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Home My WebLink AboutCOM 0603.000 2008-2010 HAWAII ISLAND .-..> $ u:;:t z c:::> c;:::: -n ,...ll.~, rn r", I,. " 1"\"\ (') 00 ~o ..... r- ~'~2 N HUMANE SeeIBTY i:""".'"""'*. -0 ::3 (J:) ....-...... .,/ '""~.'-" October 29, 2009 fT"j o c....' 0::> J. Yoshimoto County Council Chair Hawaii County Council 25 Aupuni Street Hilo, Hawaii 96720 Dear Mr. Yoshimoto: Enclosed is a draft copy of our Fiscal Year Ending 2009 Financial Audit as well as a copy of a letter written by our Auditor Linda Tester requesting additional information. This letter was sent to Nori Ishii who said that she would forward it to the proper person in the Administration Section. I am assured by John Carbonaro, CPA that the final copy of the 2009 Audit will be sent as soon as those questions are answered. This meets the reporting requirement for our current contract. I was also assured by Darice Cullio of the firm Taketa, Iwata and Hara, CPA that the 2006 Financial Review and the Fiscal Year Ending 2007 Financial Audit will be delivered to the County by October 31, 2009. As you can see to complete this enormous task, we were forced to engage a second Auditing Firm. They will begin on the Fiscal Year Ending 2008 Financial Audit as soon as possible. Please feel free to call me at 329-8002 with any questions or comments. Sincerely, ()~ lUkct:-~ Donna Whitaker Executive Director Comm. No. Cp 0 3 Ref. To: Ref. Dote NQV 0 2 '2.\1~$ 74-5225 Queen Kaahumanu Hwy · Kailua-Kona, HI 96740. Telephone (808) 329-1175. Fax (808) 329-4618 Keaau (808) 966-5458 · Kamuela (808) 885-4558 HA W All ISLAND HUMANE SOCIETY (A Hawaii Nonprofit Corporation) AUDITED FINANCIAL STAT ,- INDEPENDENT AUDITORS' REPORT To the Board of Directors Hawaii Island Humane Society Kailua Kona, Hawaii 96740-2701 We have audited the accompanying statement of financial Hawaii Island Humane Society (a Hawaii non-profit corporation) as of June 30, 20~, the rela , tatements of activity, functional expenses, changes .in. ~et assets and .~ash f10~6~tQe t~en -t These financial statements are the responsIbIlIty of Hawan Isl '.. Humane Soclety's.aQ.~gement. Our responsibility is to express an opinion on these final)_ atement.s based on our if':v ~::/<"/*tt:<:;" ' -;-'" Except as discussed in the following paragraph, we conJ_~j<tttr audit in accordante with auditing standards generally accepted in the Unite,d States of Americlt~ se standards require that we plan and perform the audit to obtain reasonabl urance about wh the financial statements are free of material misstatement. An audit inchl ining, on a te evidence supporting the amounts and disclosures in the financial stat ? udit also in ',.;;r es assessing the accounting principles used and significant estimates ma~' t, a~ell as evaluating the overall financial statement present<i;!j. . We believe r uides a reasonable basis for our . . hiff opllllon. ~7~~ Due to lack of docmne . nand not able to adequately '?/~fY Accordingly, it not practi~D P/~~~,,>~ recorded. '.. - In oy.l';~:{ ion, except foreh adjustments, if any, as might have been determined to be rfece ad the cash " -~pts fun ons noted in the preceding paragraph been susceptible to satisfactOl)r~wfWt tests, the fittancial~tatements referred to above present fairly, in all material respects, the -1i~ln~ial positi@of Hawaii Island Humane Society as of June 30, 2009, and the changes in its n~N ts andits cash flows for the year then ended in conformity with accounting principles generallY~~~&,,~,te-y;9"in the United States of America. "~f;;jjr> lP -%:. of internal c~ntrols over the cash receipts functions, we were </!'/'//~ 11 cash rec~:ipts were properly recorded and deposited. ~nd?6ur audit of such receipts beyond the amounts </ Mountain View, Hawaii October 28, 2009 HA WAIl ISLAND HUMANE SOCIETY Statement of Financial Position As of June 30, 2009 ASSETS CURRENT ASSETS Cash: Checking - BOH Operating County Checking - BOH Operating Humane Society Checking - BOH Operating Spay Neuter Money Market - HFCU Restricted Funds Checking - HFCU Share Draft Saving - HFCU Total Cash Other Current Assets Petty Cash Prepaid Insurance Retail Inventory Total Other Current Assets Total Current Assets OTHER Deposits - Deposits - Other Total Other Assets TOTAL ASSETS $ 149,253 193,486 28,532 267,855 , 100 ~~~, 50 '~1~9,276 ';>/ ,It' 373 50,266 33,609 84,248 723,524 478,536 329,394 127,400 29,878 44,826 81,890 1,091,924 (621,495) 470,429 300 200 500 $ 1,194,453 The accompanying notes and Auditors' report are an integral part of these financial statements. Page 2 HA WAIl ISLAND HUMANE SOCIETY Statement of Financial Position As of June 30, 2009 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts Payable SIN Coupon Liability Credit Cards Total Accounts Payable and Credit Cards $ 129,089 45,000 5,683 179,772 28,880 1 7)pO 1 ~;928 1,843 16,692 69,344 249,116 32,854 281,970 777,339 115,239 19,905 912,483 $ 1,194,453 TOTAL CURRENT LIABILITIES OTHER CURRENT LIABILITIES Accrued Wages County of Hawaii Payables Accrued General Excise Tax Accrued Payroll Taxes and Benefits Accrued Vacation Payable Total Other Current Liabilities LONG TERM LIABILITIES Capitalized Leases Pa~\:L" ?U' The accompanying notes and Auditors' report are an integral part of these financial statements. Page 3 HA WAIl ISLAND HUMANE SOCIETY Statement of Activity For the Year Ended June 30, 2009 Temporarily Permanently Unrestricted Restricted Restricted Total PUBLIC SUPPORT AND REVENUE County of Hawaii (Note 3) $ 2,051,119 $ 2,051,119 Donations 213,690 69,982 283,672 Fundraising 195,877 195,877 Adoptions 154,614 154,614 SIN CAP Coupon Sales 99,695 99,695 Sales 37,333 37,333 Less Cost of Goods Sold (23,282) (23,282) Humane Shelter Services 16,315 16,315 Volunteer Services (Note 5) 5,730 5,730 Recycling 5,504 5,504 Miscellaneous Revenue 10,758 10,758 Net Assets Released from Restrictions 118 Total Public Support and Revenue ,837,335 EXPENSES Salaries and Wages 1,214,085 Surgery Programs and Supplies 254,656 Employee Benefits 142,702 Insurance 106,299 Kennel and Janitorial Supplies 104,662 Payroll Taxes 102,310 Depreciation 93,130 Utilities 83,442 Fundraising Expens 69,352 Auto Expense 48,858 Repairs and Mai 43,240 Advertisin 41,017 Legal an . 34,643 34,643 AdopJ 25,954 25,954 Offiee 20,500 20,500 Network E 18,267 18,267 Printing 14,752 14,752 Bank Fees 13,930 13,930 Staff Meeting and 13,202 13,202 Meals and Travel 10,861 10,861 Humane Education 8,295 8,295 Office Equipment and Rentals 7,891 7,891 Uniforms 7,227 7,227 Postage and Freight 7,168 7,168 Dues, Licenses, Subs, Taxes 7,027 7,027 General Excise Tax and Other Taxes 6,428 6,428 Volunteer Program and Other 6,148 6,148 Contract Labor 5,520 5,520 Veterinary Care 4,330 4,330 Total Expenses 2,515,896 2,515,896 Net Revenue Over (Under) Expenses $ 251,575 $ 69,864 $ $ 321,439 The accompanying notes and Auditors' report are an integral part ofthese [mancial statements. Page 4 HA WAIl ISLAND HUMANE SOCIETY Statement of Functional Expenses For the Year Ended June 30,2009 Program Supporting Services Services Fundraising Total Salaries and Wages $ 1,114,980 $ 73,432 $ 1,214,085 Surgery Programs and Supplies 254,656 254,656 Employee Benefits 134,071 8,63 142,702 Insurance 74,550 28,24" 106,299 Kennel and Janitorial Supplies 104,662 ;#l/ 104,662 <</Sf .f&>,.~. Payroll Taxes 93,121 . 6~~,5 0 102,310 Depreciation 79,164 310 93,130 '.~'f, Utilities 75,098 8,344 83,442 Fundraising Expense 69,352 Auto Expense 48,858 Repairs and Maintenance 43,240 Advertising 13,672 41,017 Legal and Professional Services 34,643 Adoption Expense 25,954 Office Supplies 1,025 20,500 Network Expense 18,267 Printing 14,752 Bank Fees 1,393 13,930 Staff Meeting and Training 13,202 Meals and Travel 10,861 Humane Education 8,295 Office Equipment and Rent 7,891 7,891 Uniforms 7,227 Postage and J:}@ 1,682 7,168 Q;..U Dues, Lisen~s, Subs, Ta 6,621 7,027 Gener . e Tax and Ot 1,428 5,000 6,428 Volu ram and Other 4,898 1,250 6,148 Contract La 5,520 5,520 Veterinary Care., 4,330 4,330 Total Expenses $ 2,138,382 $ 250,704 $ 126,810 $ 2,515,896 The accompanying notes and Auditors' report are an integral part ofthese financial statements. Page 5 HA WAIl ISLAND HUMANE SOCIETY Statement of Changes in Net Assets For the Year Ended June 30, 2009 Temporarily Permanently Total Unrestricted Restricted Restricted Net Assets $ 525,764 $ 45,375 $ 19,905 $ 591,044 251,575 321,439 $ 777,339 $ 912,483 Net Assets, Beginning of Year Excess Support & Revenue Over Expenses Net Assets, End of Year The accompanying notes and Auditors' report are an integral part ofthese fmancial statements. Page 6 HA WAIl ISLAND HUMANE SOCIETY Statement of Cash Flows For the Years Ended June 30, 2009 CASH FLOWS FROM OPERATING ACTIVITIES Hawaii County Funding Fundraising Sales and Services to Public Foundations and Other Donations SIN CAP Revenues Other Cash Received Cash Paid to Employees and Vendors CASH FLOWS FROM INVESTING Cash Used to Purchase Equipment 2,051,119 195,877 214,021 283,672 99,695 504 (2,;, ,557) 498,331 (116,158) (116,158) 382,173 257,103 $ 639,276 The accompanying notes and Auditors' report are an integral part ofthese financial statements. Page 7 HAW All ISLAND HUMANE SOCIETY Notes to the Financial Statements June 30, 2009 Note I. ORGANIZATION The Hawaii Island Humane Society is a non-profit organization incorporated under the laws of the State of Hawaii on May 10, 1962. Hawaii Island Humane Society is organized for the prevention of cruel and/or inhumane treatment of animals. They also provide shelter for old, homeless, abandoned, sick or injured animals, as well as, encourage, promote and conduct research relating to the prevention of cruel and inhumane treatment of animals. The Hawaii Island Humane Society is responsible for carrying Hawaii for the entire island of Hawaii. They maintain shelter, Kona, Kea'au and Waimea. ' rual rri~thod of accoun "ic>6r financial . ~.., IUd <'t?o h d f tm~f:pFIn~!p es. n e~JtllIs met 0 0 c7Jwhen received and expenses are Note 2. SUMMARY OF SIGNIFICANT ACCOUNTIN Method of Accounting: The Organization uses ~t statement reporting according to generally accepted ac accounting, revenue is recognized when earned rathe recognized when incurred rather than wh paid. Revenue Recognition: Contributions receive~. temporarily restricted, or permanently restricted ~up~ort, depending o1f~he './~.R/ ,e and/or. , / re?f any donor r~strictions. Gra~ts and. other cont.nbutI?ns of ca~h .are reiorted!;as/i.:~?l;jnlf restncted support If the.y ~re receIved wIth donor stIpulatJ,(m~iP.at hmIt the us.~!. ' e donatp~~sets. When the donor restnctlOn expires, that is, when a4s:fitul~tg:htime restricH$ln ends or <purpose restriction is accomplished, temporarily restricte assets<:fe reclassified~~o unrestricted net assets and reported in the statement of activiti assets rlI'eased from relttictions. 7;', ::::?3v Ill' ;~he statement of cash flows, cash is defined as Cash and Ca~, demand d~g&~r ts. .,;<//;; '~~;;" ~~"t"'>2_ ,_ ,jt Inve~/.{ The Organiz , has 1cf9R:feCl SFAS No. 124, "Accounting for Certain Investments Held by 'N.~~:tw-Projit Org tionsFUnder SFAS No. 124, investments are stated at fair value and the netff&"~~J~lized apprecI~~ton or depreciation on investments held is included in the change in net assets in tli'~' ompanyin~tatements of activities. Purchased investments are carried at market value. Donated i ments~~ recorded at their fair market value on the date of donation. Gains and losses on the sa .xVestments are accounted for in the net asset group where the related investments are recor V Ordinary investment income is also accounted for in the net asset group where the investments1ire recorded. Property and Equipment: The Society capitalizes all furniture and equipment with a useful life greater than one year and a cost greater than $1,000. Property and equipment are stated at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed using the straight-line method over the assets' estimated useful lives. Page 8 HAW All ISLAND HUMANE SOCIETY Notes to the Financial Statements June 30, 2009 Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Equipment: The Society has purchased various fixed assets with County grant funds. As a result, these assets revert back to the grantor upon discontinuance of their intended purposes. However, management plans to use the assets for their intended purposes for the life of the assets and the likelihood of the assets having to be returned is remote. come taxes under Section taxes under Sections Income Taxes: Hawaii Island Humane Society is exempt from 501(c)(3) of the Internal Revenue Code and also from State of . 416-19 and 416-20 of the Hawaii Revised Statutes. ,(& Estimates: The preparation of financial statements ,-$iW;?c611formity with generally accepted in the United States of Americaht[~uires management to fiX/,f),,, ........ assumptions that affect certain reported amounts a,~d~~'sclosures'<;~fccordingly, ac differ from those estimates. .r1'~?;>A ~:;r unting principles estimates and l%f;~:sults could ';-,:/;:/ i/'/ // Note 3. CONCENTRATIONS ,~ :~. ~;;7/.. . . . ~~f'\"{/;~:YA The SocIety receIved approxImately 72% ~f~It~!t~~enue from to unty of Hawaii. Continued County funding at present service levels is ~ypeW~ 9n econo /" conditions on the Island of Hawaii and budgetary restraints experienced lfy~the Go /" i6ns in this funding could affect the organization's ability to . ue as a going~'1fn. . he Kona shelter is located belong to the County of Hawaii. . /".Ke Society. This agreement must be renewed annually. ?/J? ,,>>/7 i'!'/ '~a;10: ?:;:;j;f copi.~fwas purchased through a 60 month non-cancelable lease agreement requiring monthly p . . ):l~f{;f $667.64 per month. The leased copier is being amortized using the straight-line method ~~~f7i:he life of the lease. The amounts due over the next five years are as follows: ;? June 30,2010 $ 8,013 June 30, 2011 8,013 June 30, 2012 8,013 June 30, 2013 4,674 Total $ 28,713 Page 9 HAWAII ISLAND HUMANE SOCIETY Notes to the Financial Statements June 30, 2009 Note 5. NET ASSETS The Hawaii Island Humane Society has conformed to Statement of Financial Accounting Standards (SF AS) No. 117, "Financial Statements of Not- for-Profit Organizations". Accordingly, the Society is required to report information regarding its financial position and ac~i"yities according to three classes of net assets: unrestricted net assets, temporarily restricte et~!::assets and permanently restricted net assets. Unrestricted net assets represent those assets whose usage .Is i'Q"€ither te9,xq,~~rily nor permanently restricted by donors. These revenues are used for the ge9~~I~~p~tating eXrr~~~.tures of the Society or for such other purposes as determined by the Board ,9' irectors.<!0 ust be met " Temporarily restricted net assets include those asse,/f~,ying d&i1Qr restrictions i either through some specific actions of the Society or by{'<', a~Ji~'*oftime. 'P' '5( ~x:: At June 30,2009, temporarily restricted n~<~ssets consisted op;~' ;.;(1'-<>> Permanen ' "estricted net purpose of tn~~;$Qpiety. Inco ,::;?!~ the donor. AnIune. 30, 20 '",,):::;i:;>, SpaylNeuter progrif<;;\ Michi Haga Miller Fund Second Chance Fund West Hawaii Cattery Spay/Neuter Fund Capital Campai Equine Fund Keaau Kenfte s Waimea Kennel Pro 21,;,~ 20,5~4 <-550 , 3,850 10,000 5,212 8,516 5,695 $ 115,239 ts ar endowment funds restricted in perpetuity to continue the generated by these assets can be used for activities as specified by permanently restricted net assets consisted of the $19,905 for the Under SFAS No. 116, contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. The value of the volunteer services donated is based on 573 volunteer hours at $10 per hour. Page I 0 HAWAII ISLAND HUMANE SOCIETY Notes to the Financial Statements June 30, 2009 Note 7. RECONCILIATION OF EXCESS SUPPORT AND REVENUE OVER EXPENSES TO NET CASH PROVIDED BY OPERATING ACTIVITIES Excess Revenue over Expenses Adjustments to Reconcile: Depreciation Change in Other Current Assets Change in Accounts Payable Change in SIN Coupon Liability Change in Credit Cards Change in Copier Lease Change in County Payable Change in Accrued GET Change in Accrued PR Tax Change in Accrued Vacation $ 321,439 Net Cash Provided by Operating Acti. 93,130 (13,635) 1,485 45,000 3,120 2.854 '?;:!e')';# l:Z~1fOO .1,;28 (4,401) 2,311 498,331 x. aintains ~JRA retirement plan for all eligible employees s 5% of eac$eligible employee's wages. Employees are '7// 10 )'by the Organization for at least two years. 1,412. The Hawai;' direct progr program and suP., Page 11 October 21, 2009 Nori Ishii Police Finance Department County of Hawaii Dear Ms. Ishii, Thank you for your assistance with questions concerning the County Contract for Hawaii Island Humane Society (HIHS). We, at Carbonaro CPA and Associates, are in the process of auditing the financial reports of the Hawaii Island Humane Society for year ended June 30, 2009. We have questions concerning the following: 1. In the current contract dated July 28, 2008, it is stated that the annual sum of $2,051,119 includes $121,600 to be used for the County Spay/Neuter CAP Program. HIHS provides a program in which they sell Spay/Neuter Coupons to clients for less than island vets normally charge and various island vets have agreed to participate in this program and receive the coupons for spay/neuter payment. The Vets have agreed to charge the coupon rate for their services which is considerably lower than their standard fees. On a regular basis, when services are completed, the coupons are then collected by the vets as payment from the client and submitted to HIHS for reimbursement for the coupon amounts. Qualifying clients can receive free or reduced coupons, but the vets are always reimbursed at the standard coupon rate. We have the following questions in relation to the SIN coupon program: A. It appears that this program was put into place as a result of the letter issued to the Dept of Finance on 3/4/2008. This letter states that the SIN CAP program will be administered by HIHS on behalf of the County but does not define if the coupons are to be sold or given away. Per my review of this letter, it appears that the coupons are to be issued without charge to the client and that the resulting expenses are to be paid for by the $121, 600 Spay/Neuter County funds. Please advise us as to the nature of this program. B. In relation to the above item A, what is the nature of the program funds that make up the coupon sales? Is this a program that is required by the County or is the program internal to HIHS? If the program is considered to be a County program, if excess funds are generated in the fiscal year from coupon sales, how should the funds be treated? Would HIHS keep unexpended funds as unrestricted revenue or should it be carried over each year as restricted to SIN CAP? .. C. The annual report submitted by HIHS for their expenses for the Fiscal Year 2009, includes a line item for "Spay/Neuter Program expense. Per this fiscal report, the SIN Program expense exceeded the County designated funds of $121,600 by about $78 K. The revenue of about $144K generated by the coupon sales is not included on the report to offset the expenses that exceed the $121,600 allowed in the budget. Thus, it appears that the excess of the SIN cap expenses are funded by the portion of the contract that is not allocated to SIN Cap expenses. Should the coupon sales be included on the report to offset expense? 2. On the annual fiscal report approved in the contract, there is a line item noted as Admin Office Rent. This is an amount predicted by HIHS that the County would pay for the use of the Kona Admin Office. The office rent is an "in-kind" to the County for use of the administrative facility owned by HIHS. This office is located on land donated to HIHS by the County for shelter use. Is the rent allowed as an expense to the contract? Also, we need to include the amount of "in-kind flrent from the County to HIHS. What is the annual fair market value ofthis flin kind" donation? 3. The line item for rent of Keaau and Waimea shelters is predicted rent of what the County would pay for rental of the facilities that are owned by HIHS. It is 'in-kind" to the County. Is this an allowable expense per contract as noted above? 4. What is the status of annual reporting to the County? Is HIHS in good standing with the County of Hawaii? Due to the issues encountered above, is it possible to obtain an extension on the current deadline of October 31, for the 2009 audited financials? 5. Is the County contract with HIHS an expense reimbursement contract or if in the event that the funds are not fully expended, does HIHS keep the funds that are left over and consider them as unrestricted revenue? We appreciate your assistance with these questions. The written explanations are somewhat difficult to follow, so please don't hesitate to contact me with any questions or concerns. I can be reached at my cell phone # 808-283-5681 or at the shelter #329-2135. Due to the County reporting deadline of Oct. 31, we would appreciate hearing from you as soon as possible. ~incerely, A1 L (;)---r: 4-~ " '(VV\f\.UA-- lJ l €A V---J Linda R. Tester Accountant for Carbonaro CPA and Associates