California Interscholastic Federation Los Angeles City Section (A Nonprofit Organization) Financial Statements June 30, 2014

Transcription

1 California Interscholastic Federation Los Angeles City Section Financial Statements

2 INDEX TO FINANCIAL STATEMENTS Independent Auditors Report... 1 Statement of Financial Position... 3 Statement of Activities... 4 Statement of Cash Flows... 5 Notes to Financial Statements... 6

3 INDEPENDENT AUDITORS REPORT To the Executive Committee of: CIF Los Angeles City Section Los Angeles, CA Report on the Financial Statements We have audited the accompanying statement of financial position of the California Interscholastic Federation Los Angeles City Section ( CIF-LA or the Organization ) as of, and the related statements of activities and cash flows for the year 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. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. 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 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 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the California Interscholastic Federation Los Angeles City Section as of, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. SQUAR, MILNER, PETERSON, MIRANDA & WILLIAMSON, LLP Los Angeles, California October 10, 2014

5 CIF LOS ANGELES CITY SECTION STATEMENT OF FINANCIAL POSITION ASSETS Cash and cash equivalents $ 1,005,579 Accounts receivable 37,053 Prepaid expenses and other assets 10,838 Property and equipment, net of accumulated depreciation of $3,406 14,924 Total assets $ 1,068,394 LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 33,572 Total liabilities 33,572 Commitments and Contingencies (Note 4) Net Assets Unrestricted 1,034,822 Total net assets 1,034,822 Total liabilities and net assets $ 1,068,394 Page 3 The accompanying notes are an integral part of these statements.

6 STATEMENT OF ACTIVITIES For the Year Ended UNRESTRICTED NET ASSETS Revenues Membership dues $ 568,674 Championship events 290,192 Broadcasting and sponsorship revenue 160,533 Contributions 122,597 Other income 48,753 Total Revenues 1,190,749 Expenses Program Services Payroll allocated to program services 279,411 Championship expenses 275,600 Independent contractors 88,400 Distribution of contributions 19,307 Total Program Services Expense 662,718 Supporting Services Payroll allocated to supporting services 106,493 General and operations 81,287 Benefits and insurance 63,141 Other expense 32,139 Total Supporting Services Expense 283,060 Fundraising Services Payroll allocated to fundraising services 52,932 Banquet and events 6,556 Sponsorship and marketing 4,503 Total Fundraising Services Expense 63,991 Total Expenses 1,009,769 NET INCREASE IN UNTRESTRICTED NET ASSETS 180,980 NET ASSETS beginning of year 853,842 NET ASSETS end of year $ 1,034,822 Page 4 The accompanying notes are an integral part of these statements.

7 STATEMENT OF CASH FLOWS For the Year Ended CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets $ 180,980 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation 3,333 Decrease (increase) in operating assets: Accounts receivable 35,033 Prepaid expenses and other assets (10,838) Increase (decrease) in operating liabilities: Accounts payable and accrued expenses 33,572 Deferred revenues (38,410) Net cash provided by operating activities 203,670 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (9,564) Net cash used in investing activities (9,564) Net increase in cash and cash equivalents 194,106 CASH AND CASH EQUIVALENTS beginning of year 811,473 CASH AND CASH EQUIVALENTS end of year $ 1,005,579 Page 5 The accompanying notes are an integral part of these statements.

8 NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION Nature of Activities The California Interscholastic Federation ( CIF ) was founded in Los Angeles as a nonprofit organization in 1914 in order to standardize rules and team structures between schools. The CIF administers athletic competition for high schools across California. Since its inception, the CIF has grown to become the largest youth athletics agency in the nation, serving student-athletes each year who participate in interscholastic athletics in the state of California. The CIF Los Angeles City Section ( CIF-LA or the Organization ) constitutes a Section of the CIF, and as such, conducts its athletic programs in conformance with the general policies of the CIF. CIF-LA may make rules and regulations more stringent than those of the CIF, as long as they are not more liberal or lenient in legislation than permitted by the regulations of the State organization. From 1936 to November 2012, the Los Angeles Unified School District (the District ) implemented operations for CIF-LA. As of November 29, 2012, CIF-LA separated from the District and began to operate as a separate, standalone not-for-profit organization. As part of the separation, the District funded CIF-LA with a contribution of $827,857. $727,857 was contributed during the fiscal year ending June 30, 2013, and $100,000 was contributed during the fiscal year ending, and is included on the statement of activities as contribution revenue for the year then ended. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The financial statements are presented on the accrual basis of accounting following accounting guidance for not-for-profit entities. Cash and Cash Equivalents CIF-LA considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents. Cash is maintained in high quality financial institutions; such cash exceeded federally insured limits at times throughout the year. Page 6

9 NOTES TO FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Accounts Receivable CIF-LA hosts certain championship events and derives certain sponsorship and broadcasting revenues near the end of each fiscal year. As a result of the timing of these events and sponsorship deals, CIF-LA does not always collect the cash in the same fiscal year that the revenue is earned. To properly account for the earned revenue, CIF-LA maintains an accounts receivable balance at the end of each year. Accounts receivable are recorded at the invoiced amount according to the details of the sponsorship contract or the hosted championship event. The Organization did not record allowances for doubtful accounts because all amounts due were deemed fully collectable. Contributed Services CIF-LA receives donated services from a variety of unpaid volunteers assisting the organization in hosting its events. No amounts have been recognized in the accompanying statements of activities because the criteria for recognition of such volunteer efforts have not been met. Property and Equipment The cost of property and equipment is depreciated using the straight-line method over estimated useful lives of three to eight years. Cost of additions and betterments are capitalized; maintenance and repairs are charged to expense when incurred. Depreciation expense for the year ended was $3,333. Revenue Recognition Revenues, principally ticket sales, membership dues, and local sponsorship and cable broadcasting fees, are recorded as revenues for the academic school year to which such proceeds relate on an event-by-event basis. Revenues from sponsorships are recognized in the season that the related services are rendered. CIF administers the regional telecast agreements for the rights to televise games in the CIF-LA area. The amount paid is then allocated and distributed by CIF between CIF-LA and other CIF sections. For the year ended, CIF-LA earned $62,400 for these local television rights. These local television-broadcasting agreements are effective through the academic school year. Page 7

10 NOTES TO FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Concentration of Credit Risk Financial instruments that potentially subject the Organization to significant concentrations of credit risk consist primarily of cash. The Organization places its cash with a well-known financial institution. Funds are in non-interest bearing and interest bearing checking accounts and savings accounts, and are insured by the Federal Deposit Insurance Corporation ( FDIC ). At year end, the Organization maintains cash balances in some bank accounts that exceed the FDIC s insured amount of $250,000. Income Taxes CIF-LA is a nonprofit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. CIF-LA is also classified as an entity that is not a private foundation within the meaning of Section 509(a) and qualifies for deductible contributions as provided in Section 170(b)(1)(A)(vi). Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken and recognize 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 ( IRS ). Management has analyzed the tax positions taken by the Organization, and has concluded as of June 30, 2014, there are no positions taken or expected to be taken that would require recognition of the liability (or asset) or disclosure in the financial statements. The Organization is subject to routine audits for any years open under statute by taxing jurisdictions and could be subject to income or excise taxes if certain issues were found by the IRS that could result in the disqualification of the Organization s tax-exempt status; however, as of, there are no audits for any tax periods in progress. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Functional Expenses The costs of providing the various programs and activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs, primarily payroll costs, have been allocated among the program, supporting, and fundraising services benefited. Page 8

11 NOTES TO FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Net Assets The Organization 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. All net assets were unrestricted as of. Subsequent Events CIF-LA evaluated subsequent events through October 10, 2014, the date that the financial statements were available to be issued. 3. PROPERTY AND EQUIPMENT Property and equipment consist of the following: Computers and equipment $ 11,086 Furniture and fixtures 2,378 Telephones 4,866 Total property and equipment, gross 18,330 Less accumulated depreciation 3,406 $ 14, COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases its current facility under a noncancelable operating lease agreement that expires on June 30, Rent expense for the operating lease for the year ended was $9,337. Such expense is included in general and operations expenses in the accompanying statement of activities. Future lease commitments for operating rent are as follows: Year Ending June, 30: 2015 $ 9, , , ,337 $ 37,630 Page 9