HARPER, RAINS, KNIGHT & COMPANY, P.A. CERTIFIED PUBLIC ACCOUNTANTS RIDGELAND, MISSISSIPPI

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2 MISSISSIPPI COUNCIL ON ECONOMIC EDUCATION JACKSON, MISSISSIPPI FINANCIAL REPORT JUNE 30, 2016 HARPER, RAINS, KNIGHT & COMPANY, P.A. CERTIFIED PUBLIC ACCOUNTANTS RIDGELAND, MISSISSIPPI

3 CONTENTS PAGE INDEPENDENT AUDITORS' REPORT 2 FINANCIAL STATEMENTS Statements of financial position 4 Statements of activities 5 Statements of cash flows 7 Notes to financial statements 8 SUPPLEMENTAL DATA Schedule of functional expenses 15 Schedule of historical data 16 1

4 The Board of Directors Mississippi Council on Economic Education Jackson, Mississippi Report on the Financial Statements Independent Auditors' Report We have audited the accompanying financial statements of Mississippi Council on Economic Education (the "Council") which comprise the statements of financial position as of June 30, 2016 and 2015, and the related statements of activities, and cash flows for the years 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. Auditors' 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. Those standards require that we plan and perform the audits 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 auditors' 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 auditors consider internal control relevant to the Council'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 Council'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. 2

5 The Board of Directors Mississippi Council on Economic Education - Continued Auditors' Responsibility - continued We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mississippi Council on Economic Education as of June 30, 2016 and 2015, and the results of its activities and cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America. Other Matter Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information presented on pages 15 and 16 is presented for purposes of additional analysis and is 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 audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare 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. October 27,

6 MISSISSIPPI COUNCIL ON ECONOMIC EDUCATION STATEMENTS OF FINANCIAL POSITION June 30, 2016 and 2015 ASSETS Current assets Cash and cash equivalents $ 253,450 $ 529,654 Certificates of deposit 100, ,625 Pledges receivable, net 158, ,292 Prepaid expenses 9,920 8,587 Total current assets 522,295 1,020,158 Long-term certificates of deposit 601,848 - Long-term investments 272, ,730 Property and equipment, net 897 2,927 Total long-term assets 875, ,657 Total assets $ 1,397,896 $ 1,291,815 LIABILITIES AND NET ASSETS Current liabilities Accounts payable $ 65,564 $ 53,460 Payroll liabilities 6,827 4,565 Deferred revenue 96,000 28,500 Total current liabilities 168,391 86,525 Net assets Unrestricted Board designated for endowment 106, ,296 Undesignated 183, ,120 Temporarily restricted 689, ,774 Permanently restricted 250, ,100 Total net assets 1,229,505 1,205,290 Total liabilities and net assets $ 1,397,896 $ 1,291,815 The Notes to Financial Statements are an integral part of these statements. 4

7 MISSISSIPPI COUNCIL ON ECONOMIC EDUCATION STATEMENTS OF ACTIVITIES Years Ended June 30, 2016 and 2015 Unrestricted support Contributions $ 85,168 $ 87,075 Program fees 19,783 15,666 Interest and dividend income 13,030 5,963 Miscellaneous income 4, In-kind contributions 12,023 7,938 Gain (loss) on investments 767 (4,906) Total public support 134, ,902 Net assets released from restrictions Satisfaction of restrictions 712, ,087 Total revenues and other support 847, ,989 Expenses Program 681, ,474 Administrative 34,516 49,966 Fundraising 71,335 56,205 Total expenses 787, ,645 Increase in unrestricted net assets 59,692 57,344 Temporarily restricted net assets Contributions 113, ,250 Grants 496, ,703 In-kind contributions 66,514 72, , ,258 Net assets released from restrictions Satisfaction of restrictions (712,347) (703,087) Increase (decrease) in temporarily restricted net assets (35,477) 18,171 5

8 MISSISSIPPI COUNCIL ON ECONOMIC EDUCATION STATEMENTS OF ACTIVITIES - Continued Years Ended June 30, 2016 and 2015 Permanently restricted net assets Contributions $ - $ 100 Increase in permanently restricted net assets Increase in net assets 24,215 75,615 Net assets, beginning of the year 1,205,290 1,129,675 Net assets, end of the year $ 1,229,505 $ 1,205,290 The Notes to Financial Statements are an integral part of these statements. 6

9 MISSISSIPPI COUNCIL ON ECONOMIC EDUCATION STATEMENTS OF CASH FLOWS Years Ended June 30, 2016 and 2015 Cash flows from operating activities: Increase in net assets $ 24,215 $ 75,615 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 2,030 2,300 Unrealized gains on investment, net 1,369 4,906 Change in: Pledges receivable (33,550) (56,631) Prepaid expenses (1,333) (3,591) Accounts payable 12,104 10,148 Payroll liabilities 2,262 3,700 Deferred grant revenue 67,500 (15,950) Net cash provided by operating activities 74,597 20,497 Cash flows from investing activities: Proceeds from maturity of certificates of deposit 354, ,612 Proceeds from sale of investments (2,269) - Purchase of investments (3,226) (273,636) Purchase of certificates of deposit (700,000) - Net cash provided by (used in) investing activities (350,801) 87,976 Net increase (decrease) in cash and cash equivalents (276,204) 108,473 Cash and cash equivalents, beginning of year 529, ,181 Cash and cash equivalents, end of year $ 253,450 $ 529,654 The Notes to Financial Statements are an integral part of these statements. 7

10 NOTES TO FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies of Mississippi Council on Economic Education (the "Council") follows: Organization and Operation The Council, a non-profit organization, was created to insure that the K-12 schools and teachers in Mississippi provide quality instruction in economics and personal finance that is academically sound and non-partisan. The Council is affiliated with the national Council on Economic Education. The Council receives its funding primarily from donations, grants, and fees charged for participation in program activities. Method of Accounting The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America using the accrual method of accounting, accordingly, the financial statements reflect all significant receivables, payables and other liabilities. Basis of Presentation Financial statement presentation follows the recommendations of the Presentation of Financial Statements for Not-for-Profit Entities topic of the FASB Accounting Standards Codification. Under this topic, the Council 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. Use of Estimates in the Preparation of Financial Statements The Council prepares its financial statements in accordance with generally accepted accounting principles, which require that management make estimates and assumptions that affect the reported amounts. Actual amounts could differ from those results. In the opinion of management, such differences would not be significant. Concentration of Credit Risk The Council's credit risk consists of its checking accounts, money market accounts and certificates of deposits with local financial institutions in excess of the federally insured amount. Management considers credit risk to be minimal due to the high quality of the financial institutions. 8

11 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Income Taxes The Council is exempt from federal and state income taxes under Section 501(c)(3) of the Internal Revenue Code and similar state statutes. Accordingly, a provision for income taxes has not been recorded in the accompanying financial statements. The Council is classified as a publicly supported organization. There were no uncertain tax positions identified related to the current year and the Council has no unrecognized tax benefits at June 30, 2016 and 2015 for which liabilities have been established. The Council recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. The tax years that remain open for federal and major state income tax jurisdictions are 2012 and forward. Cash and Cash Equivalents For the purposes of the statements of financial position and the statements of cash flows, the Council considers cash and cash equivalents to include all cash on deposit and money market accounts at various local banks. Certificates of Deposit The Council invests in certificates of deposit which accrue interest between.25 percent and 1.70 percent and mature between fiscal years 2017 and The certificates of deposit are carried at cost which approximates market value. Property and Equipment All property and equipment are recorded at cost less accumulated depreciation, or if acquired by gift, at the fair market value on the date of gift. Depreciation is provided over five or seven years using the straight-line method. Pledges Receivable Unconditional promises to give are recognized as revenues and gains in the period received as assets, decreases in liabilities, or expenses depending on the form of benefits received. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional. Management determines the allowance for doubtful accounts by regularly evaluating individual receivables. Receivables are written off when management believes they are uncollectible. 9

12 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Investments The Council reports investments in equity securities with readily determinable fair values and debt securities in the statements of financial position at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 5 for a discussion of fair value measurements. Unrealized gains and losses are included in the changes in net assets in the statements of activities. Deferred Revenue The Council recognizes grant and program revenues as earned. Amounts received in advance of the period in which service is rendered are recorded as a liability under deferred revenue. Donated Services and Facilities The Council receives office space and use of equipment at no cost. In addition, the Council receives accounting services, at no cost, from a Jackson, Mississippi CPA firm. The CPA firm is affiliated with directors of the Council. The Council reported $78,537 and $80,243 as the fair value of contributed rental facilities, rental equipment, advertising and professional services for 2016 and 2015, respectively. Functional Allocation of Expenses The cost of providing the various programs and other activities has been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Temporarily Restricted Net Assets The Council reports cash and other assets as restricted support, if they are received with stipulations that limit the use of the donated assets. 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 statements of activities as net assets released from restrictions. Subsequent Events Subsequent events were evaluated by the Council through October 27, 2016 which is the date the financial statements were available to be issued. 10

13 (2) PLEDGES RECEIVABLE Unconditional promises to give at June 30, 2016 and 2015 are as follows: Receivables in less than one year $ 161,842 $ 131,808 Allowance for doubtful accounts (3,000) (6,516) Pledge receivables, net $ 158,842 $ 125,292 (3) PROPERTY AND EQUIPMENT Details of property and equipment at June 30, 2016 and 2015 are as follows: Equipment $ 13,846 $ 13,846 Furniture and fixtures 2,187 2,187 16,033 16,033 Accumulated depreciation (15,136) (13,106) $ 897 $ 2,927 Depreciation expense for the fiscal periods ended June 30, 2016 and 2015 was $2,030 and $2,300, respectively. (4) INVESTMENTS Investments held by the Council at June 30, 2016 and 2015 consisted of the following: Fixed maturity mutual funds $ 183,214 $ 185,757 Equity mutual funds 33,352 33,703 Equity securities 56,290 49,270 $ 272,856 $ 268,730 Return on investments for the years ended June 30, 2016 and 2015 is summarized as follows: Interest and dividends $ 13,030 $ 5,963 Net realized and unrealized gains (losses) in investments carried at fair value (carrying value) 767 (4,906) $ 13,797 $ 1,057 Interest earned on certificates of deposit amounted to $3,647 and $3,491, for the fiscal periods ended June 30, 2016 and 2015, respectively, and is included within total interest and dividend income on the statements of activities. 11

14 (5) FAIR VALUE MEASUREMENTS Accounting Standards Codification Topic 820, Fair Value Measurements establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value (carrying value). The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). The three levels of the fair value hierarchy are described as follows: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Society and Affiliates have the ability to access. Level 2 - Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets at fair value. There have been no changes in the methodologies used at June 30, 2016 and Mutual funds and equity securities: Valued at fair market value of shares/units held at year end measured using published market quotations. The preceding methods may produce a fair value calculation that may not be indicative of future fair values. Furthermore, although the Council believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. 12

15 (5) FAIR VALUE MEASUREMENTS - Continued The following tables set forth by level, within the fair value hierarchy, the Council's assets at fair value as of June 30, 2016 and Assets at Fair Value as of June 30, 2016 Level 1 Level 2 Level 3 Total Long-term investments Fixed maturity mutual funds $ 183,214 $ - $ - $ 183,214 Equity mutual funds 33,352 33,352 Equity securities 56, ,290 Total investments at fair value $ 272,856 $ - $ - $ 272,856 Assets at Fair Value as of June 30, 2015 Level 1 Level 2 Level 3 Total Long-term investments Fixed maturity mutual funds $ 185,757 $ - $ - $ 185,757 Equity mutual funds 33,703 33,703 Equity securities 49, ,270 Total investments at fair value $ 268,730 $ - $ - $ 268,730 (6) RETIREMENT PLAN The Council has established a retirement plan for eligible employees to which annual contributions are made at the discretion of the Board of Directors. The Council's contributions amounted to $4,578 and $4,122 for 2016 and 2015, respectively. (7) CONTRIBUTED GOODS AND SERVICES Contributed goods and services for which the related expenses have been recorded are as follows: For Year Ended June 30, 2016 Program Administrative Fundraising Total Professional fees $ - $ 7,403 $ - $ 7,403 Rent 15,830 1,536 3,084 20,450 Workshops and simulation 50, ,684 $ 66,514 $ 8,939 $ 3,084 $ 78,537 13

16 (7) CONTRIBUTED GOODS AND SERVICES - Continued For Year Ended June 30, 2015 Program Administrative Fundraising Total Professional fees $ - $ 3,318 $ - $ 3,318 Rent 15,830 1,536 3,084 20,450 Workshops and simulation 56, ,475 (8) TEMPORARILY RESTRICTED NET ASSETS $ 72,305 $ 4,854 $ 3,084 $ 80,243 At June 30, 2016 and 2015, temporarily restricted net assets, which have been restricted by donors, are available for the following purposes: Teacher training programs $ 535,054 $ 608,667 Student programs 154, ,107 (9) PERMANENT FUND $ 689,297 $ 724,774 During the year ended August 31, 2008, the Board of Directors established the Dr. Ted J. Alexander Permanent Fund for Economic and Financial Education to provide continued funding of the Council's mission. The Board designated unrestricted contributions to establish the fund. The permanent fund consists of the following as of June 30, 2016 and 2015: Unrestricted net assets, Board designated $ 106,296 $ 106,296 Permanently restricted net assets 250, ,100 $ 356,396 $ 356,396 The assets of the permanent fund are included in the statements of financial position within cash and cash equivalents and long-term investments. 14

17 MISSISSIPPI COUNCIL ON ECONOMIC EDUCATION SCHEDULE OF FUNCTIONAL EXPENSES Year Ended June 30, 2016 (With Comparative Totals for Year Ended June 30, 2015) Program Administrative Fundraising Totals Totals Salaries and wages $ 181,317 $ 10,919 $ 13,510 $ 205,746 $ 155,307 Employee benefits 21,817 1,106 1,369 24,292 19,309 Payroll taxes 13, ,041 15,822 11,881 Total employee compensation 217,074 12,866 15, , ,497 Awards 47,441-1,629 49,070 69,676 Contract labor 76, ,662 72,435 Depreciation 1, ,030 2,300 Dues and subscriptions 5,848 3,575-9,423 6,020 Forum 13,489-13,489 26,978 29,708 Insurance 4, ,371 4,713 Miscellaneous 14,598 (1,482) ,917 16,014 Office supplies 1, ,708 1,051 Postage and delivery 3,292-1,353 4,645 2,425 Printing and reproduction 2, ,500 5,474 9,337 Professional development 131, , ,716 Professional fees - 15,403 30,000 45,403 30,932 Publications 28, ,445 52,240 Rent 15,830 1,536 3,084 20,450 20,450 Supplies 42, ,084 24,438 Telephone Travel and entertainment 32,414 1,494 1,943 35,851 27,011 Website Workshops and simulation 41, ,887 60,874 $ 681,700 $ 34,516 $ 71,335 $ 787,551 $ 757,645 Percentage of total 87% 4% 9% 100% See accompanying independent auditors' report. 15

18 MISSISSIPPI COUNCIL ON ECONOMIC EDUCATION SCHEDULE OF HISTORICAL DATA As of and for the Fiscal Years Ended Statement of Financial Position Cash $ 253,450 $ 529,654 $ 421,181 $ 545,068 $ 460,700 $ 594,137 $ 528,575 $ 356,065 $ 285,492 $ 351,773 $ 352,041 Certificates of deposit 701, , , , , , , , , ,000 - Pledges receivable 158, ,292 68,661 38, , , , , , , ,991 Long-term investments 272, , Other 10,817 11,514 10,223 13,755 19,009 10,722 10,620 10,513 11,760 13,928 3,037 Total assets $ 1,397,896 $ 1,291,815 $ 1,218,302 $ 1,314,939 $ 1,463,311 $ 1,661,478 $ 1,558,400 $ 1,445,735 $ 1,060,291 $ 689,129 $ 537,069 Liabilities $ 168,391 $ 86,525 $ 88,627 $ 82,506 $ 12,852 $ 10,568 $ 9,000 $ 82,005 $ 10,267 $ 12,808 $ 4,013 Net assets Unrestricted 290, , , , , , , , , , ,643 Temporarily restricted 689, , , , , , , , , , ,413 Permanently restricted 250, , , , , , , , , Total liabilities and net assets $ 1,397,896 $ 1,291,815 $ 1,218,302 $ 1,314,939 $ 1,463,311 $ 1,661,478 $ 1,558,400 $ 1,445,735 $ 1,060,291 $ 689,129 $ 537,069 Statement of Activities Support and revenue Unrestricted support Contributions $ 85,168 $ 87,075 $ 87,250 $ 94,667 $ 36,881 $ 80,866 $ 103,655 $ 187,972 $ 225,899 $ 111,147 $ 226,496 Program fees 19,783 15,666 11,006 26,033 25,695 23,039 23,272 24,819 27,781 20,475 20,888 Interest and dividend income 13,030 5,963 3,868 4,636 8,593 15,297 21,859 27,278 17,624 10,821 3,452 Other 16,915 3,198 9, ,471 4, ,695 2,068 Restricted support 676, , , , , , , , , , ,980 Total support and revenue 811, , , , , ,576 1,083,774 1,161,837 1,026, , ,884 Expenses Program 681, , , , , , , , , , ,467 General and administrative 34,516 49,966 38,742 49,256 31,363 31,727 30,367 39,887 30,878 52,817 13,826 Fundraising 71,335 56,205 49,075 74,159 44,563 49,673 50,086 51,609 53,705 43,123 35,446 Total expenses 787, , , , , , , , , , ,739 Increase (decrease) in net assets $ 24,215 $ 75,615 $ (102,758) $ (218,026) $ (200,451) $ 101,510 $ 185,667 $ 313,706 $ 373,703 $ 143,265 $ 368,145 Note: The above information for 2006 through 2013 was obtained from previously issued audited financial statements. See accompanying independent auditors' report. 16