SHERWOOD CENTER FOR THE EXCEPTIONAL CHILD
CONTENTS Independent auditors' report 1 Page Financial statements: Statements of financial position 2 Statements of activities and changes in net assets 3 Statements of functional expenses 4-5 Statements of cash flows 6 Notes to financial statements 7-10
Independent Auditors' Report Board of Directors Sherwood Center for the Exceptional Child Kansas City, Missouri We have audited the accompanying statements of financial position of Sherwood Center for the Exceptional Child (the Center) as of June 30, 2012 and 2011, and the related statements of activities and changes in net assets, functional expenses and cash flows for the years then ended. These financial statements are the responsibility of the Center's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. 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 Sherwood Center for the Exceptional Child as of June 30, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles., 2012 1
STATEMENTS OF FINANCIAL POSITION JUNE 30, 2012 AND 2011 ASSETS Current assets: Cash $ 562,945 $ 252,713 Accounts receivable (Note 2) 185,948 208,435 Prepaid expenses 33,024 27,163 Total current assets 781,917 488,311 Property and equipment (Notes 3 and 5) 257,735 310,060 $ 1,039,652 $ 798,371 LIABILITIES AND NET ASSETS Current liabilities: Current portion of notes payable (Note 5) $ 13,894 $ 8,041 Accounts payable 20,074 28,174 Accrued expenses (Note 4) 57,642 31,494 Total current liabilities 91,610 67,709 Notes payable, less current portion (Note 5) 13,894 Security deposits (Note 6) 800 2,000 800 15,894 Net assets, unrestricted 947,242 714,768 $ 1,039,652 $ 798,371 See notes to financial statements. 2
STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS Revenues: Adult day and family support $ 256,434 $ 215,759 Special education 1,657,425 1,319,861 Contributions and grants 115,693 147,400 Fundraising income 40,971 50,789 Rent income (Note 6) 19,200 24,000 Interest 865 387 Loss on sale of property and equipment ( 1,176) Other income 61,632 53,352 Total revenues 2,152,220 1,810,372 Expenses: Program services 1,512,473 1,331,470 General and administrative 340,055 293,036 Fundraising 67,218 66,304 Total expenses 1,919,746 1,690,810 Change in net assets 232,474 119,562 Unrestricted net assets, beginning of year 714,768 595,206 Unrestricted net assets, end of year $ 947,242 $ 714,768 See notes to financial statements. 3
STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2012 Program General and services administrative Fundraising Total Advertising $ 623 $ 314 $ 266 $ 1,203 Bank charges 1,425 718 608 2,751 Bad debts 19,873 19,873 Conference, convention, meetings 2,997 592 119 3,708 Depreciation (Note 3) 33,976 21,095 1,424 56,495 Equipment rental and maintenance 37,910 23,538 1,589 63,037 Fundraising 14,658 14,658 Insurance 165,131 41,271 6,602 213,004 Interest (Note 5) 1,190 1,190 Licenses and fees 301 152 129 582 Miscellaneous 1,490 751 635 2,876 Postage and shipping 2,005 1,011 855 3,871 Professional fees 2,272 26,683 93 29,048 Salaries 887,652 175,137 35,247 1,098,036 School professional therapist 214,831 214,831 Supplies (Note 6) 29,977 18,612 1,256 49,845 Taxes, other 242 242 Taxes, payroll 64,449 12,716 2,559 79,724 Telephone and pagers 2,653 1,648 111 4,412 Travel and mileage 18,001 18,001 Utilities 25,475 15,817 1,067 42,359 $ 1,512,473 $ 340,055 $ 67,218 $ 1,919,746 See notes to financial statements. 4
STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2011 Program General and services administrative Fundraising Total Advertising $ 591 $ 1,242 $ 138 $ 1,971 Bank charges 835 1,753 195 2,783 Conference, convention, meetings 2,391 579 112 3,082 Depreciation (Note 3) 39,467 14,708 2,006 56,181 Equipment rental and maintenance 26,939 10,039 1,369 38,347 Fundraising 13,558 13,558 Insurance 163,008 42,812 7,712 213,532 Interest (Note 5) 1,749 1,749 Licenses and fees 82 172 19 273 Miscellaneous 408 858 95 1,361 Postage and shipping 841 1,767 196 2,804 Printing and publications 287 602 67 956 Professional fees 19,917 5,456 1,011 26,384 Salaries 735,121 178,142 34,302 947,565 School professional therapist 216,569 216,569 Supplies (Note 6) 23,760 8,854 1,207 33,821 Taxes, other 81 81 Taxes, payroll 56,132 13,602 2,619 72,353 Telephone and pagers 2,854 1,064 145 4,063 Travel and mileage 9,884 9,884 Utilities 30,554 11,386 1,553 43,493 $ 1,331,470 $ 293,036 $ 66,304 $ 1,690,810 See notes to financial statements. 5
STATEMENTS OF CASH FLOWS Cash flows from operating activities: Change in net assets $ 232,474 $ 119,562 Adjustments to reconcile change in net assets to cash used by operating activities: Depreciation 56,495 56,181 Loss on disposal of property and equipment 1,176 Net changes in operating assets and liabilities: Accounts receivable 22,487 ( 70,971) Prepaid expenses ( 5,861) 2,527 Accounts payable ( 8,100) 7,049 Accrued expenses 26,148 ( 6,087) Security deposits ( 1,200) Net cash provided by operating activities 322,443 109,437 Cash flows from investing activities: Purchases of property and equipment ( 4,170) ( 33,277) Proceeds from disposition of property and equipment 300 Net cash used by investing activities: ( 4,170) ( 32,977) Cash flows from financing activities, principal payments on notes payable ( 8,041) ( 7,518) Net increase in cash 310,232 68,942 Cash, beginning of year 252,713 183,771 Cash, end of year $ 562,945 $ 252,713 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,235 $ 1,758 See notes to financial statements. 6
NOTES TO FINANCIAL STATEMENTS 1. Organization and summary of significant accounting policies: Organization: Sherwood Center for the Exceptional Child (the Center) is a not-for-profit social service agency. The Center provides special education, daily habilitative training and community integration services for children and adults with autism who reside in the Greater Kansas City metropolitan area. Funding for programs and services provided by the Center is provided by the Missouri Department of Mental Health, Medicaid and state and local educational agencies. The Center also receives donations from the Heart of America United Way, Inc., foundations, corporations and individuals. Basis of accounting: The accompanying financial statements have been prepared on the accrual basis of accounting. The Center's net assets are considered "unrestricted" as of June 30, 2012 and 2011 due to the lack of donor-imposed restrictions. These assets represent resources over which the Board of Directors has discretionary control and are used to carry out operations of the Center in accordance with its bylaws. Concentration of credit risk: Financial instruments which potentially subject the Center to significant concentrations of credit risk consist principally of cash and accounts receivable. The Center places its cash at several financial institutions. Interest-bearing accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Balances occasionally exceed this limit. Noninterest bearing accounts are fully insured by the FDIC s temporary unlimited insurance coverage through December 31, 2012. The Center performs ongoing credit evaluations of its service recipients and does not require any collateral from its service recipients. Property and equipment and depreciation: Property and equipment are stated at cost, if purchased, and at fair market value at date of gift, if donated. Depreciation is provided by the straight-line method over the estimated useful lives of the assets ranging from five to twenty-five years. The Center capitalizes additions greater than $500. Expenditures for major renewals and betterments that materially extend the lives of the property and equipment are capitalized. Expenditures for maintenance and repairs are charged against operations. 7
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. Organization and summary of significant accounting policies (continued): Revenue recognition: Revenue from special education, daily habilitative training and community integration services is recognized in the period the services are provided. Promises to give are recognized as revenue in the period the donor makes an unconditional promise to give to the Center. Income taxes: The Center is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The Center s current accounting policy is to provide liabilities for uncertain income tax provisions when a liability is probable and estimable. The Center has no uncertain tax positions for the years ended June 30, 2012 and 2011. The Center is no longer subject to audits for Federal or state purposes for years prior to fiscal 2009. Management is not aware of any violation of its tax status as an organization exempt from income taxes. Estimates and assumptions: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of 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. Contributed services: Many individuals volunteer their time and perform a variety of tasks that assist the Center, but the services do not meet the criteria for recognition as contributed services and are not reflected in the accompanying financial statements. Subsequent events: Subsequent events have been evaluated through statements were available to be issued. 2. Accounts receivable:, 2012, which is the date the financial Program service fee receivable $ 142,985 $ 165,472 Contribution receivable 42,963 42,963 $ 185,948 $ 208,435 Management considers all receivables to be fully collectible; therefore, no allowance for doubtful accounts has been recorded. 8
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. Property and equipment: Land and buildings $ 460,619 $ 456,449 Furniture and equipment 229,395 229,395 Vehicles 158,205 158,205 848,219 844,049 Accumulated depreciation ( 590,484) ( 533,989) $ 257,735 $ 310,060 Depreciation expense was $56,495 and $56,181 for the years ended June 30, 2012 and 2011, respectively. 4. Accrued expenses: Accrued wages $ 22,623 $ 18,541 Accrued vacation 32,278 10,570 Accrued payroll taxes and withholdings 1,092 1,374 Accrued interest 77 122 Garnishments payable 1,572 887 5. Notes payable, bank: $ 57,642 $ 31,494 Mortgage payable, collateralized by real estate, interest at 6.75%, payable in monthly installments of $773 including principal and interest, due January, 2014. The mortgage was paid in full in September, 2012. $ 13,894 $ 21,935 Current portion ( 13,894) ( 8,041) $ -- $ 13,894 Interest costs of $1,190 and $1,749 were incurred and expensed during the fiscal years ended June 30, 2012 and 2011, respectively. 9
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 6. Operating leases: The Center was obligated under a noncancelable operating lease for office equipment that expired May 14, 2012. Rent expense on the lease was $6,517 and $6,337 for the years ended June 30, 2012 and 2011, respectively, and is included in "Supplies" on the accompanying financial statements. The Center owns two supervised living facilities for adults with autism. Effective April 6, 2008, the two facilities were leased to another non-profit agency for $2,000 a month for a noncancelable term of six months. After the initial term, the leases continue on a month-to-month basis. The tenant paid a $2,000 security deposit to the Center. In March 2012, the other non-profit agency moved out of one of the supervised living facilities and the Center refunded $1,200 of the security deposit. 10