FINANCIAL STATEMENTS L & C Leaf & Cole, LLP Certified Public Accountants
FINANCIAL STATEMENTS TABLE OF CONTENTS Page Independent Auditor s Report 1 Statements of Financial Position 2 Statements of Activities 3 Statements of Cash Flows 4 Notes to Financial Statements 5-9 i
L & C Leaf & Cole, LLP Certified Public Accountants A Partnership of Professional Corporations Steven W. Northcote, C.P.A. Michael S. Schreibman, C.P.A Michael J. Zizzi, C.P.A. Julie A. Firl, C.P.A. Nicholas M. Gines, C.P.A. Members American Institute of Certified Public Accountants California Society of Certified Public Accountants Independent Auditor s Report To the Board of Directors San Diego Housing Federation 110 West C Street, Suite 1013 San Diego, California 92101 We have audited the accompanying statements of financial position of San Diego Housing Federation as of December 31, 2009 and 2008, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Federation s management. 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 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 San Diego Housing Federation as of December 31, 2009 and 2008, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. San Diego, California August 10, 2010 1 2810 Camino Del Rio South, Suite 200, San Diego, California 92108-3820 619.294.7200, 619.294.7077 fax, www.leaf-cole.com, leafcole@leaf-cole.com
STATEMENTS OF FINANCIAL POSITION Current Assets: (Notes 1, 2 and 3) Cash and cash equivalents $ 106,678 $ 81,342 Certificates of deposit 109,104 108,199 Accounts receivable 4,290 590 Prepaid expenses 3,980 3,978 Total Current Assets 224,052 194,109 Noncurrent Assets: (Notes 1 and 4) Equipment, net of accumulated depreciation 2,243 2,833 TOTAL ASSETS $ 226,295 $ 196,942 Current Liabilities: (Note 1 and 5) Accounts payable and accrued expenses $ 20,948 $ 24,454 Deferred revenue 25,851 35,058 Total Current Liabilities 46,799 59,512 Commitments (Notes 6 and 7) ASSETS LIABILITIES AND NET ASSETS Net Assets: (Note 1) Unrestricted 179,496 137,430 TOTAL LIABILITIES AND NET ASSETS $ 226,295 $ 196,942 The accompanying notes are an integral part of the financial statements. 2
STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED Support and Revenues: Contributions 143,796 126,560 Sponsorships 114,340 114,825 Memberships 57,461 47,841 Special events 35,475 30,731 Grants 22,166 11,484 Awards 14,039 10,900 Interest income 1,131 3,050 Other income 911 1,974 Total Support and Revenues 389,319 347,365 Expenses: Program Services 243,707 239,338 Supporting Services: Management and general 46,037 51,072 Fundraising 21,365 21,350 Total Supporting Services 67,402 72,422 Special Events 36,144 27,311 Total Expenses 347,253 339,071 Change in Net Assets 42,066 8,294 Net Assets at Beginning of Year 137,430 129,136 NET ASSETS AT END OF YEAR $ 179,496 $ 137,430 The accompanying notes are an integral part of the financial statements. 3
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED Cash Flows From Operating Activities: Change in net assets $ 42,066 $ 8,294 Adjustment to reconcile change in net assets to net cash provided by operating activities: Depreciation 590 642 (Increase) Decrease in: Accounts receivable (3,700) 14,660 Contributions receivable - 9,000 Prepaid expenses (2) 146 Increase (Decrease) in: Accounts payable and accrued expenses (3,506) 7,318 Deferred revenue (9,207) (9,096) Net Cash Provided by Operating Activities 26,241 30,964 Net Increase in Cash and Cash Equivalents 26,241 30,964 Cash and Cash Equivalents at Beginning of Year 189,541 158,577 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 215,782 $ 189,541 The accompanying notes are an integral part of the financial statements. 4
NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and Significant Accounting Policies: Organization San Diego Housing Federation, formerly known as the Nonprofit Federation for Housing and Community Development (the Federation ) is a California Not-For-Profit Corporation organized on January 3, 1992. The Federation s purpose is to bring together representatives of nonprofit housing and community development corporations with others interested in the development and management of housing for low and moderate income persons in San Diego County, and to mutually assist in the accomplishment of common goals. Significant Accounting Policies Method of Accounting The financial statement of the Federation have been prepared on the accrual basis of accounting which is in accordance with U.S. generally accepted accounting principles and, accordingly, reflect all significant receivables, payables, and other liabilities. In June 2009, the Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification) was issued. The Codification is the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. The Codification is effective for financials statements issued for interim and annual periods ending after September 15, 2009. The implementation of this standard did not have a material impact on the financial position and results of operations. Financial Statement Presentation The financial statements present information regarding the financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Fair Value Measurements The Federation has adopted the fair value standards for financial assets and liabilities that are required to be measured at fair value on a recurring basis. The Fair Value Measurement standards define fair value, establish a framework for measuring fair value, outline a fair value hierarchy based on inputs used to measure fair value and enhance disclosure requirements for fair value measurements. The fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Level 1 or 2 of the hierarchy) and the reporting entity s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). These standards do not change existing guidance as to whether or not an instrument is carried at fair value. 5
NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and Significant Accounting Policies: (Continued) Significant Accounting Policies (Continued) Fair Value Measurements (Continued) The Federation s statement of financial position includes the following financial instruments that are required to be measured at fair value on a recurring basis: Investments in certificates of deposit are considered Level 2 assets and are reported at fair value based on quoted prices in active markets for similar assets at the measurement date. Contributions Contributions are recognized when the donor makes a promise to give to the Federation that is in substance, unconditional. 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. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Capitalization and Depreciation Equipment is recorded at cost. Donations of equipment are recorded as support at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long these donated assets must be maintained, the Federation reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Federation reclassifies temporarily restricted net assets to unrestricted net assets at that time. Equipment is depreciated using the straight-line method over the estimated useful asset lives as follows: Office equipment Computer equipment 5-7 years 5 years Depreciation aggregated $590 and $642 for the years ended December 31, 2009 and 2008, respectively. Maintenance, repairs and minor renewals are charged to operations as incurred. Upon sale or disposition of equipment, the asset account is relieved of the cost and the accumulated depreciation account is charged with depreciation taken prior to the sale and any resultant gain or loss is credited or charged to earnings. 6
NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and Significant Accounting Policies: (Continued) Significant Accounting Policies (Continued) Compensated Absences Accumulated unpaid vacation totaling $11,577 and $8,866 at December 31, 2009 and 2008, respectively, are accrued when incurred and included in accounts payable and accrued expenses. Allocated Expenses Expenses by function have been allocated among program and supporting services classifications on the basis of internal records and estimates made by the Federation s management. Income Tax Status The Federation is a public charity and is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code. The Federation is not a private foundation. The Federation uses a loss contingencies approach for evaluating uncertain tax positions and continually evaluates changes in tax law and new authoritative rulings. Concentration of Credit Risk The Federation maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Federation has not experienced any losses in such accounts. The Federation believes it is not exposed to any significant credit risk on cash and cash equivalents. Cash and Cash Equivalents For purposes of the statement of the statement of cash flows, cash and cash equivalents consist of cash and other highly liquid resources with an original maturity of three months or less when purchased. Certificates of deposit that may be redeemed without a significant penalty are considered cash and cash equivalents. The following is the composition of the combined amounts appearing in the financial statements: Cash and money market funds $ 106,678 $ 81,342 Certificates of deposit 109,104 108,199 Total Cash and Cash Equivalents $ 215,782 $ 189,541 Subsequent Events In preparing these financial statements, the Federation has evaluated events and transactions for potential recognition or disclosure through August 10, 2010, the date the financial statements were available to be issued. 7
NOTES TO FINANCIAL STATEMENTS Note 1 - Organization and Significant Accounting Policies: (Continued) Significant Accounting Policies (Continued) Reclassification The Federation has classified certain prior year information to conform with the current year presentation. Note 2 Certificates of Deposit: Certificates of deposit consist of the following at December 31: Chase Bank at 1.01% due May 10, 2010 $ 14,505 $ - Chase Bank at.75% due February 10, 2010 14,433 - Chase Bank at 1.01% due August 10, 2010 14,311 - Chase Bank at.59% due February 10, 2010 14,231 - Union Bank at.78% due February 9, 2010 12,929 - Union Bank at.99% due June 9, 2010 12,917 - Union Bank at.78% due January 10, 2010 12,908 - Union Bank at.78% due February 9, 2010 12,870 - Chase Bank at 1.24% due August 10, 2009-14,359 Chase Bank at 1.24% due May 10, 2009-14,325 Chase Bank at 1.24% due August 10, 2009-14,167 Chase Bank at 1.74% due February 10, 2009-14,147 Union Bank at 1.55% due February 9, 2009-12,831 Union Bank at 1.55% due January 10, 2009-12,807 Union Bank at 1.65% due February 9, 2009-12,791 Union Bank at 1.55% due February 9, 2009-12,772 Total Certificates of Deposit $ 109,104 $ 108,199 Note 3 - Accounts Receivable: Accounts receivable of $4,290 and $590 consists primarily of sponsorships at December 31, 2009 and 2008, respectively. Management believes all accounts receivable are collectible, therefore no allowance for doubtful accounts has been established at December 31, 2009 or 2008. 8
NOTES TO FINANCIAL STATEMENTS Note 4 - Equipment: Equipment is comprised of the following as of December 31: Office equipment $ 7,343 $ 7,343 Computer equipment 4,688 4,688 12,031 12,031 Less: Accumulated depreciation (9,788) (9,198) Total $ 2,243 $ 2,833 Note 5 - Deferred Revenue: Deferred revenue is comprised of the following as of December 31: Deferred memberships $ 25,851 $ 24,142 Deferred grant revenue - 10,916 Total $ 25,851 $ 35,058 Note 6 - Employee Benefit Plan: The Federation established a Simple IRA Plan (the Plan ) in April 2003, covering employees who have received at least $5,000 in compensation during the Plan year. Employees may defer up to $13,000 of their annual compensation, not to exceed the annual amount allowed by law. The Federation matches the employee contribution up to a maximum 3% of compensation. The Federation contributed $5,221 and $5,070 for the years ending December 31, 2009 and 2008, respectively. Note 7 - Operating Lease: The Federation leases its office facilities under an operating lease which expires in October, 2011. Future minimum lease payments are as follows for the years ending December 31: Years Ended December 31, 2010 $ 20,728 2011 16,015 Total $ 36,743 Rent expense of $19,964 and $19,139 for the office facilities has been included in the statement of activities for the years ended December 31, 2009 and 2008, respectively. 9