FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT HABITAT FOR HUMANITY OF WESTCHESTER, INC. June 30, 2013

Transcription

1 FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT HABITAT FOR HUMANITY OF WESTCHESTER, INC.

2 CONTENTS Page Report of Independent Certified Public Accountant 3 Financial Statements Statement of Financial Position 4 Statement of Activities 5 Statement of Functional Expenses 6 Statement of Cash Flows 7 Notes to Financial Statements 8-13

3 Accounting and Managerial Services C E R T I F E D P U B L I C A C C 0 U N T A N T REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNT ANT Board of Directors Habitat for Humanity of Westchester, Inc. We have audited the accompanying statement of financial position ofhabitat for Humanity of Westchester, Inc. (a nonprofit Organization) as of, and the related statements of activities, functional expenses and cash flows for the year then ended. These fmancial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Organization's 2012 financial statements and, in our report dated February 01, 2013, we expressed an unqualified opinion on those financial statements. We conducted our audit 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Habitat for Humanity of Westchester, Inc. as of, and the changes in net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. ethpage, NY November 06, N Wantagh Ave Bethpage, NY f n1 Ave Astoria, NY f wramos@wrcpa.net

4 STATEMENT OF FINANCIAL POSITION ASSETS Assets Cash and cash equivalents $ $ 130,809 Non-Interest bearing mortgage loans 2,116,422 1,994,246 Discount on non-interest bearing mortgage loans (1,040,799) (981,977) Construction in progress Homes 2,932,589 3,069,492 Inventory - 57,347 Accounts receivable 36, ,941 Note receivable 4,478 - Unconditional promises to give 24,269 33,750 Property and equipment, net of accumulated depreciation 723, ,475 Prepaid expenses 35,497 27,606 Security deposits 20,300 12,808 Other receivables 32,680 44,123 Total assets $5,083,096 $5,286,620 LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 268,597 $380,031 Line of credit - Bank of America - 15,000 Loans payable 929, ,806 Totals liabilities 1,197,612 1,373,837 Net Assets Net assets - Unrestricted 3,885,484 3,912,783 Total liabilities and net assets $5,083,096 $5,286,620 The accompanying notes are an integral part of these statements -4-

5 STATEMENT OF ACTIVITIES For the year ending Unrestricted Restricted Total Total Revenues Contributions Religious 33,575 - $ 33,575 38,073 Individuals 424, , ,535 Hurricane relief 831, ,229 - Corporations 274, , ,312 Schools 38,097-38,097 17,978 Foundations 290, , ,675 Fraternal 4,550-4,550 3,280 Agencies 31,218-31,218 40,354 Banks 148, , ,890 In Kind 1,426-1,426 37,000 Other 13,354-13,354 20,392 Total contributions 2,091,115 2,091,115 1,579,489 Transfers to homeowners 250, ,000 - Fund raising events 55,060-55,060 85,301 Mortgage discount amortization 78,412-78,412 91, , , ,424 Other revenue and (loss) Interest and dividend income Rental income - 22,950 22,950 19,200 Restore 39,925-39,925 33,843 Other revenue (loss) 60,690-60,690 9,182 Total other income 123,841 22, ,841 62,414 TOTAL REVENUES AND OTHER SUPPORT 2,575,478 22,950 2,598,428 1,818,327 Expenses Program expenses 2,192,995-2,192, ,270 Management and general 415, , ,344 Fund raising expenses 17,110-17,110 19,880 TOTAL EXPENSES 2,625,727-2,625,727 1,361,494 Change in net assets (4,349) 22,950 (27,299) 456,833 Transfers between funds (22,950) (22,950) NET ASSETS- BEGINNING OF YEAR 3,912,783-3,912,783 3,455,950 NET ASSETS- END OF YEAR $ 3,885,484 $3,885,484 3,912,783 The accompanying notes are an integral part of these statements -5-

6 STATEMENT OF FUNCTIONAL EXPENSES For the year ending Program Management Fund Raising Expenses and General Expenses Total Total Operating expenses Cost of homes transferred 569, ,574 - Payroll and related expenses 413, , , ,812 Travel expenses 40,763 31,179-71,942 62,928 Interest - 31,771-31,771 29,971 Telephone 9,127 5,229-14,356 14,897 Insurance 33,883 8,471-42,354 38,852 Advertising ,880 Utilities 6,295 8,397-14,692 13,177 Occupancy Costs 27, ,657 - Fund raising cost ,465 13,465 19,306 Office expenses 3,970 58,850-62,820 93,125 Professional fees 9,316 27,954-37,270 47,390 Postage and shipping 5,247 3,579 3,609 12,435 13,666 Printing and publications 32,326 4, ,480 58,179 Depreciation - 31,139-31,139 28,689 Bank charges 291 8,252-8,543 15,798 Mortgage discount 137, ,234 - Other program expenses 11,103 12,868-23, ,856 Hurricane relief 805, ,895 - Brush with Kindness 54, ,681 70,497 Food for Volunteers 11, ,282 13,771 Tithe to Habitat for Humanity International 20, ,750 27,700 Total operating expenses $2,192,995 $ 415,622 $ 17,110 $2,625,727 $1,361,494 The accompanying notes are an integral part of these statements -6-

7 STATEMENT OF CASH FLOWS For the year ending Cash flows from operating activities: Change in net assets (27,299) 456,833 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities Depreciation 31,139 28,689 Change in operating assets and liabilities: Non-Interest bearing mortgage loans (122,176) 168,959 Inventory 57,347 (45,059) Accounts receivable 129,576) (5,465) Security deposit (7,492) 1,144 Note receivable (4,478) 49,314 Unconditional promises to give 33,750 (28,750) Prepaid expenses (7,891) (1,002) Construction in progress 136,903 (934,285) Other receivables 11,444 (38,328) Accounts payable and accrued expenses (111,434) 132,789 Discount on non-interest bearing mortgage loans (58,822) (91,123) Line of credit (15,000) (20,000) Loan payables (49,791) 337,537 Net cash provided by operating activities 89,150 11,253 Cash flows from investing activities Acquisition of Vehicles (21,600) (25,783) Acquisition of Trailers (1,000) - Acquisition of Building - (5,700) Net cash used by investing activities (22,600) (31,483) NET INCREASE IN CASH AND CASH EQUIVALENTS 66,550 (20,230) Cash and cash equivalents Beginning of year 130, ,039 End of year $ 197,359 $ 130,809 The accompanying notes are an integral part of these statements -7-

8 NOTES TO FINANCIAL STATEMENTS NOTE 1 NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. Organization Habitat for Humanity of Westchester, Inc. ( Habitat ) is a not-for-profit organization under Internal Revenue Code section 501 (c)(3) whose purpose is to develop housing for the benefit of and in cooperation with persons of low to moderate income in Westchester County, New York and then to sell the houses to such persons with no mortgage interest and no profit so as to achieve the long-term goal of eliminating poverty housing and homelessness in partnership with all people as co-workers. Income Tax Status The Organization is exempt from federal income tax under Section 501 (c)(3) of the Internal Revenue Code. Statements of Cash Flows For purposes of the statements of cash flows, Habitat considers all highly liquid debt instruments with a maturity of three months or less to be cash equivalents. Support and Revenue All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for the future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. When a temporary restriction expires, assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donated Services Donated services that have met SFAS 116 and 117 requirements have been included in the financial statement. Transfers to Homeowners Transfers to homeowners are recorded at the gross mortgage amount plus down payment received. Noninterest bearing mortgages have been discounted based upon prevailing market rates for low income housing at the inception of the mortgages. Utilizing a straight-line basis, this discount will be recognized as interest income over the term of the mortgage. Reclassification Certain prior year amounts have been reclassified to conform to the current year presentation for comparative purposes. These reclassifications have not had any impact on net income. -8-

9 NOTES TO FINANCIAL STATEMENTS NOTE 1 - NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) Home Construction Costs Costs incurred in conjunction with home construction are capitalized until title transfers to the purchaser. Following is a summary of home building activity: Homes Cost Homes under construction, January 1 9 $ 3,069,492 Additional costs incurred on beginning inventory 266,839 New homes started during the year 1 118,241 Homes transferred during the year 1 (569,574) Homes under construction, June 30 9 $ 2,932,693 As homes are completed and ownership is transferred, the total cost accumulated on the balance sheet under the Construction in Progress account is expensed to the Statement of Activities Program expenses under Cost of Homes Transferred. The total cost of homes transferred at is $569,574. Use of 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 in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the day of the financial statements and reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Financial Statement Presentation and Contributions In 1996 Habitat for Humanity of Westchester, Inc. adopted Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. Under SFAS No. 117, Habitat for Humanity of Westchester, Inc. is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. In addition, Habitat for Humanity of Westchester, Inc. is required to present a statement of cash flows. As permitted by FSAS No. 117, Habitat for Humanity of Westchester, Inc. has discontinued its use of fund accounting and has, accordingly, reclassified its financial statements to present classes of net assets. Habitat for Humanity of Westchester, Inc. also adopted SFAS No. 116, Accounting for Contributions Received and Contributions Made in In accordance with FSAS No. 116, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. -9-

10 NOTES TO FINANCIAL STATEMENTS NOTE 2 - NON-INTEREST BEARING MORTGAGE LOANS Mortgage receivables consist of thirty 20 year mortgages collateralized by the related property. The monthly payment does not include interest. The mortgages have been discounted using the prevailing market rate for low income housing at the inception of the mortgage. Utilizing a straight-line basis, this discount will be recognized as interest income over the term of the mortgages. Habitat for Humanity of Westchester, Inc. retains the right of first refusal if the mortgagor wishes to sell the property. When the property is sold the mortgagor retains an amount equal to: a) during the first eight years, the total of all mortgage payments made, and b) thereafter the amount of all mortgage payments multiplied by a cost-ofliving increase. The cost of living increase is calculated as: the consumer price index in effect for the month proceeding the month in which the repurchase is closed divided by the consumer price index in effect when the homeowner issued the mortgage. In 2010, management decided to use the services of, 'AmeriNational Community Services', to help manage and collect with its mortgage receivables. NOTE 3 - UNCONDITIONAL PROMISES TO GIVE This represents money pledged to the organization but not received as of. NOTE 4 - HABITAT FOR HUMANITY INTERNATIONAL Habitat annually remits a portion of its contributions (excluding in-kind contributions) to Habitat for Humanity International. These funds are used to construct homes in economically depressed areas around the world. The amounts transferred as of were $20,750 NOTE 5 - LOANS PAYABLE Maryknoll Fathers and Brothers During 1999, Catholic Foreign Mission Society of America Inc. a/k/a/ Maryknoll Fathers and Brothers lent $50,000 to Habitat. The Loan is a non interest bearing and is for 20 years. Monthly payments of $ commenced June 1, 1999 and will be paid until May 1, 2019, unless sooner paid. It is the understanding of both parties that Habitat for Humanity will make a sincere effort to repay this loan as soon as possible not withstanding the maturity dates of the note. The balance due at was $1,500. City of Yonkers Habitat entered into a loan agreement with the city of Yonkers where as the proceeds of the construction loan shall be used solely for the acquisition, construction and related miscellaneous cost associated with property located West of Riverdale Avenue in Yonkers for development of affordable housing. The balance due at was $200,000. Currently, there is no repayment term or maturity date associated with this loan. -10-

11 NOTES TO FINANCIAL STATEMENTS NOTE 5 - LOANS PAYABLE (cont.) Habitat for Humanity International, Inc Habitat entered into an accelerated asset recovery program whereas Habitat for Humanity International gave a 7 year note in the amount of $269,600 at 5.500% interest with mortgage receivables pledged as collateral. Loan proceeds will be used to fund program expenses. Balance due at was $237,925. Toyota Financial Habitat entered into a purchase agreement with DCH TOYOTA CITY for the purchase of a 2010 Toyota Highlander HYBD. Balances due at were $15,021. Pepino Capital LLC Habitat purchased the building where it maintains its executive offices at 524 Main Street New Rochelle, NY. Total mortgage payable to Pepino Capital LLC is in the amount of $390,000 with monthly payments at 4% per annum in the amount of $2,363. The balance due at was $349,069. Total interest expense related to the mortgage at is $13,827. SUMMARY OF LONG TERM DEBT 2013 Mortgage Payable Pepino Capital LLC $ 349,069 Loan Payable Donor 125,500 Loan Payable Maryknoll Father and Brothers 1,500 Note payable Toyota Financial 15,021 Loan Payable City of Yonkers 200,000 Loan Payable Accelerated asset recovery program 237,925 Total Loans payable $ 929,

12 NOTES TO FINANCIAL STATEMENTS NOTE 6 - RENTAL INCOME Rental income is collected on homes that are completed, but not transferred, and occupied by the intended purchaser. As the purchaser completes the purchase of the home, rental income collected from the respective purchaser is fully applied to the initial down payment in the form of a stipend. Stipends applied to the initial down payment are shown as a separate line item under program expenses. Total rental activity as of Rental income Amount Natalya Johnson $ 9,600 Irene Ondo 9,600 Joseph Gonzalez 1,250 Macarthur Wade 1,250 Sherlon Quarles 1,250 Late charges - Total $22,950 NOTE 7 LINES OF CREDIT AND FINANCING ARRANGEMENTS Habitat for Humanity has a line of credit with Customers Bank in the amount of $500,000 Balances due at was $0. NOTE 8 DONATED GOODS AND SERVICES Habitat records, as both, support and expenses, the value of donated goods and services received in support of its program. These in-kind contributions primarily include donated plumbing supplies and construction raw materials and miscellaneous supplies used in construction. The total value of donated goods and services for the years ended totaled $307,426 of which $306,000 is classified under Hurricane relief. -12-

13 NOTES TO FINANCIAL STATEMENTS NOTE 9 PURCHASE OF BUILDING On September 29, 2010, Habitat entered into a contract to purchase the building where its executive offices are located at 524 Main Street New Rochelle, NY at a total cost of $674,397 with a mortgage on the building for $390,000 payable to PEPINO CAPITAL LLC. Monthly payments are $2, Note will be payable at a rate of 4% annum for 20 years. Future principal payments are as follows: Years ending December 31, Amount , , , , ,530 Thereafter 270,197 $ 349,