HARLEM BUSINESS ALLIANCE, INC AUDITED FINANCIAL STATEMENT

Transcription

1 AUDITED FINANCIAL STATEMENT FOR YEAR ENDED DECEMBER 31, 2013 (with Independent Auditor s Report thereon)

2 DECEMBER 31, 2013 TABLE OF CONTENT INDEPENDENT AUDITOR S REPORT 1-2 STATEMENT OF FINANCIAL POSITION 3 STATEMENT OF ACTIVITES AND CHANGE IN NET ASSETS 4 STATEMENT OF CASH FLOW 5 NOTES TO FINANCIAL STATEMENTS 6-8 SUPPLEMENTAL REPORTS I 9 SUPPLEMENTAL REPORT II 10 SUPPLEMENTAL REPORT III 11 STATEMENT OF PROGRAM EXPENSES STATEMENT OF OPERATING EXPENSES 14

3 DABHN Consulting, Inc P.O Box St. Albans, NY Phone: / Fax: INDEPENDENT AUDITOR S REPORT The Board of Directors Harlem Business Alliance 275 Lenox Avenue, 2 nd fl New York, NY I have audited the accompanying financial statements of Harlem Business Alliance, Inc., which comprise the statement of financial position as of December 31, 2013, and the related statements of activities and changes in net assets, and cash flow for the year then ended, and the 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. Auditor s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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, I express 1

4 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harlem Business Alliance, Inc. as of December 31, 2013, and the changes in its net assets and its cash flow for the year then ended in accordance with the accounting principles generally accepted in the United States of America. Donna Nicholson, CPA May 12,

5 STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2013 ASSETS Assets Cash and Cash Equivalent (Note 2) $ 250,759 Accounts Receivable (Note 3) 23,755 Net Loan Receivable (Note 3) 107,500 Property and Equipment (Note 2) 171,144 Accumulated Depreciation (128,622) $ 382,014 42,522 Total Assets $ 424,536 LIABILITIES AND NET ASSETS Liabilities Accrued Liabilities (Note 4) $ 21,094 Other Payables Note 4) Total Liabilities 21,094 Net Assets 403,442 Total Liabilities and Net Assets $ 424,536 See Notes to Financial Statement

6 STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2013 REVENUE Fundraising Events (Note 5) 28,517 Membership Dues 6,000 Sponsorship (Note 5) 4,814 Grants 531,657 Donations 25,733 Interest Income 22 Small Business Support Center (Note 8) 8,566 Inkind Donation 17,000 Total Revenue 622,308 EXPENSES Program Services (Note 7) Financial Literacy 72,927 M/WBE 62,262 UMEZ 137,128 Mother Hale 8,588 Community Economic Development 189,229 Empire State SBS 2,840 Empire State CIP 27,326 Capital One 16,577 West Harlem Development Corp 21,401 Small Business Support Center (Note 8) 22,164 Management and general Salaries, Taxes & Fringe Benefits (Note 6) 35,475 Promotions & Marketing 2,315 Depreciation 16,829 Awards 5,410 Insurance 655 Maintenance 6,449 Office Expense (Note 6) 19,360 Utilities 802 Telephone 1,633 Technology and Web Hosting (Note 6) 4,638 Bank Charges 258 Professional Fees 11,700 Bad Debt Expense 5,225 Total Expense 671,190 Net Asset (deficit) (48,882) Net Assets at Beginning of Year 452,324 Net Assets at End of Year 403,442 See Notes to Financial Statement

7 STATEMENT OF CASH FLOW FOR THE YEAR ENDED DECEMBER 31, 2013 Cash Flows from Operating Activities: Change in Net Assets (48,882) Adjustments to reconcile net assets to net cash provided by operating activities: (1) Decrease in accounts and loan receivable 145,213 Increase in accrued expenses and payables 7,693 Increase in depreciation expense 36,882 Net cash used in operations 140,905 Cash Flows from Investing Activities Property and equipment - Net increase (decrease) in cash 140,905 Cash and cash equivalent -- Beginning of Year 109,854 Cash and cash equivalent -- End of Year $ 250,759 See Notes to Financial Statement

8 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE 1 ORGANIZATION The Harlem Business Alliance, Inc. (the Corporation or HBA ) was founded in 1980 by a group of prominent Harlem business leaders. In 1990 the organization was incorporated under section 402 of the business corporation laws of New York State and is a non-profit organization under section 501(c)(3) of the Internal Revenue Code. The Corporation s purpose is to establish Harlem as an economically selfsustaining community. Over the years HBA has partnered with both public and private organizations to assist existing and emerging businesses in the community. The Corporation continues its mission through ongoing advocacy for the preservation and retention of Harlem s small businesses. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Basis of Accounting The accrual method of accounting is used to recognize revenue and expenses. Revenue is recorded when earned and expenses are recorded when incurred. b. Statement of Cash Flows Cash and cash equivalent includes monies in checking, saving and money market accounts. c. Property & Equipment Property and equipment are depreciated over the life of the asset. Leasehold improvements are depreciated over the life of the initial lease agreement. d. Income Taxes The Corporation is exempt from income taxes under section 501 (c)(3) of the Internal Revenue Code. The Corporation is required to file an annual information return, Form 990, and can incur penalties if such report is not filed in a timely manner. e. Funding Grants and other funds that are earmarked for special purposes are accounted for separately. Otherwise, funding is used by the organization to pursue its mission in the Harlem community. 6

9 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE 3 RECEIVABLES a. Loan Receivable In 1998, HBA was awarded a grant from the Upper Manhattan Empowerment Zone. A part of that grant ($125,000) was used to create a revolving loan fund to assist businesses in the community with funds to acquire capital assets. As of December 31, 2013, the fund balance was $54,670 (inclusive of interest income). The outstanding loan balance, net of allowance for doubtful accounts of $5,225, as of December 31, 2013, was $40,000. In 2012, HBA was awarded a Federal grant for Community Economic Development. A portion of that grant, approximately $115,000 is to establish a revolving loan program. As of December 31, 2013, $67,500 of loans was disbursed. b. Accounts Receivable Accounts receivable of $23,755 is comprised of uncollected fundraising and program grant monies as of December 31, NOTE 4 ACCRUED EXPENSE Accrued expense is comprised of: Vendor invoices $21,094 NOTE 5 EVENTS Revenue from fundraising and sponsored events is reported net of expenses on the income statement. Schedules I and II appended to the report details the income and expenses associated with those line items. NOTE 6 STATEMENT OF OPERATING EXPENSES For presentation purposes, some expenses on the income statement were compressed. The underlying details of such expenses are presented in separate schedules called statement of operating expenses. NOTE 7 STATEMENT OF PROGRAM EXPENSES Harlem Business Alliance programs are funded by Upper Manhattan Empowerment Zone and various government agencies. The New York City agencies fund programs based on their fiscal year which is July 1 to June 30 of the subsequent year. 7

10 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 For the purpose of this financial statement, revenue and expenses are recorded in the year the contract is signed. Funding is pro-rated over the contract period and requisitioned as expenses are incurred. The Statement of Program Expenses shows how the organization allocated the funds during its fiscal year. NOTE 8 SMALL BUSINESS SUPPORT CENTER In 2012, with the help of construction grants, HBA built a Small Business Support Center (SBSC) to provide back office support to small businesses in the community as well as providing affordable co-working space. Schedule III, details the revenue and expenses associated with the operation of this center. 8

11 SUPPLEMENTAL SCHEDULE I AS OF DECEMBER 31, 2013 EVENT: AWARDS DINNER REVENUE $ 48,494 EXPENDITURES: Consultant $ 2,763 Awards 1,152 Photographer/ Video 350 Administrative Expense 1,597 Decorating 820 Venue 11,268 Journal Production 1,778 Music 250 Total Expenditures 19,977 Net Income $ 28,517 9

12 EVENT: SUMMIT HARLEM BUSINESS ALLIANCE, INC SUPPLEMENTAL SCHEDULE II SPONSORED EVENT AS OF DECEMBER 31, 2013 REVENUE: $ 13,500 EXPENDITURES: Printing & Graphic Design $ 485 Catering 2,450 Venue Rent 3,000 Marketing 465 Photographer 250 Production 1,337 Video 700 Total Expenditures 8,686 Net Revenue $ 4,814 10

13 SUPPLEMENTAL SCHEDULE III SMALL BUSINESS SUPPORT CENTER AS OF DECEMBER 31, 2013 REVENUE 8,566 EXPENDITURES: Repairs 681 Utilities 2,259 Telephone and Internet 4,984 Bank Charges and Fees 1,370 Office Expense 604 Events 415 Rent in Kind 11,000 Maintenance 850 Total Expenditures 22,164 Net Revenue (13,598) 11

14 STATEMENT OF PROGRAM EXPENSES AS OF DECEMBER 31, 2013 Statement 1 - Program Expenses Financial Literacy Program Salaries 38,260 Fringe 1,396 Program Consultant 26,330 Program Materials 71 Rent 3,913 Utilities 545 Insurance 326 Payroll Fees 57 Overhead 631 Communication & Advertising 1,398 72,927 MWBE Program Salaries 30,861 Fringe Benefits 1,175 Program Consultant 26,610 Communication & Advertising 1,192 Rent 1,561 Insurance 105 Utilities 380 Overhead 131 Program Materials and Event ,262 UMEZ Program Salaries 40,421 Fringe 7,216 Program Consultant 73,738 Marketing 2,839 Rent 5,954 Telephone 3,303 Utilities 1,678 Payroll Fees 687 Supplies 1, ,128 12

15 STATEMENT OF PROGRAM EXPENSES AS OF DECEMBER 31, 2013 Statement 1 - Program Expenses (cont d) Mother Hale Salaries 6,133 Program Consultants 2,455 8,588 Community Economic Development Salaries 56,652 Payroll Taxes 1,550 Fringe 6,419 Construction 11,873 Furniture and Equipment 15,730 Loans* 67,500 Insurance 2,436 Marketing 7,800 Technology 11,379 Professional Services 38,382 Telephone and Internet 1,396 Rent 22,000 Supplies 2,615 Travel 917 Bank Charges 612 Misc 211 Utilities 3, ,810 Empire State HCDC/ SBS Consulting 2,840 2,840 Empire State HCDC/CIP Construction 13,192 13,192 13

16 STATEMENT OF PROGRAM EXPENSES AS OF DECEMBER 31, 2013 Statement 1 - Program Expenses (cont d) West Harlem Development Corp (WHDC) Salaries 10,908 Payroll Taxes 852 Fringe 606 Rent and Utilities 750 Consulting 8,285 21,401 Capital One Consulting Fee 14,070 Payroll 2,257 Rent ,577 *Loan appears on this report for information purposes only. It is not included in the totals on the Statement of Operations, because it is on the balance sheet under Loan receivable. 14

17 STATEMENT OF OPERATING EXPENSES FOR YEAR ENDED DECEMBER 31, 2013 STATEMENT 2 - Salaries & Fringe Benefits Salaries 23,471 Payroll Taxes 6,782 Health Insurance 5,103 Workers Compensation and Disability ,475 STATEMENT 3 - Office Expense Postage & Delivery 90 Membership Meetings 730 Office Expense 5,927 Payroll Fees 862 Dues & Subscriptions 695 Travel 585 Permits and Fees 143 Rent - In-Kind Donation 6,000 Rent 4,328 19,360 STATEMENT 4 - Technology and Web Hosting Technology 4,170 Web Hosting 467 4,638 15