Financial Statements, Independent Auditors Report and Supplementary Information December 31, 2013 CAMPBELL, RAPPOLD & YURASITS LLP Certified Public Accountants 1033 SOUTH CEDAR CREST BOULEVARD ALLENTOWN, PA 18103
TABLE OF CONTENTS Page(s) Independent Auditors' Report 1-2 Financial Statements: Statement of Financial Position 3 Statement of Activities 4 Statements of Cash Flows 5 Notes to Financial Statements 6-17 Supplementary Information: Schedule of Ministry Expenses 19 Schedule of Mission Support Expenses 19 Schedule of Parish Life Expenses 19 Schedule of New Hope Project Expenses 20 Schedule of General and Administrative Expenses 20
CAMPBELL, RAPPOLD & YURASITS LLP Certified Public Accountants 1033 SOUTH CEDAR CREST BOULEVARD ALLENTOWN, PA 18103-5443 PHONE (610) 435-7489 FAX (610) 435-8794 www.crycpas.com JAMES S. ANDERSON, CPA TARA L. BENDER, CPA, CSEP JAMES F. BOVA, CPA MARC A. BRINKER, CPA MELISSA A. GRUBE, CPA, CSEP DENNIS S. HELLER, CPA WARREN R. HENDERSON, CPA JOHN R. ZAYAITZ, CPA DAWN C. ANDERSON, CPA MICHELLE R. BITNER, CPA ROXANNA M. BRANDLE, CPA KYLE ELSENBAUMER, CPA PAUL G. MACK, CPA, CFE NICHOLAS A. OTTOLINI, CPA JASON L. SERFASS, CPA HEIDI D. WOJCIECHOWSKI, CPA CONSULTANT LUTHER R. CAMPBELL, JR. INDEPENDENT AUDITORS' REPORT Board of Trustees/Council Members Episcopal Diocese of Bethlehem Bethlehem, PA We have audited the accompanying financial statements of the Episcopal Diocese of Bethlehem, which comprise the statement of financial position as of December 31, 2013, and the related statement of activities and cash flows for the year 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. 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. MEMBERS: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 1
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Episcopal Diocese of Bethlehem as of December 31, 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. Report on Summarized Comparative Information We have previously audited the Episcopal Diocese of Bethlehem's 2012 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated November 4, 2015. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2012, is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information on pages 19 and 20 are 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 audit 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. January 28, 2016 A Certified Public Accountants Allentown, PA 2
STATEMENT OF FINANCIAL POSITION As of December 31, 2013 With Comparative Totals for the Year Ended December 31, 2012 2013 Temporarily 2012 - ASSETS - Unrestricted Restricted Total Total Cash $ 762,137 $ 391,305 $ 1,153,442 $ 1,030,268 Short-Term Investments (Note 2) 65,657 11,598 77,255 65,967 Accounts Receivable 247,304-247,304 195,287 Prepaid Expenses 15,329-15,329 21,219 Due to/from Diocesan Funds (126,347) 126,347 - - Loans Receivable - Clergy/Parishes (Note 4) 139,316-139,316 165,822 Pledges Receivable (Note 9) - 51,802 51,802 75,295 Diocesan Trust Investments (Note 2) 9,446,850 16,887,733 26,334,583 23,774,523 Property and Equipment, Net (Note 5) 241,389-241,389 294,396 TOTAL ASSETS $ 10,791,635 $ 17,468,785 $ 28,260,420 $ 25,622,777 - LIABILITIES AND NET ASSETS - Liabilities: Accounts Payable and Accrued Expenses $ 113,133 $ 7,379 $ 120,512 $ 148,981 Investments Held for Others - 15,387,596 15,387,596 13,873,978 TOTAL LIABILITIES 113,133 15,394,975 15,508,108 14,022,959 Net Assets: Unrestricted $ (53,541) $ - $ (53,541) $ (75,039) Investment in Property and Equipment 241,389-241,389 294,396 Designated for Long-Term Investment 9,446,850-9,446,850 8,563,576 Designated for Reserves 1,043,804-1,043,804 1,066,391 Temporarily Restricted (Note 7) - 2,073,810 2,073,810 1,750,494 Total Net Assets 10,678,502 2,073,810 12,752,312 11,599,818 TOTAL LIABILITIES AND NET ASSETS $ 10,791,635 $ 17,468,785 $ 28,260,420 $ 25,622,777 See independent auditors report and notes to financial statements. 3
STATEMENT OF ACTIVITIES Year Ended December 31, 2013 With Comparative Totals for the Year Ended December 31, 2012 Year Ended December 31, 2013 Temporarily 2012 Unrestricted Restricted Total Total Support and Revenue: Acceptances $ 98,466 $ - $ 98,466 $ 95,632 Assessments 1,029,463-1,029,463 1,065,249 Investment Income (Net of Fees of $107,786 and $99,760) 733,632 11,309 744,941 790,350 Program Grants/Contributions - 217,283 217,283 87,063 New Hope Contributions - 232,807 232,807 244,280 Contributions 21,590 11,553 33,143 36,003 Realized/Unrealized Gain in Investment Value 456,390 190,934 647,324 297,724 Gain on Sale of Assets - - - 13,350 Releases from Restrictions 340,570 (340,570) - - Total Support and Revenue 2,680,111 323,316 3,003,427 2,629,651 Expenses: Program Services Ministry 744,641-744,641 707,862 Mission Support 73,630-73,630 73,630 Parish Life 115,173-115,173 136,567 New Hope 146,563-146,563 358,849 Grants and Assistance 285,957-285,957 284,089 Supporting Services General and Administrative 446,449-446,449 630,800 Other Expenses Depreciation 35,152-35,152 36,143 Loss on Sale of Assets 3,368-3,368 - Bad Debt Expense - - - 3,955 Total Expenses 1,850,933-1,850,933 2,231,895 CHANGE IN NET ASSETS 829,178 323,316 1,152,494 397,756 Net Assets at Beginning of Year 9,849,324 1,750,494 11,599,818 11,202,062 NET ASSETS AT END OF YEAR $ 10,678,502 $ 2,073,810 $ 12,752,312 $ 11,599,818 See independent auditors report and notes to financial statements. 4
STATEMENTS OF CASH FLOWS Year Ended December 31, 2013 and 2012 CASH FLOWS FROM OPERATING ACTIVITIES: Year Ended Year Ended December 31, December 31, 2013 2012 CHANGE IN NET ASSETS $ 1,152,494 $ 397,756 Adjustments to Reconcile Changes in Net Assets to Net Cash Provided by Operating Activities: Depreciation 35,152 36,143 (Gain) Loss on Sale of Assets 3,368 (13,350) Unrealized/Realized Gain on Investments (647,324) (297,724) Trust Withdrawals (Additions) 85,892 (870,109) Restricted Contributions (461,643) (345,165) Increase/Decrease in Assets and Liabilities: (Increase) Decrease in Accounts Receivable (52,017) 79,391 (Increase) Decrease in Prepaid Expenses 5,890 (1,310) Decrease in Pledges Receivable 23,493 75,210 Increase (Decrease) in Accounts Payable and Accrued Expenses (28,469) 65,796 Increase in Investments Held for Others 1,513,618 1,485,219 Net Cash Provided by Operating Activities 1,630,454 611,857 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Investments (10,137,830) (5,519,236) Sale of Investments 8,127,914 4,497,261 Purchase of Property and Equipment (10,513) (57,303) Proceeds from Disposition of Assets 25,000 13,350 Loan Distributions to Clergy/Parishes (25,500) (10,000) Proceeds from Loan Payments 52,006 350,066 Net Cash Used by Investing Activities (1,968,923) (725,862) CASH FLOWS FROM FINANCING ACTIVITIES: Restricted Contributions 461,643 345,165 Net Cash Provided by Financing Activities 461,643 345,165 Net Increase in Cash and Cash Equivalents 123,174 231,160 Cash and Cash Equivalents at Beginning of Year 1,030,268 799,108 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,153,442 $ 1,030,268 See independent auditors report and notes to financial statements. 5
1. Summary of Significant Accounting Policies Nature of Activities Trustees - The Incorporated Trustees of the Episcopal Diocese of Bethlehem was organized to receive, hold, administer, and properly dispose of all property, real and personal, which may be given, granted, conveyed, devised, bequeathed, or transferred to them, either in their own names or in trust, for religious, charitable or educational use or purpose connected with the Protestant Episcopal Church in said Diocese or any portion thereof, or for the aid, benefit or advancement of any parish, congregation or religious, charitable or education association in the Diocese. Restricted trusts for parishes and missions and unrestricted Diocesan trusts are governed by the Trustees with separate counsel for investment advice. Trust additions and withdrawals occur on a quarterly basis. Income, net of expenses, is distributed to the beneficiaries on a quarterly basis based on an investment return policy. Council - The Mission of the Diocese of Bethlehem is to live God s love; tell what you have seen and heard. This mission will seek to create communities of faith where all God s people can deepen their relationship with Jesus. We seek so to live that the Holy Spirit might use us to draw others to Christ. We seek to welcome others to the fellowship of God s church. This vision will lead us to celebrate our Anglican identity, to proclaim the importance of our life together in Christ, to live lives of prayer, service, and compassion as we work to build a world of justice and peace, and to be open to change as the Holy Spirit prompts us. The Diocese qualifies as a tax exempt Organization under Section 501(c)(3) of the Internal Revenue Code and no provision for income taxes is required. The Diocese monitors its activities and considers the potential for income taxes if any activities are not related to its exempt purpose. Program Descriptions Ministry The office of the Bishop includes full administration of the Diocese, the diocesan staff, personnel, property expenses and the ministries that support the life of the Diocese. Parish Life Support of congregational life and programs in the parishes of the Diocese of Bethlehem. Mission Support Outreach locally and nationally. The Diocesan participation of program and ministry of the larger church. Grants/Assistance The funding of programs and ministries both locally and nationally. New Hope The funding of building a college for seminarians, five primary schools, and one high school in Kajo Keji, South Sudan. The program also supports social ministry efforts for the needy within Pennsylvania. 6
1. Summary of Significant Accounting Policies (Continued) Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting with the principles of not-for-profit accounting. Resources are classified for accounting and report purposes into three net asset categories according to externally (donor) imposed restrictions. A description of the three net asset categories follows: Cash Unrestricted Net Assets Net assets that are not subject to donor-imposed stipulations. Unrestricted net assets are available for operating and board-designated activities. Temporarily Restricted Assets Temporarily restricted net assets include gifts, grants and pledges whose use by the Organization has been limited by donors to later periods of time or after specified dates, or to specified purpose. Permanently Restricted Net Assets Permanently restricted net assets include gifts, trusts and pledges which are required by donor-imposed restrictions to be invested in perpetuity and only income be made available for operations in accordance with donor restrictions. The Organization currently does not have any permanently restricted net assets. For purposes of the statements of cash flows, the Diocese includes all bank accounts as cash. Any cash held for investment purposes is reported as investments and not as cash on the statements of cash flows. Investments Investments are carried at fair value based on quoted market values, and realized and unrealized gains and losses are reflected on the statements of activities. Accounts/Loans Receivable Assessments unpaid as of the year end are recorded as receivables and as current year revenue. Loans to clergy and parishes are carried at unpaid principal balances, less an allowance for uncollectible loans, as determined necessary. Interest received on loans is recorded on the accrual basis and all loans are considered current. No allowance is provided for uncollectibles as receivables are expected to be fully collectible. 7
1. Summary of Significant Accounting Policies (Continued) Property and Equipment Property and equipment acquisitions over $500 are recorded at historical cost. Depreciation is computed by use of the straight-line method based on estimated useful lives. Routine repairs and maintenance that do not improve or extend the original useful lives of the respective assets are expensed as incurred.. Years Revenue Sources Buildings 50 Furniture and Equipment 5-15 Vehicles 3-5 The Diocesan Council derives a majority of its operating revenue from parish assessment, acceptance collections, and investment income. These funds are generated from the various parishes included under its geographic area boundaries of Northeastern Pennsylvania. The majority of Trustee revenue is from trust investment income. Contributions Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of donor restrictions. Contributions that are restricted by the donor are reported as increases 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. Contributions that are required to be reported as temporarily restricted support are then reclassified to unrestricted net assets upon expiration of time restricted or satisfaction of donor restrictions. Contributed Services and Materials In addition to receiving cash contributions, the Diocese occasionally receives in-kind contributions from various donors. It is the policy of the Diocese to record the estimated fair market value of certain in-kind donations as an asset or expense in its financial statements, and similarly increase donations by a like amount. Contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing these skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. For the years ended December 31, 2013 and 2012, there were no amounts contributed for services and materials. Functional Expenses Functional expenses have been allocated between program services and supporting services based on an analysis of personnel time and space utilized for the related activities. 8
1. Summary of Significant Accounting Policies (Continued) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles of the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Concentrations of Credit Risk Financial instruments that are exposed to concentrations of credit risk consist of cash, accounts receivable and investments. The cash and investments in stocks and bonds are in high quality institutions and companies with high credit ratings. Accounts receivable including loans receivable and various notes receivable are principally with member parishes and clergy. Realization of these items is dependent on various individual economic conditions. Investments are based on quoted market prices. Accounts receivable and notes receivable are carried at estimated net realizable values. The Organization had approximately $635,037 in excess of federally insured limits on deposit at one bank at December 31, 2013. Reclassification Certain 2012 amounts have been reclassified in order to conform to the 2013 financial statement presentation. These reclassifications have no effect on the changes in net assets as previously reported. 2. Investments Short-term investments consist of the following: 2013 2012 Cost Market Cost Market Cash & Cash Equivalents $ 73,545 $ 73,545 $ 64,660 $ 64,660 Equities 2,626 2,654 - - Government Securities 3,924 1,056 3,619 1,307 $ 80,095 $ 77,255 $ 68,279 $ 65,967 9
2. Investments (Continued) The diocesan trust investments consist of cash and marketable securities and are presented in the financial statements at fair market value. Market risk could occur and is dependent on the future changes in market prices of the various investments held. An analysis of the investments held in trust as of December 31, 2013 and 2012 are as follows: 2013 2012 Cost Market Cost Market Cash & Cash Equivalents $ 791,355 $ 800,334 $ 1,034,158 $ 1,034,158 U.S. Treasury and Debt Securities 8,447,770 8,500,452 8,895,310 8,977,159 Equities 6,123,378 7,319,704 3,862,121 4,160,537 Mutual Funds 7,745,054 9,714,093 9,279,355 9,602,669 $ 23,107,557 $ 26,334,583 $ 23,070,944 $ 23,774,523 At December 31, 2013 and 2012, the market value of U.S. Treasury and debt securities, by contracted maturity dates, are as shown below. Expected maturities will differ from contracted maturities because borrowers have the right to call on the prepay obligations with or without call or prepayment penalties. Market Value Market Value 2013 2012 Due in 1 Year or Less $ 2,491,342 $ 2,742,417 Due after 1 Through 5 Years 3,369,928 3,632,211 Due after 5 Through 20 Years 2,639,182 2,602,531 $ 8,500,452 $ 8,977,159 10
3. Fair Value Measurements Financial Accounting Standards Board ("FASB") 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 the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820-10 are described below: Level 1 Level 2 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. 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, are significant to the fair value measurement and include management s judgments about the assumptions market participants would use in pricing the asset or liability. 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. Investments classified within Level 3 whose fair value measurements consider several inputs may include Level 1 and/or Level 2 inputs as components of the overall 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 measured at fair value. There have been no changes in the methodologies used at December 31, 2013 and 2012. Common stocks, corporate bonds, and U.S. governmental securities: Valued at the closing price reported on the active market on which the individual securities are traded. 11
3. Fair Value Measurements (Continued) The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Organization 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. The following table sets forth by level, within the fair value hierarchy, the Organization s assets at fair value as of December 31, 2013 and 2012. Assets at Fair Value as of December 31, 2013 Level 1 Level 2 Level 3 Total Cash & Cash Equivalents $ 873,879 $ - $ - $ 873,879 Equities Consumer Discretion 617,781 - - 617,781 Consumer Staples 428,625 - - 428,625 Energy 273,125 - - 273,125 Financials 668,061 - - 668,061 Healthcare 727,252 - - 727,252 Industrials 590,184 - - 590,184 Technology 1,138,101 - - 1,138,101 International 2,749,198 - - 2,749,198 Materials 97,797 - - 97,797 Telecom 32,234 - - 32,234 Mutual Funds Balanced 725,204 - - 725,204 Large Blend 4,089,597 - - 4,089,597 Foreign Large Growth 1,109,288 - - 1,109,288 Foreign Large Blend - - - - Small-Cap 3,087,237 - - 3,087,237 Specialty 702,767 - - 702,767 Corporate Bonds - 6,639,497-6,639,497 Government Securities - 1,862,011-1,862,011 Total Assets at Fair Value $ 17,910,330 $ 8,501,508 $ - $ 26,411,838 12
3. Fair Value Measurements (Continued) Assets at Fair Value as of December 31, 2012 Level 1 Level 2 Level 3 Total Cash & Cash Equivalents $ 1,098,818 $ - $ - $ 1,098,818 Equities Consumer Discretion 353,861 - - 353,861 Consumer Staples 316,802 - - 316,802 Energy 277,963 - - 277,963 Financials 395,355 - - 395,355 Healthcare 447,602 - - 447,602 Industrials 443,474 - - 443,474 Technology 1,003,805 - - 1,003,805 International 705,355 - - 705,355 Materials 176,449 - - 176,449 Telecom 39,871 - - 39,871 Mutual Funds Balanced - - - - Large Blend 4,368,476 - - 4,368,476 Foreign Large Growth 1,646,860 - - 1,646,860 Foreign Large Blend 685,321 - - 685,321 Small-Cap 2,225,963 - - 2,225,963 Specialty 676,049 - - 676,049 Corporate Bonds - 6,569,229-6,569,229 Government Securities - 2,409,237-2,409,237 Total Assets at Fair Value $ 14,862,024 $ 8,978,466 $ - $ 23,840,490 There were no transfers between Level 1, Level 2 and Level 3 investments in 2013 and 2012. 13
4. Loans Receivable The Diocese provides loans to member parishes, as well as conically resident priests of the Diocese, to assist in the purchase of homes. The loans are payable in monthly installments at interest rates ranging from 0% - 6.5%. Outstanding loan balances at December 31, are as follows: Term Loan December 31, Maturity Date (Years) Amount 2013 2012 June, 2013 10 35,000 $ - $ 2,010 July, 2013 5 40,000-6,455 June, 2014 10 24,275 1,394 4,121 October, 2014 5 10,000 1,947 3,842 May, 2016 3 8,500 6,907 - January, 2017 10 18,000 4,986 8,673 December, 2017 10 19,400 9,112 11,082 August, 2018 5 17,000 16,209 - December, 2020 10 14,000 9,872 11,154 February, 2021 10 22,700-18,639 August, 2021 20 200,000 80,355 90,351 March, 2022 10 10,000 8,534 9,495 Total Loans Receivable $ 139,316 $ 165,822 5. Property and Equipment Property and equipment are as follows: 2013 2012 Land and Buildings $ 458,150 $ 458,150 Furniture and Equipment 182,553 172,040 Vehicles - 50,431 640,703 680,621 Less: Accumulated Depreciation (399,314) (386,225) $ 241,389 $ 294,396 The depreciation expense for 2013 and 2012 was $35,152 and $36,143, respectively. 14
6. Employee Retirement Plans The Diocesan clergy and lay staff participate in a defined benefit retirement plan managed by the Church Pension Fund of New York ( The Fund ), the assets of which are pooled for the benefit of all participants. The Fund levies assessments at the rate of 18% of participants' compensation, which includes salaries, other cash compensation, and the value of housing. Diocesan retirement expense for 2013 and 2012 was $91,525 and $103,540, respectively. 7. Temporarily Restricted Net Assets Temporarily restricted net assets include council custody accounts, clergy discretionary fund accounts, Diocesan Churchwomen accounts, and the New Hope Project Funds. Activities and net asset balances for the year ended December 31, 2013 and 2012 are as follows: 2013 2012 Temporarily Temporarily Restricted Restricted Incorporated Trustee Accounts $ 89,594 $ 84,957 Council Custody Accounts 147,822 105,722 New Hope Funds 1,836,394 1,559,815 Total Temporarily Restricted Net Assets $ 2,073,810 $ 1,750,494 Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes specified by the donors as follows: 2013 2012 Bishops Discretionary $ 19,684 $ 23,226 Episcopal Churchwomen Fund 11,861 16,844 Widows Corp Conference 11,659 12,431 Kajo Keji Project - 10,057 Scholarship Assistance 3,600 3,300 Seminarian Support 10,000 8,000 Diocesan Operations 10,544 3,332 Grants and Assistance 126,659 35,558 New Hope Funds 146,563 358,849 Total Temporarily Restricted Net Assets Released from Restriction $ 340,570 $ 471,597 15
8. Commitments and Contingencies The Trustees guarantee a loan held by the Episcopal Ministries of the Diocese of Bethlehem charitable entity. The outstanding balance on the loan was $169,777 and $194,244 at December 31, 2013 and 2012, respectively. The Organization is currently using the system of Reimbursement Financing to pay unemployment compensation claims, under which a liability occurs only when a former employee collects unemployment benefits. It is at that time that the Organization must reimburse the State for claims paid. 9. Pledges Receivable In 2007, the Organization began a New Hope Campaign to raise money for the construction of the Canon Benaiah Poggo College and Diocesan Center, construction of five primary and one secondary schools, and to fund a micro-finance program. The Campaign also funds ongoing social ministry efforts for the needy within Pennsylvania. Contributions to the campaign are either restricted by the donor for specific projects or allocated by the board of trustees among the restricted goals of the campaign. Pledges Receivable expected to be collected in: 2013 2012 Less than one year $ 64,802 $ 64,802 One to five years - 14,468 64,802 79,270 Less: Unamortized discount - (1,075) 64,802 78,195 Less: Allowance for uncollectible pledges (13,000) (2,900) $ 51,802 $ 75,295 Pledge receivables due in more than one year are reflected at the present value of estimated future cash flows using a discount rate of 5%. 16
10. Leases The Organization leases office equipment under long-term lease agreements. The equipment leases expire in various years through November, 2019. Rental expense was $11,184 and $12,684 for the years ended December 31, 2013 and 2012, respectively. Future lease obligations are as follows: Future lease obligations are as follows: Year Ending December 31: 2014 16,344 2015 15,580 2016 9,240 2017 9,240 2018 5,080 Thereafter 2,750 $ 58,234 11. Summarized Totals for Year Ended December 31, 2012 The financial statements include certain prior-year summarized comparative information in total, but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with GAAP. Accordingly, such information should be read in conjunction with Episcopal Diocese of Bethlehem s financial statements for the year ended December 31, 2012, from which summarized information was derived. 12. Subsequent Events The Organization s management has considered events subsequent to December 31, 2013 that affect the Organization through January 28, 2016, the date the financial statements were available to be issued, and has determined that no material subsequent events exist that require disclosure. 17
SUPPLEMENTARY INFORMATION 18
SCHEDULE OF EXPENSES With Comparative Totals for the Year Ended December 31, 2012 2013 2012 Ministry Expenses Salaries and wages $ 252,041 $ 213,931 Payroll Taxes 21,748 23,855 Employee benefits 214,210 248,716 Housing 125,953 121,953 Conventions 17,111 22,608 Repairs and maintenance 18,228 17,456 Utilities 19,491 13,428 Continuing education 40,203 8,005 Telephone 3,444 6,549 Insurance expense 12,947 8,753 Miscellaneous expense 19,265 22,608 Total Ministry Expenses $ 744,641 $ 707,862 Mission Support Expenses National Church $ 73,630 $ 73,630 Total Mission Support Expenses $ 73,630 $ 73,630 Parish Life Expenses Salaries and wages $ 30,110 $ 30,110 Congregational Development 71,666 91,769 Youth Ministry 13,397 14,688 Total Parish Life Expenses $ 115,173 $ 136,567 See independent auditors report on supplementary information. 19
SCHEDULE OF EXPENSES (CONTINUED) With Comparable Totals for the Year Ended December 31, 2012 2013 2012 New Hope Project Expenses Contract Labor $ 20,980 $ 38,885 Grants and Assistance 123,985 310,408 Printing and publications 141 4,363 Conferences and meetings - 1,452 Supplies 10 727 Bank fees 1,447 3,014 Total New Hope Project Expenses $ 146,563 $ 358,849 General and Administrative Expenses Salaries and wages $ 251,533 $ 263,608 Employee benefits 72,267 157,875 Office expense 23,860 31,594 Auto expense 5,924 6,752 Bank fees 18,045 15,599 Travel expense 11,145 18,271 Repairs and maintenance 12,637 9,821 Professional fees 17,467 17,467 Miscellaneous expense 20,324 93,793 Telephone 13,247 16,020 Total General and Administrative Expenses $ 446,449 $ 630,800 See independent auditors report on supplementary information. 20