Adding up. Consolidated Financial Statements and Report of Independent Certified Public Accountants and Single Audit Reports

Transcription

1 Adding up Consolidated Financial Statements and Report of Independent Certified Public Accountants and Single Audit Reports YMCA OF THE USA May 2013

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3 Contents Page Report of Independent Certified Public Accountants 4 Consolidated Financial Statements Statements of financial position 7 Statements of activities 8 Statements of cash flows 10 Statements of functional expenses 11 Notes to consolidated financial statements 13 Supplementary Information Consolidating statement of financial position 36 Consolidating statement of activities 37 Single Audit Reports Schedule of expenditures of federal awards 39 Notes to schedule of expenditures of federal awards 40 Report of Independent Certified Public Accountants 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 42 Report of Independent Certified Public Accountants on Compliance for Each Major Federal Program and on Internal Control Over Compliance 44 Schedule of findings and questioned costs 47

4 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors National Council of Young Men s Christian Associations Grant Thornton LLP 175 W Jackson Boulevard, 20th Floor Chicago, IL T F GrantThornton.com linkd.in/grantthorntonus twitter.com/grantthorntonus Report on the financial statements We have audited the accompanying consolidated financial statements of the National Council of Young Men s Christian Associations of the United States of America and Affiliates (Y-USA), which comprise the consolidated statements of financial position as of December 31, 2012 and 2011, and the related consolidated statements of activities, cash flows and functional expenses for the years 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 consolidated 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 consolidated 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 consolidated financial statements based on our audits. We conducted our audits 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the Grant Thornton LLP U.S. member firm of Grant Thornton International Ltd

5 assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to Y-USA s preparation and fair presentation of the consolidated 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 Y-USA 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the National Council of Young Men s Christian Associations as of December 31, 2012 and 2011, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Supplementary Information Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating information as of and for the year ended December 31, 2012, on pages 36 and 37 and the schedule of expenditures of federal awards, as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the consolidated financial statements. Such supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures. These additional procedures include comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with the auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. Grant Thornton LLP U.S. member firm of Grant Thornton International Ltd

6 Other reporting required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 13, 2013, on our consideration of Y-USA s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Y-USA s internal control over financial reporting and compliance. Chicago, Illinois May 13, 2013 Grant Thornton LLP U.S. member firm of Grant Thornton International Ltd

7 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31, ASSETS ASSETS Cash and cash equivalents $ 18,381 $ 20,969 Prepaid expenses and other assets 2,124 1,126 Accounts receivable, net 23,977 22,377 Related-party accounts receivable, net Investments 77,558 72,108 Land held for sale, net - 10,905 Land, building and equipment, net 9,448 9,844 Jerusalem property development 10,977 10,747 Beneficial interests in perpetual trusts 7,697 7,157 TOTAL ASSETS $ 150,344 $ 155,385 LIABILITIES AND NET ASSETS LIABILITIES Accounts payable and accrued liabilities $ 16,528 $ 18,700 Deferred revenue 1,991 1,712 Notes payable ,803 Deferred lease payments 10,405 10,642 Total liabilities 29,092 41,857 NET ASSETS Unrestricted Undesignated 11,672 11,618 Board-designated 45,917 45,016 Total unrestricted 57,589 56,634 Temporarily restricted 41,448 35,626 Permanently restricted 22,215 21,268 Total net assets 121, ,528 TOTAL LIABILITIES AND NET ASSETS $ 150,344 $ 155,385 The accompanying notes are an integral part of these statements. 7

8 CONSOLIDATED STATEMENT OF ACTIVITIES For the year ended December 31, 2012 Temporarily Permanently Unrestricted restricted restricted Total Revenues and support Contributions and support Government and other grants $ 5,093 $ 19,714 $ - $ 24,807 Corporate and foundation gifts - 3,209-3,209 General Jerusalem International YMCA World Service campaign - 1,153-1,153 Total contributions and support 5,456 24, ,214 Financial support from member YMCAs 52, ,496 Program and service revenue 5, ,969 Jerusalem International YMCA program revenue 4, ,878 Royalties and other revenue 2, ,387 Interest and dividends 1, ,336 Net assets released from restrictions 21,904 (21,904) - - Total revenues and support 94,128 2, ,280 Expenses Program activities Social responsibility 38, ,777 Youth development 26, ,029 Healthy living 21, ,413 Total program activities 86, ,219 Supporting services Management and general 10, ,681 Fund-raising 2, ,181 Total supporting services 12, ,862 Total expenses 99, ,081 Change in net assets from operations (4,953) 2, (1,801) Non-operating activities Net realized and unrealized gains on investments 5,908 3,077-8,985 Change in beneficial interests in perpetual trusts Total non-operating activities 5,908 3, ,525 CHANGE IN NET ASSETS 955 5, ,724 Net assets at beginning of year 56,634 35,626 21, ,528 Net assets at end of year $ 57,589 $ 41,448 $ 22,215 $ 121,252 The accompanying notes are an integral part of this statement. 8

9 CONSOLIDATED STATEMENT OF ACTIVITIES For the year ended December 31, 2011 Temporarily Permanently Unrestricted restricted restricted Total Revenues and support Contributions and support Government and other grants $ 4,344 $ 21,170 $ - $ 25,514 Corporate and foundation gifts 92 21,047-21,139 General ,013 Jerusalem International YMCA World Service campaign - 1,673-1,673 Total contributions and support 5,223 44, ,705 Financial support from member YMCAs 56, ,324 Program and service revenue 5, ,049 Jerusalem International YMCA program revenue 4, ,801 Royalties and other revenue 1,106-1,106 Interest and dividends ,178 Net assets released from restrictions 41,149 (41,149) - - Total revenues and support 114,586 3, ,163 Expenses Program activities Consulting and other services to local associations 36, ,633 Awards and grants to associations 29, ,959 Jerusalem International YMCA 6, ,825 Activate America 2, ,520 Movement advancement and national positioning 20, ,855 Public policy and government relations 1, ,997 International movement strengthening 1, ,285 Innovation activities 2, ,450 Total program activities 102, ,524 Supporting services Management and general 9, ,453 Fund-raising 2, ,200 Total supporting services 11, ,653 Total expenses 114, ,177 Changes in net assets from operations 409 3, ,986 Non-operating activities Net realized and unrealized losses on investments (1,458) (905) - (2,363) Change in beneficial interests in perpetual trusts - - (534) (534) Total non-operating activities (1,458) (905) (534) (2,897) CHANGE IN NET ASSETS (1,049) 2,195 (57) 1,089 Net assets at beginning of year 57,683 33,431 21, ,439 Net assets at end of year $ 56,634 $ 35,626 $ 21,268 $ 113,528 The accompanying notes are an integral part of this statement. 9

10 CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, Cash flows from operating activities Change in net assets $ 7,724 $ 1,089 Adjustments to reconcile change in net assets to net cash used in operating activities Depreciation and amortization 1,558 1,385 Net realized and unrealized (gains) losses on investments (8,985) 2,363 Change in beneficial interests in perpetual trusts (540) 534 Permanently restricted contributions (407) (477) Changes in operating assets and liabilities Accounts payable and accrued liabilities (2,172) (5,342) Accounts receivable (1,600) (5,037) Deferred revenue and lease payments Prepaid expenses and other assets (998) (75) Net cash used in operating activities (5,378) (4,755) Cash flows from investing activities Disposal of land held for sale 10,905 - Jerusalem property development (1,371) (1,119) Jerusalem property development - arbitration award 1,141 1,528 Acquisitions of land, building and equipment, net (1,163) (596) Sales of investments 3,913 2,937 Purchases of investments (407) (477) Net cash provided by investing activities 13,018 2,273 Cash flows from financing activities Permanently restricted contributions Payments on notes payable (10,635) (4,272) Net cash used in financing activities (10,228) (3,795) NET DECREASE IN CASH AND CASH EQUIVALENTS (2,588) (6,277) Cash and cash equivalents at beginning of year 20,969 27,246 Cash and cash equivalents at end of year $ 18,381 $ 20,969 Supplemental disclosure of cash flow information Cash paid for interest $ 204 $ 62 The accompanying notes are an integral part of these statements. 10

11 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES For the year ended December 31, 2012 Program activities Supporting services Social Youth Healthy Management responsibility development living Total and general Fund-raising Total Total Personnel costs $ 16,051 $ 11,468 $ 9,968 $ 37,487 $ 5,999 $ 1,780 $ 7,779 $ 45,266 Awards and grants to associations 9,282 5,198 3,780 18, ,260 Purchased, contract or donated services 4,855 4,012 2,699 11,566 1,864-1,864 13,430 Conferences and meetings 1, , ,211 Printing, publications and promotions 1, , ,511 Occupancy 1, , ,447 Business-related travel costs 1,610 1,200 1,184 3, ,649 Supplies ,077 Equipment - expendable or rented ,224 Volunteer costs , ,226 Business insurance Provisions Telecommunications Depreciation and amortization , ,558 Postage and shipping Financing costs Miscellaneous ,001 Total functional expenses $ 38,777 $ 26,029 $ 21,413 $ 86,219 $ 10,681 $ 2,181 $ 12,862 $ 99,081 The accompanying notes are an integral part of this statement. 11

12 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES For the year ended December 31, 2011 Program services Supporting services Consulting and other Movement Public services Awards and Jerusalem advancement policy and International to local grants to International Activate and national government movement Innovation Management associations associations YMCA America positioning relations strengthening activities Total and general Fund-raising Total Total Personnel costs $ 21,107 $ 3,921 $ 3,728 $ 1,221 $ 2,712 $ 1,309 $ 751 $ 1,538 $ 36,287 $ 5,719 $ 1,771 $ 7,490 $ 43,777 Awards and grants to associations , , ,767 Purchased, contract or donated services 5,344 1, ,865 1,482-1,482 11,347 Business-related travel costs 2, , ,494 Printing, publications and promotions , , ,675 Occupancy 1, , ,140 Conferences and meetings 1,289 1, , ,005 Supplies , ,236 Equipment - expendable or rented , ,944 Volunteer costs , ,289 Business insurance Provisions Telecommunications , ,074 Depreciation and amortization , ,385 Postage and shipping Organizational dues Financing costs Miscellaneous Total functional expenses $ 36,633 $ 29,959 $ 6,825 $ 2,520 $ 20,855 $ 1,997 $ 1,285 $ 2,450 $ 102,524 $ 9,453 $ 2,200 $ 11,653 $ 114,177 The accompanying notes are an integral part of this statement. 12

13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2012 and 2011 NOTE A - DESCRIPTION OF ORGANIZATION The National Council of Young Men s Christian Associations of the United States of America and Affiliates and Jerusalem International YMCA (JIY) (collectively, Y-USA or the Organizations) is an Illinois not-for-profit organization with headquarters in Chicago, Illinois. As the national resource office for the nation s 2,700 YMCAs, Y-USA s basic objective is to build the capacity of YMCAs to advance our cause of strengthening community through youth development, healthy living and social responsibility. Youth development aims to nurture the potential of every child and teen through programs such as childcare, education and leadership, swim and camp. Healthy living programs aim to improve the nation s health and well-being through programs that focus on family time, well-being and fitness, sports and recreation. Social responsibility incorporates giving back and providing support to our neighbors with programs that include social services, global services, volunteerism and advocacy. Y-USA s funding comes from various sources, the most significant being from YMCA associations throughout the United States. These associations are autonomous corporations, separately incorporated in their respective states, have independent boards and issue separate, individual financial statements, which are not included in the accompanying consolidated financial statements. Y-USA is governed by its Board of Directors (the National Board). Objectives, purposes, powers and functions of Y-USA are performed, carried out and made effective by the National Board. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting and include the accounts of Y-USA and its subsidiary, JIY. Interorganization balances and transactions have been eliminated in consolidation. JIY is registered in Israel as a not-for-profit in accordance with the Association s Law (1980). The Investment Committee has the responsibility of overseeing and protecting the endowment assets. Certain endowments and gifts contain restrictions that specify the use of income and/or principal. All distributions from the endowment fund continue to be made in accordance with the original donor restrictions and board designations and are accounted for in accordance with accounting principles generally accepted in the United States of America, adherence to Illinois law and the Uniform Prudent Management of Institutional Funds Act (UPMIFA). All disbursements are made for the express purpose of furthering YMCA work throughout the world. These consolidated financial statements include the accounts and transactions of Y-USA and JIY. 13

14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 2012 and 2011 For the year ended December 31, 2012, Y-USA has changed the presentation of its functional expenses. This change enables Y-USA to report its functional expenses that are aligned with Y-USA s strategic plan by each of the areas of focus. Accordingly, the functional expenses have been presented in the three categories for social responsibility, youth development and healthy living. Net Assets Net assets have been recorded and reported as changes in unrestricted, temporarily restricted or permanently restricted net assets. Unrestricted - Unrestricted net assets consist of resources that are available for use in carrying out the mission of the Organizations and include those expendable resources that have been designated for special use by the National Board. Temporarily restricted - Temporarily restricted net assets represent those amounts that are donor restricted with respect to purpose or time. When a donor restriction expires, that is, when a stipulated time restriction ends or the purpose of a restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statement of activities as net assets released from restrictions. Permanently restricted - Permanently restricted net assets result from contributions with donor restrictions that mandate the original principal be invested in perpetuity. Permanently restricted net assets include beneficial interests in perpetual trusts held by third parties. The majority of the earnings from permanently restricted net assets are available for the general use of the Organizations. Revenues In the absence of donor restrictions, contributions and bequests are considered to be available for unrestricted use. All revenue is recognized in the period when the contribution, pledge or unconditional promise to give is received. Contributed Services A substantial number of unpaid volunteers have made significant contributions of their time in the furtherance of Y-USA s activities. Such services do not meet the criteria for recognition as contributions; therefore, their value is not reflected in the accompanying consolidated financial statements. Contributed services are reported as contributions if such services create or enhance nonfinancial assets or if they would have been purchased if not provided by contribution, require specialized skills, and are provided by individuals possessing such specialized skills. Contributed services are recognized at their estimated fair values at date of receipt with an equal and offsetting amount in unrestricted functional expenses in the consolidated statements of activities, resulting in no net impact on the change in net assets during the year. Contributed services recognized related to consulting work were $400 and $-0- for the years ended December 31, 2012 and 2011, respectively. 14

15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 2012 and 2011 Awards and Grants to Associations These grants represent amounts distributed to member and international YMCAs to assist them in furthering their individual missions. Cash and Cash Equivalents Cash equivalents consist of short-term, highly liquid investments with maturities of three months or less. Investments Publicly traded investments are recorded at fair value determined on the basis of closing market prices or bid quotations. Other investments are recorded at fair value based on Y-USA s unit share of the fair value of the underlying investments. Purchases and sales of investments are recorded on a trade-date basis. Dividend income is recorded on the ex-dividend date. Net realized and unrealized gains and losses are reflected in nonoperating activities. Accounts Receivable Accounts receivable are due from member associations and other entities net of allowances for uncollectible accounts. Y-USA determines its allowance for uncollectible accounts by considering a number of factors, including the length of time receivables are past due, Y-USA s previous collection history, the member association s or entity s current ability to pay its obligation to Y-USA, and the condition of the general economy and the industry as a whole. Y-USA writes off accounts receivable when they become uncollectible, and the payments subsequently received on such receivables are credited to the appropriate allowance for uncollectible accounts. Land, Building and Equipment Land, building, equipment and leasehold improvements are recorded at cost. Depreciation is provided using the straight-line method based on the estimated useful lives of the related assets, ranging from three to thirty years. Amortization on leasehold improvements is provided over the life of the lease. Y-USA s fixed asset capitalization policy is to capitalize long-lived assets with a value greater than $5. Beneficial Interests in Perpetual Trusts Y-USA has beneficial interests in certain perpetual trusts, which are held by third parties. Y-USA recognizes contribution revenue equal to its proportionate share of the fair value of the trust assets upon notification and determination that its right to receive benefits under the agreement is unconditional and irrevocable. Changes in the fair value of Y-USA s interest in the trust assets are reflected as gains or losses in the consolidated statements of activities in the period in which they occur. The distributions are recognized as investment income. 15

16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 2012 and 2011 Concentration of Credit Risk Y-USA has certain financial instruments that subject it to potential credit risk. Those financial instruments consist primarily of cash and cash equivalents. Y-USA maintains its cash balance with financial institutions. At times, these balances may exceed the Federal Deposit Insurance Corporation insured limits. Y-USA has not experienced any loss on these accounts and believes there is no significant exposure of credit risk on cash and cash equivalents. Use of Estimates Management of the Organizations has made certain 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 revenue and expenses during the year. Actual results could differ from those estimates. Income Taxes Y-USA adopted Accounting Standards Codification (ASC) as of January 1, ASC clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return, including issues relating to financial statement recognition and measurement. This section provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not to be sustained if the position were to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. Y-USA is exempt from income tax under Internal Revenue Code (IRC) Section 501(c)(3) and is only subject to tax on income unrelated to its exempt purposes, unless that income is otherwise excluded by the IRC. The tax years ended 2009, 2010, 2011 and 2012 are still open to audit for both federal and state purposes. The adoption of ASC did not have any impact on the Organizations financial statements. Y-USA had no liability for uncertain tax positions as of December 31, 2012 and Fair Value Measurements The Financial Accounting Standards Board (FASB) has issued guidance that defines fair value, establishes a framework for measuring fair value, specifies a fair value hierarchy based on the inputs used to measure fair value, and specifies disclosure requirements for fair value measurements. The guidance also maximizes the use of observable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the transparency of inputs as follows: 16

17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 2012 and 2011 Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the report date. A quoted price for an identical asset or liability in an active market provides the most reliable fair value measurement because it is directly observable to the market. Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the report date, as well as investments measured at net asset value (NAV), or its equivalent, that are redeemable at or near the reporting date. The nature of these securities includes investments for which quoted prices are available but which are traded less frequently and investments that are fair valued using securities, the parameters of which can be directly observed. Level 3 - Assets that lack sufficient pricing observability as of the report date, and investments measured at NAV or its equivalent asset value that are not redeemable at or near the reporting date. These assets are measured using management s best estimate of fair value, where the inputs into the determination of fair value are not observable and require significant management judgment or estimation. Inputs are used in applying the various valuation techniques and broadly refer to assumptions that market participants use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics and other factors. A financial instrument s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes observable requires significant judgment by the Organizations. The Organizations consider observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The categorization of a financial instrument within the fair value hierarchy is based on the pricing transparency of the instrument and does not necessarily correspond to the Organizations perceived risk of that instrument. Investments for which values are based on quoted market prices in active markets, and are therefore classified within Level 1, include mutual funds, common and preferred stock, and short-term money market mutual funds. The Organizations do not adjust the quoted price for such instruments, even in situations where the Organizations hold a large position and a sale could reasonably impact the quoted price. Investments that trade in markets that are not considered to be active, but that are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs, are classified within Level 2. These include certain commingled funds and limited partnerships. As Level 2 investments include positions that are not traded in active markets and/or subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and or/non-transferability, which are generally based on available market information. Also included in Level 2 are investments measured using an NAV per share or its equivalent that may be redeemed at that NAV at the reporting date or in the near term, which is generally considered to be within 90 days. 17

18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 2012 and 2011 Investments classified within Level 3 have significant unobservable inputs as they trade infrequently or not at all. Level 3 instruments include certain limited partnerships and an investment with the Jerusalem Foundation. When observable prices are not available for these investments, the Organizations use one or more valuation techniques (e.g., the market approach, the income approach or the cost approach) for which sufficient and reliable data is available. Also included in Level 3 are investments measured using an NAV per share or its equivalent that will not be redeemed at that NAV at the reporting date or in the near term, or for which redemption at that NAV is uncertain due to lockup periods or other investment restrictions. Y-USA s beneficial interests in perpetual trusts held by others are valued using the fair value of the assets in the trust as a practical expedient, unless facts and circumstances indicate that the fair values of the assets in the trust differ from the fair value of the beneficial interests. Perpetual trusts held by others are classified within Level 3 of the fair value hierarchy. Y-USA adopted new guidance issued by the FASB that clarifies existing disclosures and requires new disclosures about fair value measurements. The requirement that purchases, sales, issuances and settlements be presented gross in the Level 3 reconciliation was adopted in Since this guidance only amends the disclosure requirements, it did not have any impact on Y-USA s financial statements. Transfers between levels are recognized at the end of the accounting period. The transfers out of Level 3 into Level 2 were the result of a notice of intent to redeem shares which requires a 100-day notice. In September 2012, Y-USA exercised its option to redeem 100% of its Class B shares. The fair value of the redemption is $1,581. The carrying value of Y-USA s cash and cash equivalents, invested cash in pending securities, accounts and pledges receivable, accounts payable, accrued liabilities and notes payable approximate their fair values due to their short-term nature. Recently Adopted Accounting Pronouncement In May 2011, the FASB issued Accounting Standards Update (ASU) No , Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and IFRS. ASU No clarifies or changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. Y-USA adopted ASU No as of December 31, 2012, and has included the required disclosures in the footnotes. ASU No had no impact on Y-USA s financial position or results of operations. Prior-Year Revisions Certain amounts previously reported have been revised to conform to the current-year presentation. 18

19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 2012 and 2011 NOTE C - ACCOUNTS RECEIVABLE Accounts receivable consist of the following at December 31: Pledges due in varying amounts through 2014, noninterest-bearing, with interest imputed at 5% $15,824 $15,192 Present value discount (154) (451) Total pledges 15,670 14,741 YMCA dues 6,070 5,961 Other trade receivables 6,328 6,181 Related-party accounts receivable Total accounts receivable 28,250 27,035 Less allowance for doubtful accounts (4,091) (4,506) Accounts receivable, net $24,159 $22,529 Pledges receivable at December 31, 2012 and 2011, are due in future periods as follows: Less than one year $13,677 $10,043 One to five years 2,147 5,149 Total pledges 15,824 15,192 Less Provision for uncollectible accounts (108) (161) Discount to present value (154) (451) Pledges, net $15,562 $14,580 Pledges are restricted for the following purposes: YMCA Activate America initiatives YMCA child care initiatives YMCA family initiatives YMCA work in selected immigrant communities YMCA of the USA strategic plan initiatives 19

20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 2012 and 2011 NOTE D - ALLOWANCE FOR DOUBTFUL ACCOUNTS Changes in Y-USA s allowance for doubtful accounts receivable and financial support are as follows for the years ended December 31: Beginning balance $ 4,506 $4,231 Provision for bad debts Accounts written off (1,095) (255) Total allowance for doubtful accounts $ 4,091 $4,506 NOTE E - INVESTMENTS At December 31, 2012 and 2011, investments comprised the following: Publicly traded Mutual funds $ 9,675 $13,117 Common and preferred stock 40,460 34,212 Short-term money market mutual fund 180 6,870 Total publicly traded 50,315 54,199 Other investments Commingled funds 21,175 7,079 Invested cash in pending security purchases 2,357 7,500 Limited partnership 3,146 2,815 Jerusalem Foundation Total other investments 27,243 17,909 Total investments $77,558 $72,108 20