ASSISTANCE LEAGUE OF THE BAY AREA

Transcription

1 ASSISTANCE LEAGUE OF THE BAY AREA FINANCIAL STATEMENTS Years Ended May 31, 2015 and 2014 with Independent Accountant s Review Report

2 ASSISTANCE LEAGUE OF THE BAY AREA FINANCIAL STATEMENTS Years Ended May 31, 2015 and 2014 Table of Contents Independent Accountant s Review Report... 1 Financial Statements: Statements of Financial Position... 2 Statements of Activities... 3 Statements of Functional Expenses... 5 Statements of Cash Flows... 7 Notes to the Financial Statements... 8

3 Houston Offi ce 3411 Richmond Avenue Suite 500 Houston, Texas Main INDEPENDENT ACCOUNTANTS REVIEW REPORT whitleypenn.com To the Board of Directors Assistance League of the Bay Area Houston, Texas We have reviewed the accompanying financial statements of Assistance League of the Bay Area (the Organization ), which comprise the statements of financial position as of May 31, 2015 and 2014, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management s financial data and making inquiries of the Organization s management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error. Accountant s Responsibility Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion. Accountant s Conclusion Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America. Houston, Texas December 14, 2015 Dallas Fort Worth Houston An Independent Member of

4 STATEMENTS OF FINANCIAL POSITION May 31, Assets Cash and cash equivalents (Note C) $ 612,817 $ 580,695 Accounts receivable 2,691 - Prepaid expenses 4,527 10,369 Inventories, net (Note D) 105, ,248 Other assets (Note E) 2,839 2,839 Property and equipment, net (Note F) 5,625 11,784 Total assets $ 734,330 $ 722,935 Liabilities and Net Assets Liabilities: Accounts payable $ 82 $ 2,990 Accrued expenses 962 1,227 Deferred dues revenue 18,620 19,980 Deferred lease incentive (Note G) - 1,470 Total liabilities 19,664 25,667 Commitments and Contingencies (Note K) Net Assets: Unrestricted: Designated for future operating needs 407, ,960 Undesignated 306, ,308 Total net assets 714, ,268 Total liabilities and net assets $ 734,330 $ 722,935 See accompanying notes to financial statements. 2

5 STATEMENT OF ACTIVITIES Year Ended May 31, 2015 Unrestricted Temporarily Restricted Total Support and revenues Resale shop revenue: Contributions of merchandise $ 150,769 $ - $ 150,769 Sales of donated merchandise 142, ,623 Less: value of merchandise sold (142,623) - (142,623) Net revenue from resale shop 150, ,769 Cookbook revenue 6,231-6,231 Less: cost of goods sold (5,403) - (5,403) Change in inventory obsolescence reserves Net revenue from cookbook sales Special events revenue (Note H) 105, ,934 Less: cost of direct benefits to attendees (27,215) - (27,215) Net revenue from special events 78,719-78,719 Other income: Contributions and grants 17,547 43,277 60,824 Membership 29,197-29,197 Interest income Net assets released from restrictions: Satisfaction-of-purpose restrictions 43,277 (43,277) - Total support and revenues 321, ,273 Expenses Program services: Operation School Bell 149, ,082 Kids U Scholarship Program 7,469-7,469 Communities in Schools 17,413-17,413 Operation Cinderella 22,396-22,396 Other 6,263-6,263 Total program service expenses 202, ,623 Supporting services: Fundraising: Resale shop 65,578-65,578 Cookbooks 2,847-2,847 Management and general 9,736-9,736 Membership development 23,091-23,091 Total supporting services 101, ,252 Total expenses 303, ,875 Change in net assets 17,398-17,398 Net assets, beginning of year 697, ,268 Net assets, end of year $ 714,666 $ - $ 714,666 See accompanying notes to financial statements. 3

6 STATEMENT OF ACTIVITIES Year Ended May 31, 2014 Unrestricted Temporarily Restricted Total Support and revenues Resale shop revenue: Contributions of merchandise $ 115,344 $ - $ 115,344 Sales of donated merchandise 132, ,409 Less: value of merchandise sold (132,409) - (132,409) Net revenue from resale shop 115, ,344 Cookbook revenue 11,912-11,912 Less: cost of goods sold (9,371) - (9,371) Less: inventory obsolescence reserves 8,955-8,955 Net loss from cookbook sales 11,496-11,496 Special events revenue (Note H) 107, ,859 Less: cost of direct benefits to attendees (26,903) - (26,903) Net revenue from special events 80,956-80,956 Other income: Contributions and grants 26,527 22,459 48,986 Membership 28,469-28,469 Interest income Net assets released from restrictions: Satisfaction-of-purpose restrictions 22,459 (22,459) - Total support and revenues 285, ,781 Expenses Program services: Operation School Bell 175, ,346 Kids U Scholarship Program 6,028-6,028 Communities in Schools 10,879-10,879 Operation Cinderella 2,189-2,189 Other 2,555-2,555 Total program service expenses 196, ,997 Supporting services: Fundraising: Resale shop 60,546-60,546 Cookbooks 2,827-2,827 Management and general 16,344-16,344 Membership development 18,127-18,127 Total supporting services 97,844-97,844 Total expenses 294, ,841 Change in net assets (9,060) - (9,060) Net assets, beginning of year 706, ,328 Net assets, end of year $ 697,268 $ - $ 697,268 See accompanying notes to financial statements. 4

7 STATEMENT OF FUNCTIONAL EXPENSES For the year ended May 31, 2015 Program Services Supporting Services Operation School Bell Kids U Scholarship Program Communities in Schools Operation Cinderella Other Total Program Services Resale Shop Cookbooks Management and General Membership Development Total Supporting Services Total Expenses Cleaning, pest control and trash $ 593 $ - $ - $ 122 $ - $ 715 $ 2,903 $ - $ - $ - $ 2,903 $ 3,618 Clothing, shoes and health kits 124, , , ,936 National conference and meetings , ,077 8,077 12,053 Dental services - - 9, , ,170 Depreciation and amortization ,108 4, ,051 6,159 Education, training ,310 1,310 1,310 Eye glasses and eye exams Insurance ,198 4, ,925 6,123 National Assistance League dues ,895 10,895 10,895 Office expense , ,440 1,702 Operating supplies 7,643-6, ,529 3,264-2,073-5,337 19,866 Other expenses 3, ,659 8,761 3,837 2,847 3,920-10,604 19,365 Postage and printing ,809 3,484 3,516 Professional fees 1, ,354 5, ,171 7,525 Public relations, marketing ,629-1,621-3,250 3,652 Rent 5, ,171-6,880 27, ,942 34,822 Repairs and maintenance , ,326 2,915 Scholarships - 6, , ,626 Security Storage , ,311 2,234 Telephone and utilities 1, ,434 5, ,830 7,264 Total expenses per statement of activities $ 149,082 $ 7,469 $ 17,413 $ 22,396 $ 6,263 $ 202,623 $ 65,578 $ 2,847 $ 9,736 $ 23,091 $ 101,252 $ 303,875 See accompanying notes to financial statements. 5

8 STATEMENT OF FUNCTIONAL EXPENSES For the year ended May 31, 2014 Program Services Supporting Services Operation School Bell Kids U Scholarship Program Communities in Schools Operation Cinderella Other Total Program Services Resale Shop Cookbooks Management and General Membership Development Total Supporting Services Total Expenses Cleaning, pest control and trash $ 461 $ - $ - $ 95 $ - $ 556 $ 2,261 $ - $ 279 $ - $ 2,540 $ 3,096 Clothing, shoes and health kits 160, (561) - 160, ,155 National conference and meetings ,056 6,056 6,056 Dental services - - 6, , ,385 Depreciation and amortization ,189 4, ,418 6,607 Education, training ,092 1,092 1,092 Eye glasses and eye exams Insurance 1, ,655 4,688-1,142-5,830 7,485 National Assistance League dues ,853 9,853 9,853 Office expense , ,477 1,894 Operating supplies 1,394-3, ,364 1, ,730 8,094 Other expenses 1, ,555 3,592 3,828 2,544 7,008-13,380 16,972 Postage and printing Professional fees 1, ,260 5, ,740 7,000 Public relations, marketing ,915-1,357-3,272 3,744 Rent 5, ,134-6,673 27,059-3,336-30,395 37,068 Repairs and maintenance Scholarships - 6, , ,028 Security Storage , ,684 2,036 Telephone and utilities 1, ,589 6, ,238 8,827 Total expenses per statement of activities $ 175,346 $ 6,028 $ 10,879 $ 2,189 $ 2,555 $ 196,997 $ 60,546 $ 2,827 $ 16,344 $ 18,127 $ 97,844 $ 294,841 See accompanying notes to financial statements. 6

9 STATEMENTS OF CASH FLOWS Year Ended May 31, Operating Activities: Change in net assets $ 17,398 $ (9,060) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 6,159 6,607 Deferred lease incentive (1,470) (1,667) Change in operating assets and liabilities: Accounts receivable (2,691) - Prepaid expenses 5,842 1,924 Inventories 11,417 46,405 Accounts payable (2,908) (7,006) Accrued expenses (265) 246 Deferred dues revenue (1,360) 2,684 Net cash provided by operating activities 32,122 40,133 Net increase in cash and cash equivalents 32,122 40,133 Cash and cash equivalents at beginning of year 580, ,562 Cash and cash equivalents at end of year $ 612,817 $ 580,695 See accompanying notes to financial statements. 7

10 NOTES TO THE FINANCIAL STATEMENTS May 31, 2015 and 2014 A. NATURE OF ACTIVITIES Assistance League of the Bay Area (the Organization or ALBA ) is a not-for-profit, Texas Corporation and is a chartered chapter of National Assistance League. The accompanying financial statements include the activities of ALBA and its auxiliary, Assisteens. The Organization is organized for the promotion and encouragement of public welfare and philanthropic work in the community. The Organization provides the following programs: Operation School Bell ( OSB ) provides new clothing and shoes to disadvantaged elementary, middle, and high school students in the Clear Creek Independent School District, Dickinson ISD, La Porte ISD, Friendswood ISD, and the Bay Area Charter School System. Kids U Scholarships provides scholarships for summer classes to disadvantaged children. Children attend classes at the University of Houston Clear Lake. Partnership with Communities in Schools-Bay Area Inc. provides a variety of support services to at-risk students such as eye exams and funding for the school. Ready for Work Partnership with United Way Financial Opportunity Center is an ongoing philanthropic program to provide referred clients with job interview clothing from current Resale Shop Inventory. Community Outreach ALBA provides the means to respond with goods or services to community needs on a one-time or short-term basis. Operation Cinderella ALBA provides high school seniors in need with everything necessary, from formal dresses to tuxedo rental, for a positive prom experience. Hands from the Heart ALBA offers senior citizens the warmth of companionship through monthly manicures and social interaction at an area nursing home. Assisteens members include students in the ninth through twelfth grades. The Assisteens is represented on the Board by the Assisteens Coordinator in a voting capacity. As an auxiliary of the Organization, Assisteens participate in the programs of the Organization including Operation Cinderella, Operation School Bell, and holds a 5K Run to raise funds for Operation School Bell. Assisteens provides the following programs: Birthday in a Box provides birthday recognition to elementary school students for students at McWhirter Elementary. Project Snuggle provides a new, cozy blanket to children in residence at Bay Area Turning Point shelter. ALBA s revenues and support come primarily from fundraising efforts, including a spring gala. In addition, ALBA operates a resale shop, run by ALBA volunteers. Financial contributions from the community are also a source of support. 8

11 NOTES TO THE FINANCIAL STATEMENTS (continued) B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the Organization s significant accounting policies consistently applied in the presentation of the accompanying financial statements follows: Basis of Presentation The financial statements have been prepared, and in accordance with accounting principles generally accepted in the United States of America ( GAAP ). Accordingly, these financial statements are prepared on the accrual basis of accounting and present the financial position, results of operations, and cash flows of ALBA. In accordance with Financial Accounting Standards Board Accounting Standards Codification ( FASB ASC ) Topic , net assets, revenue, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of ALBA and changes therein are classified and reported as follows: Unrestricted net assets net assets that are not subject to donor-imposed stipulations. Unrestricted net assets may be designated for specific purposes by action of the Board of Directors. Temporarily restricted net assets net assets subject to donor-imposed stipulations that may or will be met either by the occurrence of a specific event or the passage of time. When a donor temporary restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities and changes in net assets as net assets released from restrictions. Permanently restricted net assets net assets subject to be maintained in perpetuity, due to donor-imposed stipulations, with generally only the income used for general or specific purposes. As of May 31, 2015 and 2014, there were no temporarily or permanently restricted net assets. A portion of the unrestricted net assets were designated by the Board of Directors of ALBA for future operating needs. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 9

12 NOTES TO THE FINANCIAL STATEMENTS (continued) B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Fair Value of Financial Instruments The Organization calculates the fair value of its assets and liabilities that qualify as financial instruments and includes this information in the notes to financial statements when the fair value is different than the carrying value of those financial instruments. The estimated fair value of accounts receivable, prepaid expenses, inventories, accounts payable, and accrued expenses approximate the carrying amounts due to the relatively short maturity of these instruments. Cash and Cash Equivalents Cash and cash equivalents include cash held in checking and money market accounts, time deposits, certificates of deposit, and all highly liquid investments with original maturities of three months or less. The Organization maintains deposits primarily in five financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation ( FDIC ). The Organization has not experienced any losses related to amounts in excess of FDIC limits. Promises to Give Unconditional promises to give are recognized as revenues or gains in the period received and assets, decreases in liabilities, or decrease in expenses, depending on the form of the benefit received. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional. If they are expected to be collected after more than one year, promises to give are discounted to reflect the net present value of amounts receivable in future periods. Allowance for Uncollectible Amounts Promises to give are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts and current economic conditions. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a reduction to promises to give. Based on the information available, management does not believe that an allowance for doubtful accounts is required as of May 31, 2015 and

13 NOTES TO THE FINANCIAL STATEMENTS (continued) B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Inventories ALBA maintains an inventory of new clothing and shoe vouchers for use in its Operation School Bell program, an inventory of new and used clothing and accessories for use in its Operation Cinderella program, an inventory of used clothing and household items donated by chapter members and others for sale in a resale shop operated by ALBA, and an inventory of cookbooks. New clothing and cookbook inventory is stated at the lower of cost or market determined by the first-in, first-out method. ALBA incurs an expense for the shoe vouchers only when they are redeemed and the vendor issues an invoice. Used inventory is stated at its estimated fair value at the date of donation. Property and Equipment Property and equipment are stated at cost or at fair value as of the date of donation, in the case of donated assets. It is ALBA s policy to capitalize and depreciate property and equipment valued at $500 or more. Amounts for repairs and maintenance are recorded and expensed as incurred. ALBA provides for depreciation and amortization of property and equipment by use of the straight-line method over the estimated useful lives as follows: Leasehold improvements Furniture and fixtures Computer equipment 5 to 6 years 3 to 7 years 3 years Contributions of long-lived assets, or of cash or other assets that must be used to acquire long-lived assets, are reported as increases in temporarily restricted net assets. Restrictions are considered met, and an appropriate amount reclassified to unrestricted net assets, over the useful life of the long-lived assets as determined by ALBA s depreciation policy. Membership Dues and Deferred Revenues Membership dues and revenues related to a special event, which are collected prior to the fiscal year to which they apply, are deferred and recognized over the periods to which the dues and revenues relate. Contributions Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence or nature of any donor restrictions. Time-restricted contributions are required to be reported as temporarily restricted support and are then reclassified to unrestricted net assets upon expiration of the time restrictions. 11

14 NOTES TO THE FINANCIAL STATEMENTS (continued) B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Donated Materials and Services Significant materials and services are donated to ALBA by various individuals, corporations, and other organizations. Donated materials and professional services are reflected in the accompanying financial statements at their fair values on the dates of donation. The donated materials consist primarily of used clothing and household items donated for resale at the thrift shop operated by ALBA. In addition, ALBA s functions and programs are primarily conducted by volunteers. The value of this contributed time is not reflected in the accompanying financial statements since the services do not require specialized skills. During the year ended May 31, 2015, these volunteers donated approximately 26,000 hours with an estimated value of $609,156. This value was computed using an estimated hourly rate of $23.26, based upon the average hourly earnings of nonagricultural workers of $20.77 for the time period, as determined by the U.S. Department of Labor s Bureau of Labor Statistics, plus 12% for estimated fringe benefits. During the year ended May 31, 2014, these volunteers donated approximately 25,000 hours with an estimated value of $568,134. This value was computed using an estimated hourly rate of $22.77, based upon the average hourly earnings of nonagricultural workers of $20.33 for the time period, as determined by the U.S. Department of Labor s Bureau of Labor Statistics, plus 12% for estimated fringe benefits. Tax Status and Uncertain Tax Positions ALBA is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code (the Code ), except to the extent it has unrelated business income. Accordingly, no provision for income tax has been made in the accompanying financial statements. In addition, ALBA qualifies for the charitable-contribution deduction under Section 170(b)(1)(A) and has been classified as an organization that is not a private foundation under Section 509(a)(2). Management evaluates tax positions taken by the Organization and recognizes a tax liability (or asset) if the Organization has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. Management has analyzed the tax positions taken by the Organization and has concluded that as of May 31, 2015, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Organization is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Management believes the Organization is no longer subject to income tax examination for years prior to

15 NOTES TO THE FINANCIAL STATEMENTS (continued) B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Functional Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the Statements of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services they benefited based on management s judgment. Advertising and Marketing The Organization expenses all advertising and marketing costs when incurred. Advertising expense for the years ended May 31, 2015 and 2014, was $3,651 and $3,744, respectively. C. CASH AND CASH EQUIVALENTS Cash and cash equivalents as of May 31 consist of the following: Checking accounts: JP Morgan Chase Bank $ 93,786 $ 133,768 JP Morgan Chase Bank (Assisteens) 41,427 43,462 Frost Bank 156,222 83,018 Compass Bank 13,068 13,069 Total checking accounts 304, ,317 Savings accounts: JSC Federal Credit Union: Certificate of Deposit 194, ,731 Compass Bank Money Market 113, ,647 Total savings accounts 308, ,378 Total cash and cash equivalents $ 612,817 $ 580,695 13

16 NOTES TO THE FINANCIAL STATEMENTS (continued) D. INVENTORIES As of May 31, inventories consisted of the following: Operation School Bell new $ 23,500 $ 25,592 Operation Cinderella new and used 20,708 31,950 Resale Shop used 44,340 37,021 Cookbooks new 93,631 99, , ,596 Less: reserve for obsolescence (76,348) (76,348) Total inventories, net $ 105,831 $ 117,248 E. OTHER ASSETS As of May 31, 2015 and 2014, the Organization had $2,839 of deposits classified as other assets on the statements of financial position. F. PROPERTY AND EQUIPMENT As of May 31, property and equipment consisted of the following: Furniture and fixtures $ 6,061 $ 6,061 Computer equipment 6,022 6,022 Leasehold improvements 36,484 36,484 48,567 48,567 Less: accumulated depreciation and amortization (42,942) (36,783) Total property and equipment, net $ 5,625 $ 11,784 Depreciation and amortization expense for each of the years ended May 31, 2015 and 2014, were $6,159 and $6,607, respectively. 14

17 NOTES TO THE FINANCIAL STATEMENTS (continued) G. DEFERRED LEASE INCENTIVE In 2010, ALBA was given a building allowance of $10,000 by their landlord for the resale shop lease located on Nasa Road One, Webster, Texas. The allowance was recorded as a liability (included in deferred revenue in the accompanying statements of financial position) and amortized over the remaining life of the lease including renewal options, as a reduction of rent expense. The balance of the deferred lease incentive is as follows at May 31: Deferred lease incentive $ 10,000 $ 10,000 Less: accumulated amortization (10,000) (8,530) Deferred lease incentive, net $ -0- $ 1,470 H. SPECIAL EVENTS Throughout the year, ALBA organizes various fundraising events, the proceeds from which help to support ALBA s community program services and operations. The revenue and related expenses from the events held during the year ended May 31, 2015, compared with the totals for the year ended May 31, 2014, are as follows: Event Revenue Cost of Direct Benefits to Attendees 2015 Net Revenue 2014 Net Revenue Gala $ 94,427 $ 24,987 $ 69,440 $ 75,909 Seasonal fundraiser 11,507 2,228 9,279 5,047 Total special events $ 105,934 $ 27,215 $ 78,719 $ 80,956 I. BUILDING LEASE ALBA operates its resale shop in a commercial space located in Webster, Texas. The monthly lease is $2,172 through April 30, Future minimum payments under the terms of non-cancelable operating leases consisted of the following at May 31, 2015: 2016 $ 23,892 Thereafter - Total minimum lease payments $ 23,892 15

18 NOTES TO THE FINANCIAL STATEMENTS (continued) I. BUILDING LEASE (continued) Rent expense for the years ended May 31, 2015 and 2014, was $38,272 and $37,068, respectively, and is included in shared expenses on the statements of functional expenses. J. CONCENTRATIONS The Organization operates in Houston, Texas, and, as such, is dependent upon the community s interest in its programs and the willingness and ability of donors in the area to continue supporting the Organization. The ability of the Organization s donors to continue giving amounts comparable with prior years may be dependent, among other things, upon current and future overall economic conditions and the continued deductibility for income tax purposes of donations to the Organization. K. SUBSEQUENT EVENTS In preparing ALBA s financial statements, management has evaluated all subsequent events and transactions for potential recognition or disclosure through December 14, 2015, which is the date the financial statements were available for issuance. 16