FINANCIAL STATEMENTS With Independent Auditors' Report. July 31, 2014 and 2013

Transcription

1 FINANCIAL STATEMENTS With Independent Auditors' Report July 31, 2014 and 2013

2 Table of Contents Independent Auditors' Report 1 Financial Statements Statements of Financial Position 3 Statements of Activities 4 Statements of Cash Flows 5 Notes to Financial Statements 6 Supplemental Information Independent Auditors' Report on Supplemental Information 12 Schedules of Functional Expenses 13 Page

3 INDEPENDENT AUDITORS' REPORT Board of Directors Military Community Youth Ministries Colorado Springs, Colorado We have audited the accompanying financial statements of Military Community Youth Ministries, which comprise the statements of financial position as of July 31, 2014 and 2013, and the related statements of activities and cash flows 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. Those standards require that we plan and perform the audit 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 auditor's judgment, including the assessment of the risks of material 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.

4 Board of Directors Military Community Youth Ministries Colorado Springs, Colorado Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Military Community Youth Ministries, as of July 31, 2014 and 2013, and the changes in its net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Colorado Springs, Colorado September 19,

5 Statements of Financial Position July 31, ASSETS: Cash and cash equivalents $ 1,185,787 $ 855,525 Accounts receivable 368, ,103 Accounts receivable from related organizations - 51,792 Pledges receivable net 105, ,335 Prepaid expenses 5,358 8,918 Furniture and equipment net 14,992 13,397 Total Assets $ 1,680,006 $ 1,452,070 LIABILITIES AND NET ASSETS: Liabilities: Accounts payable and accrued expenses $ 33,780 $ 84,701 Accounts payable to related organizations 388, , , ,051 Net assets: Unrestricted: Operating 906, ,743 Equity in furniture and equipment 14,992 13, , ,140 Temporarily restricted 336, ,879 1,257,374 1,213,019 Total Liabilities and Net Assets $ 1,680,006 $ 1,452,070 See notes to financial statements -3-

6 Statements of Activities Year Ended July 31, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total SUPPORT AND REVENUE: Contributions 971,345 $ 626,760 $ 1,598,105 $ 799,554 $ 584,188 $ 1,383,742 Contract revenue 1,821,575-1,821,575 2,008,279-2,008,279 Camp and service project fees 400, , , ,506 Contributed services and facilities 3,641,655-3,641,655 3,856,061-3,856,061 Miscellaneous 79,714-79,714 60,321-60,321 Total Support and Revenue 6,915, ,760 7,541,956 7,385, ,188 7,969,909 NET ASSETS RELEASED: Administrative assessments 51,250 (51,250) - 39,200 (39,200) - Time restrictions 101,303 (101,303) - 42,176 (42,176) - Purpose restrictions 535,761 (535,761) - 543,410 (543,410) - Total Net Assets Released 688,314 (688,314) - 624,786 (624,786) - EXPENSES: International communities 4,107,385-4,107,385 4,303,197-4,303,197 Continental United States communities 1,628,616-1,628,616 2,010,482-2,010,482 Headquarters 1,761,600-1,761,600 1,799,820-1,799,820 Total Expenses 7,497,601-7,497,601 8,113,499-8,113,499 Change in Net Assets 105,909 (61,554) 44,355 (102,992) (40,598) (143,590) Net Assets, Beginning of Year 815, ,879 1,213, , ,477 1,356,609 Net Assets, End of Year $ 921,049 $ 336,325 $ 1,257,374 $ 815,140 $ 397,879 $ 1,213,019 See notes to financial statements -4-

7 Statements of Cash Flows Year Ended July 31, CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 44,355 $ (143,590) Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 1,406 2,027 Change in operating assets and liabilities: Accounts receivable 51,745 (37,541) Accounts receivable from related organizations 51,792 (51,792) Pledges receivable (3,176) (60,929) Prepaid expenses 3,560 1,889 Accounts payable and accrued expenses (50,921) (35,117) Accounts payable to related organizations 234,502 (58,534) Deferred revenue - (17,915) Net Cash Provided (Used) by Operating Activities 333,263 (401,502) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of furniture and equipment (3,001) - Net Cash Used by Investing Activities (3,001) - Net Change in Cash and Cash Equivalents 330,262 (401,502) Cash and Cash Equivalents, Beginning of Year 855,525 1,257,027 Cash and Cash Equivalents, End of Year $ 1,185,787 $ 855,525 See notes to financial statements -5-

8 Notes to Financial Statements July 31, 2014 and NATURE OF THE ORGANIZATION: Military Community Youth Ministries (MCYM) is a Colorado corporation, exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. MCYM is not a private foundation under Section 509(a) of the Internal Revenue Code. MCYM's primary sources of revenue are contributions, contract revenue, and contributed services. MCYM operates in the United States and overseas and works with military chaplains in providing Christian outreach ministry to junior and senior high school age youth of United States (U.S.) military personnel. As an interdenominational Christian ministry, MCYM provides full time, professional youth ministry staff at approximately 50 military installations worldwide. Funding support comes from individuals, U.S. government service contracts, and private organizations. MCYM is affiliated with other Christian youth-serving ministries which support its mission, notably Youth for Christ, Young Life, and the National Federation of Catholic Youth Ministry. 2. SIGNIFICANT ACCOUNTING POLICIES: MCYM maintains its accounts and prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. 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, disclosures of any contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could differ from the estimates. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader. CASH AND CASH EQUIVALENTS Cash and cash equivalents include checking and money market accounts. These accounts may, at times, exceed federally insured limits. MCYM has not experienced any losses in such accounts, and it believes it is not exposed to any significant credit risk on cash and cash equivalents. In addition, MCYM has accounts that are held in foreign banks, and those accounts had reconciled balances of $507,891 and $499,444 as of July 31, 2014 and 2013, respectively. ACCOUNTS RECEIVABLE Accounts receivable consists of U.S. government contract revenue that has been earned by MCYM but not yet received. Management considers all accounts receivable to be fully collectible; therefore, no allowance for doubtful accounts is considered necessary. Accounts are written off when all methods to collect have been exhausted. Due to the nature of the contracts, interest is not accrued on past due balances. -6-

9 Notes to Financial Statements July 31, 2014 and SIGNIFICANT ACCOUNTING POLICIES, continued: PLEDGES RECEIVABLE NET Pledges receivable are unconditional promises to give and are recognized as assets and support in the period made. All pledges receivable are due within one year. An allowance for uncollectible amounts of $19,898 and $18,474 was recorded as of July 31, 2014 and 2013, respectively. Management's estimate of uncollectible amounts was based upon analysis of historical collections. FURNITURE AND EQUIPMENT NET Furniture and equipment are recorded at cost or, if donated, estimated fair value at the date of receipt. Items with a cost or fair value greater than $1,000 are capitalized. Depreciation is calculated on the straight-line method over an estimated useful life of three to five years. CLASSES OF NET ASSETS The financial statements report amounts separately by class of net assets: Unrestricted net assets include resources that are used to support MCYM's current operations and provide for the long-term needs of MCYM, as well as resources invested in furniture and equipment. Temporarily restricted net assets consist of amounts restricted by donors for programs and pledges receivable. SUPPORT, REVENUE, AND EXPENSES Contributions are recorded when made, which may be when cash or other assets are received or unconditionally promised. Contributed goods are recorded at their estimated fair value. Contributions received are recorded as unrestricted or temporarily restricted support depending on the existence and/or nature of any donor restrictions. All donor-restricted support is reported as an increase in temporarily restricted net assets. When donor restrictions expire, that is, when the purpose restriction is fulfilled or the time restriction expires, the net assets are reclassified from temporarily restricted to unrestricted net assets. Contract revenue includes payments received from contracts for youth work from various military bases throughout Europe, the U.S., and the Pacific Rim. These payments are recognized as revenue when earned. The Not-for-Profit Topic of the FASB ASC requires recording the value of donated services that create or enhance nonfinancial assets or require specialized skills. MCYM records seconded missionary staff services from Young Life and Youth for Christ that meet these requirements. Contributed facilities consist of donated office space and are recorded at the estimated fair market value. Camp and service project fees are collected from participants. Revenue is recognized when the event occurs. -7-

10 Notes to Financial Statements July 31, 2014 and SIGNIFICANT ACCOUNTING POLICIES, continued: UNCERTAIN TAX POSITIONS The financial statement effects of a tax position taken or expected to be taken are recognized in the financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Interest and penalties, if any, are included in expenses in the statements of activities. As of July 31, 2014, MCYM had no uncertain tax positions that qualify for recognition or disclosure in the financial statements. MCYM's Federal Exempt Organization Business Income Tax Returns (Form 990) for the years ended July 31, 2013, 2012, and 2011 are subject to examination by the IRS, generally for three years after they were filed. RECLASSIFICATIONS Certain prior year amounts have been reclassified in order to conform with current year presentation. This reclassification has no significant impact on the financial statements as a whole. 3. FURNITURE AND EQUIPMENT NET: Furniture and equipment net consists of: July 31, Furniture and equipment $ 83,237 $ 80,236 Less accumulated depreciation (68,245) (66,839) $ 14,992 $ 13, TEMPORARILY RESTRICTED NET ASSETS: Temporarily restricted net assets consist of: July 31, START grants $ 139,219 $ 167,929 Campership 91, ,156 Other - 3,459 Time restricted pledges receivable 105, ,335 $ 336,325 $ 397,879-8-

11 Notes to Financial Statements July 31, 2014 and LINE OF CREDIT: During the year ended July 31, 2014, MCYM opened an unsecured line of credit with a related party in the amount of $100,000, with an interest rate of 5%, maturing in September No draws were made on the line of credit during the year ended July 31, During the year ended July 31, 2013, MCYM held a line of credit from a financial institution in the amount of $100,000. The line of credit matured November CONTRIBUTED SERVICES AND FACILITIES: Contributed services and facilities consist of: Year Ended July 31, Support funds sent directly to Young Life and Youth for Christ (see Note 8) $ 3,615,340 $ 3,831,228 Contributed rent 26,315 24,833 $ 3,641,655 $ 3,856, FUNCTIONAL ALLOCATION OF EXPENSES: The costs of providing various program services and supporting activities have been summarized on a functional basis below. Accordingly, certain costs, such as personnel and occupancy, have been allocated among the program services and supporting activities benefited. MCYM's functional expenses are: Year Ended July 31, Program services $ 6,816,982 $ 7,404,324 Supporting activities: General and administrative 557, ,847 Fund-raising 123,465 79,328 $ 7,497,601 $ 8,113,499-9-

12 Notes to Financial Statements July 31, 2014 and RELATED PARTY TRANSACTIONS: Most MCYM staff members are hired through Young Life and Youth for Christ. MCYM also hires staff when Young Life and Youth for Christ are unable to provide staffing. MCYM directly supervises these staff members and also assists them in raising support funds. The support funds raised by these staff members are generally sent by the donor directly to their parent agency and are recognized by MCYM as contribution revenue and personnel expenses. In addition, MCYM forwards contract revenue to staff agencies for the direct salaries and related expenses which are in excess of the support funds raised. Related party transactions consist of: Year Ended July 31, Related party personnel expenses: Support funds raised through: Young Life (approximately 57 and 62 individuals in 2014 and 2013, respectively) $ 2,118,691 $ 2,069,094 Youth for Christ (approximately 38 and 63 individuals in 2014 and 2013, respectively) 1,496,649 1,762,134 3,615,340 3,831,228 Personnel expenses in excess of support raised: Young Life 1,208,622 1,422,622 Youth for Christ 771, ,321 1,979,802 2,386,943 $ 5,595,142 $ 6,218,171 July 31, Accounts receivable: Young Life $ - $ 51,792 Accounts payable: Youth for Christ $ 133,967 $ 67,422 Young Life 254,885 86,928 $ 388,852 $ 154,

13 Notes to Financial Statements July 31, 2014 and LEASE COMMITMENTS: Effective March 2006, MCYM entered into a related party lease agreement with Young Life, which was renewed in February 2014 and expires February Rent expense was $60,893 and $60,123 for the years ended July 31, 2014 and 2013, respectively. MCYM also has one copier lease agreement, which matures in July Rent expense was $2,244 and $2,207 for the years ended July 31, 2014 and 2013, respectively. Future minimum lease payments are: Year Ending July 31, 2015 $ 64, , ,134 $ 164, SUBSEQUENT EVENTS: Subsequent events have been evaluated through the report date, which represents the date the financial statements were available to be issued. Subsequent events after that date have not been evaluated. -11-

14 SUPPLEMENTAL INFORMATION

15 INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION Board of Directors Military Community Youth Ministries Colorado Springs, Colorado We have audited the financial statements of Military Community Youth Ministries as of and for the years ended July 31, 2014 and 2013, and our report thereon dated September 19, 2014, which expresses an unmodified opinion on those financial statements, appears on page 1. Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Colorado Springs, Colorado September 19, 2014

16 Schedules of Functional Expenses Year Ended July 31, 2014 Program General and Fund- Services Administrative Raising Total Personnel $ 5,372,473 $ 364,168 $ 48,000 $ 5,784,641 Camp and service projects 705, ,923 Youth programs 412, ,101 Conferences and meetings 136,587 36,423 9, ,115 Office 68,221 49,329 8, ,772 Occupancy 40,825 45,361 4,536 90,722 Travel 68,487 8,561 8,561 85,609 Fund-raising and special events ,649 36,649 Professional fees - 22, ,101 Insurance - 22,683-22,683 Advertising and promotion 7,789 3,895 8,011 19,695 Information technology 3,592 3,592-7,184 Depreciation ,406 Total Expenses $ 6,816,982 $ 557,154 $ 123,465 $ 7,497,601 Percentage of Total Expenses 91% 7% 2% 100% Year Ended July 31, 2013 Program General and Fund- Services Administrative Raising Total Personnel $ 5,974,283 $ 431,836 $ 12,000 $ 6,418,119 Camp and service projects 737, ,992 Youth programs 400, ,198 Conferences and meetings 116,059 30,949 7, ,745 Office 55,461 62,310 10, ,156 Travel 70,835 8,854 8,854 88,543 Occupancy 38,230 42,478 4,248 84,956 Professional fees - 26,019 4,167 30,186 Fund-raising and special events ,338 23,338 Advertising and promotion 8,766 4,383 8,396 21,545 Insurance - 21,532-21,532 Information technology 1,081 1,081-2,162 Depreciation 1, ,027 Total Expenses $ 7,404,324 $ 629,847 $ 79,328 $ 8,113,499 Percentage of Total Expenses 91% 8% 1% 100% -13-