big brothers big sisters of southwest louisiana,...

BIG BROTHERS/BIG SISTERS OF SOUTHWEST LOUISIANA, INC.

FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT

Year Ended December 31, 2013

Contents Page

Independent Auditors' Report 2-3

Financial Statements:

Statement of Financial Position 4-5

Statement of Activities 6

Statement of Functional Expenses 7

Statement of Cash Flows 8

Notes to Financial Statements 9-12

Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 13-14

Schedule of Findings 15

Schedule of Prior Year Findings 16

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INDEPENDENT AUDITORS' REPORT

Board of Directors Big Brothers/Big Sisters of

Southwest Louisiana, Inc. Lake Charles, Louisiana

We have audited the accompanying financial statements of Big Brothers/Big Sisters of Southwest Louisiana, Inc. (a non-profit organization) as of and for the year ended December 31, 2013 and the related notes to the financial statements, which collectively comprise Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s basic financial statements as listed in the table of contents.

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 America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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 on 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 estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of Big Brothers/Big Sisters of Southwest Louisiana, Inc. as of December 31, 2013 and the respective changes in financial position, and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued a report dated June 4, 2014 on our consideration of Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s internal control over fmancial reporting and compliance.

McMullen and Mancuso, CPAs, LLC

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June 4,2014

Big Brothers/Big Sisters of Southwest Louisiana, Inc.

STATEMENT OF FINANCIAL POSITION

December 31, 2013 with comparative totals for 2012

ASSETS

2013 CURRENT ASSETS

Cash and cash equivalents (Note J) Unconditional promises to give (Note H) Grants receivable Accrued video revenue Prepaid expenses

Total current assets

344,491 61,047 7,840 462

4,855

2012

377,296 56,259

624 13,473

418,695 447,652

PROPERTY AND EQUIPMENT (Note A-5) Furniture and equipment Leasehold improvements Building Building improvements

Less accumulated depreciation

Land Donated interest in timeshare

Net property and equipment

Total Assets

96,683 8,494

377,272 222,837 705,286 (323,316) 381,970 20,052 14,500

416,522

95,138 8,494

416,234 222,837 742,703

(307,011) 435,692 20,052 14,500

470.244

835,217 $ 917,896

The accompanying notes are an integral part of these statements.


STATEMENT OF FINANCIAL POSITION

December 31, 2013 with comparative totals for 2012

LIABILITIES AND NET ASSETS

2013 2012 CURRENT LIABILITIES

Accounts payable-trade Accrued expenses Other liability Deferred support (Note F)

Total current liabilities

Total liabilities

NET ASSETS Unrestricted Operating Fixed Assets

Total unrestricted net assets

Temporarily restricted Total net assets

Total Liabilities and Net Assets

3,624 2,017

8,700 14,341

14,341

377,545 381,970 759,515

61,361 820,876

835,217

11,184 1,816 3,466 14,043 30,509

30,509

395,436 435,692 831,128

56,259 887,387

917,896


Big Brothers/Big Sisters of Southwest Louisiana. Inc.

STATEMENT OF ACTIVITIES

Year ended December 31, 2013 with comparative totals for 2012

2013 2012

UNRESTRICTED TEMPORARILY RESTRICTED TOTAL TOTAL

REVENUE, GAINS AND OTHER SUPPORT United Way of Southwest Louisiana $ i i 122,094 $ 122,094 $ 112,518 Grants and service fees 341.199 . 341,199 468,113 Contributions 21,326 . 21,326 24,896 In-kind contributions - - - 150 Investment eamings 938 - 938 2,539 Other 2,437 - 2,437 513 Bingo revenues 577,632 - 577,632 630,190 Fund-raising/special events 102,131 - 102,131 137,099 Gain on sale of building 3,958 - 3,958 .

Total revenues and gains 1,049,621 122,094 1.171,715 1.376.018

Net assets released from restrictions 116,992 (116,992) - -

TOTAL REVENUES. GAINS AND OTHER SUPPORT 1,166,613 5,102 1,171,715 1,376,018

EXPENSES AND LOSSES Program service-community services 653,732 - 653,732 782,912 Management and general 42,428 - 42,428 31,493 Fund-raising/special events 26,501 - 26,501 28,365 Bingo 530,268 . 530,268 566,567

TOTAL EXPENSES AND LOSSES 1,252,929 1,252,929 1,409,337

CHANGE IN NET ASSETS (86,316) 5,102 (81,214) (33,319)

NET ASSETS AT BEGINNING OF YEAR AS ORIGINALLY REPORTED 831,128 56,259 887,387 920,706

PRIOR PERIOD ADJUSTMENT 14,703 14.703 .

NET ASSETS AT BEGINNING OF YEAR AS RESTATED 845,831 56,259 902,090 920,706

NET ASSETS AT END OF YEAR $ 759,515 $ 61,361 $ 820.876 $ 887,387



STATEMENT OF FUNCTIONAL EXPENSES

For the year ended December 31, 2013

with comparative totals for 2012

Supporting Services Total Program Program Management Fund and Supporting Services and General Raising Bingo Service Expense

2013 2013 2012 Activities $ 808 $ - $ - $ - $ ; 808 $ 1,660 Bank fees 371 45 36 2,103 2,555 3,825 Bingo awards and progressive - - - 373,572 373,572 385,137 Contract labor - - - - - 2,877 Dues 8,956 1,092 874 - 10,922 12,020 FGP program 192,514 - - - 192,514 220,063 Hospitalization/health benefits 32,767 3,997 3,197 - 39,961 50,470 Insurance 22,074 2,693 2,154 2,583 29,504 25,133 Meeting and training 2,674 327 260 - 3,261 4,935 Miscellaneous 658 80 64 - 802 576 Other programs 1,234 - - - 1,234 2,302 Payroll taxes 23,071 2,814 2,251 - 28,136 38,329 Postage 1,256 153 123 28 1,560 3,447 Professional fees 11,286 1,377 1,100 800 14,563 14,850 Publicity and promotion 394 48 38 - 480 1,146 Rent and occupancy 11,994 1,464 1,170 43,284 57,912 57,064 Retirement 6,236 761 608 - 7,605 12,054 Salaries 285,814 22,804 10,465 34,463 353,546 395,005 Security - - - 9,440 9,440 12,722 Supplies 6,525 796 637 46,239 54,197 79,075 Taxes and licenses - - - 17,756 17,756 21,363 Telephone 9,276 1,131 905 - 11,312 13,375 Travel and transportation 7,811 953 762 - 9,526 19,660 Utilities 7,836 956 764 - 9,556 7,986 Volunteer screening 1,103 - - - 1,103 2,404

Total before depreciation 634,658 41,491 25,408 530,268 1,231,825 1.387,478 and other expense

Depreciation 19,074 937 1,093 - 21,104 21,859

TOTAL EXPENSES $ 653,732 : $ 42,428 $ 26,501 $ 530,268 $ 1,252,929 $ 1,409,337



STATEMENT OF CASH FLOWS

Year ended December 31, 2013 with comparative totals for 2012

2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES

Increase (decrease) in net assets Adjustments to reconcile change in net assets to net cash provided (used) by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of DeRidder building Payments for property, equipment and improvements

NET CASH FROM INVESTING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

BEGINNING CASH AND CASH EQUIVALENTS

ENDING CASH AND CASH EQUIVALENTS

Supplemental Disclosure; Income tax paid in the year ended December 31, 2012 was $22,040. Income tax paid in the year ended December 31, 2013 was $17,340.

(81.214) $

37,990 (1,414) 36,576

(32,805)

377,296

(33,319)

Depreciation 21,104 21,859 Gain from sale of DeRidder building (3,958) -

(Increase) decrease in operating assets Grants receivable (7,840) 1,042 Accrued video revenue 162 686 Prepaid expenses 8,618 4,477 Unconditional promises to give (4,788) (2,663)

Increase (decrease) in operating liabilities Accounts payable-trade (7,560) 8,114 Deferred support (5,343) (38,824) Other liability - employee insurance coverage (3,466) 3,466 Accrued expenses 201 1,053 Income tax payable 14,703 (1,297)

NET CASH FROM OPERATING ACTIVITIES (69,381) (35,406)

(35,406)

412,702

344,491 $ 377,296



NOTES TO THE FINANCIAL STATEMENTS December 31,2013

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of Big Brothers/Big Sisters of Southwest Louisiana, Inc. have been prepared on the accrual basis and in conformity with the standards promulgated by the American Institute of Certified Public Accountants in its audit guide for voluntary health and welfare organizations.

1. Organization and Purpose

Big Brothers/Big Sisters of Southwest Louisiana, Inc. is a not-for-profit organization whose main purpose is to provide children from single-parent homes with the confidence and desire to develop into loving and productive adults through the warmth and friendship of a caring adult volunteer. The Organization's purpose is carried out through two offices located throughout Southwest Louisiana.

2. Basis of Presentation

Financial statement presentation follows the recommendations of the Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. Under SFAS No. 117, the Organization 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.

3. Cash and Cash Equivalent

For purposes of the Statements of Cash Flows, the Organization considers all unrestricted, highly liquid investments with an initial maturity of three months or less to be cash equivalents.

4. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. This will affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

5. Propertv and Equipment

The Organization follows the practice of capitalizing all furniture and fixtures acquired in excess of $1,000. Donated fixed assets are recorded as support at their estimated fair value at the date of donation; all other fixed assets are recorded at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Depreciation amounted to $21,104 for the year ended December 31, 2013, based on an estimated useful life of five years for equipment and forty years for buildings.


NOTES TO THE FINANCIAL STATEMENTS December 31,2013

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

6. Concentration of Revenue and Support

A majority of the revenue for the Organization's programs is provided by bingo revenues (49%), federal and state grants (29%) and by various donors through contributions and fundraisers. If the Organization no longer held the bingo sessions, or there were significant reductions in amounts received in funding or by donors, the operations of the Organization could be adversely impacted.

7. Public Support and Revenue

All contributions and grants are considered to be available for unrestricted use unless specifically restricted by the donor or the grantor.

The Organization receives funding primarily from the United Way of Southwest Louisiana individual contributions, fundraisers, grants, bingo revenues, interest, and other income.

8. Advertising Costs

Advertising costs are charged to operations when incurred. For the year ended December 31, 2013, the Organization incurred $480 in publicity and promotion costs.

9. Contributed Services

During the year ended December 31, 2013, the value of contributed services meeting the requirements for recognition in the financial statements was not material and has not been recorded. In addition, many individuals volunteer their time and perform a variety of tasks that assists the Organization, but these services do not meet the criteria for recognition as contributed services.

10. Comparative Totals

The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Organization's financial statements for the year ended December 31, 2012, from which the summarized information was derived.

NOTE B - FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Organization in estimating its fair value disclosures for financial instruments:

Cash, cash equivalents, short-term unconditional promises to give, and note payable: The carrying amounts reported in the statement of fmancial position approximate fair values because of the short maturities of those instruments.

Short-term investments: The fair value of investments is based on quoted market prices for those similar investments.

10


NOTES TO THE FINANCIAL STATEMENTS December 31, 2013

NOTE B - FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)

Long-term unconditional promises to give: The fair value of promises to give that are due in more than one year is estimated by discounting the future cash flows using a current risk free rate of return based on the yield of a U.S. Treasury Security with a maturity date similar to the expected collection period.

NOTE C - FUNCTIONAL ALLOCATION OF EXPENSES

Expenses were allocated in the accompanying financial statements to program and support services functional expense groups. The methods of allocation were based on the Organization's estimates of the relative proportion of various staff members' time and effort between program and support services as well as the Organization's estimates of the amount of each expense utilized for program or support service functions.

NOTE D - INCOME TAXES

Big Brothers/Big Sisters of Southwest Louisiana, Inc. was incorporated under the laws of the state of Louisiana. The Organization is operated exclusively for charitable services and has qualified for the exemption from Federal income taxes under Section 501 (c) (3) of the Internal Revenue Code. In addition, the Organization has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509 (a) of the Code. The Organization is subject to income tax on unrelated business income which includes the net pull tab profit received from the bingo operations. Income tax amounted to $ 16,591 for the year ended December 31,2013.

NOTE E - RETIREMENT PLAN

The Organization participated in a defined contribution retirement plan that covers all full-time employees fulfilling the eligibility requirements set by the plan underwriter (Mutual of America). Contributions to the plan were three percent (3%) of gross wages during 2013, and amounted to $7,605. In compliance with the requirements of the Tax Reform Act of 1986, the Board of Directors on September 17, 1997 voted to amend its retirement plan. On March 20, 1998, the Internal Revenue Service issued a favorable determination letter regarding this amendment.

NOTE F - DEFERRED SUPPORT

Deferred support in the unrestricted fund includes $8,700 received in the current year for contributions made to support the 2014 Bowl for Kids Sake. These receipts are reported as deferred items until the event takes place and conditions and terms of the grant are completed.

NOTE G - COMPENSATED ABSENCES

Employees of Big Brothers/Big Sisters of Southwest Louisiana, Inc. are entitled to paid vacation, paid sick days, and personal days off depending on Job classification, length of service and other factors. The value of these compensated absences was not recorded due to their immateriality. The Organization's policy is to recognize the costs of those compensated absences when actually paid to employees.

II


NOTES TO THE FINANCIAL STATEMENTS December 31, 2013

NOTE H - UNCONDITIONAL PROMISES TO GIVE

During the year ended December 31, 2013, the Organization received its United Way allocation of $122,094 for the period July 2013 through June 2014. The receivable of $61,047 is the amount for January 2014 through June 2014. This allocation is temporarily restricted as to time of receipt and is properly reflected in the accompanying Statement of Activities as an increase in temporarily restricted net assets. Uncollectible allocations are expected to be insignificant.

NOTE I - LEASES

The Organization conducts its bingo sessions at a facility owned by the Calcasieu Parish Voluntary Council on Aging, Inc. (CCOA). Rent is paid to CCOA for each bingo session held. Lease expense was $43,300 for the year ended December 31,2013.

NOTE J - CASH AND CASH EQUIVALENTS

The Organization maintains the following cash accounts:

December 31, 2012 December 31, 2013 Cash on Hand- Gaming $ 4,000 $ 4,000 Petty Cash Accounts 119 41 Operating Account 38,630 21,713 Savings Account 281,605 300,121 Bingo Account 52,942 18,616

$ 377,296 $ 344,491

• The Organization is required to maintain a separate bank account for the gaming (Bingo) account

NOTE K-CONCENTRATION OF RISK

Financial instruments that potentially subject the Organization to concentrations of credit risk consist of promises to give receivable. Amounts receivable from promises to give at December 31, 2013 consists of $61,047 from the United Way of Southwest Louisiana.

NOTE L-FUND-RAISING EXPENSE

Fund-raising expenses related to the Bowl for Kids Sake event totaled $19,055 or 16% of the total special events revenues. Special events are shown net of these costs on the Statement of Activities for the year ended December 31, 2013 and 2012. The amount of salaries and related payroll taxes, and other expenses allocated to fund-raising are not included in the above total.

NOTE M - SUBSEQUENT EVENT

Subsequent events were evaluated through June 4, 2014, which is the date the fmancial statements were available to be issued.

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INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A EDITING STANDARDS

Board of Directors Big Brothers/Big Sisters of Southwest Louisiana, Inc. Lake Charles, LA

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the fmancial statements of Big Brothers/Big Sisters of Southwest Louisiana, Inc., which comprise the statement of financial position as of and for the year ended December 31, 2013, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated May 22, 2014.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion effectiveness of the Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Organization's financial statements will be not prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of the report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

McMullen and Mancuso, CPAs, LLC

June 4,2014

14


SCHEDULE OF FINDINGS

Year Ended December 31, 2013

We have audited the financial statements of Big Brothers/Big Sisters of Southwest Louisiana, Inc. for the year ended December 31, 2013, and have issued our report thereon dated June 4, 2014. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our audit of the financial statements as of December 31, 2013 resulted in an unmodified opinion.

Section I - Summary of Auditor's Report

a. Report on Internal Control and Compliance Material to the Financial Statements

Internal Control

Yes X No Material Weaknesses

Compliance

Compliance Material to Financial Statements

Other Conditions Yes

Yes

X No

X No

Section II - Financial Statement Findings

There were no current year financial statement findings.

15


SCHEDULE OF PRIOR AUDIT FINDINGS

Year Ended December 31,2013

RefNo.

Fiscal Year Finding Initially

Occurred Description of Finding

Section I - Internal Control and Compliance Material to the Financial Statements:

2012-1 Unknown Because of the size of the Organization and the limited number of accounting personnel, it is not feasible to maintain a complete segregation of duties to achieve effective internal control.

Corrective Action Taken

Resolved

2012-2 Unknown The Organization does not have a staff person who has the qualifications and/or training to apply GAAP in recording transactions or preparing financial statements.

Resolved

2012-3 2010 We recommended several adjusting journal entries. Substantially all of the entries were to make accruals and other adjustments required in the annual closing process.

Resolved

Management Letter Comment:

ML-1 2012 We noted a small difference between the bank balance in the bank reconciliation for December 2012 and the general ledger.

Resolved

This schedule is prepared by management.

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