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HomeMy WebLinkAboutCOM 0696.000 2008-2010 - "C: IVED 2i FEB ? FP1 4 20 Cr CYK CC_,,: IF ; ,;: AI HAWAII ISLAND HUMANE SOCIETY (A Hawaii Nonprofit Corporation) AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Comm. No. 4061 Ref. To: { G Ref. Owe_ MI 0 4 Into C arbonarol4aer Certified Public Accountants Member: AICPA CPA Associates HSCPA 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 position of Hawaii Island Humane Society (a Hawaii non -profit corporation) as of June 30, 2009, and the related statements of activity, functional expenses, changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of Hawaii Island Humane Society's management. Our responsibility is to express an opinion on these financial statements based on our audit. Except as discussed in the following paragraph, we conducted our audit 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Due to lack of documentation and lack of internal controls over the cash receipts functions, we were not able to adequately verify that all cash receipts were properly recorded and deposited. Accordingly, it was not practicable for us to extend our audit of such receipts beyond the amounts recorded. In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had the cash receipts functions noted in the preceding paragraph been susceptible to satisfactory audit tests, the financial statements referred to above present fairly, in all material respects, the financial position of Hawaii Island Humane Society as of June 30, 2009, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule of county program activity on page 8 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. C P,4 Mountain View, Hawaii October 28, 2009 P.O. Box 4372 • Hilo, Hawaii 96720 • Phone: (808) 968 -1002 Fax: 1 -(866) 728 -6430 HAWAII ISLAND HUMANE SOCIETY Statement of Financial Position As of June 30, 2009 ASSETS CURRENT ASSETS Cash: Checking - BOH Operating County $ 149,253 Checking - BOH Operating Humane Society 193,486 Checking - BOH Operating Spay Neuter 28,532 Money Market - HFCU Restricted Funds 267,855 Checking - HFCU Share Draft 100 Saving - HFCU 50 Total Cash 639,276 Other Current Assets Petty Cash 373 • Prepaid Insurance 50,266 Retail Inventory 33,609 Total Other Current Assets 84,248 Total Current Assets 723,524 PROPERTY AND EQUIPMENT (Note 2) Buildings 478,536 Vehicles 329,394 Equipment - Office 127,400 Operating Room Equipment 29,878 Leasehold Improvements 44,826 Miscellaneous Assets 81,890 1,091,924 Accumulated Depreciation (621,495) Total Fixed Assets 470,429 OTHER ASSETS Deposits - Officer Badges 300 Deposits - Other 200 Total Other Assets 500 TOTAL ASSETS $ 1,194,453 The accompanying notes and Auditors' report are an integral part of these financial statements. Page 2 HAWAII ISLAND HUMANE SOCIETY Statement of Financial Position As of June 30, 2009 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts Payable $ 149,089 S/N Coupon Liability (Note. 11) 45,000 Credit Cards 5,683 Total Accounts Payable and Credit Cards 199,772 OTHER CURRENT LIABILITIES Accrued Wages 28,880 Deferred County Funds (Note 12) 121,125 County of Hawaii Payahles 17,001 Accrued General Excise Tax 4,928 Accrued Payroll Taxes and Benefits 1,843 Accrued Vacation Payable 16,692 Total Other Current Liabilities 190,469 TOTAL CURRENT LIABILITIES 390,241 LONG TERM LIABILITIES Capitalized Leases Payable 32,854 TOTAL LIABILITIES 423,095 NET ASSETS (Notes) Unrestricted Net Assets 636,214 Temporarily Restricted 115,239 Permanently Restricted 19,905 Total Net Assets 771,358 TOTAL LIABILITIES AND NET ASSETS $ 1,194,453 The accompanying notes and Auditors' report are an integral part of these financial statements. Page 3 HAWAII 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) $ 1,929,994 $ 1,929,994 Donations 213,690 69,982 283,672 Fundraising 195,877 195,877 Adoptions 154,614 154,614 S/N CAP Coupon Sales (Note 10) 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 6) 5,730 5,730 Recycling 5,504 5,504 Miscellaneous Revenue 10,758 10,758 Net Assets Released from Restrictions 118 (118) - Total Public Support and Revenue 2,646,346 69,864 - 2,716,210 EXPENSES Salaries and Wages 1,214,085 1,214,085 Surgery Programs and Supplies 254,656 254,656 Employee Benefits 144,498 144,498 Insurance 106,299 106,299 Kennel /Animal Disposal and Janitorial Supplies 115,687 115,687 Payroll Taxes 102,310 102,310 Depreciation 93,130 93,130 Utilities 83,442 83,442 Fundraising Expense 69,276 69,276 Auto Expense 49,457 49,457 Repairs and Maintenance 43,240 43,240 Advertising 41,017 41,017 Legal and Professional Services 39,962 39,962 Adoption Expense 25,954 25,954 Office Supplies 20,625 20,625 Network Expense 18,267 18,267 Printing 14,752 14,752 Bank and Credit Card Fees 13,930 13,930 Staff Meeting and Training 13,267 13,267 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 7,169 7,169 Dues, Licenses, Subs, Taxes 8,172 8,172 _ General Excise Tax and Other Taxes 6,428 6,428 Volunteer Program and Other 6,149 6,149 Contract Labor 5,520 5,520 Veterinary Care 4,330 4,330 Total Expenses 2,535,896 - - 2,535,896 Net Revenue Over (Under) Expenses $ 110,450 $ 69,864 $ - $ 180,314 The accompanying notes and Auditors' report are an integral part of these financial statements. Page 4 HAWAII ISLAND HUMANE SOCIETY Statement of Functional Expenses For the Year Ended June 30, 2009 Program Supporting Services Services Fundraising Total Salaries and Wages $ 1,054,863 $ 133,549 $ 25,673 $ 1,214,085 Surgery Programs and Supplies 254,656 254,656 Employee Benefits 135,867 8,631 144,498 Insurance 99,610 3,189 3,500 106,299 Kennel /Animal Disposal and Janitorial Supplies 115,687 115,687 Payroll Taxes 93,121 6,650 2,539 102,310 Depreciation 45,500 42,974 4,656 93,130 Utilities 75,812 7,630 83,442 Fundraising Expense 69,276 69,276 Auto Expense 44,571 4,886 49,457 ' Repairs and Maintenance 42,253 987 43,240 Advertising 1,467 39,550 41,017 Legal and Professional Services 27,994 11,968 39,962 Adoption Expense 25,954 25,954 Office Supplies 12,474 7,127 1,024 20,625 Network Expense 14,940 3,327 18,267 Printing 1,475 13,277 14,752 Bank and Credit Card Fees 10,448 2,089 1,393 13,930 Staff Meeting and Training 10,647 2,620 13,267 Meals and Travel 6,500 4,361 10,861 Humane Education 8,295 8,295 Office Equipment and Rentals 3,946 3,945 7,89] Uniforms 7,227 7,227 Postage and Freight 4,680 697 1,792 7,169 Dues, Licenses, Subs, Taxes 6,114 2,058 8.172 General Excise Tax and Other Taxes 1,428 5,000 6,428 Volunteer Program and Other 4,899 1,250 6,149 Contract Labor 5,520 5,520 Veterinary Care 4,330 4,330 Total Expenses $ 2,118,850 $ 302,193 $ 114,853 $ 2,535,896 The accompanying notes and Auditors' report are an integral part of these financial statements. Page 5 HAWAII ISLAND HUMANE SOCIETY Statement of Changes in Net Assets For the Year Ended June 30, 2009 Temporarily Permanently Total Unrestricted Restricted Restricted Net Assets Net Assets, Beginning of Year $ 525,764 $ 45,375 $ 19,905 $ 591,044 Excess Support & Revenue Over Expenses 110,450 69,864 - 180,314 Net Assets, End of Year $ 636,214 $ 115,239 $ 19,905 $ 771,358 The accompanying notes and Auditors' report are an integral part of these financial statements. Page 6 HAWAII ISLAND HUMANE SOCIETY Statement of Cash Flows For the Years Ended June 30, 2009 CASH FLOWS FROM OPERATING ACTIVITIES Hawaii County Funding $ 2,051,119 Fundraising 195,877 Sales and Services to Public 214,021 Foundations and Other Donations 283,672 S/N CAP Revenues 99,695 Other Cash Received 10,504 Cash Paid to Employees and Vendors (2,356,557) Net Cash Provided by Operating Activities (Note 7) 498,331 CASH FLOWS FROM INVESTING ACTIVITIES Cash Used to Purchase Equipment (116,158) Net Cash Used by Investing Activities (116,158) CASH FLOWS FROM FINANCING ACTIVITIES - Net Increase in Cash for the Year 382,173 CASH BALANCE, BEGINNING OF YEAR 257,103 CASH BALANCE, END OF YEAR $ 639,276 The accompanying notes and Auditors' report are an integral part of these financial statements. Page 7 HAWAII ISLAND HUMANE SOCIETY Schedule of County Program Activity • For the Year Ended June 30, 2009 Animal S/N - Control CAP Total Receipts: County of Hawaii Contracted Funds $ 1,929,519 $ 121,600 $ 2,051,119 Total Receipts 1,929,519 121,600 2,051,119 Operating Expenses Salaries and Wages $ 1,075,077 $ - $ 1,075,077 Surgery Programs and Supplies 2,111 121,600 123,711 Employee Benefits 121,904 - 121,904 Kennel /Animal Disposal /Janitorial Supplies 78,250 - 78,250 Insurance 105,575 - 105,575 Payroll Taxes 93,121 - 93,121 Utilities 75,813 - 75,813 Auto Expense 43,972 - 43,972 Repairs and Maintenance 42,253 - 42,253 Legal and Professional Services 27,994 - 27,994 • Network Expense 14,940 - 14,940 Staff Meeting and Training 10,647 - 10,647 Uniforms 7,227 - 7,227 Office Supplies 7,175 - 7,175 Meals and Travel 6,344 - 6,344 Dues, Licenses, Subs, Taxes 6,114 - 6,114 Contract Labor 5,520 - 5,520 Postage and Freight 4,680 - 4,680 Office Equipment and Rentals 3,946 - 3,946 Printing 1,475 - 1,475 Advertising 1,467 - 1,467 Bank Fees 1,409 - 1,409 Veterinary Care 545 - 545 Total Operating Expenditures 1,737,559 121,600 1,859,159 Fixed Asset Purchases 70,835 - 70,835 Excess Receipts over Expenditures (Note 12) $ 121,125 $ - $ 121,125 The accompanying notes and Auditors' report are an integral part of these financial statements. Page 8 HAWAII ISLAND HUMANE SOCIETY Notes to the Financial Statements June 30, 2009 Note 1. 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 out animal control for the County of Hawaii for the entire island of Hawaii. They maintain shelters in each of three island locations; Kona, Kea'au and Waimea. Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting: The Organization uses the accrual method of accounting for financial statement reporting according to generally accepted accounting principles. Under this method of accounting, revenue is recognized when earned rather than when received and expenses are recognized when incurred rather than when paid. Revenue Recognition: Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and /or nature of any donor restrictions. Grants and other contributions of cash are reported as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. When the donor restriction expires, that is, when a stipulated time restriction ends or purpose 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. Cash and Cash Equivalents: For the purpose of the statement of cash flows, cash is defined as demand deposits and savings accounts. Investments: The Organization has adopted SFAS No. 124, "Accounting for Certain Investments Held by Not-for-Profit Organizations." Under SFAS No. 124, investments are stated at fair value and the net unrealized appreciation or depreciation on investments held is included in the change in net assets in the accompanying statements of activities. Purchased investments are carried at market value. Donated investments are recorded at their fair market value on the date of donation. Gains and losses on the sale of investments are accounted for in the net asset group where the related investments are recorded. Ordinary investment income is also accounted for in the net asset group where the investments are 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 9 HAWAII 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. Income Taxes: Hawaii Island Humane Society is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code and also from State of Hawaii income taxes under Sections 416 -19 and 416 -20 of the Hawaii Revised Statutes. Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Note 3. CONCENTRATIONS The Society received approximately 72% of its revenue from the County of Hawaii. Continued County funding at present service levels is dependent upon economic conditions on the Island of Hawaii and budgetary restraints experienced by the County. Reductions in this funding could affect the organization's ability to continue as a going concern. Funds received pursuant to the County of Hawaii purchase of service agreement are for operating the County Animal Shelter and enforcing the County's animal control regulations. These funds are to be used in accordance with the agreement. Costs charged against the agreement are subject to review and acceptance by the County of Hawaii. The shelter building and land on which the Kona shelter is located belong to the County of Hawaii. The County provides the site at no cost to the Society. This agreement must be renewed annually. Note 4. LEASES On January 28, 2008, a copier was purchased through a 60 month non - cancelable lease agreement requiring monthly payments of $667.64 per month. The leased copier is being amortized using the straight -line method over the 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 8,013 June 30, 2014 802 Total $ 32,854 Page 10 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 (SFAS) No. 117, "Financial Statements of Not - for - Profit Organizations ". Accordingly, the Society 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. Unrestricted net assets represent those assets whose usage is neither temporarily nor permanently restricted by donors. These revenues are used for the general operating expenditures of the Society or for such other purposes as determined by the Board of Directors. Temporarily restricted net assets include those assets having donor restrictions that must be met either through some specific actions of the Society or by the passage of time. At June 30, 2009, temporarily restricted net assets consisted of the following: Michi Haga Miller Fund $ 21,882 Second Chance Fund 20,534 West Hawaii Cattery 19,550 Spay/Neuter Fund 23,850 Capital Campaign I0,000 Equine Fund 5,212 Kcaau Kennels 8,516 Waimea Kennel Project 5,695 Total Temporarily Restricted Net Assets $ 115,239 Permanently restricted net assets are endowment funds restricted in perpetuity to continue the purpose of the Society. Income generated by these assets can be used for activities as specified by the donor. At June 30, 2009, permanently restricted net assets consisted of the $19,905 for the Spay/Neuter program. Note 6. DONATED SERVICES 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 11 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 $ 180,314 Adjustments to Reconcile: Depreciation 93,130 Change in Other Current Assets (13,635) Change in Accounts Payable 142,610 Change in S/N Coupon Liability 45,000 Change in Credit Cards 3,120 Change in Copier Lease 32,854 Change in County Payable 12,100 Change in Accrued GET 4,928 Change in Accrued PR Tax (4,401) Change in Accrued Vacation 2,311 Net Cash Provided by Operating Activities $ 498,331 Note 8. RETIREMENT PLAN The Hawaii Island Humane Society maintains an IRA retirement plan for all eligible employees whereby the Organization contributes 5% of each eligible employee's wages. Employees are considered eligible after they have been employed by the Organization for at least two years. During the year, retirement plan expenses totaled $21,412. Note 9. FUNCTIONAL EXPENSES The Hawaii Island Humane Society allocates expenses on a functional basis among three categories: direct program services, supporting services, and fundraising. Most expenses are allocated to the program and support services benefited. Note 10. SPAY /NEUTER PROGRAM The Hawaii Island Humane Society sells coupons that enable the client to take their animal to a participating veterinarian for spay /neuter services. As a service to the community, the veterinarian has agreed to perform his services at a reduced rate which is the price that the client paid for the coupon. The veterinarian accepts the coupon as payment for the spay /neuter services that he has performed and then bills the Hawaii Island Humane Society for payment of his services. The County of Hawaii subsidizes the payments to the veterinarian by funding Hawaii Island Humane Society the amount of $121,600 per year. The program expenses exceed the county funding. The remaining expenses are paid from the revenues generated by coupon sales. As of June 30, 2009, the program incurred a loss of $19,063 above the amount generated by both coupon sales and county funds. Page 12 HAWAII ISLAND HUMANE SOCIETY Notes to the Financial Statements June 30, 2009 Note 11. S/N COUPON LIABILITY The coupons sold through the S/N CAP program are redeemed by the client when veterinary services are performed. The amount of $45,000 on the balance sheet represents unredeemed coupons. Note 12. DEFERRED REVENUE Deferred Revenue of $121,125 at June 30, 2009, represents the unearned County of Hawaii contract funds that support the County Animal Control program. Page 13