,750 Receivables due in one to two years 10,000 50,000 Net unconditional promises to give $ 121,473 $ 124,750 NOTE H FUNDRAISING ACTIVIES The Organization conducted fundraising activities during the years ended December 31, 2012 and Revenue and expenses for the activities are as follows: Total revenue raised $291,875 $129,635 Total expenses 106,276 14,242 $185,599 $115,393 NOTE I RESTATEMENT OF FINANCIAL STATEMENTS The financial statements as of December 31, 2011 were restated to reflect inventory of donated clothes and household furniture valued at $27,570. Accordingly, in-kind support and unrestricted net assets balance was increased by $27,570. NOTE J RECLASSIFICATIONS Certain amounts in the 2011 financial statements have been reclassified to conform to the 2012 financial statement presentation. -16-