HomeMy WebLinkAboutCOM 0091.001 2018-2020 COUNTY CLERK
COUNTY OF HAWAIII
RECEIVED
Time 1:2(P PM Bv �t&
Date 2020 jPw io
HAWAII ISLAND December 28, 2019
HUMANE
soelfry
County Council Chair Valerie Poindexter
BOARD OF DIRECTORS County of Hawaii
Adam Atwood 25 Aupuni Street
PRESIDENT Hilo, Hawaii 96720
Danielle Degele
SECRETARY
Dear Council Chair Poindexter,
Monica Kwon
TREASURER
Enclosed, please find a copy of Hawaii Island Humane Society's
StAsy Ruddle Audited Financial Statements for the years ended June 30, 2019 and
PAST PRESIDENT 2018.
Scott Bridges
Kocey Coyle I have recently taken the helm at the Hawaii Island Humane Society,
and look forward to working with the County of Hawaii in 2020.
tenni Lee
Wionda Pollard Please feel free to contact me with any questions at 808-329-8002 or
via email at ceo(a-
,)hihs.org.
Elizabeth lose,DVM
CHIEF EXECUTIVE OFFICER
Sincerely,
E iz6beth Jose, DVM
78-6767 Mamalahoa Highway8F Holualoa,Hawaii 96725 1& hihsorg
Kona 808.329-1175 10 Keaau 808.9665458 Waimea 808.885.4558
Comm. No
Ref. To:
Ref. Date-JAN 7 2020
HAWAII ISLAND HUMANE SOCIETY
(A Hawaii Nonprofit Corporation)
AUDITED FINANCIAL STATEMENTS
WITH INDEPENDENT AUDITOR'S REPORT
FOR THE YEARS ENDED JUNE 30, 2019 AND 2018
HAWAII ISLAND HUMANE SOCIETY
Table of Contents
Page
Independent Auditor's Report I
Financial Statements:
Statements of Financial Position 3
Statement of Activities and Change in Net Assets—2019 5
Statement of Activities and Change in Net Assets—2018 6
Statement of Functional Expenses -2019 7
Statement of FUnctiona I Expenses - 2018 8
Statements of Cash Flows 9
Supplementary Information:
Schedules of County Program Activities 10
Notes to the I"inancial Statements I I
Carbonaro Certified Public Accountants
Member: AICPA
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INDEPENDENT AUDITOR'S REPORT
Tothe Management and Board ofDirectors nf
Hawaii Island Humane Society
Kai|uaKona, Davvui'i96740-270|
We have audited the accompanying financial statements ofHawaii Island Humane Society (a 8uwui'i nonprofit.
organization) (the Organization) which comprise tile statements o[ financial position asofJune 30, 2019 and
2018, and the related statements of activities and change in net assets, functional expenses and cash flows for the
years then ended, and the related notes tothe 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 /\medou; this includes the design,
implementation, and uuain1snunoc of internal control relevant to the p,opu,u1inn and fair presentation of financial
statements that are |icc fronn material misu{o1couon(` whether due to fraud or error.
Auditor's Responsibility
-
Our responsibility ia10express all opinion onthese Onunoiu| statements based on our audits. We conducted our
audits in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards
require that *e plan and pcdbnu the audits to mtvaio reasonable assurance about whether tile financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thc
financial statements. The procedures oe|cotcd depend oil the auditor's judgment, including the assessment oftile
risks of material misstatement of the financial statements, whether due to fraud or error. In making rbnoe risk
assessments, the auditor considers iotcnnu| uoub*| relevant (othe 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 oil 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 cnbmnutea made by counugconcnL as well as evaluating the overall
presentation ofthe financial a1u{enueu1s.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide o basis for our audit
opinions.
Opinion
In our Opinion, the financial otutenocu{s referred to above present fairly, in all material respects, the financial
position of Hawaii ls|uud Humane Society as of June 30, 2019 and 2018, and <bc related statements of activities
and changes in net assets, hmnchonol expenses and cash flows for the yuu,o then ended in accordance with
accounting principles generally accepted inthe United States ofAmerica.
Maui: Big Island:
l885Mai nStreet, Suite 488 ` WakUuku, Hawaii 96793 Location: l26Kinoo|eStreet ' Hilo, Hawaii 96720
310OhukoiRoad, Suite 3O5 ` Kiihei, Hawaii 96753 Mailing: PO. Box 4372 ^ Hilo, Hawaii 9672O
Phome: 8O8.24Z.SOO2 Phone: 808.930.6850
To the Management and Board nfDirector of
Hawaii Island Humane Society
Other Matters
Our audit was conducted for the purpose of'forming un opinion on the financial statements as o whole. The
Schedules ofCouu1y ynoQruoo Activities on page iO is presented for purposes of additional uou}yoiy and isnot u
required part ofthe fiouocio| statements. Such iofbnno1iun is the responsibility ofmanagement and was derived
frorn and relates directly to the underlying accounting and other records used to prepare the financial statements.
The information has been subjected tothe auditing procedures applied iothe audit ofthe financial statements and
oeduiu additional procedures, including comparing and reconciling such information directly tothe underlying
accounting and other records used to prepare the Doanuio| statements or to the financial statements themselves,
and other additional procedures in accordance with auditing standards generally accepted in the United States of
f\roeriuu. In our opinion, the infbnnuhun is fairly s(uk:d in all material respects in relation to the financial
stutcnnunta as u whole.
Hilo, 8awui^i
October 25, 20\9
Page 2 |
HAWAII ISLAND HUMANE SOCIETY
Statements ofFinancial Position
For the Years Ended June 3O`28}9and 20l8
ASSETS
2019 2018
CURRENT ASSETS
Cash and uod Caah Equivalents(Note 2) S 1,580.364 3.168.135
Other Current f\oeu(a
Accounts Receivable 1,225 17,056
Pledge Receivable,net ofAllowance(Note |6) 6,080 54'500
Prepaid Expense 1.652 12,202
Retail lnventory(Note 2) 12,140 12,140
Total Other Current Assets 21,017 96,798
Total Current Assets 1,601,381 3,264c933
PROPERTY AND G0D|PyWBNT(No|u2)
Keu'uuLmnd
100,000 100,000
Ho|ua\oaLuoJ(Note |4) 452,646 452,646
Buildings 871.502 871,502
Vehicles 447,995 408,558
Equipment Office 69,689 69.689
Operating RoomEquipment 54.292 49,884
Leasehold Improvements(Note 15) 162,945 162,045
Land Improvement Dog Park 1,184.222 1.184,222
Construction In Progress(Note ]4) 3,745.6*8 1,557,980
Miscellaneous Assets 21,954 21,954
7'/10,929 4,864,580
Accumulated Depreciation
Net Property and Gquipmcn1 6,271,136 4,108,962
OTHER ASSETS
Investments (Note 4) 24`400 25,844
Deposits' Other 500 808
TWo/ Other Assets 24900 26,702
TOT/\L /\88GlS 7.897417 7400547
����
The accompanying notes are oo integral part ofthese financial ytotmnno|a.
Page
HAWAII ISLAND HUMANE SOCIETY
Statements of Financial Position
For the Years Ended June 30,2019 and 2018
LIABILITIES AND NET ASSETS
2019 2018
CURRENT LIABILITIES
Accounts Payable S 497,468 89,389
S/N Coupon and Other County Payables(Note 12) 3,969 3,371
Credit Card Payable 8,533 2,611
Total Current I.Jabilities 509,970 95,371
OTHER CURRENT LIABILITIES
Accrued Wages 54,516 47,919
Accrued Vacation Payable 18,120 32,351
Accrued Payroll Taxes and Benefits 21,561 18,406
Total Other Current Liabilities 94,197 98,676
TOTAL CURRENT LIABILITIES 604,167 194,047
NET ASSETS (Note 8)
Net Assets Without Donor Restriction 6,510,169 4,689,355
Net Assets With Donor Restriction 783,081 2,517,195
Total Net Assets 7,293,250 7,206,550
TOTAL LIABILITIES AND NET ASSETS 7,897,417 7,400,597
The accompanying notes are an integral part of these financial statements.
Page 4
HAWAII ISLAND HUMANE SOCIETY
Statement of Activities and Change in Net Assets
For the Year Ended June 30,2019
Without Donor With Donor Restriction 2019
Restriction Temporaries Permanently Total
PUBLIC SUPPORT AND REVENUE
County of Hawai'i 2,081,625 $ - $ 2,081,625
Donations 13,266 805,534 - 818,800
Fundraising 279,887 - - 279,887
Adoptions
148,756 - - 148,756
Grants 5,000 112,483 - 117,483
Donated Set-vices(Note 7) 40,606 - - 40,606
Donated Rent (Note 7) 25,200 - - 25,200
Sales 20,066 - - 20,066
Cost of Goods Sold (Note 2) (4,804) - - (4,804)
Miscellaneous Revenue 16,273 - 16,273
Humane Shelter Services 15,485 - 15,485
S/N CAP Coupon Sales(Note 11) 922 - 922
Gain on Sale of Asset 500 - 500
Recycling - - - -
Net Assets Released from Restrictions 2,652,131 (2,652,131) - -
Total Public Support and Revenue 5,294,913 (1,734,114) - 3,560,799
EXPENSES
Program Expenses 3,080,998 - 3,080,998
Management and General 318,971 - 318,971
Fundraising Expenses 74,130 - 74,130
Total Expenses 3,474,099 3,474,099
CHANGE IN NET ASSETS $ 1,820,814 $ (1,734,114) $ - $ 86,700
NET ASSETS, BEGINNING OF YEAR 4,689,355 2,494,821 22,374 7,206,550
NET ASSETS, END OF YEAR $ 6,510,169 $ 760,707 $ 22,374 $ 7,293,250
The accompanying notes are an integral part of these financial statements.
Page 5
HAWAII ISLAND HUMANE SOCIETY
Statement of Activities and Change in Net Assets
For the Year Ended June 30, 2018
Without Donor With Donor Restriction 2018
Restriction Temporarily Permanent
Total
PUBLIC' SUPPORT AND REVENUE
County of I-JaNvai'i $ 2,081,625 2,081,625
Donations 205,142 3,003,390 3,208,532
Fundraising 250,300 - 250,300
Adoptions 140,900 - 140,900
Grants - 275,000 275,000
Donated Services(Note 7) 4,150 - 4,150
Donated Rent(Note 7) 25,200 - 25,200
Sales 25,125 - 25,125
Cost of Goods Sold (Note 2) (3,977) - (3,977)
Miscellaneous Revenue 8,103 - 8,103
Humane Shelter Services 12,593 - 12,593
S/N CAP Coupon Sales(Note 11) 1,677 - 1,677
Gain on Sale of Asset 11,736 - 11,736
Recycling 662 - 662
Net Assets Released frorn Restrictions 1,997,588 (1,997,588) -
Total Public Support and Revenue 4,760,824 1,280,802 - 6,041,626
EXPENSES
Program Expenses 2,669,754 - - 2,669,754
Management and General 278,244 - - 278,244
Fundraising Expenses 151,195 - - 151,195
Total Expenses 3,099,193 - - 3,099,193
CHANGE IN NET ASSETS $ 1,661,631 S 1,280,802 $ - $ 2,942,433
NET ASSETS, BEGINNING OF YEAR 3,027,724 1,214,019 22,374 4,264,117
NET ASSETS, END OF YEAR $ 4,689,355 $ 2,494,821 $ 22,374 $ 7,206,550
The accompanying notes are an integral part of these financial staternents.
Page 6
HAWAII ISLAND HUMANE SOCIETY
Statement of Functional Expenses
For the Year Ended June 3O, 20/0
Supporting Services
Program vxuouAoment 2019
Services and General Fundraising Total
Salaries and TVagco 0 /,205.947 * 135,500 $ 13,550 8 1,354.997
Kennel Supplies, Food and Medicine 361.333 - - 361,333
Employee Benefits 251,226 28,228 2,823 282,276
Legal and Professional Services 137,115 48,176 - 185,24/
Surgery Programs and Supplies /47,662 13.7/7 - 161,379
Payro|/ Taxes 116`468 13,086 1,300 138,803
LhUidea 1/2,319 7,169 - 119.488
Depreciation 110,641 - - 110`641
Auto Expense 187,959 ' - 107,959
Repairs and Maintenance 63.642 34,269 - 97,910
Insurance 86,738 5.536 92,274
Adoption Expense 58,984 - - 58,984
Office Supplies 38,714 9,679 - 48,303
Fundraising Expense - ' 47,508 47,508
In-Kind - Service(Note 7) 40,606 - 40.606
Advertising 40,096 ' - 40,096
-
Veterinary Care and Evidence Annuals 34,897 - ' 34,897
Rent, including In-kind Rent(Note 7) 31,279 1.250 - 32.529
Animal Disposal 26,911 - - 26,911
Network Expense 15`613 10,409 ' 26,022
Printing 17,014 - 895 17,909
Bank and Credit Card Fees 12,556 ' 3'139 15,695
General Excise Tax and Other Taxes 11,332 ' 3.982 15,314
Meals and Travel 12,333 2,349 - 14`682
Other Expenses 9,024 2'/78 - 12,101
Staff Meeting and Training 7,875 3'063 - 10,938
Uniforms 8.663 - - 8,663
Annual Control Equipment 5,517 - - 5.517
Dues, Licenses, Subscriptions 3,059 2,308 ' 5,367
Postage and Freight 2.158 2,056 925 5,130
Humane Education 2,417 ' 2,417
TOTAL EXPENSES 3,080,998 918,971 74,130 $ 3,474,099
The accompanying notes are an in(c8m|part ofthese Gnoociu|statements.
Page |
/
HAWAII ISLAND HUMANE SOCIETY
Statement oyFunctional Expenses
For the Year Ended June 3O, 20)D
Supporting Services
Program Management 2018
8azviuea and General
�undL2jo � Total
u�
Salaries and VVugeo 1,141,503 $ 128,259 $ 12,826 S 1,282,588
Kennel Supplies, Food and Medicine 290,817 ' - 298.817
Employee Benefits 230,399 25,888 2.589 258,876
Legal and Professional Services 65,588 23,042 - 88,622
Surgery Programs and Supplies 149.042 13'845 - 162,887
Payroll Taxes 135,236 15,195 1^520 15/'951
Utilities 100,803 6,434 - 107,237
Depreciation 46.505 - - 46,505
Auto Expense 99,334 ' - 99.334
Repairs and Maintenance 59,775 32,187 - 91,962
Insurance 66.727 4,259 - 70,986
Adoption Expense 51,240 - - 51.240
Office Supplies 29,786 7.427 - 37,/93
Fundraising Expense ' - 125,613 125,613
'
In-Kind - Service(Note 7) 4,150 - 4,158
Advertising 43,386 - - 43.386
Veterinary Care and Evidence Animals /7,041 - - 17.041
Rent, including In-kind Rent(Note 7) 30,484 1,250 - 31,734
Animal Disposal 26,376 - 26`376
Network Expense 16`921 11,281 - 28,202
Printing 14^868 - 783 15,651
Bank and Credit Card Fees 8,238 ' 2^059 10`297
General Excise Tax and Other Taxes 12,988 ' 4.564 17,552
Meals and Travel 3,/08 502 - 3,700
Other Expenses 6^184 1,358 - 7.542
Staff Meeting and Training 3.752 1,459 - 5,211
Uni form 4,/85 - 4,185
Aoimu) Cunov| Equipment 2,993 - - 2,933
Duos, Licenses, Subscriptions 3,987 3,008 6,995
Postage and Freight 2,903 2,750 1.241 6,903
RumoucGdu*Nioo 1,584 - - 1,584
TOTAL EXPENSES 2,669,754 278,244 151,195 $ 3,099,193
The accompanying notes are au integral part of these financial o{ommcotu.
Page
HAWAII ISLAND HUMANE SOCIETY
Statements of Cash Flows
For the Years Ended June 30,2019 and 2018
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Hawaii County Funding $ 2,081,625 2,081,625
Retail Sales and Services to Public 318,521 437,401
Fundraising 279,887 250,300
S/N CAP Coupon Sales 922 2,928
Foundations and Other Donations 867,300 3,176,532
Other Cash Received 14,779 8,765
Cash Paid to Employees and Vendors (2,919,984) (3,056,723)
Net Cash Provided by Operating Activities(Note 19) 643,050 2,900,828
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Investments 1,494 39,694
Proceeds from Asset Sale 500 11,736
Cash Used to Purchase Property and Equipment (39,108) (1,433,835)
Cash Used for Construction in Process (2,193,707) (393,604)
Net Cash Used by Investing Activities (2,230,821) (1,776,009)
CASH FLOWS FROM FINANCING ACTIVITIES
Net(Decrease) Increase in Cash for the Year (1,587,771) 1,124,819
CASH BALANCE, BEGINNING OF YEAR 3,168,135 2,043,316
CASH BALANCE, END OF YEAR $ 1,580,364 $ 3,168,135
Supplemental Non-Cash Investing Activities
Construction in Progress in Accounts Payable $ 328,209 $ 70,351
The accompanying notes are an integral part ol'these financial statements.
Page 9
HAWAII ISLAND HUMANE SOCIETY
Supplementary Information
Schedules ofCounty Program Activities
For the Years Ended June 3O^ 2O)9and 28|8
2019 20|8
ymimx| 8/N x^imo| 8/N
Coo,mlC&Y Total Cn",wi CAP Total
Receipts: --------- ------- --------' --------- ---------------
CountyufHn\vai'iContracted Funds 1^800^900 $ 220,725 $ 2.08/.625 $ 1.860,900 $ 220.725 $ 2.081^625
Gain noSale ofAsset 500 - 500 521 - 52/
Total Receipts 1^861.400 220.725 2.081125 1,861.421 220.725 2.082.146
Operating Expenses
Salaries and Wages 889^926 889,926 963^641 ' 963,641
Surgery Programs and Supplies(Note }|) - 195`831 195^831 - 223�022 223.822
Kennel Supplies,Food and Medicine 209^199 - 209.199 195.165 - 195.165
Employee Benefits 176.129 - 176.123 191^494 ' /91,494
ihUhico 102.988 ' 102388 84,98 ' 84,931
Pa)i,ol} Taxes 99,642 - 99,642 104.705 ' 104,705
Auto Expense 95]80 - 95.380 0i835 ' 86,835
InSUrance 60.805 ' 60.885 55,010 - 55,010
Legal and Professional Services 50,757 - 50.757 5`561 - 5.561
Outside Services/Contract Labor 47'967 - 47.967 5004 - 50,684
Repairs and Maintenance 43,520 ' 43,520 55�685 ' 55.685
Animal Disposal 26^911 - 26,911 26376 - 20.376
Advertising 19,326 - 19'326 19�665 - 19.645
Office Supplies 11235 - 11235 12,780 - 12,180
Network Expense 10.809 ' 10,809 12.059 12.059
Office Equipment and Rentals 70.438 - 10,438 8.571 - 8,571
Uniforms 7,752 ' 7.752 4]*8 - 4]68
Travel and Mileage 6.428 - 6428 2.474 ' 2,474
Staff Meeting and Training 5.071 ' 5'071 2,348 - 2.348
Animal Control Equipment 5,056 - 5,056 2^933 - 2.933
Bank uodCredit Card Fees 2^667 ' 1667 5^599 - 5.599
Dues, Licenses. Subs.Taxes ).X84 - 1^884 2'088 - 2.088
Postage and Freight 786 ' 786 1,761 - /,761
Veterinary Care and Svidc^ocAnimals 54 ' 54 - ' -
' ]aucs. Property. Other ' - - 930 - 930
Surgical Supplies ' - ' 499 499
Priming - - - 155 ' 155
Total Operating Expenses 1,884,204-------- ---195��- ---1�0.0�� -------- -------- --------
_ -85.517 ---^,-- _.~`~~'
Capital Lease Payments - ' - . - '
Fixed Assets Purchased - - - - - -
Excess Recip/oO,o <UodoiDiubursrocmo $ $ 2090 S (34. *
,297) $ (36,393)
The ucomnpanyingnotes are aointegral part nfthese financial otatemen|a.
Page 10
HAWAII ISLAND HUMANE SOCIETY
Notes to the Financial Statements
June 30, 2019 and 2018
Note 1. ORGANIZATION
The Hawaii Island Humane Society is a nonprofit Organization (tile Organization) incorporated under the laws of
the State of Hawaii on May 10, 1962. The Hawaii Island Humane Society is organized to prevent cruelty to
animals, to eliminate pet Overpopulation, and to enhance the bond between humans and 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'aLl, and Waimea.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Melhod qfAccounfing.- The Organization uses the accrual method of accounting for financial statement reporting
according to generally accepted accounting principles in the United States of America. 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. The
Organization has adopted the policy of recording donor restrictions met in the same year as increases to
unrestricted net assets.
Cost qf'Goods Said: Cost of goods sold consists of the cost of inventory merchandise purchased for resale that
has been sold. The cost of goods sold for fiscal years ending June 30, 2019 and 2018, were $4,804 and $3,977,
respectively.
Use qj*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.
Property and Eejuil.mient.- The Organization 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.
The Organization has purchased various fixed assets with County grant fluids. 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.
Inventory: Retail inventory is stated at cost. Cost is determined using the first-in, first-out(FIFO) method.
Reclossijicalions.- Certain account balances in the financial statements for the fiscal year ended June 30, 2018,
have been reclassified for comparative purposes to conform to the presentation for fiscal year ended June 30,
2019. These had no effect on the Total Assets reported for the fiscal year ended June 30, 2018.
Page I I
HAWAII ISLAND HUMANE SOCIETY
Notes to the Financial Statements
June 30, 2019 and 2018
Note 2. SLJMMARY Of: SIGNIFICANT ACCOUNTING; POLICIES -C0771illuecl
Cush and Cash L
,a "quivalent and Concentration cif Risk: For the put-pose of the statement of cash flows, the
Organization considers all cash and other highly liquid investments with initial maturities of three months or less
to be cash equivalents. Interest income oil the certificates of deposit is recorded as income when earned. Cash and
equivalents exclude cash restricted for the endowment fund. The Organization maintains cash balances at
financial institutions that may at times exceed the FDIC insured limits. Management acknowledges the possibility
of'risk in this arrangement; however, the size and longevity of the depository institutions minimizes such risk.
The following is a summary of deposits as Of June 30:
2019 2018
Fully Insured Deposits $ 861,252 $ 836,548
Uninsured and Un collateralized 719,112 2,331,587
$ 1,580,364 $ 3,168,135
Note 3. CONCENTRATIONS
The Organization received approximately 58% and 35% of its revenue from the County of'Hawaii as of.fune 30,
2019 and 2018, respectively. 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 Count}/ of Hawaii purchase of service agreement are for operating the Count),
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
f-lawai'i.
Note 4. INVESTMENTS
Investments: The Organization has implemented FASB ASC 820-10-50-1 which establishes a fair value hierarchy
for inputs used in measuring fair market value that maximizes the use of observable inputs, and minimizes the use
Of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are
those that market participants would use in pricing the asset or liability based on the best information available in
the circumstances. This fair value hierarchy consists of three broad levels.
• Level I inputs consist of unadjusted quoted prices in active markets such as stock
exchanges for identical assets and have the highest priority.
• Level 2 inputs Consist of significant other observable inputs Such as quoted prices for
similar assets and liabilities in active markets, and inputs that are observable for the asset
and liability, either directly or indirectly, for substantial]), the full term of the financial
instrument.
• Level 3 inputs consist of significant unobservable inputs and include situations where there
is little, if any, market activity for the investment. The inputs require significant judgment
or estimates, Such as those associated with discounted cash flow methodologies and
appraisals.
Page 12
HAWAII ISLAND HUMANE SOCIETY
Notes to the Financial Statements
June 30, 2019 and 2018
Note 4. INVESTMENTS -continued
Fair values of assets measured on a recurring basis are as follows, there are no liabilities or other assets measured
at fair value on a recurring or non-recurring basis.
June 30,2019
Significant Significant Non-
Quoted Prices: Other Inputs: Observable
Assets Total Level I Level 2 Inputs: Level 3
Certificate ot'Deposit 24,400 24,400
Annuity Contracts* - -
Mutual Funds -
Total 24,400 $ 24,400 $ $
June 30, 2018
Significant Significant Non-
Quoted Prices: Other Inputs: Observable
Assets Total Level I I-eve] 2 Inputs: Level 3
Certificate of Deposit 24,204 $ 24,204 $
Annuity Contracts* 1,690 - 1,690
Mutual Funds -
Total $ 25,894 $ 24,204 $ $ 1,690
*Annuity Contracts: Annuity Conti-acts are valued at present value Of future cash receipts.
The following table summarizes the changes in fair values associated with FASB A.SC 820 Level 3 assets:
Level 3 Level 3
2019 2018
Balance Beginning of Year 1,690 $ 5,693
Capital Distributions - 43
Net Unrealized and Realized Losses (1,690) (4,046)
Balance Ending of Year $ - $ 1,690
Note 5. LEASES
The Organization has a cancellable lease to rent space from Parker Ranch for the Waimea facilities. The future
minimum lease payments is $6,000 for the year ending June 30, 2020.
In June 2015, a copier lease was transferred to a new non-cancelable lease with monthly payments of$384,
Page 13
HAWAII ISLAND HUMANE SOCIETY
Notes to the Financial Statements
June 30, 2019 and 2018
Note 5. LEASES.-coininuecl
The future rent expense for these copiers at June 30 are:
2020 $ 11,548
2021 10,192
2022 853
Total S 22,593
Note 6. FUNCTIONAL EXPENSES
The Organization allocates expenses on a functional basis among three categories: direct program services,
fundraising, and management and general. Expenses are allocated to the program and supporting services
benefited. Expense allocations are generally computed based on the number of employees or contractors
performing program or administrative functions.
Note 7. IN-KIND DONATIONS
Dontilecl ,See-vices: Under FASB AS(.7 958, contributions of donated services that create or enhance non-
financial assets or that require specialized skills, and 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. Donated services at June 30, 2019 and 2018 are $40,606 and $4,150, respectively. A number of
volunteers have donated significant amounts of their time however no objective basis is available to measure
the value of these services.
In-kind Rent: The building and land on which the Kona shelter is located belongs to the County of Hawaii.
The County provides the site at no cost to the Organization. This agreement must be renewed annually. The
annual estimated value of the donated rent from the County of Hawaii is $25,200.
Note 8. NET ASSETS AND NEW ACCOUNTING PRONOUNCEMENTS
On August 18, 2016, the FASB issued ASU 2016-14, Not-for- Profit Entities (Topic 958) — Presentation of
Financial Statements ot'Not-for-Profit Entities. Hawaii Island Humane Society has adjusted the presentation of
its financial statements accordingly, applying the changes retrospectively to the comparative period presented.
The new standards change the following aspects of the Organization's financial statements:
The temporarily restricted net asset class has been renamed net assets with donor restrictions. The unrestricted net
asset class has been renamed net assets without donor restrictions.
Net assets, revenue, and support are classified based on the existence or absence of donor-unposed restrictions.
Accordingly, net assets and changes therein are classified as follows:
Page 14
HAWAII ISLAND HUMANE SOCIETY
Notes tmthe Financial Statements
June]0, 2O]9and 2OiQ
Note 8. NET ASSETS -continued
Net assets without donor restrictions include all resources that are not subject to donor-imposed stipulations
or contributions with donor-imposed restrictions that are ouc1 during the same year uathe contribution is
made. Net ouocta without donor restrictions denoted as property and equipment represent equity in such
property and equipment. The Board of Directors has selected certain net assets without donor restriction to
be identified as Board Designated net assets for the Capital Campaign. Bound Designated Net Assets at
June 30' 2Ol9and 2Ol8, were $77,l5O.
Net usao{o with donor restriction include amounts that the donor uuhicc(o to restrictions in perpetuity and
amounts auhjuc1io legal nrdonor-imyooed stipulations that may or will be met either by actions of the
organization and/or passage oftime.
Net assets with donor restriction represent restricted grants and funds received from foundations and donors
for which the restriction had not yet been fulfilled. The net assets donor restriction consisted of the following
u\June 3O:
20|9 2018
Capital Campaign 203'828 1.968,562
K4u6i/c8puy/Nmucr 161,351 '
Second Chance 137,834 145,605
Kuu'uoKcun6a 60,333 67,424
Transfer Program 47,833 -
Katie Fund 47,624 49,813
Lava Flow 27,448 26.215
Spay/Neuter 23.959 /81,163
Equine Fund 21,565 24.983
Miobi Haga 19.479 19,479
Education 5.725 8,249
Waimea Kennels 3`196 3,328
Kona Kennels 540 '
Net ooxc(s with donor o:ahidiVn include the permanently /c$iicicd net mmods. Not assets with donor
rcstzic1ion'pcnnannntrua|dchon are endowment funds restricted in perpetuity to continue the purpose of the
Organization. Income generated by these assets can be used for activities as specified by the donor. At June
30` 2019 and 2018, permanently restricted net uoau1a consisted of $22,374 for the Spay/Neuter (8/N)
program.
The Uniform Prudent Management of Institutional Funds /kot (D9K4{F&) applies to nonprofit organizations
in Huvvoi^i. <jPM}P/\ updates the prudence standard for the management and investment ofcharitable bunds,
and it mnoodx the provisions governing the release and modification of restrictions on cbudtah|c funds.
Management has evaluated the provisions of the standard and has concluded that the adoption ofU9M/P/\ iu
fiscal year 2019, and 2018, did not have a significant effect on the Organization's financial statements.
The financial statements include anew disclosure about liquidity and availability o[resources (Note 10). �
HAWAII ISLAND HUMANE; SOCIETY
Notes to the Financial Statements
June 30, 2019 and 2018
Note 8. NET ASSETS -continued
The changes have the following effect on net assets at June 30, 2018:
As Originally After Adoption
Net Asset Class Presented of ASU 2016-14
Unrestricted Net Assets 4,612,226
Board Designated 77,156
Temporarily Restricted Net Assets 2,494,821
Permanently Restricted 22,374
Net Assets Without Donor Restriction $ 4,689,382
Net Assets With Donor Restriction 2,517,195
Total Net Assets 7,206,577 $ 7,206,577_
Note 9. RETIREMENT PLAN
The Flawaii 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. For the)/cars ending June 30, 2019 and
2018, the retirement plan expenses totaled $35,354 and $41,264, respectively.
Note I.Q. I-I-QUIDITY AND AVAILABILITY OF FINANCIAL ASSETS
Management's policy is to structure its financial assets to be available as its general expenditures, liabilities
and other obligations come due.
Financial Assets at June 30, 2019 1,580,364
Less amounts unavailable tel general expenditures:
Donor Restricted Current Net Assets (760,707)
Financial assets available to meet cash needs for
general expenditures within one year 819,657
Note 11. SPAY/NELJTER PROGRAM
The Organization Sells Coupons that enable the patron to take their animal to a participating veterinarian for
spay/neuter services. As a service to the community, the veterinarian has agreed to perform these 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 has been performed, and then bills the Ilawaii Island Flurnane
Society for payment of these services.
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HAWAII ISLAND HUMANE SOCIETY
Notes to the Financial Statements
June 30, 2019 and 2018
Note 11. SPAY/NEUTER PROGRAM -
The veterinarian employed at:the Organization also performs spay/neuter services accepting the Free Coupon
as payment. The Organization incurs these costs in compensation to the veterinarian as well as related
payroll taxes and benefits.
The Organization also provides Coupons free of charge under the County off-lawai'i S/N program. See Note
12.
Note 12. S/N COUPON LIABILITY
The coupons sold through the S/N CAP program are redeemed by the patron when veterinary services are
performed. Estimated amounts of$3,969 and $3,371 are recorded as a liability for the years ending June 30,
2019 and 2018, respectively.
At June 30, 2019 and 2018, the Organization was obligated to honor a number of unredeemed coupons
issued for the County of Hawaii SN program with all associated estimated veterinarian cost of$34,190 and
$35,520 at June 30, 2019 and 2018, respectively. No funds were received when these coupons were issued
and a I iabi I ity has not been recorded as the surgeries have yet to be performed.
Note 13. INCOME TAXES
The Organization is exempt from Federal income taxes Under &,eiion 501(c)(3) of the Internal Revenue
Code, and also from State of Hawai'i income taxes under &ctions 416-19 and 416-20 of the I-lawai'i
Revised Statutes.
The accounting standard on accounting for uncertainty in income taxes addresses the determination of
whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial
statements. Under that guidance, the Organization may recognize the tax benefit from all uncertain tax
position only if it is more likely than not that the tax position will be sustained on examination by taxing
authorities based on the technical merits of the position. Examples of tax positions include the tax-exempt
status of the Organization and various positions related to the potential Sources of unrelated business taxable
income (OBIT). The tax benefits recognized in the financial statements from such a position are measured
based oil the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
There were 110 unrecognized tax benefits identified or recorded as liabilities for 2019 and 2018.
The Organization files its 1orms 990 in the U.S. Federal jurisdiction and the office of the State's Attorney
General for the State of Flawai'i. The Organization is generally no longer Subject to examination by the
Internal Revenue Service for years before 2016.
Note 14. HOLUALOA LAND AND BUILDING
The Organization purchased a 12-acre parcel with three existing buildings that will require renovation prior to
occupancy on April 13, 2011. Depreciation will not be taken while construction is in process. At June 30,2019,
Page 17
HAWAII ISLAND HUMANE SOCIETY
Notes to the Financial Statements
June 30, 2019 and 2018
Note-14- HOLUA.LoAj,LAND AND BUILDING-continued
construction in progress is $3,745,688 and the project is expected to be completed by December 31, 2019 for a
total cost of$12,000,000.
Note 15. LEAS.EI-IQLD IMPROVEMENTS
To provide enhanced quality care for animals, the Hawaii Island Humane Society has made various site
improvements to ]eased properties including a dog park, puppy kennels, a horse shed, as well as complying with
the Americans ivi/h Disobilities Act requirements. Total improvements to leased facilities are $162,945 for the
years ending June 30, 2019 and 2018.
Note 16. PLEDGE I2ECEIVABLE
The Organization has been conducting a fundraising capital campaign for a state-of-the-art Animal Community
Center. Towards that end, many generous donors have pledged funds to be received over future fiscal years.
Contributions received are recognized as SUPPOrt in the period the promise is received at their fair value. The
pledge receivable is stated at net estimated realizable value, using a discount rate of 4% to calculate the present
value allowance, when applicable to multi-year pledges. Pledge receivable consists of the 17011OWing as Of June
30:
2019 2018
Gross Pledge Receivable $ 6,000 $ 54,500
Present Value Allowance -
Net Pledge Receivable $ 6,000 $ 54,500
Amounts due in:
I,ess than one year $ 6,000 $ 48,500
One to three years $ - $ 6,000
Note 17.�LLA�ffiD PARTY
A Board of Director member is the owner of Alii Veterinary Hospital which the Hawaii Island Humane Society
utilizes for veterinary care and also leases facilities. The total amount paid to Alii Veterinary Hospital during the
years ending June 30, 2019 and 2018, were $10,131 and $7,628, respectively.
Note 18. SUBSEQUENT EVENTS
In preparing these financial statements, Management has evaluated events and transactions for potential
recognition or disclosure through October 25,2019, the date the financial statements were available for use.
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HAWAII ISLAND HUMANE SOCIETY
Notes tothe Financial Statements
June 3O, 2O]gand 2O18
2019�sLote 11 RECONCILIAT[QN OF NGF
BY
QPERATJI�G ACTIVITIES
2018
Change inNet Assets
� �
AdjuotnunmtoRecood86^700 2,942,433
'942/13]
Depreciation
110,64/ 46,505
Loss/(Cain) nn Disposal
(500) (11,736)
Change inAccounts and Pledges Receivable 65.231 N8^217l
Change inOther Current Assets 10,550 1^807
Change ioDeposits Other 308 6.392
ChungcinAccounts Payable 368.677 (49,788)
Change in Credit Card Payable 5,922 375
Change in Accrued Liabilities
12,977
Net Cash Provided hyOperating Activities $ 643,050 $ 2900828
�
In February 2016, the F/\88 iuoocd /\5U 2016-02, Ltuxua, which muperscdcy P/\S8 Accounting Standards
Codification (ASC) Topic 840, Lcaooe, and makes other conforming amendments to
U.S.~0 \/ P ASU'2U|6 O2`rcquircm, among other changes to the ]uamc accounting guidance, lessees to recognize most leases on the balance
sheet u right-of-use asset and lease liability as well as additional qualitative and quantitative d~oclosurco ASU2O|6'02 is effective for the Organization's fimco| years beginning after December 75` 2019" but poonh" ea/'yudopiion, and mundu1oo u modified retrospective transition method, The provisions are effective for tileOrgunizatioo`mfiaou| yeurending ]une30, 2 ). Management iucurrently evaluating the impact that the adoption
o[these provisions will have oil the financial statements, but expects ASU 2 |6-02 — add significant rieht-of-uae
assets and ]emmc liabilities(othe statement offinancial position.
In November 20/6, the FASB issued /\SiJ 20/6-18, Statement ofCash Rovm (Topic
� 2]0): Restricted
ictud C' us"-h
`vhich requires that u statement of cash flows explain the change during the period in the ~iu/ of cash, ouo
/cguivolcn1z, and amounts generally described as restricted oaab or restricted cash equivalents. As u result,amounts generally described as restricted uamb and restricted cash equivalents should be iou|~~~d with ou"" andcoah equivalents when reconciling tile beginning-of-period and end-of-period (m1a| amounts shown °' /"`n1nismcn( nfoush flows. The new standard amendments are effective for fiscal years beginning after December
15, 2018, and interim periods within fiscal years beginning after December 15` 2019 Early adoption is permitted.provisions are effective for the Organization's fiscal year ending June 3O' 202|. The amendments °"""'" beapplied using u retrospective transition method to each period presented. Kooageocnr /soo'oot|yeva|oo1ingbbe
impact that the adoption ofthese provisions will have oil the financial stun
The Organization is involved inauadministrative claim arising inthe normal course ofbupiuemu The claim ia
from u current employee. /\m the outcome of this claim is unknown, no contingent liability associated with this
issue has been recorded inthe Organization's financial statements.
Page 19