THE GENESIS PROJECT FINANCIAL STATEMENTS AND SUPPLEMENTAL REPORTS June 30, 2014 and 2013
TABLE OF CONTENTS Independent Auditor's Report Statements of Financial Position Statements of Activities Statements of Functional Expenses Statements of Cash Flows Notes to Financial Statements 3 4 5 6 7 Supplemental Information Schedule of Budget vs. Actual Expenses Schedule of Financial Awards Schedule of Revenues and Expenses by Funding Source and Contract 12 13 14 Reports Required by Governmental Auditing Standards Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Structure Based on an Audit of Basic Financial Statements Performed in Accordance with Government Auditing Standards 15
Arledge & Associates, P.C. CERTlFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT To the Board of Directors of The Genesis Project, Inc. We have audited the accompanying financial statements of The Genesis Project, Inc. (a nonprofit organization), which comprise the statement of financial position as of June 30, 2014 and 2013, and the related statements of activities, functional expenses, 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 op1mon 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 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Genesis Project, Inc. as of June 30, 2014 and 2013, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 309 N. Bryant Ave. Edmond, OK 73034 405.348.0615 Fax 405.348.0931 www.jmacpas.com Member of AICPA and OSCPA
Other Matters Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic 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 basic 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 basic financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 5, 2014, on our consideration of the organization's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in assessing the results of our audit. Edmond, Oklahoma September 5, 2014
STATEMENTS OF FINANCIAL POSITION June 30 2014 and 2013 ASSETS 2014 2013 Current assets: Cash $ 247,525 Certificate of deposit 94,680 Government claims receivable 76,319 Other receivables 4,715 Investment in community foundation 24,023 Total current assets 447,262 Property and equipment: Buildings 478,061 Furniture and equipment 68,219 Vehicles 51,964 Land 50,000 Less: accumulated depreciation (591,689) Property and equipment, net 56,555 TOT AL ASSETS $ 503,817 $ 96,823 94,507 78,771 4,530 22,083 296,714 478,061 68,219 51,964 50,000 (576,644) 71,600 $ 368,314 LIABILITIES AND NET ASSETS Accounts payable $ 9,623 Accrued expenses 58,839 Total liabilities 68,462 Net assets: Unrestricted 215,087 Temporarily restricted 196,245 Permanently restricted 24,023 Total net assets 435,355 TOT AL LIABILITIES AND NET ASSETs $ 503,817 $ 8,786 59,450 68,236 242,300 35,695 22,083 300,078 $ 368,3 14 The accompanying notes are an integral part of these financial statements. 3
STATEMENTS OF ACTIVITIES For the years ended June 30, 2014 and 2013 Temporarily Pennanently 2014 2013 Unrestricted Restricted Restricted Totals Totals Support and revenue: Donations $ 64,597 $ 167,005 $ $ 231,602 $ 34,778 State contracts: OHS Funds- Contract E 900,909 900,909 899,360 School Lunch Program 26,170 26,170 28,133 Other income 6,234 Investment income 5,523 1,940 7,463 6,289 Net assets released from restriction 6,455 (6,455) Total support and revenues 1,003,654 160,550 1,940 1,1 66,144 974,794 Expenses: Program services 886,827 886,827 883,232 Management and general 87,289 87,289 88,594 Fundraising 56,751 56,751 49,386 Total expenses 1,030,867 1,030,867 1,021,212 Increase (decrease) in net assets (27,213) 160,550 1,940 135,277 (46,418) Net assets at beginning of year 242,300 35,695 22,083 300,078 346,496 Net assets at end of year $ 215,087 $ 196,245 $ 24,023 $ 435,355 $ 300,078 The accompanying notes are an integral part of these financial statements. 4
STATEMENTS OF FUNCTIONAL EXPENSES For the years ended June 30, 2014 and 2013 Program Services Management & General Fundraising June 30, June 30, 2014 2013 Totals Totals Salary and benefits $728,334 $ 53,436 Advertising and promotion 4,532 Cafeteria 26,335 Staff cafeteria costs 12,392 Insurance 29,036 Maintenance 20,122 Professional services 9,331 Staff training 1,155 Supplies 30,583 353 Taxes and fees 5,822 Utilities 27,678 Vehicle expense 7,832 Depreciation 15,045 Other 2,130 Total Functional Expenses $886,827 $ 87,289 $ 38,169 18,582 $ 56,751 $ 819,939 $ 823,679 4,532 827 26,335 30,078 12,392 14,154 29,036 40,512 20,122 6,695 9,331 12,396 1,155 2,090 49,518 28,379 5,822 6,710 27,678 28,789 7,832 9,469 15,045 17,434 2,130 $ 1,030,867 $ 1,021,212 The accompanying notes are an integral part of these financial statements. 5
STATEMENTS OF CASH FLOWS For the years ended June 30, 2014 and 2013 2014 2013 Cash flows from operating activities: Change in net position Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation Net (gain) loss on investments (Increase) decrease in government claims receivable (Increase) decrease in other receivable Increase (decrease) in accounts payable Increase (decrease) in accrued expenses Net cash provided (used) by operating activities Cash flows from investing activities: Purchase of certificate of deposit Distributions from Oklahoma City Community Foundation Net cash provided (used) by investing activities $ 135,277 15,045 (3,051) 2,452 (185) 837 (611) 149,764 (173) 1, 111 938 $ (46,418) 17,434 (2,112) (2,937) (172) (6,227) (903) (41,335) 1,070 1,070 Net increase (decrease) in cash and equivalents Cash at beginning of year Cash at end of year 150,702 96,823 $ 247,525 (40,265) 137,088 $ 96,823 The accompanying notes are an integral part of these financial statements. 6
NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 1. Summary of Significant Accounting Policies Organization - The Genesis Project, Inc. ("Genesis"), located in central Oklahoma, was incorporated September 10, 1980, under the laws of the State of Oklahoma as a not-for-profit corporation. Genesis works in connection with the Oklahoma County Juvenile Courts and the Oklahoma Department of Human Services (Child Welfare) to provide medical, psychological and residential care for battered children. Funding and support for Genesis is derived from contributions, donations of supplies and services from the public and local business community, and government funding. Financial Statement Presentation - These financial statements have been prepared in conformity with generally accepted accounting principles and are presented in accordance with F ASB Accounting Standards Codification Subtopic 958-205, Not-For-Profit Entities - Presentation of Financial Statements. Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires the use of accounting estimates by management. Accordingly, actual results could differ from those estimates. Property and Equipment - Property and equipment is stated at cost, less accumulated depreciation. The capitalization threshold is $500. Depreciation is charged to operating expense and is computed using the straight-line method over the estimated useful lives of the assets, which range from three to thirty-one years. Maintenance and repairs are charged to operations when incurred and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts and the resulting gain or loss is reflected in operations. Income Taxes - Genesis is exempt from federal taxation pursuant to Section 50l(c)(3) of the Internal Revenue Code and therefore, no provision for income taxes has been made. However, limited events or interpretations of the Internal Revenue Code could result in contingent income tax obligations to Genesis. Genesis follows accounting guidance related to the accounting for uncertainty in income tax reporting, which provides criteria for the recognition, measurement, presentation, and disclosure of uncertain tax positions. At June 30, 2014 and 2013, no uncertain tax positions taken or expected to be taken have been identified by Genesis. As of June 30, 2014, the tax years ended June 30, 2011 through June 30, 2013 are open to examination by taxing authorities. Accrued Compensated Absences - Employees of Genesis are entitled to paid vacation depending on length of service and other factors. At June 30, 2014 and 2013, compensated absences of $26,270 and $29, 780, respectively, have been accrued by Genesis. 7
NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 1. Summary of Significant Accounting Policies (Con't) Investments - Genesis reports investments at quoted market values. Gains and losses on investments are reported in the statement of activities as increases or decreases in unrestricted net assets. As discussed in Note 2, investments consist entirely of amounts held by the Oklahoma City Community Foundation. Subsequent Events - Genesis has evaluated the effects of all subsequent events from June 30, 2014 through September 5, 2014, the date the financial statements were available to be issued. 2. Investment in Community Foundation The Oklahoma City Community Foundation (the "Foundation") has assets whose earnings have been designated by the original donor to benefit specific charitable organizations. These donations have been set up as designated funds by the Foundation in the charitable organization's name. Genesis has such a fund at the Foundation. Genesis follows the provisions in Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) 958-605-25, Transfers of Assets to a Not-for-Pro.fit Organization or Charitable Trust That Raises or Holds Contributions for Others. In accordance with FASB ASC 958-605-25, the portions of the funds contributed by Genesis and held by the Foundation are considered reciprocal transfers, because Genesis is also a beneficiary of the funds. As a result, Genesis has recorded these funds as an investment in its June 30, 2014 and 2013 statement of financial position totaling $24,023 and $22,083 respectively. The Foundation has variance power assuring donors that if the charitable purpose of their contribution becomes impractical or impossible, the distributions will be directed to similar purposes in the community. Therefore, the portion of the funds held by the Foundation on behalf of Genesis contributed by unrelated third party donors is included in the net assets of the Foundation and is not reflected in the accompanying financial statements. 8
NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 2. Investment in Community Foundation (Con't) Genesis' activity for the years ended June 30, 2014 and 2013 is as follows: Reciprocal Third Party Balances Balances Totals Balance at June 30, 2012 $ 21,041 $ 68,095 $ 89,136 Distributions (1,070) (3,460) (4,530) Gains (losses) on investments and third party contributions 2,112 7,145 9,257 Balance at June 30, 2013 22,083 71,780 93,863 Distributions (1,111) (3,604) ( 4,715) Gains (losses) on investments and third party contributions 3,051 10,125 13,176 Balance at June 30, 2014 $ 24,023 $ 78,301 $ 102,324 3. Temporarily Restricted Net Assets Temporarily restricted net assets are available to fund capital projects. 4. Permanently Restricted Net Assets Permanently restricted net assets consist of funds contributed by Genesis and held by the Foundation. Net assets released from restriction consist of distributions from the Foundation to Genesis, calculated using five percent of the average market value over the previous twelve quarters. 9
NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 5. Fair Value Measurements Genesis' investments are reported at fair value in the accompanying statements of financial position. Financial Accounting Standards Board Accounting Standards Codification (F ASB ASC) 820-10 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. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy under F ASB ASC 820-10 are as follows: Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the organization has the ability to access. Level 2: Inputs to the valuation methodology included quoted market 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 markets 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 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. The beneficial interest in assets held at the Foundation of $24,023 and $22,083 as of June 30, 2014 and 2013 reported as investment in community foundation in the accompanying statements of financial position, has been valued, as a practical expedient, at the fair value of Genesis' share of the Foundation's investment pool as of the measurement date. The Foundation values securities and other financial instruments on a fair value basis of accounting. The estimated fair values of certain investments of the Foundation, which includes private placements and other securities for which prices are not readily available, are determined by management of the Foundation and may not reflect amounts that could be realized upon immediate sale, nor amounts that ultimately may be realized and are considered level 3 measurements. Accordingly, the estimated fair values may differ significantly from the values that would have been used had a ready market existed for these investments. The beneficial interest in assets held at the Foundation is not redeemable by Genesis as described in Note 2. 10
NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 Financial instruments classified as level 3 in the fair value hierarchy represent Genesis' investments in financial instruments in which management has used at least one significant unobservable input in the valuation model. A reconciliation of the activities for these level 3 financial instruments is included in Note 2. 6. Pension Plan Effective January 1, 2010, Genesis began sponsoring a Savings Incentive March Plan for Employees. Under terms of the plan, employees may voluntarily contribute to the plan on a tax deferred basis up to Internal Service Revenue limitations. Genesis matches employee deferrals up to two percent of eligible compensation. Contributions totaling $6,534 and $7,875 were made by Genesis for the years ended June 30, 2014 and 2013, respectively. Participating employees have a non-forfeitable interest at all times in their contributions and Genesis' matching contributions vest immediately. 7. Contingencies Genesis receives a substantial portion of its total revenues from contracts with the State of Oklahoma. These contracts are subject to audit by the State or its representatives. Such audits could lead to requests for reimbursement to the State for expenditures disallowed, the amount of which, if any cannot be determined at this time. Additionally, future funding could be affected by government cutbacks. 11
SUPPLEMENTARY INFORMATION
SCHEDULE OF BUDGET VS. ACTUAL EXPENSES For the year ended June 30, 2014 Budget Actual Favorable (Unfavorable) Salary and benefits $ 797,088 Advertising and promotion 3,034 Cafeteria 39,450 Insurance 59,394 Maintenance 18, 133 Professional services 8,000 Staff training 2,120 Supplies 40,839 Taxes and fees 1,000 Utilities 25,360 Vehicle expense 8,177 Depreciation Other 1,591 $ 819,939 $ (22,851) 4,532 (1,498) 38,727 723 29,036 30,358 20,122 (1,989) 9,331 (I,331) 1,155 965 49,518 (8,679) 5,822 (4,822) 27,678 (2,318) 7,832 345 15,045 (15,045) 2,130 (539) Total $ 1,004, 186 $ 1,030,867 $ (26,681) 12
SCHEDULE OF FINANCIAL AW ARDS For the Year Ended June 30, 2014 Funding Agency Program Title CFDA# Contract Number Contract Period Contract Amount Revenues Expenses U.S. Dept. of Agricultu School Nutrition I 0.553-5-8 55-12-55 07.01.13-06.30.14 $ 26,170 $ 26,170 _$ 2_6,~1_70_ (Passed through State of Oklahoma - Department ofhuman Services) Total U.S. Dept. of Agriculture 26,170 26,170 26,170 State of Oklahoma Department of Human Services Level E Contract Care NIA 995-503324 07.01.13-06.30.14 900,909 900,909 900,909 Total State of Oklahoma 900,909 900,909 900,909 Total Financial Awards $ 927,079 $ 927,079 $ 927,079 ======= 13
SCHEDULE OF REVENUES AND EXPENSES BY FUNDING SOURCE AND CONTRACT For the year ended June 30, 2014 U.S. Department State of of Agriculture Oklahoma School LevelE Private Nutrition Contract Care Funds Totals Revenues: Federal and state contracts $ 26,170 $ 900,909 $ $ 927,079 Donations and other 238,892 238,892 Total revenues 26,170 900,909 238,892 1,165,971 Expenses: Program services 25,034 861,793 886,827 Management and general 1,136 39,1 16 47,037 87,289 Fundraising 56,751 56,751 Total expenses 26,170 900,909 103,788 1,030,867 Excess of revenues over expenses $ $ $ 135,104 $ 135,104 14
Arledge & Associates, P.C. CERTIFIED PUBLIC ACCOUNTANfS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MA TIERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors of The Genesis Project, Inc. We have audited the financial statements of The Genesis Project, Inc. (Genesis) (a nonprofit organization) as of and for the year ended June 30, 2014, and have issued our report thereon dated September 5, 2014. We conducted our audit 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. Internal Control over Financial Reporting Management of Genesis is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Genesis' internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Genesis' internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control over financial reporting. 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 a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Genesis' 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. 309 N. Bryant Ave. Edmond, OK 73034 405.348.0615 Fax 405.348.0931 www.jmacpas.com Member of AICPA and OSCPA
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. Edmond, OK September 5, 2014