WHIDBEY ANIMALS` IMPROVEMENT FOUNDATION

WHIDBEY ANIMALS' IMPROVEMENT FOUNDATION
INDEPENDENT AUDITOR'S REPORT
AND
FINANCIAL STATEMENTS
For The Years Ended December 3lr z0l4 and
Eric L. Anderson, C.P.A., lnc., P.S.
Certified Public Accountant
z0ll
WHIDBBY ANIMALS' IMPROVBMENT FOUNDATION
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR' S REPORT
t-2
FINANCIAL STATEMENTS
Statements of Financial Position
J
Statements of Activities
4
Statements of Cash Flows
5
Statements of Functional Expenses
6
Notes to Financial Statements
7
-14
Member of:
American lnstitute of Certified Public Accountants
Washington Soclefy of Ceftified Public Accountants
Private Companies Practice Secfion of Firms of ATCPA
Eric L. Anderson, C.P.A., lnc., P.S
Certified Public Accountant
II\DEPEI\DENT AUDITOR'
S
REPORT
To the Board of Directors
Whidbey Animalst Improvement X'oundation
Coupeville, WA
I have audited the accompanying financial statements of Whidbey Animals' knprovement Foundation (a
rionprofit organization) which comprise the statements of financial position as. of December 31,2014
and 2013, and the related statements of activities, cash flows, and functional expenses for the years then
ended, and the related notes to the financial statements.
Managembnt's Rerponsibility for the f inancial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accormting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of intemal control relevant to the preparation and. fair
presentation of frnancial statements that are free from material misstatement, whether due to fraud or
erTor.
Auditorts Responsibility
My responsibility is to express an opinion on these financial statements based on my audits. I oonduced
my audits in accordirnce with auditing standards generally accepted in the United States of America.
Those standards require that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatembnt.
An audit involves performing procedures to obtain audit evidence about the amounts and disilosures in
the fmancial statements. The procedures selected depend on the auditor's judgrnent, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
enor. In making those risk-assessments, the auditor considers intemal control relevant to the entity's
preparation anS fair presentation of. the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entrty's intemal contol. Accordingly, I express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating.the overall presentation of the furancial
statements:
I believe that the audit evidence I have obtained is sufEcient and appropriate to provide
a basis
audit opinion.
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r
PO. Box 5181 3125 Colby, Suite c r Everett, WA 98206
Phone: 425.257 .037'l ! Fax: 425.257 .0379 [email protected] I www.everettipa.com
.
for my
Opinion
In my opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Whidbey Animals' Improvement Foundation as of December 31,2014 ani 2013,
and the changes in its net assets and its cash flows for the years then ended, in accordance with
accounting principles generally accepted in the United States of America.
eu ,Z o( zt-
1
Eric L Anderson, CPA, Inc., PS
Everett, WA
January 14,2016
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WHIDBEY ANIMALS' IMPROVEMENT FOUNDATION
STATEMENTS OF FINANCIAL POSITION
DECEMBER 31,2014 AND 2013
2014
2013
ASSETS
Current assets
$
Cash
Restricted cash
Accounts receivable
Promises to give, current portion
Inventories
Prepaid expenses and deposits
Donated land held for sale
102,625
$
1,969,079
Total current assets
915,369
16,667
11,693
91,397
12,729
93,277
12,099
6,786
5,339
10,000
2,209,277
10,000
Property, plant and equipment
Equipment and fixtures net of accumulated
depreciation of $121 ,440 and $100,136, respectively
1,136,757
303,484
82,494
Land
Construction in progress
Net property, plant and equipment
297,725
82,494
438,758
863,528
1,249,506
Other assets
Promises to give, less current portion
Note receivable
818,977
3,010
75,000
78,010
Total other assets
Total assets
89,001
$ 3,536,793
13,600
13,600
41,969,n1_
LIABILITIES
Current liabilities
Accounts payable
$
Accrued construction costs
Current portion, long-term debt
6,992
$
38,399
100,627
2,607
66,897
Other accrued liabilities
Total current liabilities
76,496
Long-term debt, net of current portion
8,950
Total liabilities
85,446
61,552
200,578
200,579
NET ASSETS:
1,363,475
2,087,932
3,457,347
Unrestricted
Temporarily restricted
Total net assets
Total liabilities and net assets
_$
See accompanying notes to financial statements.
-3-
922,593
946,163
7,769,756
3,s36J%_ _$-1269,nL
WHIDBEY ANIMALS' IMPROVEMENT FOUNDATION
STATEMENTS OF ACTIVITIES
FOR THE YEARS BNDED DECEMBER 3I,2OI4 AND 2OI3
2014
Temporarily
Unrestricted
Restricted
Total
Support and revenue:
Donations:
$
Cash
Noncash
Thrift shop, merchandise
359,886
16,519
$
1,681,383
s
2,041,269
16,519
sales and
other fundraising revenue
Grants
Shelter program revenue
555,259
179,490
198,825
Miscellaneous income
Interest
:"
l,l3l,l24
Total
Net assets released from restrictionsSatisfaction of program restrictions
735,752
Total support and revenue
L,866,876
555,259
179,490
198,825
A,)sq
l5,3gg
1,894
1,977,521
l,gg4
3,008,645
(735,752)
l,l4l,769
3,008,645
Expenses:
Program services
520,437
Management and general
106,690
106,690
Thrift store operations
490,973
490,873
Fundraising
208,054
208,054
1,326,054
1,326,054
Total expenses
520,437
Change in net assets
540,822
l,l4l,769
1,682,591
Net assets, beginning of year
822,593
946,163
1,768,756
Net assets, end of year
See accompanying notes
_a_1,363,4r5_
to financial statements.
-4-
-S 2,087 W_ _S 3A51347
Unrestricted
s
2013
Temporarily
Restricted
Total
$
349,968
186,252
1g,g96
31,717
536,220
51,613
229,200
229,200
533,320
533,320
171,735
4,155
1,079,074
171,735
(1,346)
2,809
820
820
446,643
1,525,717
464,591
(464,581)
1,543,655
(17,938)
1,525,717
542,953
542,953
60,244
436,139
436,139
207,211
207,211
1,246,547
1,246,547
_$
60,244
297,108
(17,938)
279,170
525,485
964,101
l,4gg,5g6
822,s%_ _q_946,r63_ _$-1J68,?56_
WHIDBEY ANIMALS' IMPROVEMENT FOUNDATION
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 3I,2OI4 AND 2OI3
2014
CASH FLOWS FROM OPERATING ACTIVITIES
Changes in net assets
Adjustments to reconcile change in net assets to
net cash provided by operating activities:
Depreciation
Received in-kind donated asset
Net (increase) decrease in accounts receivable
Net (increase) decrease in pledges receivable
Net (increase) decrease in inventory and prepaid expenses
Net (increase) decrease in donated assets held for sale
Net increase (decrease) in accounts payable
Net increase (decrease) in accrued liabilities
Contributions restricted for long-term purposes
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
s
I ,682,591
20L3
$
279,170
21,304
(2,300)
(4,994)
(62,524)
(2,088)
74,940
(27e)
(31,407)
5,345
(1,684,430)
34,200
5,572
6,896
(440,326)
(78,493)
(21,198)
(529,498)
(9,105)
(538,603)
(109,034)
CASH FLOWS (USED) FROM INVESTING ACTIVITIES
Additions to construction in progress
Purchases of property and equipment
NET CASH USED BY INVESTING ACTIVITIES
8,906
(1,600)
11,323
(
145,490)
(254,524)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt
Contributions restricted for long-term purposes
(2,798)
1,684,430
++o,lza
NET INCREASE IN CASH AND
RESTzuCTED CASH
1,067
,334
164,604
CASH AND RESTzuCTED CASH AT
BEGINNING OF YEAR
1,004,370
839,7 66
CASH AND RESTRICTED CASH AT
END OF YEAR
_s
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest during the year
See accompanying notes
to financial statements.
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WHIDBEY ANIMALS' IMPROYEMENT FOIINDATION
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31,2014 and 2013
NOTE A - SUMMARY OF'SIGNIFICANT ACCOI]NTING POLICIES
Nature of Orsanization
Whidbey Animals' Improvement Foundation (the Foundation), a nonprofit Washington corporation, is
dedicated to provide support for interim care given by animal shelters and foster care personnel to stray,
lost, abandoned, free roaming or surrendered companion animals on Whidbey Island, Washington.
The Foundation has four major programs:
Animal Shelter -The Foundation works to improve the quality of lives of animals at the shelter
by providing food, heat, medication, veterinary services and general animal care. They maintain
a minimum kill facility in Coupeville and Oak Harbor, Island County by facilitating adoptions of
shelter animals by advertising the availability of animals in publications and placing posters in
local businesses.
Cat Adoption Center -The Foundation maintains locations at Oak Harbor, Freeland and
Coupeville, Island County for the adoption of cats. These locations provide adoption
opportunities for cats that may not be adopted at the Animal Shelter because of space limitations
at the facility.
Communitv Outreach -The Foundation provides educational materials to be distributed to the
public on the benefits of spaying and neutering and responsible pet care. They also distribute
coupons to needy pet owners to defray the cost of spaying and neutering their pets.
Spay/I'{euter Suite -The Foundation provides spay and neuter services to the homeless animals
in the shelter in their own surgery suite. Local veterinarians provide these services through
contracts and donations of their time. The goal of this program is that all animals adopted
through the Foundation will be altered.
Basis of Accountinq
The accompanying financial statements have been prepared on the accrual basis of accounting in
accordance with accounting principals generally accepted in the United States.
Estimates
The preparation of frnancial statements in conformity with accounting principles generally accepted in
the United States requires the Foundation's management to make estimates and assumptions that affect
reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
-7-
WHIDBEY ANIMALS' IMPROVEMENT FOUNDATION
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 3lr 2014 and 2013
NOTE A - (Continued)
Basis of Presentation
Financial presentation follows the recommendations of the Financial Accounting Standards Board
(FASB) in its ASC 958, Not-for-Profit Entities. Under ASC 958, the Foundation is required to rcport
information regarding its financial position and activities according to three classes of net assets:
unreshicted, temporarily restricted and permanently restricted. When a temporary restriction expires,
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 December 37,2014 ard 2013 the Foundation
held no permanenfly restricted net assets.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash in various types of bank accounts including checking and
money market accounts. The Foundation maintains cash balances with various financial institutions that
may at times exceed insured limits.
Restricted cash consists of cash in various types of bank accounts, including checking and savings
accounts, where the Foundation keeps restricted cash donations, including those designated for the New
Shelter campaign.
Accounts Receivable
The Foundation extends credit to its customeis in the normal course of business and performs ongoing
credit evaluations of its customers. Accounts 30 days or more past due are not assessed finance charges.
Management considers accounts receivable to be fully collectible. Accordingly, there was no allowance
for doubtfrrl accounts at December 31,2014 and 2013, which does not materially differ from the
allowance method.
fnventories
The Foundation records inventories at the lower of donated value or market. The Foundation records
otler inventory at the lower ofcost or market on a first-in, first-out basis (FIFO).
Contributions Received and Made
Under FASB ASC 958-605, Revenue Recognition -Contributions Received, contributions are recorded
as unrestricted, temporarily restricted or permanently restricted support, depending on the existence or
nature of any donor restrictions in the period that the promise is made.
-8-
WHIDBEY ANIMALS' IMPROVEMENT FOUNDATION
NOTES TO FINANCIAL STATEMENTS
For The Years Bnded December 3lr 2014 and 2013
NOTE A - (Continued)
Depreciation and Capitalization Policv
The cost of purchased fixtures and equipment or fair market values of donated assets are being
depreciated using the straight-line method over a period of five to thirty-nine years. The Foundation
capitalizes fixtures and equipment with a cost greater than $500 and a useful life ofone year or greater.
Depreciation expense totaled $21,304 and $8,906 for 2014 and 2013, respectively.
Sales Tax
of Washington imposes a sales tax on all of the Foundation's non-exempt sales. The
Foundation collects sales tax from customers and remits the entire amount to the state. The Foundation's
accounting policy is to exclude the tax collected and remitted to the state from non-exempt sales.
The state
Joint
F
undraisine Costs
The Foundation sends out newsletters that contain donation requests. A portion of the costs of these
newsletters has been allocated to fundraising. The functional expense categories that include allocated
costs to fundraising are printing and publications, supplies and postage.
Advertisinq
The Foundation uses advertising to promote its programs among the audiences
advertising are expensed as incurred.
it
services. The costs
of
Allocation of Functional Exoenses
The Foundation allocates all functional expenses to each program based on management's best estimates
of program utilization after analysis of the cunent year budget and prior year's history. Where no prior
information is available, expenses are allocated on a consistent basis which appears most reasonable to
management.
F'air Value of Financial Instruments
Generally accepted accounting principles require disclosure of an estimate of fair value for certain
financial instruments. The Foundation's significant financial instuments are cash, accounts/gmnts
receivable, promises to give and other short-term assets and liabilities. For these financial instruments,
carrying value approximates fair value.
-9-
WHIDBEY AI{IMALS' IMPROYEMENT FOT'IIDATION
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 3lr20l4 and 2013
NOTE B - PROMISES TO GIYE-CAPITAL CAMPAIGN
In 2010, the Foundation began a capital campaign for the construction ofa new shelter. The following is
included in pledges receivable and restricted contributions as of December 31, 2014 and2Ol3.
2014
$ 9t,391 $
3.010
Promises to give in less than one year
Promises to give over one year
f--94rCI1
Total
20t3
93,277
13.600
$--106.S77
Related Party Promise to Give
An Oflicer ofthe Foundation pledged $300,000 in 2010 to the capital campaign, payable in increments
of $100,000 each in January 2012,2013 and20l4. This pledge was paid in firll.
NOTEC-NOTERECEIVABLE
Note receivable is a $75,000 promissory note received as part of a bequest. The note is secured by a
deed of trust and bears interest at 4% per annum with payments of$360 per month commencing the first
day of October 2015 and continuing until September 2018 at which time the entire balance of principal
and accrued interest shall be due.
NOTE D - II\IVENTORY
in the
community donate used clothing and household items to the thrift shop for the
Foundation's fundraising efforts. These items are sold in the thrift shops, located in Freeland and in Oak
Harbor, Washington. Fair market value of the donated items is equal to what the Foundation can sell
them for. Items donated to the thrift shops are recorded at the actual amount sold at resale value of
9575,174 and is included with noncash in-kind donations in the statement of activities for the year ended
December 3l , 2014 . The used inventory held for resale has been consistently valued at approximately 1
o%
of sales.
People
The Foundation also purchases sweatshirts and other small items with the Foundation's logo and sells
them at the Animal Shelter. In addition to inventory for resale, the Foundation maintains an inventory of
supplies and medications for use at the shelter. The inventory is valued at the lower ofcost or market on
a first-in, first-out basis. Inventory at December 31, 2014 and,20l3 consisted of the following:
2014
$ t2,654
Used inventory held for resale
Purchased inventory for resale
75
$f2JD
Total inventory
-
10-
$
2013
12,006
82
$_l2JS8
WHIDBEY ANIMALS' IMPROVEMENT FOI]NDATION
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31,2014 and 2013
NOTE E - IN-KII\D CONTRIBUTIONS
The Foundation recognizes contributed property, facilities and services in accordance with Financial
Accounting Standmds Board ASC 958-605-25-16, Contributed Services, the Foundation recognizes
conhibutions of services only if the services received (a) create or enhance nonfinancial assets or (b)
require specialized skills and are provided by individuals that possess those skills, and would need to be
purchased
not provided by donation. Donations of property and equipment are recorded as
contributions at their estimated fair value at the date of donation. Such donations are reported as
increases in unrestricted net assets unless the donor has restricted the donated asset to a specific purpose,
Assets donated with explicit restrictions regarding their use and contributions of cash that must be used
to acquire property and equipment are reported as temporarily or permanently restricted contributions
depending on the restriction. The Foundation reports expirations of donor temporarily restrictions when
the donated or acquired assets are placed in service as instructed by the donor. The Foundation also
recognizes the donation of other noncash items of expense that the Foundation would have to purchase
in the open market. Donated services and facilities are reflected in the frnancial statements at the amount
that the Foundation would have had to purchase them on the open market.
if
During the years ended December 31,2014 and 2013, in-kind contributions consisted of the following:
$
Thrift shop inventory
Rent, Animal Shelter
2014
575,174 $
4
909,325
16"519
13,67
Property, stock and vehicles
Shelter food, supplies and materials
Total
2013
543,338
13,67 4
35,317
2.622
$1514.692 $_594p5t
The Foundation also had a substantial number of unpaid volunteers who donated significant amounts of
time. The value of this contributed time is not reflected in the accompanying financial statements since
there is no objective basis available to measure the value of such time and it does not meet the criteria
for recognition under FASB ASC 958-605-25 -16, Contributed Services.
NOTE F - LONG-TERM DEBT
The Foundation entered into a capital lease to purchase a telephone system. Payments are $363 per
month with maturity in December 2018. The lease is secured with the equipment acquired.
Total outstanding as of December 3 1,2014
Less current portion
Net long term portion
-11-
$
11,557
2.607
$__ip50
WHIDBEY ANIMALS' IMPROVEMENT FOUNDATION
NOTES TO FINANCIAL STATBMENTS
For The Years Ended December 3lr 2014 and 2013
NOTE F - (Continued)
Annual maturities of the capital lease is as follows for the years ending December
$
2015
2016
2017
3
1:
2,607
3,026
3,5
l3
2.411
201 8
$_LrJ57
NOTE G - TEMPORARILYRESTRICTED NET ASSETS
Temporarily restricted net assets are available for the following purposes at December 31,2014 and
2013:
2013
New shelter capital
$ 2,063 ,480 $ 92 I ,6 I 8
24.545
_$9116153
2014
24.452
campaigr
Fund-A-Need
Total
NOTE
$2,W-W
H- SHELTERPROGRAM REVENUE
The Foundation manages the Whidbey Island Animal Shelter under a contract with Island County for a
minimum monthly fee of $4,026. The Foundation also manages an animal shelter for the City of Oak
Harbor under a contract for a minimum monthly fee of $8,333. The loss of these funding sources would
have a negative effect on the operations of the Foundation, and could put the future of the Foundation in
jeopardy. In addition, medical and other fees are charged to individuals who use the shelter facilities to
adopt or sunender animals. Program revenue is summarized as follows:
2013
City of Oak Harbor management contract
$ I 15,000 $ 88,750
Island County management contract
48,3 10
Medical and miscellaneous fees
34.67 5
Total program revenue
$_19&825 LIZLJ35
2014
52,373
31.452
-t2-
WIIIDBEY ANIMALS' IMPROVEMENT F'OUNDATION
NOTES TO F'INANCIAL STATEMENTS
For The Years Ended December 31,2014 and 2013
NOTE I - OPERATING LEASES
The Foundation leases four buildings and one parking lot on Whidbey Island, Washington. The first
building, which serves as a thrift shop and cat adoption center, is located in Oak Harbor. This lease
terminates July 15, 2015, with two successive extensions of this lease to be exercised separately, each
such extension to be for a period of five years. The lease for the parking lot adjacent to the Oak Harbor
thrift shop and cat adoption center, which began February 1,2013, also expires July 15, 2015. The
second building, which serves as a thrift shop, is located in Freeland. The Freeland thrift shop lease
expires July 31,2017, with one 5 year option to renew. The third building, which serves as a cat
adoption center, is also located in Freeland, and expired August 31, 2013. The fourth building, which
served as the Foundation's capital campaign office, is located in Langley and was on a month-to-month
basis until tie premises were vacated November 1, 2013. In the normal course of business, operating
leases are generally renewed or replaced by other operating leases. All of these leases require the lessee
to pay all utility costs. These operating leases called for aggregate monthly payments of $8,290 and
$8,290 for 2014 and 2013, respectively. Minimum future payments under these operating lease
agreements for the remaining terms of the leases are as follows:
For the years
Ttirf
December
3
l,
$
2016
2017
Total minimum lease rental
66,630
32,400
19.900
s l r7.930
Rental expenses under operating leases were $99,480 and $99,210 for 2014 and 2013, respectively.
NOTE J - NEW SIIELTER CAPITAL CAMPAIGN
The Foundation brought together a team to cotrrmence a capital campaign to raise the funds necessary to
construct a new shelter on the land owned by the Foundation in Coupeville. Temporary reshictions on
net assets at the end of 2014 and 2013 xe related in part to funds raised through the capital campaign.
Funds are restricted for the acquisition and construction, plus other direct costs and expenses related to
the new shelter. The campaign goal is $3.8 million for constructing both the main shelter for the care
and adoption of companion animals, and for a second building to be used for storage and as a
community center. The second building, the Annex, began construction in July of2013 and completed
in October of2014. The Foundation is currently using the Annex for administrative offices and storage.
Construction on the main shelter began in September 2014.
-
13-
WHIDBEY ANIMALS' IMPROVEMENT FOUNDATION
NOTES TO FINAIICIAL STATEMENTS
For The Years Ended December 31^r2014 and 2013
NOTE
K-
CONSTRUCTION IN PROGRESS
The Foundation follows the policy of capitalizing as a component of construction in progress the
expenses for consultants, architects, site preparation, utility installation and other expenses related to
designing and building the new shelter. As a structure is completed, the associated building costs are
removed from construction in progress and capitalized as a separate asset. The Amex was completed
and the Foundation began using the building for administative offices Novemb et 7,2013, therefore
$220,906 was removed from construction in progress during 2013. Cumulative capitalized construction
expenditures at December 31,2014 and 2013 related solely to the new shelter project are $863,528 and
$438,758, respectively.
NOTE L_INCOME TAXES
The Foundation is a not-for-profit organization that is exempt from income tax under Section 501(c)(3)
of the Intemal Revenue Code. The Foundation does not conduct any activities that would result in
unrelated business income and therefore is not required to file Form 990T, Exempt Organization
Business Tax Retum. Therefore, no provision for income tax is included in these financial statements.
The Foundation's tax filings are subject to audit by various taxing authorities. The Foundation's open
audit periods are 2011-2014, generally for tlree years after they were fiIed. At December 31,2014 and
2013, and for the years then ended the Foundation recognized $0 in interest and penalties in relation to
income taxes in the accompanying financial statements.
NOTE M - SIIBSEQUENT EVENTS
Management has evaluated subsequent events t}rough January 14, 2015, the date the financial
statements were available to be issued. In July 2015, the Organization secured a line of credit with a
local bank for $750,000 to complete the construction of the new shelter. This line of credit has a
maturity date of July 2016.
NOTE
N-
CHANGES TO OPERATIONS
The Foundation's Oak Harbor Animal Shelter, which was located on the U.S. Navy Seaplane Base and
was part of a long-time contract between the City of oak Harbor and the U.S. Naly, was vacated
September 30,2013. Beginning October 1, 2013 the Foundation is under contract with the City of Oak
Harbor to operate their holding facility on Goldie Road for the purpose of caring for the animals during
the statutory 6-day holding period, after which the Foundation relocates the cats to the Oak Harbor Cat
Adoption Center and the dogs to the Coupeville Shelter for adoption and longer tenn care.
-14-