SCHOOLS INTEROPERABILITY FRAMEWORK ASSOCIATION AUDITED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION

Transcription

1 AUDITED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION FOR THE YEAR ENDED AUGUST 31, 2007 (With Summarized Financial Information for the Year Ended August 31, 2006)

2 TABLE OF CONTENTS TITLE PAGE INDEPENDENT AUDITORS REPORT 3 FINANCIAL STATEMENTS Statements of Financial Position 4 Statement of Activities 5 Statement of Cash Flows 6 NOTES TO FINANCIAL STATEMENTS 7-10 SUPPLEMENTAL FINANCIAL INFORMATION INDEPENDENT AUDITORS REPORT ON OTHER FINANCIAL INFORMATION 11 SCHEDULE OF FUNCTIONAL EXPENSES 12

3 INDEPENDENT AUDITORS REPORT Board of Directors Schools Interoperability Framework Association Washington, DC We have audited the accompanying statement of financial position of Schools Interoperability Framework Association as of August 31, 2007 and the related statements of activities, functional expenses, changes in net assets, and cash flows for the year then ended. These financial statements are the responsibility of the Association 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 Schools Interoperability Framework Association 2006 Financial Statements, and in our report dated November 29, 2006, we expressed an unqualified opinion on those financial statements. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 statements presentation. We believe 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 Schools Interoperability Framework Association as of August 31, 2007, and the change in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Silver Spring, Maryland November 15, bkey@bkeycpa.com Website bkeycpa.com Beatrice P. Key, CPA 8630 Fenton Street, Suite 316 Silver Spring, MD

4 STATEMENT OF FINANCIAL POSITION AUGUST 31, 2007 (With Summarized Financial Information as of August 31, 2006) ASSETS CURRENT ASSETS Cash and cash equivalents $360,427 $146,188 Dues receivable 270, ,384 Other receivable 9,040 - Total current assets 639, ,572 PROPERTY EQUIPMENT Furniture, fixtures and equipment 29,491 24,989 Less: Accumulated depreciation (12,553) (7,123) Net property and equipment 16,938 17,866 OTHER ASSETS Investments 270, ,379 Software,(net of accumulated amortization of $3,367 and $1,148) 3,871 3,767 Total other assets 273, ,146 TOTAL ASSETS $930,608 $789,584 The Accompanying Notes to Financial Statements are an Integral Part of these Financials. 4

5 LIABILITIES AND NET ASSETS CURRENT LIABILTIES Accounts payable and accrued expenses $ 35,570 $ 7,549 Deferred dues 534, ,307 Other deferred income - 68,390 Total current liabilities 569, ,246 COMMITMENT AND CONTINGENCIES _ - - Total liabilities 569, ,246 NET ASSETS Unrestricted 360, ,338 Temporarily restricted - - Total net assets 360, ,338 TOTAL LIABILTIES AND NET ASSETS $930,608 $789,584

6 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2007 (With Summarized Financial Information as of August 31, 2006) Temporarily Restricted Total 2007 Total 2006 Unrestricted SUPPORT AND REVENUE Membership dues $ 991,606 $ - $ 991,606 $ 894,547 Grants 186, , ,250 Registration fees 203, ,197 69,115 Program fees 34,150-34,150 29,200 Interest income 18,616-18,616 10,002 Other income 4,595-4,594 - Total support and revenue 1,438,574-1,438,574 1,117,114 EXPENSES Program services 1,176,538-1,176, ,283 Support services 230, , ,788 Total expenses 1,407,125-1,407,125 1,017,071 CHANGE IN NET ASSETS 31,449-31, ,043 NET ASSETS, BEGINNING OF YEAR 329, , ,295 NET ASSETS, END OF YEAR $_ 360,787 $ - $_ 360,787 $ 329,338 The Accompanying Notes to Financial Statements are an Integral Part of these Financials. 5

7 STATEMENT OF CASH FLOWS FOR THE YEARS ENDED AUGUST 31, 2007 and CASH FLOW FROM OPERATING ACTIVITIES Change in net asset $ 31,449 $ 100,043 Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation and amortization 7,649 5,121 (Increase)/Decrease in assets Dues receivable 52,052 (179,380) Other current assets - 1,635 Other receivable (9,040) - Increase/(Decrease) in liabilities Accounts payable 28,021 (5,558) Deferred dues 149,944 44,318 Other deferred revenue (68,390) 68,390 Net cash provided by operating Activities 191,685 34,569 CASH FLOW FROM INVESTING ACTIVITIES Purchase of equipment and software (6,825) (12,227) Investments made - (299,379) Investments liquidated 29,379 - Net cash used by investing Activities 22,554 (311,606) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 214,239 (277,037) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 146, ,225 CASH AND CASH EQUIVALENT AT END OF YEAR $360,427 $146,188 SUPPLEMENTAL CASH FLOW INFORMATION Actual cash payments for: Federal and State income taxes $ - $ - Interest $_ - _ $ - The Accompanying Notes to Financial Statements are an Integral Part of these Financials. 6

8 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2007 AND 2006 NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization The Schools Interoperability Framework Association (SIF) is a non-profit organization formed on April 16, The Association s mission is the establishment of independent platform and vendor neutral interoperable specifications for PK12 Software. The Association s primary source of revenues is membership dues based on a Company s annual revenues, ranging from $1,000 to $27,000. Accounting Method The Association s policy is to prepare its financial statements using the accrual method of accounting, whereby revenue is recognized when earned and expenses are recognized when incurred. Membership Dues SIF membership is open to all LEAs, SEAs, government entities and companies that have agreed to adhere to SIF Implementation Specifications. Annual dues are invoiced based on revenue levels and anniversary dates and accounted as deferred dues. Revenue is recognized when earned over the remaining period of the membership agreement. Cash and Cash Equivalents Cash and cash equivalent include demand deposits and undeposited collections. For the purpose of the statement of cash flows, the Association considers all highly liquid debt instruments with original maturities of 90 days or less to be cash equivalents. As of August 31, 2007 and 2006, there were $105,334 and $ 50,000 in respectively cash equivalents. Dues Receivable Dues receivable are stated at the amount management expect to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts. The allowance for doubtful amounts as of August 31, 2007 and 2006 was $41,738 and $35,976, respectively.

9 7 SCHOOLS INTEROPERABILITY FRAMEWORK ASSOCIATION NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2007 AND 2006 NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fixed Assets Property and equipment are recorded at the original cost to the Association or, if donated, the appraised value at the time of donation. The assets are being depreciated using the estimated useful lives of the respective assets on a straight-line basis. Cost of repairs and maintenance are expensed as incurred. Software Costs Costs associated with the purchase of software are being amortized using the straight-line method over an estimated useful life of 36 months. Income Tax Under Section 501 (c)(3) of the Internal Revenue Code, the Association is exempt from payments on income other than net unrelated business income. As of August 31, 2007 no provision for taxes was made as the Association had no unrelated business income. Use of Estimates The preparation 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. 8

10 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2007 AND 2006 NOTE 2 INVESTMENTS Investments include Certificates of Deposit with maturity dates in excess of 90 days. Investments are recorded at fair value. The fair value of investments at August 31, 2007 and 2006 were as follows: Certificates of Deposits $270,000 $299,379 NOTE 3 PEO SERVICES AND EMPLOYEE BENEFIT PLAN SIF has a Professional Employer Organization ( PEO ) Service agreement with Ambrose Group LLC, who provides the Association with a comprehensive Personnel Management System which encompasses a broad range of services, including payroll administration and employer benefit programs. The benefit programs include 401(k) plan which cover all the employees of the Association. The Association must contribute an amount equal to 2% of participants compensation to the plan each year. For the years ended August 31, 2007 and 2006, $9,313 and $ 7,435 was contributed to the plan, respectively. NOTE 4 SERVICE AGREEMENT In April 2003, the Association entered into service agreement with Software and Information Industry Association (SIIA), formally the Parent Company. Pursuant to the agreement, SIIF agrees to provide office space and equipment and administrative support services in consideration of a monthly fee of $5,000. This agreement was terminated on December 31, In January 2006, the Association extended the agreement with SIF for a monthly fee of $2,000. Total occupancy and administration service fees for the years ended August 31, 2007 and 2006 was $24,000 and $24,000, respectively. 9

11 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2007 AND 2006 NOTE 5 SUBSEQUENT EVENTS During the year ended August 31, 2007, SIF applied with the Internal Revenue Service (IRS) to change its year end from a fiscal to a calendar year end. The IRS approved SIF s request on, This change becomes effective from January

12 INDEPENDENT AUDITORS' REPORT ON ADDITIONAL FINANCIAL INFORMATION Board of Directors Schools Interoperability Framework Association Washington, DC Our report on our audit of the basic financial statements of Schools Interoperability Framework Association for the year ended August 31, 2007 appears on page 3. We conducted our audits in accordance with generally accepted auditing standards for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedules of Functional Expenses on page 12 are presented for purpose of additional analysis and are not required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Silver Spring, Maryland November 15, 2007 The Accompanying Notes to Financial Statements are an Integral Part of these Financials. 11