FINANCIAL STATEMENTS With Independent Auditor’s Report JUNE 30, 2015 and 2014 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, 2015 and 2014
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
6-11
SUPPLEMENTAL INFORMATION Schedule of Functional Expenses
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, 2015 and 2014, 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.
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 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, 2015 and 2014, 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. Other Matter Our audits were 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 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 7, 2015
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, 2015 and 2014 2015 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
64,991 154,093 41,577 2,523 1,764,593
$
304,632 154,093 42,868 2,523 1,693,953
$ 2,027,777
$ 2,198,069
$
$
13,752 14,755
18,361 3,394 16,230
28,507
37,985
1,845,177 154,093
2,005,991 154,093
1,999,270
2,160,084
$ 2,027,777
$ 2,198,069
See Accompanying Notes and Independent Auditor's Report. 3
2014
LATIN AMERICAN BIBLE INSTITUTE STATEMENTS OF ACTIVITIES For the Years Ended June 30, 2015 and 2014
SUPPORT AND REVENUE: Contributions Student tuition and fees Rental income Bookstore Missions Guest services Other income Investment 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 Change in net assets NET ASSETS, at beginning of year NET ASSETS, at end of year
Temporarily Permanently Unrestricted Restricted Restricted
2015 Total
2014 Total
$
225,508 $ 952,829 90,027 2,963 7,583 56,277 7,002 29
242,633 983,468 114,357 4,975 2,856 15,191 22,428 7,775 97
155,508 $ 952,829 90,027 2,963 7,583 56,277 29
77,002
70,000 $ 7,002 -
(77,002)
- $ -
-
-
-
1,342,218
-
-
1,342,218
1,393,780
1,181,019
-
-
1,181,019
1,019,821
1,181,019
-
-
1,181,019
1,019,821
85,136 236,877
-
-
85,136 236,877
81,479 201,293
322,013
-
-
322,013
282,772
1,503,032
-
-
1,503,032
1,302,593
-
-
-
154,093
2,160,084
2,068,897
- $
154,093
$ 1,999,270
$ 2,160,084
(160,814) 2,005,991 $ 1,845,177
$
(160,814)
See Accompanying Notes and Independent Auditor's Report. 4
91,187
LATIN AMERICAN BIBLE INSTITUTE STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2015 and 2014 2015 CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets Adjustments to reconcile change in net assets to cash provided by operating activities: Depreciation Gifts-in-kind of assets Bad debts Changes in: Student tuition and fees receivable Prepaid expenses Accounts payable Accrued liabilities Deposits
$
Net cash flows (used) provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Acquistion cost of property and equipment Net cash flows used by investing activities Net change in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year
$
(160,814)
$
91,187
33,970 (10,000) 43,062
30,967 -
(41,771) (4,609) (3,394) (1,475)
(12,567) (786) 5,232 3,394 760
(145,031)
118,187
(94,610)
(7,980)
(94,610)
(7,980)
(239,641)
110,207
458,725
348,518
219,084
See Accompanying Notes and Independent Auditor's Report. 5
2014
$
458,725
LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2015 and 2014 Note 1 – Nature of Organization Latin American Bible Institute (LABI) is a Christian not-for-profit educational institution which was established in 1926 and incorporated on January 30, 1989 in the state of California. LABI’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. LABI holds the distinction of being one of the oldest Hispanic educational institutions in the United States LABI is endorsed by the Alliance of Christian Higher Education of the General Council of the Assemblies of God, Springfield, Missouri and the Southern Pacific District of the Assemblies of God.
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, LABI 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 Cash accounts held at financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The balances in these accounts may, at times, exceed federally insured limits. Management believes that LABI is not exposed to any significant credit risk in connection with cash and cash equivalents. 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.
6
LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2015 and 2014 Note 2 - Summary of Significant Accounting Policies (continued) 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, 2015 and 2014, the total allowance for doubtful accounts was $5,883 and $75,104, respectively. LABI wrote off $43,062 in uncollectible student tuition receivables in 2015. 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. Fixed assets have a depreciable life of 5 to 40 years depending on asset classification. 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. LABI has elected to capitalize all property and equipment expenditures greater than $1,000. Depreciation expense for the years ended June 30, 2015 and 2014 was $33,970 and $30,967, respectively, and is included in program service expenses. The property is located on land that is co-owned with the Southern Pacific District of the Assemblies of God (SPDAG). The land which was originally donated to LABI, has been deeded to SPDAG. LABI and SPDAG are currently researching the exact ownership percentages of the property for each party. 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, LABI has adopted Financial Accounting Standards Board ASC 958-605-25, Not-for-Profit Entities – Revenue Recognition, for the years ended June 30, 2015 and 2014. 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. 7
LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2015 and 2014 Note 2 - Summary of Significant Accounting Policies (continued) 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 LABI; however, since the above requirements were not met, the value of the contributed services has not been recorded in the financial statements. Income Taxes LABI is exempt from federal and state income tax under Internal Revenue Code Section 501(c)(3). LABI 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, 2015 and 2014 LABI 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. LABI has evaluated its uncertain tax positions and related income tax contingencies, and does not believe that any material uncertain tax positions exist. LABI’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 LABI 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, 2015 and 2014 Note 3 – Fair Value Measurement LABI has adopted Financial Accounting Standards Board ASC 820-10-50, Fair Value Measurement for the years ended June 30, 2015 and 2014. This accounting standard applies to all financial instruments that are being measured and reported on a fair value basis. ASC 820-1050 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standard establishes a fair value hierarchy in three levels that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows. • Level 1 – Inputs are quoted market prices (unadjusted) in active markets for identical assets or liabilities. Valuations for assets and liabilities traded in active exchange markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. • Level 2 – Inputs other than quoted prices within Level 1 that are observable, either directly or indirectly. Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities. • Level 3 – Inputs are unobservable. Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounts, cash flow models, and similar techniques and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
Level 1 Valuation: Cash equivalents: Certificates of deposit Total level 1 investments Return on Investments: Interest earned Total return on investments
9
2015
2014
$ 155,816
$ 299,093
$ 155,816
$ 299,093
$
7,002
$
7,775
$
7,002
$
7,775
LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2015 and 2014 Note 4 - Property and Equipment A summary of property and equipment follows:
Land and buildings Furniture and equipment Library Vehicles Total property and equipment Accumulated depreciation
2015
2014
$1,301,484 93,012 802,000 10,000
$1,239,263 50,623 802,000 10,000
2,206,496
2,101,886
(441,903)
Net property and equipment
$1,764,593
(407,933) $1,693,953
Note 5 - Operating Lease Agreements Rental Income LABI leases a portion of its property to other ministries and churches for religious services and special events. LABI also leases its facilities for student housing. For the years ended June 30, 2015 and 2014, LABI recognized $90,027 and $114,357, respectively, in rental income. Office Equipment LABI leases office equipment under agreements classified as operating leases. Rental expense related to these leases for the years ended June 30, 2015 and 2014 was $16,820 and $8,064, respectively. Future minimum payments for office equipment leases are as follows: Year Ended June 30
Amount
2016 2017 2018 2019 2020
$
10
11,097 5,783 5,783 5,783 1,928
LATIN AMERICAN BIBLE INSTITUTE NOTES TO FINANCIAL STATEMENTS June 30, 2015 and 2014 Note 6 - 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 LABI’s scholarship programs.
Note 7 – Subsequent Events The management of LABI has reviewed the results of operations and evaluated subsequent events for the period of time from its year end June 30, 2015 through October 7, 2015, 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. In July of 2015 LABI received an advance of funds in the amount of $50,000 from the Southern Pacific District of the Assemblies of God (SPDAG). As of the date of the audit report no terms have been agreed to as to the classification and repayment of the funds. There is an oral understanding that once LABI receives accreditation and Title IV funding, a formal agreement will be entered into for the repayment of these funds. The funds are held as a long-term liability.
11
SUPPLEMENTAL INFORMATION
LATIN AMERICAN BIBLE INSTITUTE SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2015 (Includes Summarized Totals for 2014) Instruction and Student Activities Academic resources Accreditation Advertising and promotional Auto Bad debts Charges and fees Commencement Depreciation Dues and subscriptions Employee benefits Events Food Gifts and donations Honorariums Information systems Insurance Leases Library Meetings Merchandise Miscellaneous Missions Outside services Property taxes Postage and shipping Payroll taxes Repairs and maintenance Residence guest services Residence student services Refunds Reimbursements Salaries Sales taxes Scholarships Security Staff development Supplies Telephone and internet Travel Utilities Yearbook
Fund Raising
General and Administrative
2015 Total
2014 Total
$
15,668 15,306 3,549 43,062 12,453 12,595 33,970 8,035 13,423 45,380 4,026 1,460 3,515 22,510 16,820 2,302 18,033 5,022 5,872 800 14,310 7,083 4,375 22,069 57,379 1,618 12,772 12,099 389,100 399 238,505 15,653 3,434 34,026 13,833 9,408 58,439 2,716
$
24,891 1,016 3,232 55,997 -
$
15,100 24,246 11,240 9,236 5,200 160,044 3,781 1,537 6,493 -
$
15,668 30,406 24,891 3,549 43,062 12,453 12,595 33,970 32,281 13,423 45,380 4,026 1,460 3,515 34,766 16,820 2,302 18,033 5,022 5,872 800 14,310 7,083 4,375 34,537 62,579 1,618 12,772 12,099 605,141 399 238,505 15,653 3,434 37,807 15,370 9,408 64,932 2,716
$
18,709 28,410 41,554 4,066 12,606 13,527 30,967 66 43,760 11,479 48,457 6,333 2,855 2,599 32,896 8,064 2,706 11,724 2,250 6,431 5,135 14,110 6,808 11,599 22,645 49,789 13,349 2,820 9,033 20,616 427,775 602 272,457 5,846 3,875 35,518 12,764 3,544 51,978 2,871
$
1,181,019
$
85,136
$
236,877
$
1,503,032
$
1,302,593
See Independent Auditor's Report. 12
