EXCHANGE CLUB/HOLLAND J. STEPHENS CENTER FOR THE PREVENTION OF CHILD ABUSE, INC. JUNE 30, 2012 TAMARA L. BECKMAN CERTIFIED PUBLIC ACCOUNTANT
EXCHANGE CLUB/HOLLAND J. STEPHENS CENTER FOR THE PREVENTION OF CHILD ABUSE, INC. JUNE 30, 2012 TABLE OF CONTENTS INDEPENDENT AUDITOR S REPORT 1-2 STATEMENT OF FINANCIAL POSITION 3 STATEMENT OF ACTIVITIES 4 STATEMENT OF FUNCTIONAL EXPENSES 5 STATEMENT OF CASH FLOWS 6 NOTES TO THE FINANCIAL STATEMENTS 7-10 SCHEDULE OF FEDERAL & STATE AWARDS 11 AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 12-13
TAMARA L. BECKMAN CERTIFIED PUBLIC ACCOUNTANT 6 SOUTH MADISON AVENUE COOKEVILLE, TN 38501 OFFICE (931) 526-5489 FAX (931) 526-9064 INDEPENDENT AUDITOR S REPORT Board of Directors Exchange Club/ Holland J. Stephens Center for the Prevention of Child Abuse, Inc. I have audited the accompanying statement of financial position of Exchange/Holland J. Stephens Center for the Prevention of Child Abuse, Inc. (a nonprofit organization) as of June 30, 2012, and the related statements of activities, functional expenses, and cash flows for the year then ended. These financial statements are the responsibility of the organization s management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Exchange Club/Holland J. Stephens Center for the Prevention of Child Abuse, Inc. as of June 30, 2012, and the changes in its net assets and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, I have also issued my report dated March 6, 2013 on my consideration of the organization s internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of my testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in conjunction with this report in considering the results of my audit. My audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying Schedule of Expenditures of Federal and State Awards is presented for purposes of additional analysis. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. Such information is the responsibility of management and derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. March 6, 2013 Cookeville, Tennessee Tamara L. Beckman, CPA
EXCHANGE CLUB/HOLLAND J. STEPHENS CENTER FOR THE PREVENTION OF CHILD ABUSE, INC. STATEMENT OF FINANCIAL POSITION JUNE 30, 2012 ASSETS Current Assets Cash and Cash equivalents $ 50,987.54 Investments 8,209.66 Accounts Receivable 41,152.56 Prepaid Expenses 4,306.93 Total Current Assets $ 104,656.69 Fixed Assets Furiture & Fixtures 3,967.01 Office Equipment 31,970.86 Building & Improvements 240,989.87 Less: Accumulated Depreciation (54,892.80) Total Fixed Assets 222,034.94 Total Assets $ 326,691.63 LIABILITIES AND NET ASSETS Current Liabilities Accounts Payable $ 2,844.37 Payroll Tax Liabilities 513.47 Line of Credit 112.88 Compensated Absences Payable 9,317.51 Accrued Interest 6,570.12 Current Portion of Long Term Debt 1,817.88 Total Current Liabilities $ 21,176.23 Long-term Debt USDA Rural Development Loan 162,434.12 Total Liabilities 183,610.35 Net Assets Unrestricted Net Assets 143,081.28 Total Liabilities and Net Assets $ 326,691.63 The notes are an integral part of the financial statements. 3
EXCHANGE CLUB/HOLLAND J. STEPHENS CENTER FOR THE PREVENTION OF CHILD ABUSE, INC. STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2012 Unrestricted Net Assets Support State and Federal Grants $ 374,800.00 Contributions 53,577.06 In-Kind Contributions 160.00 Interest Income 220.75 Fundraising 16,983.51 Total Unrestricted Support $ 445,741.32 EXPENSES: Program Services: 282,033.33 Support Services: General and Administrative 137,985.19 Fundraising 5,221.24 Total Support Services 143,206.43 Total Unrestricted Expenses 425,239.76 Total Increase in Unrestricted Net Assets Before Other Income (Expense) 20,501.56 Loss on Investments (312.25) Interest Expense (6,570.12) Total Other Income (Expense) (6,882.37) Total Increase in Unrestricted Net Assets 13,619.19 Net assets, beginning of year 129,462.09 Net assets, end of year $ 143,081.28 The notes are an integral part of the financial statements. 4
EXCHANGE CLUB/HOLLAND J. STEPHENS CENTER FOR THE PREVENTION OF CHILD ABUSE, INC. STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2012 Program Services Friends Total General For Healthy Program and Fund Total Families Start Services Administrative Raising Expenses Audit $ - $ - $ - $ 2,000.00 $ - $ 2,000.00 Depreciation Expense 2,643.89 5,884.29 8,528.18 3,731.32-12,259.50 Dues/Subscriptions 121.15 1,107.35 1,228.50 571.50-1,800.00 Employee Wages 64,157.91 124,573.62 188,731.53 105,535.62-294,267.15 FF & E 761.61 2,146.49 2,908.10 1,024.83-3,932.93 Fundraising - - - - 5,221.24 5,221.24 Health Ins. - Benefits 4,091.16 11,037.15 15,128.31 7,051.93-22,180.24 In-Kind 18.60 141.40 160.00 - - 160.00 Insurance/Bonding 1,311.93 2,930.58 4,242.51 1,805.30-6,047.81 Investment Fees - - - 65.31-65.31 Meals 261.96 207.07 469.03 532.11-1,001.14 Office Bldg Maint. 114.34 254.50 368.84 158.07-526.91 Office Supplies 408.50 933.70 1,342.20 598.55-1,940.75 Other 314.05 300.54 614.59 232.37-846.96 Payroll Taxes 5,364.48 10,423.66 15,788.14 8,585.66-24,373.80 Postage 228.05 312.66 540.71 195.19-735.90 Rent - 1,200.00 1,200.00 - - 1,200.00 Subcontract - 11,889.00 11,889.00 - - 11,889.00 Telephone 1,160.04 2,509.78 3,669.82 1,013.21-4,683.03 Training 320.01 9.60 329.61 184.88-514.49 Travel 8,065.91 14,672.13 22,738.04 3,775.25-26,513.29 Utilities 652.32 1,503.90 2,156.22 924.09-3,080.31 Total $ 89,995.91 $ 192,037.42 $ 282,033.33 $ 137,985.19 $ 5,221.24 $ 425,239.76 The notes are an integral part of the financial statements. 5
EXCHANGE CLUB/HOLLAND J. STEPHENS CENTER FOR THE PREVENTION OF CHILD ABUSE, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2012 Cash Flows From Operating Activities Cash Received for Support $ 438,559.77 Cash Paid to/for Employees for Services (344,223.88) Cash Paid for Goods and Services (71,585.49) Total Cash Flows from Operating Activities $ 22,750.40 Cash Flows From Investing Activities Transfer from Investments 332.73 Purchase of Fixed Assets (689.40) Total Cash Flows from Investing Activities (356.67) Cash Flows from Financing Activities Proceeds from Loan & Line of Credit 25,000.00 Interest Paid (6,640.00) Principal Paid (27,248.00) Total Cash Flows from Financing Activities (8,888.00) Cash at Beginning of Year 37,481.81 Cash at End of Year $ 50,987.54 Reconciliation of Net Assets to Net Cash Provided by Operating Activities Increase in Net Assets $ 13,619.19 Changes In Operating Net Income Add: Depreciation Expense 12,259.50 Add: Loss on Investments 312.25 Add: Interest Expense 6,570.12 Increase in Accounts Receivable (6,960.80) Increase in Prepaid Expense (167.64) Increase in Accounts Payable 520.47 Decrease in Payroll Tax Payable (16.24) Decrease in Comp. absences payable (3,386.45) $ 22,750.40 The notes are an integral part of the financial statements. 6
EXCHANGE CLUB/HOLLAND J. STEPHENS CENTER FOR THE PREVENTION OF CHILD ABUSE, INC. NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities: The organization is a non-profit agency administering child abuse prevention programs in a several County area. The programs are funded largely through grants from the State Department of Health, the Department of Children s Services and by contributions from individuals, civic groups and others. Basis of Accounting: The agency uses the accrual basis of accounting, recognizing revenue when it becomes due to the agency and expenses when incurred. In-Kind Revenue: In-Kind revenues are contributions of donated non-cash assets. These are recorded at their fair values in the period received. 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 value in the period received. For the year ending June 30, 2012, there were no such donated services. Other donated services are received from unpaid volunteers. No amounts have been recognized in the statement of activities for these services because the criterion for recognition under SFAS No. 116 has not been satisfied. Property and Depreciation: Disbursements for property and equipment with a per-unit cost in excess of $500 are capitalized and reflected in the balance sheet at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires the use of management s estimates. Accordingly, actual results could vary from these estimates. 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 activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with an initial maturity of three months or less. Fair value approximates carrying amounts. 7
NOTES TO THE FINANCIAL STATEMENT JUNE 30, 2012 PAGE TWO Refundable Advances: The organization records grant\contract revenue as a refundable advance until it is expended for the purpose of the grant\contract, at which time it is recognized as revenue. There were no refundable advances at June 30, 2012. Financial Statements Presentation and Contributions: In 1997 the organization adopted Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. Under SFAS No. 117, the organization is required to report 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. Donor restricted contributions whose restrictions are not in the same reporting period are reported as unrestricted support. In addition, the organization is required to present a statement of cash flows. As permitted by SFAS No. 117, the organization has discontinued its use of fund accounting and has, accordingly, reclassified its financial statements to present classes of net assets. The organization also adopted SFAS No. 116, Accounting for Contributions received and Contributions made in 1997. In accordance with SFAS No. 116, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. 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 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 assets are reclassified to unrestricted net assets. NOTE 2 TAX STATUS The agency is exempt from income tax under Section 501(c) (3) of the U.S. Internal Revenue Code and, accordingly, no provision for income tax is included in the accompanying financial statements. The Organization s forms 990, Return of Organizations Exempt from Income Tax for the years ending June 30, 2010, 2011, and 2012 are subject to examination by the IRS, generally for three years after they were filed. NOTE 3 BUDGET All grant programs operate under a budget approved by the board of directors. The budget is properly amended as required with board approval and action. 8
NOTES TO THE FINANCIAL STATEMENT JUNE 30, 2012 PAGE THREE NOTE 4 INSURANCE The agency maintains adequate insurance coverage on the various assets and those facilities, which it used on a contributory basis. NOTE 5 FIXED ASSETS AND DEPRECIATION A summary of fixed assets at June 30, 2012, follows: Balance Balance Fixed Assets June 30, 2011 Acquisitions Dispositions June 30, 2012 Buildings & Improve $240,989.87 $ -- $ -- $240,989.87 Furniture & Fixtures 3,967.01 -- -- 3,967.01 Office Equipment 31,281.46 689.40 -- 31,970.86 Total $276,238.34 $ 689.40 $ -- $276,927.74 Balance Current Year Balance Accum Depreciation June 30, 2011 Depreciation Dispositions June 30, 2012 Buildings & Improve $ 7,899.49 $ 11,648.99 $ -- $ 19,548.48 Furniture & Fixtures 3,967.01 -- -- 3,967.01 Office Equipment 30,766.80 610.51 -- 31,377.31 Total $ 42,633.30 $ 12,259.50 $ -- $ 54,892.80 NOTE 6 CASH DEPOSITS The carrying amount of the agency s deposits with financial institutions was $50,887.54. The agency s deposits are fully insured by FDIC insurance coverage. There is $100.00 in Petty Cash. NOTE 7 RISK MANAGEMENT The organization is exposed to various risks of loss to torts; theft of damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The organization purchases commercial insurance for all claims and for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. NOTE 8 INVESTMENTS Investments as of June 30, 2012 are summarized as follows: Carrying Cost Fair Value Value $ 8,854.64 $ 8,209.66 $ 8,209.66 Fair value is market price at June 30, 2012. The accumulated investment loss as of June 30, 2012 was $644.98 and the current year investment loss was $312.25 and is classified as unrestricted. 9
NOTES TO THE FINANCIAL STATEMENT JUNE 30, 2012 PAGE FOUR NOTE 9 NOTES PAYABLE On July 8, 2011, an office building was purchased and a note payable was acquired through USDA Rural Development in the amount of $166,000.00. The interest rate on the note is 4.00% and will mature July 7, 2051. Payments to maturity are as follows: Year Ending June 30, Principal Interest Total 2013 $ 1,817.88 $ 6,570.12 $ 8,388.00 2014 1,890.64 6,497.36 8,388.00 2015 1,966.26 6,421.74 8,388.00 2016 2,044.91 6,343.09 8,388.00 2017 2,126.71 6,261.29 8,388.00 2018-2022 11,979.70 29,960.30 41,940.00 2023-2027 14,575.13 27,364.87 41,940.00 2028-2032 17,732.87 24,207.13 41,940.00 2033-2037 21,574.74 20,365.26 41,940.00 2038-2042 26,248.97 15,691.03 41,940.00 2043-2047 31,935.89 10,004.11 41,940.00 2048-2051 30,358.30 3,089.28 33,447.58 $164,252.00 $162,775.58 $327,027.58 The Organization also has a line of credit established with a local bank. It has an interest rate of 5.00%. Changes to Notes Payable/Line of Credit are as follows: Balance New Note Balance 06/30/11 Notes Payments 06/30/12 Line of Credit $ 612.88 $25,000.00 $25,500.00 $ 112.88 Notes Payable 166,000.00 -- 1,748.00 164,252.00 $166,612.88 $25,000.00 $27,248.00 $164,364.88 NOTE 10 FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing the various programs and activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. NOTE 11 COMPENSATED ABSENCES Employees earn sick and annual leave based upon years of service. Sick leave accumulates but does not vest. Annual leave accumulates and vests with the related liability being included in current liabilities. Total accrued annual leave at June 30, 2012 was $9,317.51. NOTE 12 SUBSEQUENT EVENTS The Organization has evaluated subsequent events through March 12, 2013, the date in which the financial statements were available to be issued. 10
EXCHANGE CLUB/HOLLAND J. STEPHENS CENTER FOR THE PREVENTION OF CHILD ABUSE, INC. SCHEDULE OF EXPENDITURES OF FEDERAL & STATE AWARDS FOR THE YEAR ENDED JUNE 30, 2012 Federal State Cash/ Cash/ Grantor/ State or (Accrued) (Accrued) Pass-through Federal Pass-through or Deferred Receipts or or Deferred Grant or CFDA Grantor's Revenue Revenue Disbursements/ Revenue Program Title Number Number at July 1, 2011 Recognized Expenditures at June 30, 2012 Healthy Start 93.556 GR-11-25274-00 $ (13,644.53) $ 284,997.69 $ 290,000.00 $ (18,646.84) Total Federal Grants $ (13,644.53) $ 284,997.69 $ 290,000.00 $ (18,646.84) Tennessee Department of Children's Services: Child Abuse Prevention N/A GR-08-21355-00 (20,547.23) 48,041.51 50,000.00 (22,505.72) Total State Grants $ (20,547.23) $ 48,041.51 $ 50,000.00 $ (22,505.72) Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance summarizes the expenditures of Exchange Club/Holland J. Stephens Center, Inc. under programs of the federal and state governments for the year ended June 30, 2012. The schedule is presented using the accrual basis of accounting. 11
TAMARA L. BECKMAN CERTIFIED PUBLIC ACCOUNTANTS 6 SOUTH MADISON AVENUE COOKEVILLE, TN 38501 OFFICE (931) 526-5489 FAX (931) 526-9064 AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Exchange Club/Holland J. Stephens Center for the Prevention of Child Abuse, Inc. I have audited the financial statements of the Exchange Club/Holland J. Stephens Center for the Prevention of Child Abuse, Inc. as of and for the year ended June 30, 2012, and have issued my report thereon date March 6, 2013. I conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting Management is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing my audit, I considered Exchange Club/Holland J. Stephens Center for the Prevention of Child Abuse, Inc. s internal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressing my opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization s internal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of the Organization s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned function, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis.
My consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses, as defined above. I did not identify any deficiencies in internal control over financial reporting that I consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Exchange Club/Holland J. Stephens Center for the Prevention of Child Abuse, Inc. s financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended for the information of the audit committee, management, the Tennessee State Comptroller s Office and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. March 6, 2013 Cookeville, Tennessee Tamara L. Beckman, CPA