SUMMIT BIBLE COLLEGE AND WORSHIP CENTER (A California NonProfit Organization)

Transcription

1 SUMMIT BIBLE COLLEGE AND WORSHIP CENTER (A California NonProfit Organization) FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Year Ended December 31, 2013 (With Independent Auditor's Report Thereon) Bill R. Walker Certified Public Accountant

2 CONTENTS Page(s) Independent Auditor's Report 1-2 Financial Statements Statement of Financial Position 3 Statement of Activities and Change in Net Assets 4 Statement of Cash Flows 5 Notes to Financial Statements 6-11 Supplementary Schedules Schedule of Functional Expenses 12

3 BILL R. WALKER Certified Public Accountant INDEPENDENT AUDITOR S REPORT To the Board of Directors of Summit Bible College and Worship Center Bakersfield, California I have audited the accompanying financial statements of Summit Bible College and Worship Center (a nonprofit organization) which comprise the statement of financial position as of December 31, 2013, 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 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 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, I 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. 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 Summit Bible College and Worship Center as of December 31, 2013, 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 Spring Grove Lane, Bakersfield, California Tel , Fax , billwalkercpa@gmail.com 1

4 Other Matter My audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses on page 12 is presented for purposes of additional analysis and is 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 audit 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 my opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Bill R. Walker Bill R. Walker Certified Public Accountant Bakersfield, California August 12,

5 FINANCIAL STATEMENTS

6 SUMMIT BIBLE COLLEGE AND WORSHIP CENTER Statement of Financial Position December 31, 2013 ASSETS Current Assets Cash and cash equivalents $ 41,635 Accounts receivable 554,109 Employee advances 150 Total Current Assets 595,894 Property and Equipment, net of accumulated depreciation 26,114 $ 622,008 LIABILITIES AND NET ASSETS Current Liabilities Accrued liabilities $ 466 Total Current Liabilities 466 Net Assets Unrestricted 621, ,542 $ 622,008 See accompanying notes to financial statements 3

7 SUMMIT BIBLE COLLEGE AND WORSHIP CENTER Statement of Activities and Change in Net Assets Year Ended December 31, 2013 Revenue and Support Tuition Bible College $ 554,577 Bookstore sales 30,977 License fees 4,042 Contributions 18,289 Conferences and seminars 9,665 Graduation fees 7,798 Total revenue and support 617,550 Expenses Program 336,561 Management and general expenses 58,325 Fundraising Total expenses 394,886 Change in net assets 222,664 Net assets, beginning of the year 371,379 Prior period adjustment 27,499 Net assets, beginning of the year restated 398,878 Net assets, end of year $ 621,542 See accompanying notes to financial statements 4

8 SUMMIT BIBLE COLLEGE AND WORSHIP CENTER Statement of Cash Flows Year Ended December 31, 2013 Cash flows from operating activities Change in net assets $ 222,664 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 7,653 Changes in operating assets and liabilities: Accounts receivable (195,576) Employee advances (150) Accounts payable (2,444) Accrued liabilities (34,720) Net cash (used) by operating activities (2,573) Cash and cash equivalents at beginning of year 44,208 Cash and cash equivalents at end of year $ 41,635 See accompanying notes to the financial statements 5

9 Summit Bible College and Worship Center Notes to Financial Statements For the Year Ended December 31, 2013 Note 1. Description of the Organization Summit Bible College and Worship Center (Summit) was founded in 1996 and its main goal is to equip new and existing Christian leaders who will in turn measurability affect problem areas in the Kern County community through specific ministries and to: Help ministers everywhere, make positive changes to the most severe and urgent problems in their respective communities. Build biblical centers or ministries for understanding and implementation of godly values in every community throughout the world. Summit has trained over 400 leaders that are serving all over Kern County. In total, the organization has ministers in 95 cities in California, 50 states, and in 10 countries. Summit currently has 1,000 students studying in English and Spanish along with 1,500 students studying online. Summit s alumni have helped drug addicts, the incarcerated, people in crisis, youth groups, church outreach leaders, and much more. Summit has added Spanish classes, which in addition to our core classes, are growing quickly and demanding more class space. Class offerings are expanding each quarter with 20 offered currently. Summit Bible College and Worship Center seeks to help students grow spiritually, intellectually, socially, and professionally. Summit is focused on becoming a transforming place for students, who in turn will help transform the world. General and administrative activities include the functions necessary to provide support the organization s program activities. General and administrative activities include those that provide governance (Board of Directors), oversight, business management, financial recordkeeping, budgeting, legal services, human resource management, and similar activities that ensure an adequate working environment and an equitable employment program. Fundraising activities include publicizing and conducting fundraising campaigns; maintaining donor lists; conducting special fundraising events; and other activities involved in soliciting contributions. 6

10 Note 2.Significant Accounting Policies Summit Bible College and Worship Center Notes to Financial Statements For the Year Ended December 31, 2013 The organization prepares its financial statements in accordance with generally accepted accounting principles promulgated in the United States of America (U.S. GAAP) for Not for Profits. The significant accounting and reporting policies used by the organization are described subsequently to enhance the usefulness and understandability of the financial statements. Budgetary procedures The President of the Organization prepares the budget. The final budget is submitted to the Board of Directors for review at the first meeting of the fiscal year. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities at the date of the financial statements. On an ongoing basis, the organization s management evaluates the estimates and assumptions based upon historical experience and various factors and circumstances. The organization s management believes that the estimates and assumptions are reasonable in the circumstances; however, the actual results could differ from those estimates. Net Assets The financial statements report net assets and changes in net assets in three classes that are based upon the existence or absence of restrictions on use that are placed by its donors as follows: Unrestricted Net Assets Unrestricted net assets are resources available to support operations. The only limits on the use of unrestricted net assets are the broad limits resulting for the nature of the organization, the environment in which it operates, the purposes specified in its corporate documents and its application for exempt status, and any limits resulting from contractual agreements with creditors and others that are entered into in the course of its operations. Temporarily Restricted Net Assets Temporarily restricted net assets are resources that are restricted by a donor for use for a particular purpose or in a particular future period. The organization s unspent contributions are classified in this class if the donor limited their use, as are the unspent appreciation of its donorrestricted endowment funds. When a donor s restriction is satisfied, either by using the resources in the manner specified by the donor or by the passage of time, the expiration of the restriction is reported in the financial statements by reclassifying the net assets from temporarily restricted to unrestricted net assets. Net assets restricted for acquisition of buildings or equipment (or less commonly, the contribution of those assets directly) are reported as temporarily restricted until the specified asset is placed in service by the organization, unless the donor provides more specific directions about the period of its use. The organization had no temporarily restricted assets at year ended December 31,

11 Summit Bible College and Worship Center Notes to Financial Statements For the Year Ended December 31, 2013 Note2. Significant Accounting Policies continued Permanently Restricted Net Assets Permanently restricted net assets are resources whose use by the organization is limited by donorimposed restrictions that neither expire by being used in accordance with a donor s restriction nor by the passage of time. The portion of the organization s donor-restricted endowment funds that must be maintained in perpetuity are classified in this net asset class, as is the organization s beneficial interest in a perpetual charitable trust held by a bank trustee. All revenues and net gains are reported as increases in unrestricted net assets in the statement of activities unless the use of the related resources is subject to temporary or permanent donor restrictions. All expenses and net losses other than losses on endowment investments are reported as decreases in unrestricted net assets. Net losses on endowment investments reduce temporarily restricted net assets to the extent that net gains of the fund from prior years are unspent and classified there; remaining losses are classified as decreases in unrestricted net assets. If an endowment fund has no net gains from prior years, such as when a fund is newly established, net losses are classified as decreases in unrestricted net assts. The organization had no permanently restricted assets at year ended December 31, Cash Equivalents Cash equivalents are short term, interest bearing, highly liquid investments with original maturities of three months or less, unless the investments are held for meeting restrictions of a capital or endowment nature. Accounts Receivable Accounts receivable consist of unsecured non-interest bearing amounts that consist of tuition due from students in the Bible College. Management believes that all outstanding accounts receivable are collectible in full, therefore no allowance for uncollectible receivables has been provided. Vehicles, Furniture, and Equipment Vehicles, furniture, and equipment are reported in the statement of financial position at cost, if purchased, and at fair value at the date of donation, if donated. Equipment is capitalized if it has a cost of $1,000 or more and a useful life when acquired of more than 1 year. Repairs and maintenance that do not significantly increase the useful life of the asset are expensed as incurred. Depreciation is computed using the straight-line method over the useful lives of the assets, as follows: Vehicles 5 years $ 3,115 Furniture and office equipment 5 years 38,306 Less, accumulated depreciation (15,307) $ 26,114 Depreciation expense for the year ended December 31, 2013 was $ 7,653. 8

12 Summit Bible College and Worship Center Notes to Financial Statements For the Year Ended December 31, 2013 Note2. Significant Accounting Policies continued Furniture and office equipment are reviewed for impairment when a significant change in the asset s use or another indicator of possible impairment is present. No impairment losses were recognized in the financial statements in the current period. Accounting for Contributions Contributions, including unconditional promises to give, are recognized when received. All contributions are reported as increases in unrestricted net assets unless use of the contributed assets is specifically restricted by the donor. Amounts received that are restricted by the donor to use in future periods or for specific purposes are reported as increases in either temporarily restricted or permanently restricted net assets, consistent with the nature of the restriction. Unconditional promises with payments due in the future years have an implied restriction to be used in the year the payment is due, and therefore are reported as temporarily restricted until the payment is due unless the contribution is clearly intended to support activities of the current fiscal year or is received with permanent restrictions. Conditional promises, such as matching grants, are not recognized until they become unconditional, that is, until all conditions on which they depend are substantially met. Expense Recognition and Allocation The cost of providing the organization s programs and other activities is summarized on a functional basis in the schedule of functional expenses. Expenses can be identified with a specific program or support service are charged directly to that program or support service. Costs common to multiple functions have been allocated among the various functions benefitted. General and administrative expenses include those costs that are not directly identifiable with any specific program, but which provide for the overall support and direction of the organization. Fundraising costs are expensed as incurred, even though they may result in contributions received in future years. The organization generally does not conduct its fundraising activities in conjunction with its other activities. Income taxes: The Organization is a tax-exempt organization under Section 501(c) (3) of the Internal Revenue Code and Section (d) of the Revenue and Taxation Code of the State of California. Since the Organization is exempt from income tax, no provision is made for current or deferred tax expense. Annual information returns filed with federal and state governments use the same accounting methods as those used for financial reporting. The Organization is no longer subject to Federal or state government tax authorities examinations for the years before 2009 and 2008, respectively. 9

13 Summit Bible College and Worship Center Notes to Financial Statements For the Year Ended December 31, 2013 Note 3. Fair Value Measurements The organization reports its fair value measures using a three level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy, established by GAAP, requires that entities maximize the use of observable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows: Level 1. Quoted prices for identical assets or liabilities in active markets to which the organization has access at the measurement date Level 2. Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; observable inputs other than quoted prices for the asset or liability (for example, interest rates and yield curves); and inputs derived principally from, or corroborated by, observable market data by correlation or by other means. Level 3. Unobservable inputs for the asset or liability. Unobservable inputs should be used to measure the fair value to the extent that observable inputs are not available. When available, the organization measures fair value using level 1 inputs because they generally provide the most reliable evidence of fair value. However, level 1 inputs are not available for many of the assets and liabilities that the organization is required to measure at fair value (for example, unconditional promises to give and in-kind contributions.) The primary uses of fair value measures in the organization s financial statements are initial measurement of noncash gifts, including gifts of investment assets and unconditional promises to give. 10

14 Summit Bible College and Worship Center Notes to Financial Statements For the Year Ended December 31, 2013 Note 4. Concentrations of Risk Amounts held in financial institutions are not in excess of the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation limits. The organization deposits its cash with high quality financial institutions, and management believes the organization is not exposed to significant credit risk on those amounts. The majority of the organization s contributions and tuition income (bible college) are received from individuals and organizations located in Kern County and the greater Bakersfield metropolitan area. As such, the organization s ability to generate resources via contributions and tuition income is dependent upon the economic health of that area. An economic downturn could cause a decrease in contributions and tuition income that coincides with an increase in demand for the organization s services. Note 5. Related-Party Transactions The organization rents its facilities from Dr. Jeff and Joyce Victor who own the facilities housing the Bible College and Worship Center. Total rent paid to the Victors for the use of the facilities for the year ended December 31, 2013 was $25,075. The amount paid to the Victors was at or below market rate for the rental of equivalent facilities in the Kern County market. Dr. Jeff Victor volunteers services rendered to the organization and therefore receives no salary. Note 6. Subsequent Events Subsequent events have been evaluated through August 12, 2014, which is the date the financial statements were available to be issued. Events occurring after that date have not been evaluated to determine whether a change in the financial statements would be required. Note 7. Prior Period Adjustment For the year ended December 31, 2013 an issue was identified which required the adjustment to net unrestricted assets to correct previously issued financial statements. Donated assets with a fair market value totaling $35,153 were recorded in the books and records along with the related accumulated depreciation. The prior period adjustment is reflected as an adjustment in the Statement of Activities and Changes in Net Assets. 11

15 SUPPLEMENTARY INFORMATION

16 SUMMIT BIBLE COLLEGE AND WORSHIP CENTER Schedule of Functional Expenses Year Ended December 31, 2013 Management Program and General Fundraising Total Compensation and related expenses: Compensation $ 155,177 $ 29,558 $ - $ 184,735 Payroll taxes 15,836 3,016-18, ,013 32, ,587 Advertising 10,109 1,926-12,035 Automobile 5,525 1,053-6,578 Books and other merchandise 38, ,921 Depreciation expense 6,429 1,224 7,653 Travel 4,399 4,518 8,917 Seminars 5, ,422 Charitable contributions 6, ,292 Insurance 1, ,637 Meals and entertainment 7,904 1,505 9,409 Office and related expenses 12,458 2,373-14,831 Printing and reproduction 5,482 1,044-6,526 Professional and legal services 25, ,216 Rent and related expenses 27,646 11,269-38,915 Graduation expense 7,947 7, ,548 25, ,299 $ 336,561 $ 58,325 $ $ 394,886 12