Jacksonville, Florida Consolidated Financial Statements
Table of Contents Page No. Independent Auditor's Report 1 Consolidated Statements of Financial Position 3 Consolidated Statements of Activities and Changes in Net Assets 4 Consolidated Statements of Functional Expenses 7 Consolidated Statements of Cash Flows 8 10
Consolidated Statements of Financial Position ASSETS Operating Fund Capital Fund Endowment Fund Total, All Funds 2017 2016 2017 2016 2017 2016 2017 2016 Cash $ 436,984 $ 429,490 $ 167,843 $ 179,916 $ 523,339 $ 235,336 $ 1,128,166 $ 844,742 Restricted cash 201,187 200,986 - - - - 201,187 200,986 Accounts receivable 236,737 342,169 1,009 32,964 (158,056) (162,103) 79,690 213,030 Pledges receivable 107,105 143,860 204,358 259,266 366,625 666,637 678,088 1,069,763 Inventories 87,259 94,236 - - - - 87,259 94,236 Prepaid expense 83,840 137,418 - - - - 83,840 137,418 Investments 690,891 629,494 - - 11,738,828 10,851,073 12,429,719 11,480,567 Property and equipment, net of accumulated depreciation - - 6,251,803 6,421,410 - - 6,251,803 6,421,410 $ 1,844,003 $ 1,977,653 $ 6,625,013 $ 6,893,556 $ 12,470,736 $ 11,590,943 $ 20,939,752 $ 20,462,152 LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses $ 76,674 $ 83,984 $ - $ - $ - $ - $ 76,674 $ 83,984 Deferred activities 31,600 88,376 - - - - 31,600 88,376 Custodial accounts 223,103 223,185 - - - - 223,103 223,185 Line of credit - - 1,395,500 1,425,500 - - 1,395,500 1,425,500 Total liabilities 331,377 395,545 1,395,500 1,425,500 - - 1,726,877 1,821,045 Net assets: Unrestricted 1,366,479 1,370,048 2,860,720 3,099,050 3,603,170 3,337,779 7,830,369 7,806,877 Temporarily restricted 146,147 212,060 2,368,793 2,369,006 499,534 432,288 3,014,474 3,013,354 Permanently restricted - - - - 8,368,032 7,820,876 8,368,032 7,820,876 Total net assets 1,512,626 1,582,108 5,229,513 5,468,056 12,470,736 11,590,943 19,212,875 18,641,107 $ 1,844,003 $ 1,977,653 $ 6,625,013 $ 6,893,556 $ 12,470,736 $ 11,590,943 $ 20,939,752 $ 20,462,152 The accompanying notes are an integral part of this statement. - 3 -
Consolidated Statements of Activities and Changes in Net Assets For the year ended Operating Fund Capital Fund Endowment Fund Total, All Funds 2017 2016 2017 2016 2017 2016 2017 2016 CHANGES IN UNRESTRICTED NET ASSETS: Direct public support: Friends of Scouting $ 716,933 $ 677,276 $ - $ - $ - $ - $ 716,933 $ 677,276 Project sales contributions - - - 75 - - - 75 Capital contributions - - 6,200 10,500 - - 6,200 10,500 Special events - gross 463,667 432,527 - - - - 463,667 432,527 Less cost of direct benefits (174,254) (166,032) - - - - (174,254) (166,032) Net special events 289,413 266,495 - - - - 289,413 266,495 Legacies and bequests - - - - 6,031 6,635 6,031 6,635 Foundations and trusts 233,496 143,568 30,000 63,931 1,000-264,496 207,499 Other direct support 15,042 24,116-4,911 - - 15,042 29,027 Total direct public support 1,254,884 1,111,455 36,200 79,417 7,031 6,635 1,298,115 1,197,507 Indirect public support: United Way 296,824 305,684 - - - - 296,824 305,684 Fees from government agencies 171,773 374,713 - - - - 171,773 374,713 Total indirect public support 468,597 680,397 - - - - 468,597 680,397 Revenue: Product sales 1,100,022 1,091,803 - - - - 1,100,022 1,091,803 Less cost of goods sold (209,689) (211,099) - - - - (209,689) (211,099) Less commissions paid to units (434,723) (427,701) - - - - (434,723) (427,701) Net product sales 455,610 453,003 - - - - 455,610 453,003 Investment income (loss) 696,464 709,746 1,155-494,688 (86,750) 1,192,307 622,996 Camping revenue 931,962 843,122 12,000 - - - 943,962 843,122 Activity revenue 374,796 241,462 - - - - 374,796 241,462 Other revenue 105,705 107,449 1,000 486,335 - - 106,705 593,784 Total revenue 2,564,537 2,354,782 14,155 486,335 494,688 (86,750) 3,073,380 2,754,367 Net assets released from restriction 180,682 171,498 213-50,000 84 230,895 171,582 Total public support and revenue 4,468,700 4,318,132 50,568 565,752 551,719 (80,031) 5,070,987 4,803,853 The accompanying notes are an integral part of this statement. - 4 -
Consolidated Statements of Activities and Changes in Net Assets For the year ended Operating Fund Capital Fund Endowment Fund Total, All Funds 2017 2016 2017 2016 2017 2016 2017 2016 Expenses Program services 3,413,198 3,362,252 332,907 303,148 53,945 49,591 3,800,050 3,714,991 Support services Management and general 379,694 172,426 60,423 23,006 10,961 4,312 451,078 199,744 Fundraising 528,943 679,718 98,043 96,964 110,025 17,968 737,011 794,650 Total supporting services 908,637 852,144 158,466 119,970 120,986 22,280 1,188,089 994,394 Charter and National service fees 59,356 59,356 - - - - 59,356 59,356 Total expenses 4,381,191 4,273,752 491,373 423,118 174,931 71,871 5,047,495 4,768,741 Increase (decrease) in unrestricted net assets 87,509 44,380 (440,805) 142,634 376,788 (151,902) 23,492 35,112 CHANGES IN TEMPORARILY RESTRICTED NET ASSETS: Direct public support: Friends of Scouting 110,296 160,207 - - - - 110,296 160,207 Capital Campaign - - - 3,120 - - - 3,120 Special events - gross 1,250 8,950 - - - - 1,250 8,950 Other direct support 1,933 5,741 - - - - 1,933 5,741 Total direct public support 113,479 174,898-3,120 - - 113,479 178,018 Revenue: Investment income (loss) 1,290 1,931 - - 117,246 (19,249) 118,536 (17,318) Total revenue 1,290 1,931 - - 117,246 (19,249) 118,536 (17,318) Net assets released from restrictions (180,682) (171,498) (213) - (50,000) (84) (230,895) (171,582) Total public support and revenue (65,913) 5,331 (213) 3,120 67,246 (19,333) 1,120 (10,882) Increase (decrease) in temporarily restricted net assets (65,913) 5,331 (213) 3,120 67,246 (19,333) 1,120 (10,882) The accompanying notes are an integral part of this statement. - 5 -
Consolidated Statements of Activities and Changes in Net Assets For the year ended Operating Fund Capital Fund Endowment Fund Total, All Funds 2017 2016 2017 2016 2017 2016 2017 2016 CHANGES IN PERMANENTLY RESTRICTED NET ASSETS: Direct public support: Other direct support - - - - 166,781 527,000 166,781 527,000 Revenue: Gain (loss) on investments - - - - 380,375 (106,722) 380,375 (106,722) Total direct public support - - - - 547,156 420,278 547,156 420,278 Increase in permanently restricted net assets - - - - 547,156 420,278 547,156 420,278 INCREASE (DECREASE) IN TOTAL NET ASSETS 21,596 49,711 (441,018) 145,754 991,190 249,043 571,768 444,508 NET ASSETS, beginning of year Unrestricted net assets 1,370,048 1,446,823 3,099,050 2,880,067 3,337,779 3,444,875 7,806,877 7,771,765 Temporarily restricted net assets 212,060 206,729 2,369,006 2,365,886 432,288 451,621 3,013,354 3,024,236 Permanently restricted net assets - - - - 7,820,876 7,400,598 7,820,876 7,400,598 Total net assets, beginning of year 1,582,108 1,653,552 5,468,056 5,245,953 11,590,943 11,297,094 18,641,107 18,196,599 TRANSFERS AND ADJUSTMENTS (91,078) (121,155) 202,475 76,349 (111,397) 44,806 - - NET ASSETS, end of year Unrestricted net assets 1,366,479 1,370,048 2,860,720 3,099,050 3,603,170 3,337,779 7,830,369 7,806,877 Temporarily restricted net assets 146,147 212,060 2,368,793 2,369,006 499,534 432,288 3,014,474 3,013,354 Permanently restricted net assets - - - - 8,368,032 7,820,876 8,368,032 7,820,876 Total net assets, end of year $ 1,512,626 $ 1,582,108 $ 5,229,513 $ 5,468,056 $ 12,470,736 $ 11,590,943 $ 19,212,875 $ 18,641,107 The accompanying notes are an integral part of this statement. - 6 -
Consolidated Statements of Functional Expenses For the year ended Total Program and Supporting Services Supporting Services Program Management Fund Services and General Raising Total 2017 2016 Employee compensation: Salaries $ 1,361,564 $ 192,222 $ 234,786 $ 427,008 1,788,572 $ 1,770,501 Employee benefits 235,461 44,251 54,049 98,300 333,761 327,740 Payroll taxes 114,989 16,407 20,040 36,447 151,436 154,328 Employee related expenses 16,370 765 934 1,699 18,069 21,636 Total employee compensation 1,728,384 253,645 309,809 563,454 2,291,838 2,274,205 Other expenses: Professional fees 86,794 45,265 16,237 61,502 148,296 204,437 Supplies 399,750 1,921 58,317 60,238 459,988 403,419 Telephone 42,994 5,271 6,439 11,710 54,704 55,311 Postage and shipping 10,118 1,300 6,974 8,274 18,392 19,722 Occupancy 412,632 6,550 18,328 24,878 437,510 310,172 Rental and maintenance of equipment 67,099 6,108 7,460 13,568 80,667 81,906 Publications and media 58,071 1,428 21,866 23,294 81,365 86,255 Travel 191,397 16,153 19,729 35,882 227,279 243,563 Conferences and meetings 25,041 2,709 3,126 5,835 30,876 43,353 Assistance to individuals 67,201 - - - 67,201 88,523 Recognition awards 174,596 15,264 29,560 44,824 219,420 238,998 Interest expense 35,541 - - - 35,541 30,114 Insurance 97,613 19,224 21,297 40,521 138,134 143,453 Other expenses 106,232 15,975 144,260 160,235 266,467 117,677 Total other expenses 1,775,079 137,168 353,593 490,761 2,265,840 2,066,903 Expenses before depreciation 3,503,463 390,813 663,402 1,054,215 4,557,678 4,341,108 Depreciation 296,587 60,265 73,609 133,874 430,461 368,277 Total functional expenses $ 3,800,050 $ 451,078 $ 737,011 $ 1,188,089 $ 4,988,139 $ 4,709,385 The accompanying notes are an integral part of this statement. - 7 -
Consolidated Statements of Cash Flows For the year ended CASH FLOWS FROM OPERATIONS Operating Fund Capital Fund Endowment Fund Total, All Funds 2017 2016 2017 2016 2017 2016 2017 2016 Change in net assets $ 21,596 $ 49,711 $ (441,018) $ 145,754 $ 991,190 $ 249,043 $ 571,768 $ 444,508 Adjustments to reconcile change in net assets to net cash flows from operations Depreciation - - 430,461 368,277 - - 430,461 368,277 Amortization - (184) - - 2,088 (1,377) 2,088 (1,561) (Gain) loss on sale of investments (52,732) 14,187 - - (597,533) 157,870 (650,265) 172,057 Unrealized (gain) loss in investments (47,021) (31,236) - - (770,207) (418,297) (817,228) (449,533) (Gain) loss on disposal of property and equipment - - - (486,335) - - - (486,335) Change in restricted cash (201) (201) - - - - (201) (201) Change in accounts receivable 142,187 68,856 86,863 305,321 295,965 (462,683) 525,015 (88,506) Change in inventory 6,977 (33,025) - - - - 6,977 (33,025) Change in prepaid expenses 53,578 (47,363) - 402 - - 53,578 (46,961) Change in accounts payable and accrued expenses (7,310) 18,151 - (4,441) - - (7,310) 13,710 Change in deferred activities (56,776) 69,941 - - - - (56,776) 69,941 Change in custodial accounts (82) 28,015 - (811) - - (82) 27,204 Transfers and adjustments (91,078) (121,155) 202,475 76,349 (111,397) 44,806 - - Net cash flows from operations (30,862) 15,697 278,781 404,516 (189,894) (430,638) 58,025 (10,425) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment - - (260,854) (1,590,230) - - (260,854) (1,590,230) Proceeds from sale asset - - - 500,784 - - - 500,784 Purchases of investments (235,053) (737,579) - - (4,474,288) (11,430,359) (4,709,341) (12,167,938) The accompanying notes are an integral part of this statement. - 8 -
Consolidated Statements of Cash Flows For the year ended Operating Fund Capital Fund Endowment Fund Total, All Funds 2017 2016 2017 2016 2017 2016 2017 2016 Proceeds from sale of investments 273,409 772,708 - - 4,952,185 11,900,640 5,225,594 12,673,348 Net cash flows from investing activities 38,356 35,129 (260,854) (1,089,446) 477,897 470,281 255,399 (584,036) CASH FLOWS FROM BORROWING ACTIVITIES Repayment of line of credit - - (30,000) - - - (30,000) - Proceeds from line of credit, net - - - 815,500 - - - 815,500 Net cash flows from borrowing - - (30,000) 815,500 - - (30,000) 815,500 NET INCREASE (DECREASE) IN CASH 7,494 50,826 (12,073) 130,570 288,003 39,643 283,424 221,039 CASH, beginning of year 429,490 378,664 179,916 49,346 235,336 195,693 844,742 623,703 CASH, end of year $ 436,984 $ 429,490 $ 167,843 $ 179,916 $ 523,339 $ 235,336 $ 1,128,166 $ 844,742 The accompanying notes are an integral part of this statement. - 9 -
1. Reporting Entity and Nature of Activities The North Florida Council, Boy Scouts of America, Inc. (Council), is a Florida nonprofit organization operating under a Charter from the Boy Scouts of America, Inc. The Council provides the program of Scouting to young men ages 7 through 21, and young women ages 14 through 21 in 17 counties in Northeast Florida. The program utilizes age appropriate curriculum and methods as developed by the Boy Scouts of America, Inc. The Council headquarters is located in Jacksonville, Florida. A local volunteer elected executive board is the governing and reviewing authority for the Council s activities. It is the mission of the North Florida Council, Boy Scouts of America, Inc., that it shall promote, within the territory covered by the charter from time to time granted it by the Boy Scouts of America and in accordance with the Congressional Charter, Bylaws, and Rules and Regulations of the Boy Scouts of America, the Scouting program of promoting the ability of boys and young men and women to do things for themselves and others, training them in Scoutcraft, and teaching them patriotism, courage, self-reliance, and kindred virtues, using the methods which are now in common use by the Boy Scouts of America. The Council s web site address is www.nfcscouting.org. Its primary headquarters is located at 521 South Edgewood Avenue, Jacksonville, Florida 32205; phone 904-388-0951. 2. Summary of Significant Accounting Policies Principles of Consolidation The Council has control over and an economic interest in a Trust Fund, which results in the accounts of the Trust Fund being consolidated with those of the Council in the accompanying consolidated financial statements. All intercompany balances and transactions have been eliminated in the consolidation. The Council and the Trust Fund are hereinafter collectively referred to as the Organization. Basis of Accounting The financial statements of the Organization have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables and other liabilities. Basis of Presentation In accordance with accounting principles generally accepted in the United Stated, the Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Fund Accounting To ensure observance of limitations and restrictions placed on the use of resources available to the Organization, the accounts of the Organization are maintained in accordance with fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds established according to their nature and purpose. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group. - 10 -
The assets, liabilities, and net assets of the Organization are reported in three self balancing fund groups: General Operating fund represents unrestricted resources and the portion of expendable funds that are available for the Organization s day-to-day operations. Capital fund represents all property and equipment used by the Organization and includes the purchase of property and equipment with legally restricted funds that have not yet been expended. Endowment fund represents resources that are set aside for the long-term growth funds to support the operation of the Organization. Contributions Pledges receivable for contributions are recognized upon notification of a donor s unconditional promise to give to the Organization. An allowance for uncollectible promises to give is recorded based on an analysis of collection histories and on reviews of the credit worthiness of major donors. 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 donorrestricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the consolidated statement of changes in net assets as assets released from restrictions. Donated Materials, Long-lived Assets, Facilities & Services Donated land, buildings, equipment, investments, and other noncash donations are recorded as contributions at their fair market value at their date of donation. The Organization reports the donations 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 must 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 long those long-lived assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Donated services that do not require specialized skills or enhance nonfinancial assets are not recorded in the accompanying consolidated financial statements because no objective basis is available to measure the value of such services. A substantial number of volunteers have donated significant amounts of their time to the Organization s program services and its fundraising campaigns, the value of which is not recorded in the accompanying consolidated financial statements. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 consolidated financial statements and the reported amounts of revenues and - 11 -
expenses during the reporting period. Actual results could differ from those estimates. Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements. Recognition of Pledges Pledges are recorded when received, and allowances are provided for amounts estimated to be uncollectible. The allowance for uncollectible pledges totaled $101,805 and $113,161 at December 31, 2017 and 2016. Friends of Scouting enrollments consist of contributions received from individuals and organizations that want to be associated with the Organization through their financial support. There is no requirement for Friends of Scouting to pay an annual membership fee. Inventories Inventory consists of scouting and other items available for resale and is stated at the lower of cost are market determined by the first-in, first-out (FIFO) method. The Organization uses hand receipts to account for the inventory. Donated items are recorded at estimated fair value at the date of donation. Advertising Advertising costs are charged to operations in the period in which the advertisement is placed. Advertising for 2017 and 2016 amounted to $76,993 and $75,334, respectively. Investments Investments consist primarily of assets invested in marketable equity and debt securities, and moneymarket accounts. The Organization accounts for investments in accordance with the FASB standard for investments held by not-for-profit organizations. This standard requires that investments in equity securities with readily determinable fair values and all investments in debt securities be measured at fair value in the consolidated Statement of Financial Position. Fair value of marketable equity and debt securities is based on quoted market prices. The realized and unrealized gain or loss on investments is reflected in the consolidated Statement of Changes in Net Assets. Investments are exposed to various risks such as significant world events, interest rate, credit, and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the fair value of investments will occur in the near term and that such changes could materially affect the amounts reported in the consolidated Statement of Financial Position. Property and Equipment The Organization capitalizes all expenditures in excess of $2,500 for property and equipment at cost. Contributed property and equipment is recorded at the estimated fair value on the date the gift was acquired. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method. Gains and losses on the disposition of fixed assets are recorded as income or loss at the difference between the gross proceeds received and remaining net book value. Long-lived assets held and used by the Organization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability would be performed following generally accepted accounting principles. - 12 -
Income Taxes The Organization is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and comparable state law as a charitable organization, whereby only unrelated business income, as defined by Section 509(a)(1) of the Code is subject to federal income tax. The Organization currently has no unrelated business income. Accordingly, no provision for income taxes has been recorded. Consolidated Statements of Cash Flows For the purpose of the Consolidated Statements of Cash Flows, the Organization considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents. Restricted Cash Cash has been placed in a separate account and pledged to Wells Fargo Bank, N.A. as additional security for the revolving line of credit. These funds were set aside at the request of the lending institution as part of the execution of the revolving line of credit. The restricted cash balance was $201,187 and $200,986 at, respectively. Functional Allocation of Expenses The cost of providing the various programs and other activities has been summarized on a functional basis in the statement of functional expenses. Expenses that relate to a specific function are charged directly to that function. Those expenses that cover more than one function are allocated among the programs and supporting services benefited based on a time study conducted by the Organization. The results of this allocation are added to the previously directly allocated expenses to create the total expense number by functional category. In accordance with the policy of the National Council of the Boy Scouts of America (the National Council ), the payment of the charter fee to the National Council is not allocated as a functional expense. Endowment Spending Policy The Organization s Endowment Fund Corporate Trustee shall pay to the North Florida Council, Boy Scouts of America a quarterly distribution. In making this computation, the fair market value of the assets in the General Fund shall be determined in accordance with recognized asset valuation principles, consistent with the valuation methods regularly used by the Corporate Trustee. In regards to the General Fund, the Trustee shall pay an annualized distribution rate of no more than four and one-half percent (4.5%) based upon the rolling twelve (12) quarter average market value of the General Fund as of the last day of each quarter (March 31/June 30/September 30/December 31). In regards to the Baker Fund, the Trustee shall pay the net income earned each quarter. It shall be the responsibility of the Trust Advisory Committee and Corporate Trustee to periodically review the spending policy against actual returns in order to make any necessary adjustments. In January 2015, the Board authorized additional distribution at a rate of no more than one and onehalf percent (1.5%), based upon the rolling twelve (12) quarter average market value of the General Fund. The additional distribution is restricted for the use to the strategies and activities outlined in the Council s approved Business Plan to increase the number of youth enrolled and engaged in scouting. Additional distribution will remain in effect until the Board acts to amend it, or until January 1, 2018. In November 2017 the Board increased the annual distribution rate to five percent (5.0%) effective January 2018. - 13 -
Investment Policy The Organization s primary objective of the Endowment Fund investment portfolio is to generate long-term, total rate of return (income plus appreciation) that will permit real growth in Endowment Fund assets. The Organization views its Endowment Fund as permanent that is, having a perpetual life. Therefore, the Organization is willing to rely on projections of long-term market performance and not be overly concerned by short-term reversals in the market. The general investment policy shall be to diversify investments within both equity and fixed-income securities to provide a balance that will enhance total return while avoiding undue risk concentration in any single asset class or investment category. The investment of certain portions of the Endowment Fund in the future may be restricted or otherwise designated and thus not subject to the full context of the investment policy. The Endowment Fund shall be invested with the care, skill, prudence and diligence under the prevailing circumstances that a prudent person acting in like capacity and familiar with such matters would use in the investment of Endowment Funds of like character and with like aims. The investments of the Endowment Fund shall be so diversified as to minimize the risk of large losses. Understanding that risk is present in all types of securities and investment styles, the Endowment Fund Committee recognizes that some risk is necessary to produce long-term investment results that are sufficient to meet the Endowment Fund s objectives. However, the investment managers are to make reasonable efforts to control risk. Investment guidelines allow for common stock purchases to be limited to marketable securities of companies having a minimum market capitalization of $500,000,000 and quoted on a major exchange or in the over-the-counter markets. Fixed income security purchases will be limited to bonds issued in the U.S. Treasury, government agencies and corporations carrying a credit rating of no less than investment grade as defined by Standard & Poor s or its equivalent as defined by other recognized rating agencies. The investment guidelines should be interpreted as only prohibiting the purchase of bonds rated below investment grade. If lower rated bonds are already held within the portfolio, it is the Committee s discretion to hold or sell according to the money manager s recommendation. Prior-Period Information The consolidated financial statements include certain prior-year summarized comparative information in total. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Organization s consolidated financial statements for the year ended December 31, 2016, from which the summarized information was derived. Change in Accounting Principle In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820) Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share. ASU No. 2015-07 permits a reporting entity, as a practical expedient, to measure fair value of certain investments using the net asset value per share of the investment and provide guidance on required disclosure for such investments. The standard is effective for annual reporting periods beginning after December 15, 2016. Management has adopted this accounting guidance. The updated disclosure is included in Note 4 and did not have a material impact on the Organization s financial statements. - 14 -
Recent Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-14, Not-for-Profit Entities (Topic 958) Presentation of Financial Statements of Not-for-Profit Entities. ASU 2016-14 guidance simplifies the current net asset classification requirements from three net asset classifications to two. The amendment also improves the information presentation in the consolidated financial statements and notes regarding liquidity, financial performance, and cash flows. The standard is effective for annual reporting periods in fiscal years that begin after December 15, 2017. We are currently evaluating the standard and do not anticipate it will have a material impact on the Organization s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 replaces leasing rules with comprehensive lease measurement and recognition standard and expanded disclosure requirements. ASU 2016-02 will require leases to recognize most leases on their statement of financial of financial positions as liabilities, with corresponding right-of-us assets. The standard is effective for annual reporting periods in fiscal years that begin after December 15, 2019. We are currently evaluating the magnitude and other potential impacts on the Organization s consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenues from Contracts with Customers (Topic 606) and has modified the standard thereafter. The standard replaces existing revenue recognition rules with comprehensive revenue measurement and recognition standard and expanded disclosure requirements. ASU No. 2014-09 is effective for annual reporting periods in fiscal years that begin after December 15, 2017. We are currently evaluating the magnitude and other potential impacts to the Organization s consolidated financial statements. 3. Endowment Fund The Organization s Endowment Fund includes donor-restricted endowment funds. As required by accounting principles generally accepted in the United States, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Unrestricted net assets, identified by the Organization s board of directors to be used for future investment and growth, are included in unrestricted net assets board-designated. The Organization has interpreted the State Prudent Management of Institutional Funds Act ( SPMIFA ) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Organization classifies as permanently restricted net assets: (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Organization in a manner consistent with the standard of prudence prescribed by SPMIFA. - 15 -
In accordance with SPMIFA, the Organization considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) The duration and preservation of the fund (2) The purposes of the Organization and the donor-restricted endowment fund (3) General economic conditions (4) The possible effect of inflation and deflation (5) The expected total return from income and the appreciation of investments (6) Other resources of the Organization (7) The investment policies of the Organization Changes in the endowment net assets for the years ended are as follows: From time to time, the fair value of assets associated with individual donor-restricted endowments funds may fall below the level the donor or SPMIFA requires the Organization to retain as permanently restricted. Deficiencies of this nature result from unfavorable market fluctuations and would be included in unrestricted net assets. There were no deficiencies at December 31, 2017 or 2016. - 16 -
4. Fair Value Measurements Generally accepted accounting principles clarify that fair value is an exit price, representing the amount that would be received to sell an asset in an orderly transaction between market participants. Under this guidance, fair value measurements are not adjusted for transaction costs. This guidance establishes 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 (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this guidance are described below. Level 1 Valuations for assets traded in active exchange markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 Valuations for assets traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets which use observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities, liquid mortgage products, active listed equities and most money market securities. Such instruments are generally classified within Level 1 or Level 2 of the fair value hierarchy. As required by this guidance, the Organization does not adjust the quoted price for such instruments. The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include most investment-grade and high-yield corporate bonds, less liquid mortgage products, less liquid equities, state, municipal and provincial obligations, and certain physical commodities. Such instruments are generally classified within Level 2 of the fair value hierarchy. - 17 -
The following tables set forth the Organization s assets that were accounted for or disclosed at fair value on a recurring basis as of. Investments measured at fair valued using Net Asset Value (NAV) per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Financial Position. The Organization uses the NAV to determine the fair value of mutual funds which: (a) do not have a readily determinable fair value and (b) prepare their consolidated financial statements consistent with measurement principles of an investment company or have the attributes of an investment company. - 18 -
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8. Line of Credit The Company has a revolving line of credit with Wells Fargo Bank, N.A., allowing for borrowings up to $1,600,000, with interest at a fixed rate of 2.50%, with interest payable monthly. The loan requires periodic principal reduction payments such that the outstanding balance does not exceed $1,400,000 at March 11, 2017, $1,200,000 at March 11, 2018, $600,000 at March 11, 2019, and paid off by March 11, 2020. The line of credit is collateralized by a savings account deposited at the financial institution and specifically identified securities. The collateral value at December 31, 2017 is $1,925,886. At, the Organization had drawn $1,395,500 and $1,425,500, respectively, on the line of credit. - 20 -
9. Operating Lease The Organization has entered into operating lease agreements for office equipment. One lease began in January 2013 and requires sixty-three equal monthly payments of $1,250. Another operating lease began April 2013 and requires sixty equal monthly payments of $460. In September 2015 the Organization entered an operating lease that required twenty equal quarterly payments of $513. Estimated lease payments under non-cancelable operating leases for the next five years and in the aggregate are as follows: 10. Restrictions on Net Assets Temporary Restrictions Although restricted contributions typically are reported as support that increases restricted net assets, they may be reported as unrestricted support if the restrictions are met in the same reporting period, the policy is followed consistently, and it is disclosed. Net assets were temporarily restricted for the following purposes: - 21 -
Permanent Restrictions The Organization has interpreted state law as requiring the preservation of the permanent funds, unless explicit donor stipulations express otherwise. The permanent restrictions on net assets include endowment fund investments held indefinitely. All investment income, excluding capital gains and losses realized in the endowment account, if not donor restricted, are considered expendable for Organization operations. Net assets were permanently restricted for the following purposes: The Property Maintenance Fund has not been fully funded as of December 31, 2017. The funding is contingent on the Organization matching the gift in its entirety before the gift will be fully paid. 11. Net Assets Released from Restrictions Net assets were released from donor restrictions during 2017 and 2016 by incurring expenses satisfying the restricted purposes or by the occurrence of other events specified by donors. Net assets released were donated by the following: 12. Retirement Plan The National Council, BSA has a qualified contributory retirement plan administered at the national office, which covers employees of the National Council, including the North Florida Council, Boy Scouts of America, Inc. The plan name is the Boy Scout of America Master Pension Trust Boy Scouts of America Retirement Plan for Employees and covers all employees who have completed one year of service and who have agreed to make contributions. Eligible employees contribute two percent (2%) of compensation and the Council contributes an additional seven percent (7%) to the plan. Pension expenses for the years ending, were $88,738 and $86,812, respectively. - 22 -
The actuarial information for the multi-employer plan as of February 1, 2014, indicates that it is in compliance with ERISA regulations regarding funding. The assumed rate of return used in determining actuarial present values of accumulated benefits was four percent (4%). The mortality assumption was changed from the RP-2000 Mortality tables for annuitants and non-annuitants projected using Scale AA to 2019 and 2027, to the RP-2000 Mortality tables for annuitants and nonannuitants projected using Scale AA to 2020 and 2028. The actuarial valuation includes all Plan amendments as of February 1, 2013. The Organization has established an Eligible 457(b) Deferred Compensation Plan for the benefit of a select group of highly compensated employees. 13. Affiliates The Organization is obligated to pay an annual administrative and charter fee to the National Boy Scouts of America. 14. Risk Concentrations The Organization maintains several bank accounts at two banks. Accounts at institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of December 31, 2017, the uninsured portion of the balances was $538,009. 15. Fees from Government Agencies The Organization receives support from government agencies. This support is subject to change with little notice or inadequate funding to pay for the related cost. A significant reduction in the level of its support, if this were to occur, may have an effect on the Organization s programs and activities. 16. Supplemental Disclosures of Cash Flow Statement During the years ended cash payments for interest expense were $35,541 and $30,114, respectively. 17. Evaluation of Subsequent Events The Organization has evaluated subsequent events through April 19, 2018, the date which the financial statements were available to be issued. - 23 -