illinois-eastern iowa district of kiwanis international financial ...
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL Bloomington, Illinois
FINANCIAL STATEMENTS September 30, 2016 and 2015
TABLE OF CONTENTS PAGE INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
1
FINANCIAL STATEMENTS Statements of Financial Position Statements of Activities and Changes in Net Assets Statements of Cash Flows Notes to the Financial Statements
3 4 6 7
SUPPLEMENTARY INFORMATION Schedule of Financial Position – all designations Schedule of Activities Compared to Budget
13 14
CliftonLarsonAllen LLP CLAconnect.com
INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
Board of Directors Illinois-Eastern Iowa District of Kiwanis International Bloomington, Illinois We have reviewed the accompanying financial statements of Illinois-Eastern Iowa District of Kiwanis International (District) (a not-for-profit corporation), which comprise the statements of financial position as of September 30, 2016 and 2015, and the related statements of activities and changes in net assets and cash flows for the years then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of the District’s management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement whether due to fraud or error. Accountant’s Responsibility Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion. Accountant’s Conclusion Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
1
Board of Directors Illinois-Eastern Iowa District of Kiwanis International Supplementary Information The accompanying Schedule of Financial Position - All Designations and Schedule of Activities Compared to Budget (collectively, supplementary information) are presented for purposes of additional analysis and are not a required part of the basic 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 supplementary information has been subjected to the review procedures applied in our review of the basic financial statements. We are not aware of any material modifications that should be made to the supplementary information. We have not audited the supplementary information and do not express an opinion on such information.
a CliftonLarsonAllen LLP Bloomington, Illinois February 15, 2017
2
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL STATEMENTS OF FINANCIAL POSITION September 30, 2016 and 2015 ASSETS 2016 CURRENT ASSETS Cash and cash equivalents Accounts receivable Prepaid expenses Inventory
$
Total current assets
207,227 5,000 17,678 1,637
$
231,542
Capital assets, net of accumulated depreciation of $15,890 TOTAL ASSETS
2015 202,817 20,014 557 223,388
-
-
$
231,542
$
223,388
$
1,770
$
1,110 1,723
LIABILITIES AND NET ASSETS LIABILITIES Accounts payable Payroll liabilities TOTAL LIABILITIES
1,770
2,833
125,967
130,226
1,864 32,912 7,065 50,506 7,000 200 4,258
1,863 27,293 4,065 45,561 8,139 200 3,208
Total unrestricted, designated
103,805
90,329
Total net assets
229,772
220,555
NET ASSETS Unrestricted, undesignated Unrestricted, designated: Capital projects Convention reserves International leadership Operating reserves Restricted scholarship Key leader reserves Aktion club outreach fund
TOTAL LIABILITIES AND NET ASSETS
$
231,542
$
See independent accountants' review report and accompanying notes. 3
223,388
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS Years Ended September 30, 2016 and 2015
2016 REVENUES AND SUPPORT Membership dues New member fees Spastic paralysis - office subsidy Interest/ dividend income District conventions and conferences - 2015-2016 District conventions and conferences - 2014-2015 International convention and conferences Illeiowan advertising revenues Scholarship fund revenues Aktion club outreach Miscellaneous
$
Total revenues and support EXPENSES Program services Illeiowan publication Convention expenses: District conventions and conferences - 2015-2016 District conventions and conferences - 2014-2015 International convention Meeting expense and district administrator's reimbursements: Sponsored programs administrator and adult committee expenses Other board expenses Governor's expenses Governor assistant's expenses Immediate past governor's expenses Lieutenant governor's expenses Governor elect expenses Treasurer's expenses Committee chair expenses Training expenses Recognition and awards Growth initiatives expenses Scholarship grants Mid-winter convention Total program expenses
$
167,150 16,870 4,000 395 60,131 5,889 2,000 2,861 1,050 150
2015 $
168,300 15,708 4,000 463 53,506 29,726 2,000 5,639 1,775 840
260,496
281,957
5,500
5,450
66,687 13,471
68,374 54,592
10,850 331 5,590 500 6,467 1,500 19 18,622 1,580 3,356 4,000 2,423
16,646 412 4,336 1,000 500 6,450 1,500 500 16 17,368 1,176 5,862 3,000 2,500
140,896
$
See independent accountants' review report and accompanying notes. 4
189,682
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS (Continued) Years Ended September 30, 2016 and 2015
2016 Management and general expenditures Salaries and wages Employee benefits Executive director expenses Occupancy and maintenance Officer insurance Professional fees Stationery, printing and supplies Postage Equipment rental Telephone Equipment and software purchases Other administrative expenses
$
63,712 12,190 2,628 13,483 965 5,510 2,694 940 372 2,507 4,968 414
2015 $
63,170 11,845 2,058 12,070 795 5,310 2,865 1,299 397 2,384 3,978 430
Total management and general expenses
110,383
106,601
Total expenses
251,279
296,283
Increase (decrease) in unrestricted net assets
9,217 220,555
NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR
(14,326)
$
229,772
234,881 $
See independent accountants' review report and accompanying notes. 5
220,555
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL STATEMENTS OF CASH FLOWS Years Ended September 30, 2016 and 2015
2016 CASH FLOWS FROM OPERATING ACTIVITIES Increase (decrease) in net assets Effects of changes in operating assets and liabilities: Accounts receivable Prepaid expenses Inventory Accounts payable Payroll liabilities
$
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR
9,217
2015 $
(5,000) 2,336 (1,080) (1,110) 47
40 (1,915) (3,390) 37
4,410
(19,554)
202,817
$
(14,326)
207,227
222,371
$
See independent accountants' review report and accompanying notes. 6
202,817
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS September 30, 2016 and 2015 NOTE 1 – SUMMARY OF ACCOUNTING POLICIES A summary of significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: Nature of Operations The Illinois-Eastern Iowa District of Kiwanis International (District) is a not-for-profit organization established to attain the objectives of Kiwanis International through the clubs within the District. Basis of Accounting The accompanying financial statements are presented in accordance with the accrual basis of accounting, whereby, revenue and support is recognized when earned and expenses are recognized when incurred. Financial Statement Presentation Financial statement presentation follows the recommendations of the Financial Accounting Standards Board in its Account Standards Codification (ASC) ASC 958-605 “Revenue Recognition” and ASC 958-205 “Presentation of Financial Statements.” ASC 958-605 requires the District to distinguish between contributions received for each net asset category in accordance with donor-imposed restrictions. As such, contributions are recognized as revenue when they are received. ASC 958-205 requires the District 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. A description of the net asset categories that are applicable to the District follows. Unrestricted net assets – Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets – Net assets subject to donor-imposed stipulations that may or will be met, either by actions of the District and/or the passage of time. When a restriction is met, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statement of Activities as net assets released from restrictions. As of September 30, 2016 and 2015, none of the net assets were temporarily restricted. Permanently restricted net assets – Net assets subject to donor-imposed stipulations that will be maintained permanently by the District. As of September 30, 2016 and 2015, the District had no permanently restricted net assets. Cash and Cash Equivalents For financial statement purposes, cash equivalents primarily include money market funds, savings accounts, and certificates of deposits with an initial maturity of three months or less.
7
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS September 30, 2016 and 2015 NOTE 1 – SUMMARY OF ACCOUNTING POLICIES (Continued) Property and Equipment Property and equipment are recorded at cost. The District capitalizes all expenditures for fixed assets over $500. Normal repairs and maintenance are charged to operations in the period incurred. Depreciation is calculated on the straight-line method over the useful life of the asset. Inventory Inventory consists of shirts and emblems for purchase by the members. Inventory is stated at original cost. 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. Accordingly, actual results could differ from those estimates. Income Tax Status The District is exempt from federal income taxes under the provision of Section 501 (c)(4) of the Internal Revenue Code. However, income from any activities not directly related to the District’s tax exempt purpose is subject to taxation as unrelated business income. The District qualifies for the charitable contribution deduction under Section 170{b}(1)(A). Management is not aware of any violation of its tax status as exempt from income taxes, or any exposure to unrelated business income tax or other tax liabilities. Certain Significant Concentrations Financial instruments that potentially subject the District to concentrations of credit risk consist principally of checking accounts, money markets, and certificates of deposit. The balances are insured by the Federal Deposit Insurance Corporation (FDIC). As of September 30, 2016 and 2015, the District had no uninsured deposits. Entities Under Common Control For the years ended September 30, 2016 and 2015, various officers of the District were also officers of the Illinois-Eastern Iowa District of Spastic Paralysis Research Foundation, a related entity. It is management’s opinion that the financial position and results of activities of the District have not been significantly affected by the transactions with this entity. Advertising The District expenses its advertising costs as they are incurred.
8
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS September 30, 2016 and 2015 NOTE 1 – SUMMARY OF ACCOUNTING POLICIES (Continued) Prepaid Expenses Expenses incurred in the current fiscal year for the upcoming Governor-Elect and his Board of Directors are reported as prepaid expenses. Those prepaid expenses are then reclassified as expenses in the next fiscal year to correctly match the expense with the Governor’s term. The amount of Governor-Elect expenses included in prepaid expenses for fiscal years 2016 and 2015 was $16,700 and $18,488, respectively. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis. Costs are charged on a direct functional basis whenever practicable and all other costs are allocated on the basis of the proportional use of the services provided. NOTE 2 – CASH AND CASH EQUIVALENTS The District’s cash and cash equivalents at September 30, 2016 and 2015 consist of the following: 2016 Checking accounts PayPal (credit card settlement account) Soy Capital Bank (money market) Soy Capital Bank (petty cash account) Soy Capital Bank (operating account) Total
2015
$
7 $ 175,328 2,138 29,754
158 136,913 1,603 64,143
$
207,227 $
202,817
NOTE 3 – PROPERTY AND EQUIPMENT At September 30, 2016 and 2015, the costs and related accumulated depreciation of property and equipment consisted of the following: 2016 Accumulated Depreciation
Cost
2015 Net
Net
Computer equipment, including software Furniture and fixtures
$
4,217 $ 11,673
4,217 $ 11,673
-
$
-
Total
$
15,890 $
15,890 $
-
$
-
Depreciation expense for the years ended September 30, 2016 and 2015 was $0.
9
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS September 30, 2016 and 2015 NOTE 4 – BOARD DESIGNATED NET ASSETS The Board of Directors of the Illinois-Eastern Iowa District of Kiwanis International has designated net assets for various purposes. These designations are as follows: Capital Projects Fund – The Board established this fund in 1998 for the purpose of accounting for the purchase of capital items, such as computers, office equipment, furniture, etc. An initial budget of $5,000 was allocated to the capital projects fund. Convention Reserves Fund – The Board established this fund for the purpose of providing reserves to cover convention expenses in years where the convention revenues do not exceed the expenses resulting from less than anticipated attendance, unexpected expenses, and other unforeseeable events. The Finance Committee established a reserve balance goal equivalent to 50% of the average expenses of the annual conferences or conventions. International Leadership – The Board established this fund in 1998 for the purpose of supporting District candidates for International leadership positions. During each year ended September 30, 2016 and 2015, the board designated an additional $3,000. During the year ended September 30, 2016 and 2015, the Board paid $0 and $8,953, respectively, for leadership positions. Operating Reserves Fund – The Board established this fund in 2007 to provide reserves to cover operating expenses in years when the dues revenue for the District do not exceed the operating expenses. The Board established a reserve balance goal equal to one year of normal operating expenses to be funded at a rate of $.75 per paid member per year from current dues revenue until the goal balance is achieved; or at an amount equal to the current year operating net revenue if that is less than $.75/paid member. During the year ended September 30, 2016 and 2015, operating reserves of $.75 per member totaling $4,945 and $5,345 were allocated. Restricted Scholarship Fund – The Board established this fund through specific fundraising efforts to provide dollars required for Circle K and Key Club Scholarships awarded by our IllinoisEastern Iowa District of Kiwanis International. The funds receipts consist of matching dollars from the Kiwanis International Foundation (based on 5% of the total dollars they receive from the I-I District Clubs during the previous year) and fundraising efforts at the annual District Convention. The District finance committee annually decides how many scholarships are given for each entity based on the dollars available in the fund. Aktion Club Outreach Fund – The Board established this fund for the purpose of providing outreach support to new and potential Aktion clubs. Aktion clubs are Kiwanis clubs for adults with special needs requirements. Key Leader Outreach Fund – The Board established this fund for the purpose of providing outreach support to the District’s Key Leader Program. Key Leader is a weekend conference held annually for today’s emerging leaders ages 14-18. This is a life-changing event focused on service leadership as the first, most meaningful development experience. Workshops, lectures and teambuilding activities take place over the course of the weekend, providing opportunities to grow in confidence, make new friends and learn skills that can be taken back to the school community. Positive interaction with other Key Leader “graduates” can offer continuing reinforcement, encouragement and growth of leadership skills. 10
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS September 30, 2016 and 2015 NOTE 4 – BOARD DESIGNATED NET ASSETS (Continued) Designated net assets as of September 30, 2016 and 2015 are as follows: 2016 Designated for: Capital projects Convention reserves International leadership Operating reserves Restricted scholarships Key leader reserves Aktion club outreach fund
$
Total designated net assets
2015
1,864 $ 32,912 7,065 50,506 7,000 200 4,258
1,863 27,293 4,065 45,561 8,139 200 3,208
$ 103,805 $
90,329
NOTE 5 – OPERATING LEASES The District enters into lease agreements for equipment and office space under annual and multiyear lease agreements. Certain of the agreements contain renewal options. Total lease expense for the years ended September 30, 2016 and 2015 was $12,172 and $12,928, respectively. Future minimum lease payments at September 30, 2016 are as follows: 2017 2018 2019
$
13,372 14,572 10,429
Total
$
38,373
NOTE 6 – RELATED-PARTY TRANSACTIONS The District shares occupancy and office supplies expenses with the Illinois-Eastern Iowa District of Kiwanis International Spastic Paralysis Research Foundation. The Foundation reimbursed the District for its estimated share of expenses in the amount of $4,000 for each of the years ended September 30, 2016 and 2015.
11
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS September 30, 2016 and 2015 NOTE 7 – COMMITMENTS AND CONTINGENCIES The District has agreements with various hotels and convention centers for Board meetings and its conventions. As of September 30, 2016, the District had the following agreements for events: Commitment Date January 2014
Venue and Event Double Tree, Bloomington, IL 2017 District Convention
Event Dates 8/09/17 - 8/13/17
Minimum Commitment $
43,412
July 2016
Marriott, Peoria, IL 2018 District Convention
8/01/18 - 8/05/18
44,510
July 2016
Crowne Plaza, Springfield, IL 2019 District Convention
7/31/19 - 8/04/19
38,664
August 2016
Double Tree, Bloomington, IL Mid-Year Board Meeting
2/25/17
1,990
Total Commitments as of September 30, 2016
$
128,576
NOTE 8 – SUBSEQUENT EVENTS In preparing these financial statements, the District has evaluated events and transactions for potential recognition or disclosure through February 15, 2017, the date the financial statements were available to be issued.
See independent accountants’ review report. 12
SUPPLEMENTARY INFORMATION
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL SCHEDULE OF FINANCIAL POSITION - ALL DESIGNATIONS Year Ended September 30, 2016
Aktion Club Fund
General Fund ASSETS Current assets Cash and equivalents Accounts receivable Prepaid expenses Inventory
$
Total current assets
103,422 5,000 17,678 1,637
$
127,737
4,258 -
Key Leader Fund
$
4,258
200 -
Capital Projects Fund
$
200
1,864 -
Convention Reserves Fund
International Leadership Fund
$
$
32,912 -
7,065 -
Operating Reserve Fund
$
50,506 -
Restricted Scholarship Fund
$
7,000 -
1,864
32,912
7,065
50,506
7,000
Capital assets Furniture and equipment Less accumulated depreciation
-
-
-
-
-
-
-
-
Total capital assets
-
-
-
-
-
-
-
-
Total assets LIABILITIES AND NET ASSETS Current liabilities Accounts payable Payroll liabilities
$
127,737
$
4,258
$
200
$
1,864
$
32,912
$
7,065
$
50,506
$
7,000
$
1,770
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Total current liabilities
1,770
Net assets Unrestricted Designated for capital projects Designated for convention reserves Designated for international leadership Designated for operating reserves Designated for restricted scholarship Designated for key leader reserves Designated for Aktion club Total net assets Total liabilities and net assets
$
-
-
-
-
-
-
-
125,967 -
4,258
200 -
1,864 -
32,912 -
7,065 -
50,506 -
7,000 -
125,967
4,258
200
1,864
32,912
7,065
50,506
7,000
127,737
$
4,258
$
200
$
1,864
$
See independent accountants' review report. 13
32,912
$
7,065
$
50,506
$
7,000
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL SCHEDULE OF ACTIVITIES COMPARED TO BUDGET Year Ended September 30, 2016
Actual Revenues and support Membership dues New member fees Spastic Paralysis - office subsidy Interest/dividend income Illeiowan advertising revenues Aktion Club Miscellaneous Scholarship fund revenues
$
Total revenues and support Expenses Program services Illeiowan publication Convention expenses: District conventions and conferences, net 2015-2016 International convention, net 2015-2016 Meeting expense and district administrator's reimbursements: Sponsored programs administrator and adult committee expenses Other board expenses Governor's expenses Governor assistant's expenses Immediate past governor's expenses Lieutenant governor's expenses Governor elect expenses Treasurer's expenses Committee chair expenses Training expenses Recognition and awards Growth initiatives expenses Scholarship grants Midwinter meetings Total program services
$
167,150 16,870 4,000 395 2,000 1,050 150 2,861
Budget $
175,000 8,500 4,000 250 2,000 -
Variance $
(7,850) 8,370 145 1,050 150 2,861
194,476
189,750
5,500
7,200
(1,700)
6,556 7,582
11,200
6,556 (3,618)
10,850 331 5,590 500 6,467 1,500 19 18,622 1,580 3,356 4,000 2,423
17,300 500 7,000 1,000 500 10,000 1,500 500 100 18,000 1,700 7,000 2,500
(6,450) (169) (1,410) (500) (500) (3,533) (481) (100) 622 (120) (3,644) 4,000 (77)
74,876
$
See independent accountants' review report. 14
86,000
4,726
$
(11,124)
ILLINOIS-EASTERN IOWA DISTRICT OF KIWANIS INTERNATIONAL SCHEDULE OF ACTIVITIES COMPARED TO BUDGET (CONTINUED) Year Ended September 30, 2016
Actual Management and general services Salaries and wages Employee benefits Executive director expenses Occupancy and maintenance Officer insurance Professional fees Stationery, printing and supplies Postage Equipment rental Telephone Equipment and software purchases Other administrative expenses Depreciation expense
$
63,712 12,190 2,628 13,483 965 5,510 2,694 940 372 2,507 4,968 414 -
Budget $
66,405 12,000 3,000 14,575 965 6,500 2,900 1,500 500 2,540 6,500 510 1,000
Variance $
(2,693) 190 (372) (1,092) (990) (206) (560) (128) (33) (1,532) (96) (1,000)
Total management and general services
110,383
118,895
(8,512)
Total expenses
185,259
204,895
(19,636)
Changes in net assets
$
Net assets, beginning of year Net assets, end of year
9,217
$
220,555 $
229,772
See independent accountants' review report. 15
(15,145) $
24,362
