IMPACT, ALCOHOL & OTHER DRUG ABUSE SERVICES, INC. Milwaukee, Wisconsin

Transcription

1 IMPACT, ALCOHOL & OTHER DRUG ABUSE SERVICES, INC. Milwaukee, Wisconsin FINANCIAL STATEMENTS Including Independent Auditors' Report

2 TABLE OF CONTENTS Independent Auditors' Report Financial Statements Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 5 Statements of Functional Expenses: For the Year Ended December 31, For the Year Ended December 31, Notes to Financial Statements 8-14

3 BAKER TILLY Baker Tilly Virchow Krause, LLP 777 E W isconsin Ave, 32nd Floor Milwaukee, WI cel4! fax4! bakenilly.com INDEPENDENT AUDITORS' REPORT Board of Directors IMPACT, Alcohol & Other Drug Abuse Services, Inc. Milwaukee, Wisconsin Report on the Financial Statements We have audited the accompanying financial statements of IMPACT, Alcohol & Other Drug Abuse Services, Inc. (the "Organization"), which comprise the statements of financial position as of December 31, 2012 and 2011, and the related 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 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. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America 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 audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of materiai misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the 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 the entity'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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. ~ ani n deptnden t mel!lbero f BAKER TILLY INTERNATIONAL Page 1 An Affirmative Action Equal Opportunity Employer

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Organization as of December 31, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 16, 2013 on our consideration of the Organization'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 the Organization's internal control over financial reporting and compliance.. ~I~ Vut:mJuJ J!AOJLU, Llf Milwaukee, Wisconsin April 16, 2013 Page2

5 STATEMENTS OF FINANCIAL POSITION As of December 31, 2012 and 2011 CURRENT ASSETS Cash and cash equivalents Investments Accounts receivable Grants receivable Pledges receivable Prepaid expenses Total Current Assets PROPERTY AND EQUIPMENT TOTAL ASSETS ASSETS 2012 $ 206, ,472 18, , ,335 10,996 1,284,930 40,399 m 1,325, $ 411, ,209 16,890 54, ,801 15,803 1,233, ,258,942 CURRENT LIABILITIES Accounts payable Accrued liabilities Current portion of capital lease Deferred revenue Total Current Liabilities LIABILITIES AND NET ASSETS $ 55, ,577 2,373 75, ,730 $ 29, ,051 97, ,543 LONG-TERM LIABILITIES Capital lease obligation Total Liabilities , ,543 NET ASSETS Unrestricted Temporarily restricted Total Net Assets TOTAL LIABILITIES AND NET ASSETS 647, ,778 1,012,831 ~ 1,325, , , ,399 ~ 1, See accompanying notes to financial statements. Page3

6 STATEMENTS OF ACTIVITIES For the Years Ended December 31, 2012 and 2011 Temporarily 2012 Temporarily 2011 Unrestricted Restricted Total Unrestricted Restricted Total PUBLIC SUPPORT Government grants $ 1,125,595 $ - $ 1,125,595 $ 1 '154, 199 $ - $ 1,154,199 Contributions 314, , , ,829 United Way 365, , , , , ,605 Special events 4,681-4,681 15,906-15,906 Net assets released from restrictions 348,842 (348,842) - 385,880 (385,880) Total Public Support 2.159, ,094,117 (40,578) 2.053,539 REVENUE Program fees 1,758,783-1,758,783 1,822,365-1,822,365 Investment income 47,903-47,903 29,180-29,180 Other ,394-29,394 Total Revenue 1,807, ,880, Total Public Support and Revenue 3,966,882 16,935 3,983,817 3,975,056 (40,578) EXPENSES Program 3,043,557-3,043,557 3,037,910-3,037,910 Management and general 792, , , ,165 Fundraising 82,860-82,860 88,025-88,025 Total Expenses 3.919,385-3,919,385 3,941, ,100 CHANGE IN NET ASSETS 47,497 16,935 64,432 33,956 (40,578) (6,622) NET ASSETS- Beginning of Year , , ,021 NET ASSETS- END OF YEAR $ $ $ 1,012,831 $ 599,556 $ $ See accompanying notes to financial statements. Page4

7 STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2012 and CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets $ 64,432 $ (6,622) Adjustments to reconcile change in net assets to net cash flows from operating activities Depreciation 10,479 9,216 Gain on sale of investments (27,724) Unrealized (gain) loss on investments (30,001) 14,550 Donated stock (5,127) (4,895) Changes in assets and liabilities Receivables (87,966) 45,265 Pledges receivable (25,534) 36,686 Prepaid expenses 4,807 (10,122) Accounts payable 25,581 (39,335) Accrued liabilities (6,474) (26,007) Deferred revenue (22,293) 12,466 Net Cash Flows from Operating Activities (72,096) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (18,528) Purchase of investments (117,262) (218,521) Proceeds from sale of investments ,558 Net Cash Flows from Investing Activities (130,663) (9,963) CASH FLOWS FROM FINANCING ACTIVITIES Payments on capital lease obligation (1,977) Net Change in Cash and Cash Equivalents (204,736) (6,485) CASH AND CASH EQUIVALENTS- Beginning of Year 411, CASH AND CASH EQUIVALENTS- END OF YEAR ~ 206, ,086 Supplemental cash flow disclosures Equipment purchased through capital iease obligations $ 7,118 $ See accompanying notes to financial statements. Page 5

8 STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended December 31, 2012 Workplace Assessment & Management Services AODA Services Referral Other 211 Total Program Fundralslng and General Total Salaries and wages $ 321,173 $ 567,681 $ 114,406 $ 593,825 $ 1,597,085 $ 49,289 $ 395,979 $ 2,042,353 Employee benefits 122, ,259 34, , ,983 25, , ,822 Payroll taxes expense , , Total Salaries and Related Expenses 475, , , ,881 2,360,381 79, ,841 3,027,535 Professional fees 54,530 31, , ,766 39, ,753 Supplies 1,646 15,000 1,518 6,547 24, ,935 29,766 Telephone 15,779 35,488 1, , , , ,750 Postage and shipping 1,451 1, ,724 8, ,050 10,554 Occupancy 24, ,619 5,906 62, , , ,770 Bank charges and interest 5 14, ,946 1,500 16,446 Rental and maintenance equipment 2,774 27, ,110 44, ,830 52,146 Printing and publications 8,685 1,903 3,274 12,213 26, ,902 31,978 Travel 5,606 5, ,364 18,599 1,992 20,591 Conferences, conventions and meetings 1,188 3, ,203 8,228 9,269 17,497 Special events 1,735 1,735 Memberships and dues ,255 2,005 15,624 17,629 Computer/Internet 11,144 5, ,580 34,916 2,371 54,831 92,118 Other ,591 1,638 Depreciation Total Expenses 602,500 1,142, ,992 1 '124,921 3,043,557 82, ,968 3,919,385 Management and general allocated 155, , ,939 24,622 (790,561) Totals $ I58,202 $ 1,418,691 $ $ 1,405,384 $ 3,809,496 $ $ $ 3, See accompanying notes to financial statements. Page6

9 STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended December 31, 2011 Workplace Assessment & Total Management Services AODA Services Referral Other 211 Program Fundraising and General Total Salaries and wages $ 373,536 $ 592,902 $ 120,314 $ 552,196 $ 1,638,948 $ 52,836 $ 404,776 $ 2,096,560 Employee benefits 126, ,544 50, , ,462 26, , ,173 Payroll taxes expense ,231 Total Salaries and Related Expenses 538, , , ,823 2,452,256 84, ,927 3,134,964 Professional fees 54,430 2,445 4,500 18,085 79, ' ,596 Supplies , ,194 16, ,999 28,148 Telephone 17,133 48,783 1,147 60, , , ,962 Postage and shipping 2,314 2, ,006 8, ,091 12,323 Occupancy 24, ,908 6,786 60, , , ,641 Bank charges and interest 14,987 14,987-1,312 16,299 Rental and maintenance equipment 1,328 15, ,314 27, ,889 38,144 Printing and publications 8,237 3,146 5,670 10,480 27,533 15,092 42,625 Travel 6,632 5,723 2,025 7,550 21, ,475 24,424 Conferences, conventions and meetings 1,310 4, ,483 10, ,667 23,312 Special events 4,507 4,507 Memberships and dues 321 1,478 1,150 2,949 15,398 18,347 Computer/internet 10, ,558 13,018 1,993 29,150 44,161 Other ,727 8,431 Depreciation Total Expenses 666,005 1 '187, , ,553 3,037,910 88, ,165 3,941,100 Management and general allocated , , ,219 (800,537) Totals $ 846,669 $ 1,468,917 $ 260,802 $ 1,235,840 $ 3,812,228 $ 114,244 $ 14,628 $ 3,941,100 See accompanying notes to financial statements. Page?

10 NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies Nature of Activities IMPACT, Alcohol & Other Drug Abuse Services, Inc.'s (the "Organization") mission is "Changing Lives. For Good". By identifying alcohol and other drug abuse and its connection to other life crises, they are able to take a different, practical approach to solving substance abuse. Because the services help people achieve and maintain healthy, productive lives, they measure results not just in dollars saved, but in lives changed. Cash and Cash Equivalents The Organization defines cash and cash equivalents as highly liquid, short-term investments with a maturity at the date of acquisition of three months or less. Cash and cash equivalents held with fund managers are recorded as investments on the statements of financial position. Investments Investments are generally recorded at fair value based upon quoted market prices, when available, or estimates of fair value. Donated assets are recorded at fair value at the date of donation, or, if sold immediately after receipt, at the amount of sales proceeds received (which are considered a fair measure of the value at the date of donation). The Organization records the change of ownership of bonds and stocks on the day a trade is made. Investment income or loss and unrealized gains or losses are included in the statements of activities as increases or decreases in unrestricted net assets unless the income or loss is restricted by donor or law. Receivables The Organization provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Organization's estimate is based on historical collection experience and a review of the current status of receivables. Receivables are presented net of an allowance for doubtful accounts of $0 at December 31, 2012 and Accounts deemed uncollectible are written off against the allowance account. Pledges Receivable Unconditional pledges receivable made to the Organization are recorded in the year the pledge is made. Current pledges receivable are expected to be collected during the next year and are recorded at net realizable value. An allowance for pledges receivable is determined based on experience. Pledges receivable are presented net of an allowance for doubtful accounts of $0 at December 31, 2012 and Page 8

11 NOTES TO FINANCIAL STATEMENTS NOTE 1- Summary of Significant Accounting Policies (continued) Property and Equipment Property and equipment are stated at cost if purchased or fair value at date of the gift if donated. All acquisitions of property and equipment in excess of $5,000 and all expenditures for improvements and betterments that materially prolong the useful lives of assets are capitalized. Maintenance, repairs, and minor improvements are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and resulting gains or losses are included in income. Donated property and equipment are recorded as increases in unrestricted net assets at their estimated fair value as of the date received. Contributions of cash that must be used to acquire property and equipment are reported as temporarily restricted contributions. The Organization reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted net assets at that time. Property and equipment are depreciated using the straight-line method over their estimated useful lives. Deferred Revenue Program service fees applying to services to be rendered in future periods are recorded as deferred revenue when received and reflected as revenue in the year when the program services fees are earned. Support from government agencies received for expenditures in future years is recorded as deferred revenue at year end. Net Assets Net assets, revenues, gains, and losses are classified based on the existence or absence of donorimposed restrictions. Accordingly, net assets of the Organization are classified and reported as follows: Unrestricted Net Assets - Net assets that are not subject to donor-imposed stipulations. Temporarily Restricted Net Assets - Net assets subject to donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Organization pursuant to those stipulations. Tax-Exempt Status The Organization has received notification that it qualifies as a tax-exempt organization under Section 501 (c)(3) of the U.S. Internal Revenue Code and corresponding provisions of State law and, accordingly, is not subject to federal or state income taxes. Page 9

12 NOTES TO FINANCIAL STATEMENTS NOTE 1- Summary of Significant Accounting Policies (continued) Revenue Recognition Contributions, including pledges receivable, are recognized in the period received. Conditional pledges are not recognized until they become unconditional, that is when the conditions on which they depend are substantially met. The Organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. Donor-restricted contributions whose restrictions are met in the same reporting period are reported as unrestricted support. Contributed Expenses The Organization receives, without charge, phone services from 211 Wisconsin. The estimated fair value of the phone usage is $110,066 and $0 for the years ended December 31, 2012 and 2011, respectively, and is recognized in the accompanying financial statements as contributions and telephone expense. Expense Allocation The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Subsequent Events The Organization has evaluated subsequent events through April 16, 2013 which is the date that the financial statements were approved and available to be issued. Page 10

13 NOTES TO FINANCIAL STATEMENTS NOTE 2 - Fair Value of Financial Instruments As defined in authoritative accounting guidance, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Organization uses various valuation methods including the market, income and cost approaches. The assumptions used in the application of these valuation methods are developed from the perspective of market participants pricing the asset or liability. Inputs used in the valuation methods can be either readily observable, market corroborated, or generally unobservable inputs. Whenever possible, the Organization attempts to utilize valuation methods that maximize the use of observable inputs and minimizes the use of unobservable inputs. Based on the observability of the inputs used in the valuation methods the Organization is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities measured, reported and/or disclosed at fair value will be classified and disclosed in one of the following three categories: Level 1 - Quoted market prices in active markets for identical assets or liabilities. Level 2 - Observable market based inputs or unobservable inputs that are corroborated by market data. Level 3 - Unobservable inputs that are not corroborated by market data. The table below presents the balances of assets measured at fair value on a recurring basis by level within the hierarchy at December Total Level1 Level2 Level3 Equity securities $ 323,961 $ 323,961 $ $ Fixed income securities 212, ,511 Total $ $ $ $ 2011 Total Level1 Level2 Level3 Equity securities 239, ,471 Fixed income securities ,738 Total $ 389,209 $ 389,209 $ $ The Organization holds investments in equity and fixed income securities that are publicly traded on various exchanges and are therefore classified as Level 1. Page 11

14 NOTES TO FINANCIAL STATEMENTS NOTE 3 - Investment Income Income from investment securities is summarized as follows: Interest and dividends $ 17,902 $ 16,340 Net realized gains 27,724 Net unrealized gains (losses) 30,001 (14,550) 47,903 29,514 Investment fees (334) Total ~ 47,903 ~ 29,180 NOTE 4 - Property and Equipment The major categories of property and equipment at December 31 are summarized as follows: Depreciable Lives Furniture and fixtures 3-10 yrs. $ 742,067 $ 716,421 Leasehold improvements 3-10 yrs. 156, ,591 Total Property and Equipment 898, ,012 Less: Accumulated depreciation 858, ,780 Net Property and Equipment ~ 40!399 ~ 25,232 NOTE 5 - Line of Credit The Organization has a $75,000 line of credit financing agreement with U.S. Bank. Interest is payable monthly at prime plus 1.25% (4.5% at December 31, 2012). The line of credit is due on demand and is secured by substantially all of the Organization's assets. There were no amounts outstanding on the line of credit at December 31, 2012 and Page 12

15 NOTES TO FINANCIAL STATEMENTS NOTE 6 - Operating Leases The Organization leases facilities and equipment under lease agreements expiring at various dates through September Two leases require lease payments plus pro-rata increases on real estate taxes and operating expenses. Future minimum lease payments as of December 31, 2012 are as follows: 2013 $ 199, , , $ 388,811 Rent expense on the operating leases was $202,805 and $269,649 for the years ended December 31, 2012 and 2011, respectively. NOTE 7 - Capital Lease In 2012, the Organization entered into a capital lease agreement for the use of a telephone system. The lease agreement expires in February The capitalized cost of the leased property at December 31, 2012 was $7,118. Amortization expense on the capital lease is included with depreciation expense. Accumulated amortization was $1,977 as of December 31, The capital lease obligation is secured by the leased equipment. The following is a schedule of future minimum lease payments under capital lease together with the present value of the net minimum lease payments as of December 31: Total Future Minimum Lease Payments Less: Amount representing interest Present Value of Future Minimum Lease Payments Less: Current portion Long-Term Capital Lease Obligation $ $ 2,940 2, , ,141 2, Page 13

16 NOTES TO FINANCIAL STATEMENTS NOTE 8 - Pension Plans The Organization has a defined contribution retirement savings plan covering substantially all eligible employees. The Organization makes a 3% contribution based on employee's salaries in addition to a discretionary contribution to the plan. Pension expense was $128,450 and $134,059 for the years ended December 31, 2012 and 2011, respectively. NOTE 9 - Net Assets Unrestricted net assets at year end are composed of: Board designated reserves $ 40,135 $ 40,135 Knowles fund 163, ,599 Undesignated reserves 443, ,822 Total $ $ 599,556 Temporarily restricted net assets at year end are composed of: Time restrictions $ 365,778 $ 345,302 Purpose restrictions Total ~ 365,778 ~ 348,843 NOTE 10 - Concentrations The Organization received approximately $1,780,000 and $1,320,000 of its funding from two sources during the years ended December 31, 2012 and 2011, respectively. The receivables from these sources amounted to $503,141 and $386,315 at December 31, 2012 and 2011, respectively. NOTE 11 - Commitments and Contingencies Financial Awards from Grantors Financial awards from federal, state and local governments in the form of grants are subject to special audit. Such audits could result in claims against the Organization for disallowed costs or noncompliance with grantor restrictions. No provision has been made for any liabilities that may arise from such audits since the amounts, if any, cannot be determined at this time. Page 14