BELL & RHODES, P.C. Certified Public Accountants 2575 Kelley Pointe Parkway, Suite 140 Edmond, OK 73013 INDEPENDENT AUDITORS REPORT The Board of Directors Oklahoma City, Oklahoma We have audited the accompanying financial statements of (the Organization ), (a nonprofit organization) which comprise the statement of financial position as of, and the related statements of activities, functional expenses, 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. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 of 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 misstatements 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 as of 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. Edmond, Oklahoma December 9, 2014
Statement of Financial Position Assets Current Assets Cash $ 239,331 Cash-restricted 27,200 Distribution receivable-oklahoma City Community Foundation 47,739 Prepaid insurance 4,371 Gift shop inventory 3,169 Total current assets 321,810 Fixed Assets Buildings 536,747 Leasehold improvements 526,893 Furniture and equipment 50,915 Office and gift shop 2,957 Clothing 1,892 Total fixed assets 1,119,404 Less: accumulated depreciation (613,577) Net fixed assets 505,827 Other Assets Endowed funds held by Oklahoma City Community Foundation 22,327 Total assets $ 849,964 Liabilities and Net Assets Current Liabilities Accounts payable $ 4,453 Accrued liabilities 2,520 Deferred revenue 28,725 Total current liabilities 35,698 Unrestricted 757,323 Temporarily restricted 34,616 Permanently restricted 22,327 Total net assets 814,266 Total Liabilities and Net Assets $ 849,964 See accompanying notes to financial statements 3
Statement of Activities For the Year Ended Temporarily Permanently Unrestricted Restricted Restricted Total Operating Revenues and Other Support Contributions and grants $ 99,485 $ - $ - $ 99,485 Facility rentals 142,721 - - 142,721 Distributions from Oklahoma City Community Foundation 47,739 - - 47,739 Program fees 45,254 - - 45,254 Special events 46,336 - - 46,336 Admission fees 6,081 - - 6,081 Miscellaneous income 4,365 - - 4,365 Interest income 234 - - 234 Total operating revenues and other support 392,215 - - 392,215 Operating Expenses Program expenses 239,439 - - 239,439 Management and general 51,421 - - 51,421 Fundraising 38,925 - - 38,925 Total operating expenses 329,785 - - 329,785 Changes in net assets from operations 62,430 - - 62,430 Change in endowed funds held by Oklahoma City Community Foundation - - 1,828 1,828 Net change in net assets 62,430-1,828 64,258 Net assets beginning of year 694,893 34,616 20,499 750,008 Net assets end of year $ 757,323 $ 34,616 $ 22,327 $ 814,266 See accompanying notes to financial statements 4
Statement of Cash Flows For the Year Ended Cash Flows from Operating Activities Change in net assets from operations $ 62,430 Adjustments to reconcile change in net assets to net cash provided by (applied to) operating activities Depreciation 38,740 Increase in restricted cash (41) Increase in receivable-oklahoma City Community Foundation (1,884) Decrease in prepaid insurance 2,595 Decrease in miscellaneous receivables 1,204 Decrease in accounts payable (10,154) Decrease in accrued liabilities (2,828) Decrease in deferred revenue (8,024) Net cash provided by operating activities 82,038 Cash balance beginning of year 157,293 Cash balance end of year $ 239,331 Supplemental Information: Interest paid $ - Income taxes paid $ - See accompanying notes to financial statements 5
Statement of Functional Expenses For the Year Ended Management Program and General Fundraising Total Salaries, payroll taxes and benefits $ 91,306 $ 10,699 $ 18,726 $ 120,731 Utilities 20,283 2,254-22,537 Insurance 17,161 3,661 147 20,969 Special events - - 20,042 20,042 Security 17,418 - - 17,418 Grounds maintenance 15,119 - - 15,119 Supplies 3,964 10,197-14,161 Facility rentals-staff expense 12,891 - - 12,891 Advertising 9,681 - - 9,681 Repairs and maintenance 8,052 - - 8,052 Audit fees - 7,214-7,214 Accounting - 7,132-7,132 Bank and credit card fees - 3,606-3,606 Dues and subscriptions - 3,139-3,139 Land Lease 2,400 2,400 Educational programs 1,768 - - 1,768 Copier lease and maintenance - 1,850-1,850 Website 656 - - 656 Miscellaneous - 571-571 Postage - 435 10 445 Printing - 388-388 Staff Development - 275-275 Depreciation expense 38,740 - - 38,740 $ 239,439 $ 51,421 $ 38,925 $ 329,785 See accompanying notes to financial statements 6
Notes to Financial Statements 1. Nature of Activities and Significant Accounting Policies Nature of Activities (the Organization) is incorporated under the laws of the State of Oklahoma as a nonprofit organization, formed for the purpose of operating and maintaining the territorial homestead of William Fremont Harn as a garden and museum complex and to provide education activities regarding the territorial years in Oklahoma. The Organization s support comes primarily from donor contributions, admissions to the complex, facility rentals for private events and other program fees. Promises to Give Contributions are recognized when the donor makes a promise to give to the Organization that is, in substance, unconditional. Contributions that are restricted by a donor are reported as increases in unrestricted assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Gifts of land, buildings and equipment are reported as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how those long-lived assets must be maintained, expiration of donor restrictions are reported when the donated or acquired long-lived assets are placed in service. Promises to give are reported at their estimated collectible amount. Receivables are determined to be uncollectible when collection efforts have been exhausted and are written off to expense at that time. There were no promises to give receivable at. Contributed Services Contribution service revenue is only recognized if the services are provided by parties who normally provide similar services for compensation or are services substantially the same as those the Organization would normally purchase. During 2014, the Organization received donated services from unpaid volunteers assisting in the activities of the Organization. No value has been assigned to these hours because they did not meet the criteria for recognition in the financial statements. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures; accordingly, actual results could differ from those estimates. 7
Notes to Financial Statements 1. Nature of Activities and Significant Accounting Policies-continued Cash and Cash Equivalents The Organization considers highly liquid investments with original maturities of three months or less to be cash equivalents. There were no cash equivalents as of. Property and Equipment Fixed assets are recorded at cost. Donated items are recorded at their fair value at the date of receipt. Items costing or having a donated value of less than $500 are expensed. As of June 30, 2014, no restrictions exist for long-lived assets. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. In 1993, a donor deeded approximately 9 1/3 acres of land on which the William Fremont Harn Gardens, Inc. is located. The donor retained the mineral rights to the property and made the transfer subject to several conditions as described below: a. The land shall never be used for private purposes, nor shall it ever be sold for private purposes, and any such attempted sale shall terminate Organization s title to the land. b. The donated tract of land shall always be designated as The William Fremont Harn Gardens. c. The Organization shall use the land only for its public, nonprofit purpose and shall not use it for purposes of providing recreation to the citizens of Oklahoma City. It shall be used only as a historical museum in accordance with the articles of incorporation of the Organization. d. Any proceeds from the condemnation of any of the land by the governmental agency shall be paid to the donor. Contributions and Support reports information regarding its financial position and changes in net assets according to three classes of net assets, if applicable, based on the existence or absence of donor-imposed restrictions, as follows: Unrestricted expendable amounts available for support of the Organization s operations. Temporarily restricted amounts which have been temporarily restricted by donors for specific purposes or time periods. The Organization treats restricted contributions that have the restrictions met in the same year as received as unrestricted contributions. Permanently restricted amounts required to be maintained for the benefit of William Fremont Harn Gardens, Inc. with income generated by such amounts available for purposes specified by the donor. The endowed funds on deposit at the Oklahoma City Community Foundation are considered permanently restricted. 8
Notes to Financial Statements 1. Nature of Activities and Significant Accounting Policies-continued Income Taxes The Organization is exempt from federal income tax under Section 501(a) of the Internal Revenue Code (IRC) as an organization described in Section 501(c)(3), and is classified as a publicly supported organization in accordance with the provisions of IRC Section 509(a)(2). The Organization s Forms 990 Return of Organization Exempt from Income Tax for the years ending June 30, 2011, 2012, 2013 and 2014 are subject to examination by the Internal Revenue Service, generally three years after they were filed. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position. Unrealized gains and losses are included in the change in net assets. Investment income and gains restricted by the donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or use) in the reporting period in which the income and gains are recognized. Inventory The inventory consists of items in the Museum Gift Shop. It is carried at the lower of cost or market value. Functional Allocation of Expenses The cost of providing various programs and other activities has been summarized on a functional basis in the Statement of Activities and in the Statement of Functional Expenses. Certain costs, primarily payroll and occupancy costs have been allocated among the programs and supporting services benefited. 2. Restrictions on Net Assets Temporarily Restricted Net Assets at consisted of the following items. Preservation project $ 17,866 Land Run Event 10,000 Schoolhouse and education 1,591 Technology 331 Other $ 4,828 34,616 The organization maintains temporarily restricted donations in a separate account until their purpose is met at which time the funds are transferred to the operating account. 9
3. Fair Value Measurements Notes to Financial Statements reports its fair value measures using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy, established by GAAP, requires that entities maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows: Level 1. Quoted prices for identical assets or liabilities in active markets to which the organization has access at the measurement date. Level 2. Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include a. quoted prices for similar assets or liabilities in active markets; b. quoted prices for identical or similar assets in markets that are not active c. observable inputs other than quoted prices for the assets or liability (for example, interest rates and yield curves); and d. inputs derived principally from, or corroborated by, observable market data by correlation or other means Level 3. Unobservable inputs for the asset or liability. Unobservable inputs should be used to measure the fair value to the extent that observable inputs are not available The fair values of the assets comprising investments at are: Level 2 Inputs Endowed Funds held by Oklahoma City Community Foundation $ 22,327 4. Oklahoma City Community Foundation The value of the reciprocal transfers to the Oklahoma City Community Foundation (OCCF) by the Organization is recognized as assets in the financial statements of William Fremont Harn Gardens, Inc. Funds on deposit for the Organization s benefit that were placed there by third parties are not recognized as assets in its financial statements. Reciprocal transfer assets totaling $22,327 are reflected as Endowed Funds held by Oklahoma City Community Foundation and as permanently restricted net assets in the statement of financial position. The market value of assets held by OCCF for the benefit of the Organization which have not been recorded in the Organization s financial statements totaled approximately $1,013,000 at June 30, 2014. 10
Notes to Financial Statements 4. Oklahoma City Community Foundation-continued Annual distributions from income are made to the Organization based on OCCF s spending policy, which is currently five percent of the average market value over the previous eight quarters of all assets held for the benefit of the Organization. A distribution in the amount of $47,739 was due to the Organization at and is reflected as a receivable in the statement of financial position and as income in the statements of activities. 5. Line of Credit The Organization has an unsecured line of credit with a local bank in the amount of $35,000. As of the Organization had not advanced on this the line. 6. Concentrations serves primarily the greater Oklahoma City area. As a result, support of the Organization is highly dependent upon the general economic conditions in the area. The risk of near term severe impact on the operations and mission of the Organization due to these concentrations is limited by the diversity of the Organization s programs and the donor base. At, the Organization had demand deposits at a local bank that exceeded the Federal Deposit Insurance Corporation limits by approximately $16,000. 7. Evaluation of Subsequent Events The Organization has evaluated subsequent events through December 9, 2014, the date which the financial statements were available to be issued. 11