YOUTH VOLUNTEER CORPS OF AMERICA. FINANCIAL STATEMENTS WITH INDEPENDENT AUDITORS REPORT FOR THE YEARS ENDED MARCH 31, 2011 and 2010

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1 FINANCIAL STATEMENTS WITH INDEPENDENT AUDITORS REPORT FOR THE YEARS ENDED MARCH 31, 2011 and 2010

2 TABLE OF CONTENTS INDEPENDENT AUDITORS REPORT FINANCIAL STATEMENTS: STATEMENTS OF FINANCIAL POSITION STATEMENT OF ACTIVITIES (2011) STATEMENT OF ACTIVITIES (2010) STATEMENT OF FUNCTIONAL EXPENSES (2011) STATEMENT OF FUNCTIONAL EXPENSES (2010) STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS i-

3 Marr and Company, P.C. th CERTIFIED PUBLIC ACCOUNTANTS 1401 East 104 Street, Suite 100, Kansas City, MO Voice (816) Fax (816) INDEPENDENT AUDITORS REPORT The Board of Directors Youth Volunteer Corps of America We have audited the accompanying statements of financial position of Youth Volunteer Corps of America (YVCA) as of March 31, 2011 and 2010, and the related statements of activities, functional expenses and cash flows for the years then ended. These financial statements are the responsibility of YVCA s management. 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 our 2010 audit in accordance with 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 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 Youth Volunteer Corps of America as of March 31, 2011 and 2010, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Kansas City, Missouri August 31, 2011 Marr and Company, P.C. Certified Public Accountants -1-

4 STATEMENTS OF FINANCIAL POSITION For the Years Ended March 31, 2011 and ASSETS Current Assets: Cash $ 303,302 $ 372,999 Certificates of Deposit 463, ,194 Federal Grants Receivable (Note 6) 100, ,385 Accounts Receivable (net of allowance of $2,776 for 2011 and $21,783 for 2010) 30,694 72,514 Unconditional Promises Receivable (net of discount of $3,330 for 2011 and $3,753 for 2010) (Note 2) 101, ,914 Interest Receivable Other Receivables 1,661 0 Inventory Total Current Assets 1,002,206 1,209,353 Capital Assets, net of accumulated depreciation (Note 4) 698 2,124 Deposits 2,096 2,096 TOTAL ASSETS $1,005,000 $1,213,573 LIABILITIES AND NET ASSETS Current Liabilities: Accounts Payable $ 26,558 $ 3,264 Payroll Withholdings 0 (62) Credit Card Payable 6,329 7,639 Accrued Personal Time 720 2,377 Total Current Liabilities 33,607 13,218 Net Assets: Unrestricted 869,556 1,048,441 Temporarily Restricted (Note 5) 101, ,914 Total Net Assets 971,393 1,200,355 TOTAL LIABILITIES AND NET ASSETS $1,005,000 $1,213,573 See the Accompanying Notes to these Financial Statements. -2-

5 STATEMENT OF ACTIVITIES For the Fiscal Year Ended March 31, 2011 Temporarily Unrestricted Restricted Totals Revenue, Income and Support: Contributions: Individuals $ 93,074 $ 20,000 $ 113,074 Corporations 39, ,177 Foundations 29, ,333 Total Contributions 161,584 20, ,584 Federal Award Revenues 483, ,549 Affiliate Sites Matching (Note 7) 129, ,492 Local Program Grants 8, ,390 Member Affiliation Fees 19, ,142 Discount for Unconditional Promises Interest Income 6, ,251 Miscellaneous Income 15, ,400 Total Revenue, Income and Support 824,231 20, ,231 Expenses: Program Services: CNCS Programs 716, ,217 Local Affiliate 120, ,791 Affiliate Development & Expansion 90, ,681 Total Program Services 927, ,689 Supporting Activities: General and Administrative 118, ,495 Fundraising 27, ,009 Total Supporting Activities 145, ,504 Total Expenses 1,073, ,073,193 Net Assets Released from Restrictions 70,077 (70,077) 0 Change in Net Assets (178,885) (50,077) (228,962) NET ASSETS, MARCH 31, ,048, ,914 1,200,355 NET ASSETS, MARCH 31, 2011 $ 869,556 $101,837 $ 971,393 See the Accompanying Notes to these Financial Statements. -3-

6 STATEMENT OF ACTIVITIES For the Fiscal Year Ended March 31, 2010 Temporarily Unrestricted Restricted Totals Revenue, Income and Support: Contributions: Individuals $ 55,918 $ 0 $ 55,918 Corporations 5, ,175 Foundations 84, ,575 Total Contributions 145, ,668 Federal Award - AmeriCorps 725, ,176 AmeriCorps Sites Matching (Note 7) 212, ,579 Local Program Grants 5, ,000 Member Affiliation Fees 18, ,767 Discount for Unconditional Promises 12, ,162 Interest Income 8, ,584 Miscellaneous Income 3, ,900 Total Revenue, Income and Support 1,131, ,131,836 Expenses: Program Services: CNCS Program 723, ,642 Local Affiliate 91, ,512 Affiliate Development & Expansion 159, ,116 Total Program Services 974, ,270 Supporting Activities: General and Administrative 169, ,519 Fundraising 12, ,145 Total Supporting Activities 181, ,664 Total Expenses 1,155, ,155,934 Net Assets Released from Restrictions 230,902 (230,902) 0 Change in Net Assets 206,804 (230,902) (24,098) NET ASSETS, MARCH 31, , ,816 1,224,453 NET ASSETS, MARCH 31, 2010 $1,048,441 $ 151,914 $1,200,355 See the Accompanying Notes to these Financial Statements. -4-

7 STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended March 31, 2011 Program Services Support Services Total Total CNCS Local Affiliate Program General & Fund Support Programs Affiliate Development Services Admin Raising Activities Totals Salary, Wages & Living Allowance $427,126 $ 45,109 $54,661 $526,896 $ 46,270 $17,808 $ 64,078 $ 590,974 Payroll Taxes 31,407 3,677 5,662 40,746 9,116 1,844 10,960 51,706 Fringe Benefits 20,773 4,260 3,264 28,297 2,763 1,063 3,826 32,123 Professional Development , ,551 2,631 Personnel Training 1,340 1, ,735 2, ,768 6,503 Facility Rent 14,568 12,487 2,081 29,136 1, ,081 31,217 Telephone 2,227 1,821 1,076 5, ,262 6,386 Insurance 5, , ,470 Equipment Repairs & Maintenance 1, , ,940 Depreciation , ,426 1,426 Marketing, Printing & Promotion 24, ,237 40,387 12,898 4,964 17,862 58,249 Office & Project Supplies 965 8, , ,915 Meetings & Conferences 2, ,996 4, ,094 Travel & Lodging 11,778 5,607 3,308 20,693 6, ,143 26,836 Affiliate Site Match 0 35, , ,000 Summer of Service Reimbursements 137, , ,356 Accounting & Audit Fees 32, ,515 16, ,102 48,617 Payroll & Bank Service Fees 2, , ,040 Bad Debt Expense , ,800 10,800 Miscellaneous , ,238 2,910 $716,217 $120,791 $90,681 $927,689 $118,495 $27,009 $145,504 $1,073,193 See the Accompanying Notes to these Financial Statements. -5-

8 STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended March 31, 2010 Program Services Support Services Total Total CNCS Local Affiliate Program General & Fund Support Programs Affiliate Development Services Admin Raising Activities Totals Salary, Wages & Living Allowance $521,033 $48,145 $ 41,880 $611,058 $104,678 $ 9,975 $114,653 $ 725,711 Payroll Taxes 41,995 3,620 1,944 47,559 11, ,136 59,695 Fringe Benefits 25,434 3,350 2,217 31,001 5, ,069 37,070 Professional Development , ,000 Personnel Training ,227 2, ,176 4,403 Facility Rent 12,146 12,620 3,094 27,860 2, ,094 30,954 Telephone 2,622 1, ,669 1, ,116 5,785 Insurance 7, ,353 1, ,241 9,594 Equipment Repairs & Maintenance , ,534 Depreciation , ,425 1,425 Marketing, Printing & Promotion 2,068 4, ,216 2, ,372 9,588 Office & Project Supplies 4,432 8, ,255 1, ,312 14,567 Meetings & Conferences 56, ,329 60,343 1, ,174 61,517 Travel & Lodging 16,928 4,975 2,650 24,553 4, ,921 29,474 Affiliate Site Grants , , ,000 Accounting & Audit Fees 27, ,626 11, ,528 39,154 Payroll & Bank Service Fees 2, ,805 1, ,105 4,910 Bad Debt Expense , ,075 15,075 Miscellaneous , ,019 2,478 $723,642 $91,512 $159,116 $974,270 $169,519 $12,145 $181,664 $1,155,934 See the Accompanying Notes to these Financial Statements. -6-

9 STATEMENTS OF CASH FLOWS For the Years Ended March 31, 2011 and CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets $(228,962) $(24,098) Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Items not requiring cash: Depreciation/amortization 1,426 1,426 (Increase)/Decrease in Assets: Federal grants receivable 3,328 (16,721) Accounts receivable 41,820 (21,186) Unconditional promises 50, ,905 Other receivables (1,540) 11,720 Increase/(Decrease) in Liabilities: Accounts payable 23,294 (9,186) Other payable (1,310) (62,639) Payroll withholdings 62 (669) Accrued liabilities (1,657) (1,262) Net Cash Provided (Used) by Operating Activities (113,462) 105,290 CASH FLOW FROM INVESTING ACTIVITIES Net change in certificates of deposit activity 43, ,746 Net Cash Provided (Used) by Investing Activities 43, ,746 Net Increase (Decrease) in Cash and Cash Equivalents (69,697) 279,036 CASH AT BEGINNING OF YEAR 372,999 93,963 CASH AT END OF YEAR $ 303,302 $372,999 See the Accompanying Notes to these Financial Statements. -7-

10 NOTES TO THE FINANCIAL STATEMENTS For the Years Ended March 31, 2011 and 2010 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES Organization The Youth Volunteer Corps of America (YVCA) was incorporated as a Missouri not-for-profit corporation in YVCA was organized to create and increase volunteer opportunities to enrich America s youth, address community needs and develop a lifetime commitment to service. YVCA is primarily funded by a federal grant and contributions from foundations, corporations and individuals. YVCA is located in over 40 communities. YVCA recruits teams of diverse youth between the ages of 11 and 18 to perform service and learning projects in their communities. The projects address unmet needs of the community while promoting a lifetime ethic of service among young people. Basis of Accounting The financial records of YVCA are maintained on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America, whereby expenses are recognized when incurred and revenues are recognized when earned. Financial Statement Presentation YVCA has complied with FASB Accounting Standards Codification ( ASC ) Topic , Not-for-Profit Presentation of Financial Statements. ASC requires that all not-for-profit organizations provide a statement of financial position, a statement of activities and a statement of cash flows. ASC also requires reporting amounts for the organization s total assets, liabilities and net assets in a statement of financial position and reporting any change in an organization s net assets in a statement of activities. ASC requires classification of an organization s net assets and its revenues, expenses, gains and losses based on the existence or absence of donor-imposed restrictions. It requires that the amount for each of three classes of net assets (permanently restricted, temporarily restricted, unrestricted) be displayed in a statement of financial position and that the amounts of change in each of these classes of net assets be displayed in a statement of activities. Permanently Restricted Net Assets are those restricted by donors in perpetuity as endowments or irrevocable trusts. As of March 31, 2011 and 2010, YVCA did not have permanently restricted net assets. Temporarily Restricted Net Assets are those gifts of cash and other assets which are stipulated by donors for specific operating purposes, special projects or for the acquisition or construction of land, buildings and equipment. See Note 4 for detail. Unrestricted Net Assets are those currently available at the discretion of the Board for use in YVCA s operations. Net Assets Released from Restrictions are when a stipulated time restriction ends or purpose restriction is accomplished, the temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities. -8-

11 NOTES TO THE FINANCIAL STATEMENTS For the Years Ended March 31, 2011 and 2010 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES (continued) Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, cash held as deposits with local financial institutions and certificates of deposit with an original maturity of less than 90 days. Property and Equipment Office furniture and equipment are recorded at cost less accumulated depreciation. Depreciation expense is provided over the estimated useful lives ranging from five to seven years using the straight-line method. YVCA has a written policy to capitalize capital assets with a useful life of more than two years and greater than $1,000. Leasehold Improvements Leasehold improvements are recorded at cost less accumulated depreciation. Amortization is provided over a four-year period consistent with the lease agreement. Inventory Inventory is recorded at cost and consists of clothing, hats, pins, buttons, brochures, videos and other promotional items which are sold to sites. Income Taxes YVCA is exempt from federal income taxes under Section 501 (c) of the Internal Revenue Control. YVCA is also exempt from state income taxes. Federal Form 990 is filed annually with the IRS. Contributions Donor restricted contributions are reported as an increase in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Uncollectible Receivables YVCA uses the allowance provision method to determine the uncollectible part of the portion billed to local chapter affiliates with AmeriCorps members. The allowance is based on prior years experience and management s analysis of specific chapter affiliates. Functional Expenses Expenses are charged to each program based on direct expenditures incurred. Functional expenses which cannot readily be related to a specific program are charged to the various programs based upon hours worked, number of program staff or other reasonable methods for allocating YVCA s multiple function expenditures. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. -9-

12 NOTES TO THE FINANCIAL STATEMENTS For the Years Ended March 31, 2011 and 2010 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES (continued) Subsequent Events According to ASC , management has evaluated subsequent events to August 31, 2011, which is the issue date of the financial statements. NOTE 2: UNCONDITIONAL PROMISES RECEIVABLE As of March 31, 2011, unconditional promises receivable showed a net balance of $101,837. To be Collected <1 Year 1-5 Years Total Promises Receivable $71,667 $33,500 $105,167 Discount on Promises Receivable at (5%) 0 (3,330) (3,330) Allowance for Uncollectible Promises Promises Receivable - net $71,667 $30,170 $101,837 As of March 31, 2010, unconditional promises receivable showed a net balance of $151,914. To be Collected <1 Year 1-5 Years Total Promises Receivable $116,000 $39,667 $155,667 Discount on Promises Receivable at (5%) 0 (3,753) (3,753) Allowance for Uncollectible Promises Promises Receivable - net $116,000 $35,914 $151,914 NOTE 3: CONDITIONAL PROMISES TO GIVE During November 2010, YVCA received notification of a $50,000 unrestricted donation that was paid in January 2011 as well as a conditional promise to give for an additional $50,000. The conditional promise would be paid over two years beginning in fiscal year 2012 for $35,000 and the remaining $15,000 to be paid in fiscal year The donation is contingent upon meeting certain donor conditions and therefore is not recorded as contribution revenue until donor conditions are met. NOTE 4: CAPITAL ASSETS Cost and accumulated depreciation of office furniture and equipment were as follows at March 31, 2011 and /31/11 3/31/10 Office, furniture & equipment $ 64,549 $ 64,549 Leasehold Improvements Less accumulated depreciation (64,776) (63,350) Net Book Value $ 698 $ 2,

13 NOTES TO THE FINANCIAL STATEMENTS For the Years Ended March 31, 2011 and 2010 NOTE 5: TEMPORARILY RESTRICTED NET ASSETS YVCA had temporarily restricted net assets which were subject to the following restrictions on their use. Unconditional promises receivable (Note 2) in the amount of $101,837 at March 31, 2011 and $151,914 at March 31, 2010, which are expected to be collected by March 31, 2014 are reported as temporarily restricted net assets. 3/31/2010 Donations Restrictions 3/31/2011 Balance Received Released Balance Unconditional Promises Receivable $151,914 $20,000 $70,077 $101,837 3/31/2009 Donations Restrictions 3/31/2010 Balance Received Released Balance Unconditional Promises Receivable $379,816 $5,000 $(232,902) $151,914 Affiliate Expansion Donation 3,000 0 (3,000) 0 Total Restricted Net Assets $382,816 $5,000 $(235,902) $151,914 NOTE 6: FEDERAL GRANTS RECEIVABLE & REVENUE FROM FEDERAL GRANTS YVCA periodically draws down funds from the federal grant for its Corporation for National Community Service (CNCS) Programs - AmeriCorps and Summer of Service. These programs are based on an expenditure reimbursement basis and funds are drawn down after the expenditures are incurred. The funds drawn down are then recorded as revenue in the books of the organization. During the period ended March 31, 2011, the organization drew down funds in the amount of $486,876 and reported a federal grant receivable in the amount of $100,057. During the period ended March 31, 2010, the organization drew down funds in the amount of $708,456 and reported federal grants receivable in the amount of $103,385. The CNCS Summer of Service grant period was scheduled to end in April CNCS annual funding for the year ending September 30, 2011, was reduced on April 25, 2011, when U.S. President Obama signed H.R resolution. The resolution eliminated the Summer of Service grant for the year ending March 31, NOTE 7: CASH MATCH FROM LOCAL SITES Participating local YVCs are required to match a percentage of the cost of AmeriCorp members that participate in their local YVC AmeriCorps program. YVCA had received a cash match from the local sites in the amount of $129,492 for fiscal year 2011 and $212,579 for fiscal year NOTE 8: OPERATING LEASE YVCA entered into a building lease agreement with the City of Roeland Park in July 1998 for 48 months. It included two option periods for successive periods of four years each. YVCA extended the lease for both periods with the final option period expiring on August 31, A six-month renewal was signed in August of 2010 that expired on February 28, Total rent expense was $31,216 and $30,954 for fiscal years 2011 and 2010, respectively. A month-to-month lease was verbally agreed upon beginning March 1, 2011 at the previous monthly amount. -11-

14 NOTES TO THE FINANCIAL STATEMENTS For the Years Ended March 31, 2011 and 2010 NOTE 9: SUBSEQUENT EVENTS YVCA was notified in May 2011 by CNCS that the CNCS AmeriCorps grant application for the three-year period beginning August 1, 2011 was declined. The current grant cycle ended July 31, 2011 and will have federal funds and expenses associated with those funds for the fiscal year ending March 31, The amount of federal revenue and corresponding expense cannot be estimated for the fiscal year ending March 31,