LABI 2014 Audited Financial Statements

FINANCIAL STATEMENTS With Independent Auditor’s Report JUNE 30, 2014 and 2013 LATIN AMERICAN BIBLE INSTITUTE 14209 E. Lo...

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FINANCIAL STATEMENTS With Independent Auditor’s Report JUNE 30, 2014 and 2013 LATIN AMERICAN BIBLE INSTITUTE 14209 E. Lomitas Avenue La Puente, California 91746

Todhunter & Associates, Inc. 18818 Teller Ave., Suite 109 Irvine, California 92612

LATIN AMERICAN BIBLE INSTITUTE June 30, 2014 and 2013

TABLE OF CONTENTS Page Number INDEPENDENT AUDITOR’S REPORT

1-2

FINANCIAL STATEMENTS Statements of Financial Position

3

Statements of Activities

4

Statements of Cash Flows

5

Notes to Financial Statements

6-10

SUPPLEMENTAL INFORMATION Schedules of Functional Expenses

11-12

TODHUNTER & ASSOCIATES, INC. AN ACCOUNTANCY CORPORATION INDEPENDENT AUDITOR’S REPORT To the Board of Trustees of Latin American Bible Institute We have audited the accompanying financial statements of Latin American Bible Institute (a nonprofit organization) which comprise the statements of financial position as of June 30, 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. Auditor’s 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Latin American Bible Institute as of June 30, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 18818 TELLER AVE., SUITE 109, IRVINE, CA 92612 TELEPHONE / FACIMILE (714) 328-3213 / 968-1491 – E-MAIL [email protected] MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS (CSCPA)

The Board of Trustees Page 2 Other Matter Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses on page 11 and 12 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 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 our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Todhunter & Associates, Inc. Irvine, California October 23, 2014

18818 TELLER AVE., SUITE 109, IRVINE, CA 92612 TELEPHONE / FACIMILE (714) 328-3213 / 968-1491 – E-MAIL [email protected] MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS (CSCPA)

LATIN AMERICAN BIBLE INSTITUTE STATEMENTS OF FINANCIAL POSITION June 30, 2014 and 2013 2014 ASSETS Cash and cash equivalents Restricted cash Student tuition and fees receivable Prepaid expenses Property and equipment, net

$

Total assets LIABILITIES AND NET ASSETS Liabilities: Accounts payable Accrued liabilities Deposits Total liabilities Net assets: Unrestricted Permanently restricted Total net assets Total liabilities and net assets

304,632 154,093 42,868 2,523 1,693,953

$

224,425 124,093 30,301 1,737 1,716,940

$ 2,198,069

$ 2,097,496

$

$

18,361 3,394 16,230

13,129 15,470

37,985

28,599

2,005,991 154,093

1,944,804 124,093

2,160,084

2,068,897

$ 2,198,069

$ 2,097,496

See Accompanying Notes and Independent Auditor's Report. 3

2013

LATIN AMERICAN BIBLE INSTITUTE STATEMENTS OF ACTIVITIES For the Years Ended June 30, 2014 and 2013

SUPPORT AND REVENUE: Contributions Student tuition and fees Rental income Bookstore Missions Guest services Other income Interest income Net assets released from restrictions: Restrictions satisfied by payments Total support and revenue EXPENSES: Program services: Instruction and student activities Total program services Supporting services: Fundraising General and administrative Total supporting services Total expenses Increase in net assets NET ASSETS, at beginning of year NET ASSETS, at end of year

Temporarily Permanently Unrestricted Restricted Restricted

2014 Total

2013 Total

$

244,153 $ 983,468 63,651 4,975 2,856 16,514 21,105 7,872

201,599 881,449 86,998 8,259 12,833 31,071 14,414 2,366

189,153 $ 983,468 63,651 4,975 2,856 16,514 21,105 7,872

25,000 $ -

(25,000)

25,000

30,000 $ -

-

-

-

1,314,594

-

30,000

1,344,594

1,238,989

970,635

-

-

970,635

965,419

970,635

-

-

970,635

965,419

81,479 201,293

-

-

81,479 201,293

50,396 160,553

282,772

-

-

282,772

210,949

1,253,407

-

-

1,253,407

1,176,368

61,187

-

30,000

91,187

62,621

1,944,804

-

124,093

2,068,897

2,006,276

- $

154,093

$ 2,160,084

$ 2,068,897

$ 2,005,991

$

See Accompanying Notes and Independent Auditor's Report. 4

LATIN AMERICAN BIBLE INSTITUTE STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2014 and 2013 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Increase in net assets Adjustments to reconcile change in net assets to cash provided by operating activities: Depreciation Gifts-in-kind of assets Changes in: Student tuition and fees receivable Prepaid expenses Accounts payable Accrued liabilities Deposits

$

Net cash flows provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Acquistion cost of property and equipment Net cash flows used by investing activities Net increase in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year

$

91,187

$

62,621

30,967 -

29,826 (5,950)

(12,567) (786) 5,232 3,394 760

(30,301) 1,799 9,811 (50) 590

118,187

68,346

(7,980)

(16,047)

(7,980)

(16,047)

110,207

52,299

348,518

296,219

458,725

See Accompanying Notes and Independent Auditor's Report. 5

2013

$

348,518

LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 Note 1 – Nature of Organization Latin American Bible Institute (the Institute) is a Christian not-for-profit educational institution which was established in 1926 and incorporated on January 30, 1989 in the state of California. The Institute’s curriculum focuses on the bilingual and bicultural preparation of men and women who have a calling from God to enter into either full-time ministry, church leadership, or to pursue a higher education degree.

Note 2 - Summary of Significant Accounting Policies The financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. A summary of significant accounting policies are described below to enhance the usefulness of the financial statements to the reader. Basis of Presentation The financial statement presentation follows the recommendations of Financial Accounting Standards Board ASC 958-205, Not-for-Profit Entities – Presentation of Financial Statements. Under this accounting standard, the Institute 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 Concentrations of Credit Risk Financial instruments which potentially subject the Institute to concentrations of credit risk consist principally of cash and cash equivalents. The Institute maintains various bank deposit accounts which, at times, may exceed federally insured limits. Cash and Cash Equivalents Cash and cash equivalents include all moneys held in banks as well as all highly liquid investments with a maturity date of three months or less. Student Tuition and Fees Receivable Student tuition and fees receivable is recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts. The allowance is established based on factors such as historical experience, credit quality and the age of the account balances in determining the appropriate allowance. As of June 30, 2014 and 2013, the total allowance for doubtful accounts was $75,104 and $52,473, respectively.

6

LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 Note 2 - Summary of Significant Accounting Policies (continued) Property and Equipment Property and equipment are stated at cost, and depreciation is provided over the estimated useful lives of the assets on a straight-line basis. Maintenance, repairs, and renewals which neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. The Institute has elected to capitalize all property and equipment expenditures greater than $1,000. Depreciation expense for the years ended June 30, 2014 and 2013 was $30,967 and $29,826, respectively, and is included in program service expenses. The property is located on land owned by the Southern Pacific District of the Assemblies of God (SPDAG). The land which was donated to the Institute has been deeded to SPDAG. The land and building are pledged to support a note payable by SPDAG to a financial institution. Revenue Recognition As required by generally accepted accounting principles, the Institute has adopted Financial Accounting Standards Board ASC 958-605-25, Not-for-Profit Entities – Revenue Recognition, for the years ended June 30, 2014 and 2013. Under this accounting standard, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted net assets depending on the existence and/or nature of any donor restrictions. All donor-restricted net assets are reported as an increase in temporarily restricted or permanently restricted net assets depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or the purpose of the restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Student Tuition Revenue Student tuition revenue is recognized as educational services have been performed throughout the academic year under the proportional performance method. Contributed Products and Services Financial Accounting Standards Board ASC 958-605-25-16, Not-for-Profit Entities – Revenue Recognition – Contributed Services, requires recording the value of donated services that create or enhance non-financial assets or require specialized skills. Volunteers have contributed significant amounts of their time to the activities of the Institute; however, since the above requirements were not met, the value of the contributed services has not been recorded in the financial statements. 7

LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 Note 2 - Summary of Significant Accounting Policies (continued) Income Taxes The Institute is exempt from federal and state income tax under Internal Revenue Code Section 501(c)(3). The Institute is subject to federal and state income tax on unrelated business income as stipulated in Internal Revenue Code Section 511. During the years ended June 30, 2014 and 2013 the Institute had no activities unrelated to its exempt purpose and therefore incurred no tax liability due to unrelated business income. Financial Accounting Standards Board ASC 740-10-25, Income Taxes, prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Institute has evaluated its uncertain tax positions and related income tax contingencies, and does not believe that any material uncertain tax positions exist. The Institute’s government reporting forms are subject to examination by federal taxing authorities for a period of three years from the date they are filed and a period of four years for state taxing authorities. Advertising Expenses The Institute expenses the cost of advertising when incurred. Use of 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 of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from these estimates Functional Allocation of Expenses The cost of providing various programs and other activities has been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited.

8

LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 Note 3 - Property and Equipment A summary of property and equipment follows:

Land and buildings Furniture and equipment Library Vehicles Total property and equipment Accumulated depreciation

2014

2013

$1,239,263 50,623 802,000 10,000

$1,239,263 42,643 802,000 10,000

2,101,886

2,093,906

(407,933)

Net property and equipment

$1,693,953

(376,966) $1,716,940

Note 4 - Operating Lease Agreements Rental Income The Institute leases a portion of its property to other ministries and churches for religious services and special events. The Institute also leases its facilities for student housing. For the years ended June 30, 2014 and 2013, the Institute recognized $63,651 and $86,998, respectively, in rental income. Office Equipment The Institute leases office equipment under agreements classified as operating leases. Rental expense related to these leases for the years ended June 30, 2014 and 2013 was $8,064 and $7,204, respectively. Future minimum payments for office equipment leases are as follows: Year Ended June 30

Amount

2015 2016

$

9

4,200 700

LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2014 and 2013 Note 5 - Net Assets Permanently Restricted Net Assets Permanently restricted net assets consist substantially of donor funds to be held in perpetuity with invested earnings to be used exclusively for the Institute’s scholarship programs.

Note 6 – Subsequent Events The management of the Institute has reviewed the results of operations and evaluated subsequent events for the period of time from its year end June 30, 2014 through October 23, 2014 the date the financial statements were available to be issued, and have determined that no adjustments are necessary to the amounts reported in the accompanying financial statements nor have any subsequent events occurred, the nature of which would require disclosure.

10

SUPPLEMENTAL INFORMATION

LATIN AMERICAN BIBLE INSTITUTE SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2014 Program Services Instruction and Student Activities Advertising and promotion Depreciation Insurance Professional services Office supplies Repairs and maintenance Salaries Payroll taxes Scholarships Program expenses Utilities

Supporting Services Fund General and Raising Administrative

Total

$

30,967 26,240 19,030 31,543 202,743 14,296 303,901 277,604 64,311

$

38,486 1,749 3,494 34,954 2,796 -

$

45,849 6,850 2,114 4,246 130,000 5,553 6,681

$

38,486 30,967 73,838 6,850 24,638 35,789 367,697 22,645 303,901 277,604 70,992

$

970,635

$

81,479

$

201,293

$

1,253,407

See Independent Auditor's Report. 11

LATIN AMERICAN BIBLE INSTITUTE SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2013 Program Services Instruction and Student Activities Advertising and promotion Depreciation Insurance Bookstore Professional services Office supplies Repairs and maintenance Salaries Payroll taxes Scholarships Program expenses Utilities

Supporting Services Fund General and Raising Administrative

Total

$

29,826 23,190 52 19,030 87,031 202,743 13,626 238,120 291,670 60,131

$

32,081 18,090 225 -

$

5,169 6,850 2,114 4,186 130,000 5,553 6,681

$

32,081 29,826 28,359 52 6,850 21,144 91,217 350,833 19,404 238,120 291,670 66,812

$

965,419

$

50,396

$

160,553

$

1,176,368

See Independent Auditor's Report. 12