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HomeMy WebLinkAboutCommUnity Crisis Services - Audit Financial Review ReportCOMMUNITY CRISIS SERVICES AND FOOD BANK FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2021 AND 2020 COMMUNITY CRISIS SERVICES AND FOOD BANK TABLE OF CONTENTS YEARS ENDED JUNE 30, 2021 AND 2020 INDEPENDENT AUDITORS’ REPORT 1 FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION 3 STATEMENTS OF ACTIVITIES 5 STATEMENTS OF FUNCTIONAL EXPENSES 7 STATEMENTS OF CASH FLOWS 9 NOTES TO FINANCIAL STATEMENTS 10 CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer for details. CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS’ REPORT Board of Directors CommUnity Crisis Services and Food Bank Iowa City, Iowa We have audited the accompanying financial statements of CommUnity Crisis Services and Food Bank (the Organization), which comprise the statements of financial position as of June 30, 2021 and 2020, and the related statements of activities, functional expenses,and cash flows for the years then ended, and the related notes to the 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 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. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 auditors’judgment, including the assessment of the risks 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 opinion. Board of Directors CommUnity Crisis Services and Food Bank (2) Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Organization as of June 30, 2021 and 2020,and the change in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2021, on our consideration of the Organization’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and other grant agreements and other matters.The purpose of that report is solely 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 the effectiveness of the Organization’s 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 the Organization’s internal control over financial reporting and compliance. a CliftonLarsonAllen LLP Cedar Rapids, Iowa November 18, 2021 COMMUNITY CRISIS SERVICES AND FOOD BANK STATEMENTS OF FINANCIAL POSITION JUNE 30, 2021 AND 2020 See accompanying Notes to Financial Statements. (3) 2021 2020 ASSETS CURRENT ASSETS Cash and Cash Equivalents 1,627,155$ 1,265,333$ Receivables 528,080 562,296 Prepaid Expenses 17,267 24,791 Total Current Assets 2,172,502 1,852,420 INVESTMENTS 724,670 561,743 PROPERTY AND EQUIPMENT Land 325,000 325,000 Buildings and Improvements 2,300,190 2,232,331 Furniture and Equipment 539,250 424,670 Total Property and Equipment 3,164,440 2,982,001 Less: Accumulated Depreciation (1,368,606) (1,256,576) Property and Equipment, Net 1,795,834 1,725,425 BENEFICIAL INTEREST IN ASSETS HELD BY COMMUNITY FOUNDATION 17,989 13,981 Total Assets 4,710,995$ 4,153,569$ COMMUNITY CRISIS SERVICES AND FOOD BANK STATEMENTS OF FINANCIAL POSITION (CONTINUED) JUNE 30, 2021 AND 2020 See accompanying Notes to Financial Statements. (4) 2021 2020 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts Payable 61,770$ 29,608$ Accrued Expenses and Other Liabilities 143,311 129,075 Deferred Revenue - 22,781 Current Portion Capital Lease 4,107 3,798 Current Portion of Note Payable - 8,053 Note Payable - PPP - 306,900 Total Current Liabilities 209,188 500,215 LONG-TERM LIABILITIES Long-Term Portion of Capital Lease, Less Current Portion Above 14,434 18,541 Total Long-Term Liabilities 14,434 18,541 Total Liabilities 223,622 518,756 NET ASSETS Without Donor Restrictions: Undesignated 3,481,288 2,807,070 Board-Designated Endowment 663,341 509,909 Board-Designated Reserve 61,329 51,834 Total W ithout Donor Restrictions 4,205,958 3,368,813 With Donor Restrictions 281,415 266,000 Total Net Assets 4,487,373 3,634,813 Total Liabilities and Net Assets 4,710,995$ 4,153,569$ COMMUNITY CRISIS SERVICES AND FOOD BANK STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2021 See accompanying Notes to Financial Statements. (5) Without Donor With Donor Restrictions Restrictions Total SUPPORT AND REVENUE Support: Contributions 1,547,262$ 19,851$ 1,567,113$ In-Kind Contributions 2,587,983 - 2,587,983 United Way 15,135 110,068 125,203 Johnson County - 122,669 122,669 City of Iowa City 69,086 - 69,086 City of Coralville 5,000 11,365 16,365 Total Support 4,224,466 263,953 4,488,419 Revenue: Grants and Contracts 2,200,243 - 2,200,243 Investment Income, Net 165,473 - 165,473 Change in Beneficial Interest in Assets Held by Community Foundation 4,008 - 4,008 Rental Income 52,498 - 52,498 Loss on Disposal of Property and Equipment (13,593) - (13,593) Note Payable Forgiveness 309,261 - 309,261 Total Revenue 2,717,890 - 2,717,890 Total Support and Revenue 6,942,356 263,953 7,206,309 NET ASSETS RELEASED FROM RESTRICTIONS Restrictions Satisfied by Passage of Time and Payments 248,538 (248,538) - Total Support and Revenue, Net Assets Released from Restrictions 7,190,894 15,415 7,206,309 EXPENSES Program Services: Crisis Intervention 1,813,862 - 1,813,862 Food Bank 3,168,513 - 3,168,513 Emergency Assistance 585,488 - 585,488 1105 Project 86,151 - 86,151 Total Program Services 5,654,014 - 5,654,014 Supporting Services: Management and General 459,298 - 459,298 Fundraising 240,437 - 240,437 Total Supporting Services 699,735 - 699,735 Total Expenses 6,353,749 - 6,353,749 CHANGES IN NET ASSETS 837,145 15,415 852,560 Net Assets - Beginning of Year 3,368,813 266,000 3,634,813 NET ASSETS - END OF YEAR 4,205,958$ 281,415$ 4,487,373$ COMMUNITY CRISIS SERVICES AND FOOD BANK STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2020 See accompanying Notes to Financial Statements. (6) Without Donor With Donor Restrictions Restrictions Total SUPPORT AND REVENUE Support: Contributions 1,389,568$ 21,898$ 1,411,466$ In-Kind Contributions 2,410,648 - 2,410,648 United Way 3,325 110,068 113,393 Johnson County - 122,669 122,669 City of Iowa City 66,000 - 66,000 Total Support 3,869,541 254,635 4,124,176 Revenue: Grants and Contracts 1,398,400 - 1,398,400 Investment Income, Net 10,993 - 10,993 Change in Beneficial Interest in Assets Held by Community Foundation 272 272 Rental Income 49,230 - 49,230 Loss on Disposal of Property and Equipment (2,253) - (2,253) Total Revenue 1,456,642 - 1,456,642 Total Support and Revenue 5,326,183 254,635 5,580,818 NET ASSETS RELEASED FROM RESTRICTIONS Restrictions Satisfied by Passage of Time and Payments 228,780 (228,780) - Total Support and Revenue, Net Assets Released from Restrictions 5,554,963 25,855 5,580,818 EXPENSES Program Services Expense: Crisis Intervention 1,364,934 - 1,364,934 Food Bank 2,718,203 - 2,718,203 Emergency Assistance 221,715 - 221,715 1105 Project 72,743 - 72,743 Total Program Services Expense 4,377,595 - 4,377,595 Supporting Services Expense: Management and General 380,340 - 380,340 Fundraising 195,276 - 195,276 Total Supporting Services Expense 575,616 - 575,616 Total Expenses 4,953,211 - 4,953,211 CHANGES IN NET ASSETS 601,752 25,855 627,607 Net Assets - Beginning of Year 2,767,061 240,145 3,007,206 NET ASSETS - END OF YEAR 3,368,813$ 266,000$ 3,634,813$ COMMUNITY CRISIS SERVICES AND FOOD BANK STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2021 See accompanying Notes to Financial Statements. (7) Total Total Total Crisis Food Emergency 1105 Program Management Supporting Functional Intervention Bank Assistance Project Services and General Fundraising Services Expenses Salaries 1,443,945$ 342,038$ 181,535$ 29,872$ 1,997,390$ 223,041$ 169,518$ 392,559$ 2,389,949$ Other Employee Benefits 64,421 22,799 12,599 3,541 103,360 20,826 9,360 30,186 133,546 Payroll Taxes 96,588 23,557 13,880 2,236 136,261 17,049 12,961 30,010 166,271 Pension Contributions 16,882 4,071 2,231 944 24,128 5,007 4,184 9,191 33,319 Professional Fees 883 5,122 10 2 6,017 15,589 2 15,591 21,608 Advertising 13,840 4,288 - - 18,128 66,450 3,338 69,788 87,916 Office Expenses 17,512 19,733 1,932 1,807 40,984 20,219 20,484 40,703 81,687 Telephone 17,324 8,543 155 5,195 31,217 3,563 1,521 5,084 36,301 Information Technology 33,681 13,479 3,143 562 50,865 18,479 7,101 25,580 76,445 Occupancy 1,204 13,009 226 8,627 23,066 1,580 903 2,483 25,549 Meeting and Conferences 19,226 1,237 405 45 20,913 383 189 572 21,485 Insurance 15,518 8,359 2,202 2,672 28,751 13,512 2,054 15,566 44,317 Special Events - - - - - - 5,108 5,108 5,108 Client Assistance 33,244 2,452,654 363,000 - 2,848,898 414 31 445 2,849,343 Travel 6,199 341 49 - 6,589 383 181 564 7,153 Maintenance 16,202 153,394 2,156 16,317 188,069 6,184 2,290 8,474 196,543 Volunteer Recognition 3,722 1,330 175 - 5,227 553 1,212 1,765 6,992 Interest Expense - - - 196 196 4,116 - 4,116 4,312 Miscellaneous 1,777 1,271 - - 3,048 20,669 - 20,669 23,717 Total Expenses by Function 1,802,168 3,075,225 583,698 72,016 5,533,107 438,017 240,437 678,454 6,211,561 Depreciation 11,694 93,288 1,790 14,135 120,907 21,281 - 21,281 142,188 Total Expenses 1,813,862$ 3,168,513$ 585,488$ 86,151$ 5,654,014$ 459,298$ 240,437$ 699,735$ 6,353,749$ Program Services Supporting Services COMMUNITY CRISIS SERVICES AND FOOD BANK STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2020 See accompanying Notes to Financial Statements. (8) Total Total Total Crisis Food Emergency 1105 Program Management Supporting Functional Intervention Bank Assistance Project Services and General Fundraising Services Expenses Salaries 1,104,245$ 201,109$ 91,588$ 18,765$ 1,415,707$ 223,802$ 121,082$ 344,884$ 1,760,591$ Other Employee Benefits 51,301 12,835 8,590 4,630 77,356 22,795 5,405 28,200 105,556 Payroll Taxes 66,580 15,259 6,652 1,533 90,024 16,325 8,605 24,930 114,954 Pension Contributions 13,893 4,761 1,217 453 20,324 8,051 3,345 11,396 31,720 Professional Fees 731 413 22 194 1,360 15,056 23 15,079 16,439 Advertising 7,070 583 - - 7,653 28,720 1,237 29,957 37,610 Office Expenses 5,421 9,406 3,631 - 18,458 15,769 12,597 28,366 46,824 Telephone 9,870 6,907 163 4,982 21,922 2,497 1,402 3,899 25,821 Information Technology 18,755 6,974 995 868 27,592 6,180 6,522 12,702 40,294 Occupancy 1,523 9,145 261 9,795 20,724 1,827 1,045 2,872 23,596 Meeting and Conferences 14,426 622 78 7 15,133 1,072 452 1,524 16,657 Insurance 10,242 5,848 1,745 3,094 20,929 6,334 1,316 7,650 28,579 Special Events 1,000 - - - 1,000 271 15,779 16,050 17,050 Client Assistance 26,594 2,339,521 104,561 - 2,470,676 5 102 107 2,470,783 Travel 16,474 345 - - 16,819 2,960 2,201 5,161 21,980 Maintenance 2,350 20,106 389 13,421 36,266 2,937 1,463 4,400 40,666 Volunteer Recognition 2,200 3,871 235 751 7,057 1,647 760 2,407 9,464 Interest Expense - - - - - 751 - 751 751 Miscellaneous 1,200 - - - 1,200 16,215 21 16,236 17,436 Total Expenses by Function 1,353,875 2,637,705 220,127 58,493 4,270,200 373,214 183,357 556,571 4,826,771 Depreciation 11,059 80,498 1,588 14,250 107,395 7,126 11,919 19,045 126,440 Total Expenses 1,364,934$ 2,718,203$ 221,715$ 72,743$ 4,377,595$ 380,340$ 195,276$ 575,616$ 4,953,211$ Program Services Supporting Services COMMUNITY CRISIS SERVICES AND FOOD BANK STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2021 AND 2020 See accompanying Notes to Financial Statements. (9) 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets 852,560$ 627,607$ Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities: Note Payable Forgiveness - PPP (306,900) - Reinvested Interest/Dividends (11,975) (11,221) Realized and Unrealized Loss (Gain) on Investments (155,628) 393 Depreciation 142,188 126,440 Loss on Disposal of Property and Equipment 13,593 2,253 Change in Beneficial Interests in Assets Held by Community Foundation (4,008) (272) Changes in Operating Assets and Liabilities: Receivables 34,216 (122,059) Prepaid Expenses 7,524 (19,538) Accounts Payable 32,162 (9,759) Accrued Expenses and Other Liabilities 14,236 33,026 Deferred Revenue (22,781) (18,007) Net Cash Provided by Operating Activities 595,187 608,863 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of Investments (159,361) (297,104) Proceeds from Sales of Investments 164,037 298,985 Purchases of Property and Equipment (226,190) (5,623) Net Cash Used by Investing Activities (221,514) (3,742) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Note Payable - PPP - 306,900 Payments on Note Payable (8,053) (17,998) Payments on Obligations under Capital Lease (3,798) - Net Cash Provided (Used) by Financing Activities (11,851) 288,902 NET INCREASE IN CASH AND CASH EQUIVALENTS 361,822 894,023 Cash and Cash Equivalents - Beginning of Year 1,265,333 371,310 CASH AND CASH EQUIVALENTS - END OF YEAR 1,627,155$ 1,265,333$ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest Paid 1,951$ 751$ COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (10) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization CommUnity Crisis Services and Food Bank formerly known as The Crisis Center of Johnson County (herein referred to as the Organization) was incorporated in June 1970 in the state of Iowa. The Organization offers crisis prevention and intervention programs to people of all ages. The mission of the Organization is to provide emotional or material support in Johnson County, Iowa in a nonjudgmental and caring way by providing immediate resources or referrals. The Organization also works collaboratively with individuals and organizations to help prevent and prepare for future needs. Significant accounting policies followed by the Organization are presented below. Use of Estimates in Preparing Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting years. Actual results could differ from those estimates. Cash and Cash Equivalents The Organization considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents. Receivables Receivables are unsecured and are reported at their outstanding balances. Management periodically evaluates the Organization’s past receivables loss experience, known and inherent risks in receivables populations, adverse situations that may affect an obligor’s ability to pay, and current economic conditions. The Organization maintained an allowance for doubtful accounts of $-0-for the years ended June 30, 2021 and 2020. Investments Investments are carried at fair value with unrealized and realized gains and losses on investments reported as an increase or decrease in net assets without donor restrictions. Investment income is recognized when earned. Property and Equipment Property and equipment which were purchased are stated at their original cost. All fixed assets are depreciated over their estimated useful lives of 5 to 20 years,using the straight- line method of depreciation. The Organization follows the practice of capitalizing at cost all expenditures for property and equipment in excess of $1,000 and a useful life greater than one year. COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (11) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Impairment of Long-Lived Assets The Organization reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or the fair value less costs to sell. Beneficial Interest in Assets Held by Community Foundation Certain funds are held by the Community Foundation of Johnson County (the Foundation), in permanent designated agency endowment funds,for the benefit of the Organization. The transactions with the Foundation are deemed to be reciprocal and, therefore, the value of the funds held by the Foundation is recognized as an asset (beneficial interest in assets held by community foundation) by the Organization. Certain other funds held by the Foundation for the benefit of the Organization have been established (see Note 5)by donors who explicitly granted variance power to the Foundation in a nonreciprocal transfer. As such, these funds are not recognized as an asset by the Organization. The distributions received from the Foundation from these funds are recognized as contribution revenue by the Organization. Net Assets Net assets are classified based on the existence or absence of donor-imposed restrictions. The following is a description of each class: Net Assets Without Donor Restrictions —Resources over which the board of directors has discretionary control. Designated amounts represent amounts which the board has set aside for a particular purpose. Net Assets With Donor Restrictions —Those resources subject to donor-imposed restrictions which will be satisfied by actions of the Organization or passage of time. Recognition of Support and Revenue The Organization recognizes support when cash, securities or other assets; unconditional promises to give; or a notification of a beneficial interest is received. Conditional promises to give, that is, those with a measurable performance or other barrier and a right of return are not recognized until the conditions on which they depend have been met. The Organization has not recorded any conditional promises to give. COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (12) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recognition of Support and Revenue (Continued) The Organization records the fair value of contributed goods.The fair value of contributed food and grocery items are determined by applying an average value per pound to the amount of donated product. For the years ended June 30, 2021 and 2020, the Organization received 1,367,481 and 1,283,681 pounds, respectively, of donated goods at a value of $2,342,350 and $2,169,421, respectively. The value of these in-kind goods is recorded as both revenue and expense and has no effect on the change in net assets. The Organization records the fair value of donated services that create or enhance nonfinancial assets or that require specialized skills that would typically need to be purchased if not provided by donation, are recorded at their fair values in the statement of activities. The Organization included $185,627 and $220,318 for the years ended June 30, 2021 and 2020, respectively. The value of these in-kind services is recorded as both revenue and expense and has no effect on the change in net assets. Revenue from programs is reported in the amount that reflects the consideration to which the Organization expects to be entitled in exchange for providing services to their program participants. Amounts received are recognized as revenue when the Organization has incurred expenditures in compliance with specific contract or grant provisions. Amounts received prior to incurring qualifying expenditures are reported as deferred revenue in the statement of financial position. Advertising The Organization expenses advertising costs as incurred. Tax-Exempt Status The Organization is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and a similar section of the Iowa income tax law, which provides income tax exemption for corporations organized and operated exclusively for religious, charitable, or educational purposes.The Internal Revenue Service has not determined that the Organization is a private foundation. The Organization files information returns in the U.S. federal jurisdiction. The Organization follows the accounting standard for evaluating uncertain tax positions and has determined that it was not required to record a liability related to uncertain tax positions for the years ended June 30, 2021 and 2020. Functional Expenses The Organization allocates its expenses on a functional basis among its program and supporting activities. Expenses that can be identified with a specific program are allocated directly according to their natural expenditure classification. Other expenses that are common to several functions are allocated by time spent and effort. COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (13) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Paycheck Protection Program Grants from the government are recognized when all conditions of such grants are fulfilled or there is reasonable assurance that they will be fulfilled.On April 22, 2020,the Organization received a loan from Hills Bank in the amount of $306,900 to fund payroll, rent, utilities, and interest on mortgages and existing debt through the Paycheck Protection Program (the “PPP Loan”).The PPP Loan bears interest at a fixed rate of 1.0% per annum, has a term of two years, and is unsecured and guaranteed by the U.S. Small Business Administration (SBA).Payment of principal and interest is deferred until the date on which the amount of forgiveness is remitted to the lender or, if the Organization fails to apply for forgiveness within the 10 months after the covered period, then payment of principal and interest shall begin on that date.These amounts may be forgiven subject to compliance and approval based on the timing and use of these funds in accordance with the program.The covered period, May 24, 2020 to June 18, 2020, is the time that a business has to spend their PPP Loan funds.The Organization is following ASC 470, Debt, to account for the initial receipts related to the PPP Loan.On January 25, 2021, the SBA process the Organization’s PPP Loan forgiveness application and notified Hills Bank the PPP Loan qualified for full forgiveness.Loan proceeds were received by the bank from the SBA on this date. Therefore, the Organization was legally released from the debt and loan forgiveness has been recorded as a gain on extinguishment of debt, which is included in note payable forgiveness income during the year ended June 30, 2021. The SBA may review funding eligibility and usage of funds for compliance with program requirements based on dollar thresholds and other factors.The amount of liability, if any, from potential noncompliance cannot be determined with certainty;however, management is of the opinion that any review will not have a material adverse impact on the Organization’s financial position. Change in Accounting Principle Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework –Changes to the Disclosure Requirements for Fair Value Measurement.The ASU removes and modifies disclosure requirements retrospectively for nonpublic entities.The ASU is effective for fiscal years beginning after December 15, 2019.Management has adopted the ASU. NOTE 2 LIQUIDITY AND AVAILABILITY The Organization regularly monitors liquidity to meet its operating needs and other commitments, while also striving to maximize the investment of its available funds. The Organization receives contributions,grants, and program fees on an ongoing basis. For purposes of analyzing resources available to meet general expenditures over a 12-month period, the Organization considers all expenditures related to its ongoing activities as well as the conduct of services undertaken to support those activities to be general expenditures. COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (14) NOTE 2 LIQUIDITY AND AVAILABILITY (CONTINUED) In addition to the financial assets available to meet general expenditures over the next 12 months, the Organization anticipates collecting sufficient support and revenue to cover general expenditures. The Organization considers contributions restricted for programs which are ongoing, major, and central to their operations to be available to meet cash needs for general expenditures. The following table shows the financial assets available for general expenditures and future needs of the Organization as of June 30: 2021 2020 Cash 1,627,155$ 1,265,333$ Receivables 264,127 307,661 Investments 61,329 51,834 Total 1,952,611$ 1,624,828$ NOTE 3 INVESTMENTS Investments consist of the following as of June 30: 2021 2020 Mutual Funds 662,203$ 466,431$ Fixed Income 15,227 55,804 Certificates of Deposit - Nonbrokered 20,794 31,236 Money Market Funds 26,446 8,272 Total 724,670$ 561,743$ NOTE 4 FAIR VALUE MEASUREMENTS Certain assets of the Organization are reported at fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows: Level 1 –Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Organization has the ability to access. COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (15) NOTE 4 FAIR VALUE MEASUREMENTS (CONTINUED) Level 2 –Inputs to the valuation methodology include: -quoted prices for similar assets or liabilities in active markets; -quoted prices for identical or similar assets or liabilities in inactive markets; -inputs other than quoted prices that are observable for the asset or liability; -inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 –Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value. Mutual Funds: Securities listed on a national market or exchange and valued at the last sale price, or if there is no sale and the market is still considered active, at the last transaction price before year-end. Fixed Income:Valued at the most recent price of the equivalent quoted yield for such securities, or those of comparable maturity, quality, and type. Beneficial Interest in Assets Held by a Community Foundation: The unobservable inputs are the underlying assets at the Foundation and follow their investment pool. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Organization believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following tables set forth by level, within the fair value hierarchy, the Organization’s assets at fair value as of June 30: Level 1 Level 2 Level 3 Total Mutual Funds 662,203$ -$ -$ 662,203$ Fixed Income - 15,227 - 15,227 Total Investments 662,203 15,227 - 677,430 Beneficial Interest in Assets Held by Community Foundation - - 17,989 17,989 Total Assets at Fair Value 662,203$ 15,227$ 17,989$ 695,419$ 2021 COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (16) NOTE 4 FAIR VALUE MEASUREMENTS (CONTINUED) Level 1 Level 2 Level 3 Total Mutual Funds 466,431$ -$ -$ 466,431$ Fixed Income - 55,804 - 55,804 Total Investments 466,431 55,804 - 522,235 Beneficial Interest in Assets Held by Community Foundation - - 13,981 13,981 Total Assets at Fair Value 466,431$ 55,804$ 13,981$ 536,216$ 2020 The following is a summary of changes in the fair value of the Organization’s Level 3 assets for the years ended June 30: 2021 2020 Balance - Beginning of Year 13,981$ 13,709$ Change in Beneficial Interest 4,008 272 Balance - End of Year 17,989$ 13,981$ The following table details Level 3 holdings as of June 30: Principal Valuation Unobservable Instrument 2021 2020 Technique Inputs Beneficial Interest in Assets Held 17,989$ 13,981$ Net Value of by Community Foundation Asset Underlying Value Assets Fair Value NOTE 5 BENEFICIAL INTEREST IN ASSETS HELD BY COMMUNITY FOUNDATION AND DESIGNATED FUNDS The Organization has established a fund at The Community Foundation of Johnson County (the Foundation).The fund is administered by the Foundation for the benefit of the Organization. Control over the investment or reinvestment of these funds is exercised exclusively by the Foundation.The transactions with the Foundation are deemed to be reciprocal and, therefore, the value of the fund held by the Foundation is recognized as an asset (beneficial interest in assets held by community foundation)by the Organization. Distributions from the fund are at the discretion of the Organization’s board.The following is the fund balance and purpose at June 30: 2021 2020 Emergency Assistance 17,989$ 13,981$ COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (17) NOTE 5 BENEFICIAL INTEREST IN ASSETS HELD BY COMMUNITY FOUNDATION AND DESIGNATED FUNDS (CONTINUED) In addition, designated funds for the benefit of the Organization, have been established by donors with the Foundation.In establishing a designated fund, the donor selects a specific nonprofit institution as a recipient, and grants are made to it annually as long as the named institution remains in existence and continues to fulfill its intended purpose. Only the distributions received by the Organization from these designated funds are included in the accompanying financial statements. The Organization received $7,964 and $8,537 from these funds for the years ended June 30, 2021 and 2020, respectively. The amount of investments held on the Organization’s behalf as of June 30, 2021 and 2020 was $511,723 and $395,691, respectively. NOTE 6 NOTE PAYABLE Note payable consists of the following as of June 30: Description 2021 2020 Note payable, that calls for monthly payments of $851 at 5.30%, with final payment due November 2023. Note is secured by specific property in Iowa City, Iowa.-$ 8,053$ This note was paid off in April 2021. The Organization has a $250,000 line of credit of which $-0-was used as of June 30, 2021. Amounts drawn against the line of credit are payable on demand and bear interest at 3.50%. The line of credit expires October 21, 2021. The line of credit is collateralized by substantially all of the Organization’s assets. NOTE 7 OBLIGATIONS UNDER CAPITAL LEASE The Organization is leasing office equipment under a capital lease which expires in June 2025. The lease requires monthly payments of $451. The total cost of the leased equipment is $22,339 as of June 30, 2021 and 2020.Accumulated depreciation at June 30, 2021 and 2020 is $4,468 and $-0-, respectively.Amortization of the capital lease totaled $4,468 and $-0-for the years ended June 30, 2021 and 2020, respectively, and is included in depreciation expense. COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (18) NOTE 7 OBLIGATIONS UNDER CAPITAL LEASE (CONTINUED) Future minimum payments under this lease is as follows: Year Ending June 30,Amount 2022 5,415$ 2023 5,415 2024 5,415 2025 5,415 Total Minimum Lease Payments 21,660 Less: Amount Representing Interest (3,119) Present Value of Minimum Lease Payments 18,541$ NOTE 8 ENDOWMENTS The Organization’s endowment consists of various funds to support their general operating needs. Its endowments consist of funds designated by the board of directors (the board)to function as endowment. As required by U.S. GAAP, net assets associated with endowment funds, including funds designated by the board to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. The Organization has adopted investment and spending policies for endowment assets that attempt to provide current income to fund the operations of the Organization as well as to enhance the future resources available to the Organization through long-term appreciation of assets. The endowment assets are invested in a manner that is intended to provide growth of principal and income. Currently, endowment assets are being held and managed by a local bank and community foundation. Distributions are approved by the board. Strategies Employed for Achieving Objectives The Organization primarily follows the investment strategy to have a target balance of $400,000 to $500,000 with an allowable variation of $350,000 to $550,000. Fixed income will be approximately $100,000, the remainder of the funds to be invested in longer term, higher risk investments, such as equity-based mutual funds and real estate investments trusts. Endowment net asset composition by type of fund as of June 30, 2021: Without Donor With Donor Restrictions Restrictions Total Board-Designated Endowment Funds 663,341$ -$ 663,341$ COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (19) NOTE 8 ENDOWMENTS (CONTINUED) Changes in endowment net assets for the year ended June 30, 2021: Without Donor With Donor Restrictions Restrictions Total Net Assets - Beginning of Year 509,909$ -$ 509,909$ Investment Income 10,740 - 10,740 Investment Fees (2,332) - (2,332) Net Appreciation 145,024 - 145,024 Net Assets - End of Year 663,341$ -$ 663,341$ Endowment net asset composition by type of fund as of June 30, 2020: With Donor Unrestricted Restrictions Total Board-Designated Endowment Funds 509,909$ -$ 509,909$ Changes in net asset composition by type of fund as of June 30, 2020: With Donor Unrestricted Restrictions Total Net Assets - Beginning of Year 503,081$ -$ 503,081$ Investment Income 9,988 - 9,988 Investment Fees (1,710) - (1,710) Net Depreciation (1,450) - (1,450) Net Assets - End of Year 509,909$ -$ 509,909$ NOTE 9 RESTRICTIONS ON NET ASSETS Net assets with donor restrictions are available for the following purposes as of June 30: 2021 2020 Crisis Intervention 6,089$ 3,089$ Food Bank 102,386 84,128 Future Operations 172,940 175,783 Total 281,415$ 263,000$ COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (20) NOTE 10 COMMUNITY DEVELOPMENT BLOCK GRANT CONTINGENCIES The Organization received CDBG funds for the renovation and architectural services for the 1105 Building Project during the year ended June 30, 2013. The grant amount was $187,400. Funds were awarded on a reimbursement basis, and revenue was recorded when cash was received at the time of project performance. No liability has been recorded on the books for the conditional loan. The City recorded a mortgage on the property in the amount of $187,400. The loan on the property requires no payments as long as the Organization owns the property and uses it in its operations through June 30, 2030. In the event the Organization sells, assigns,or transfers its interest in the property, or discontinues its programs, prior to June 30, 2030 without written concurrence from the City, the Organization is required to pay back to the City. If the Organization fully complies with the obligation of the grant and the loan through and including June 30, 2030, then there will be no loan payments due and the lien against the property will be released by the City. The Organization was awarded CDBG funds for the removal of existing parking lot and installation of new parking lot including related work at 1105 Gilbert Court. The grant amount was $100,000. Funds were awarded on a reimbursement basis, and revenue was recorded when cash was received at the time of project performance. No liability has been recorded on the books for the conditional loan. The City recorded a mortgage on the property in the amount of $100,000. The loan on the property requires no payments as long as the Organization owns the property and uses it in its operations through December 31, 2024. In the event the Organization sells,assigns, or transfers its interest in the property, or discontinues its programs, prior to December 31, 2024, without written concurrence from the City, the Organization is required to pay back to the City. If the Organization fully complies with the obligation of the grant and the loan through and including December 31, 2024, then there will be no loan payments due and the lien against the property will be released by the City. The Organization was awarded CDBG funds to increase the size of the warehouse, remodel client services, and expand the waiting area at 1105 Gilbert Court. The grant amount was $95,000, the Organization received $38,586 for the year ending June 30, 2019.The City recorded a mortgage on the property in the amount of $95,000. The loan on the property requires no payments as long as the Organization owns the property and uses it in its operations through June 30, 2025. In the event the Organization sells,assigns, or transfers its interest in the property, or discontinues its programs, prior to June 30, 2025, without written concurrence from the City, the Organization is required to pay back to the City. If the Organization fully complies with the obligation of the grant and the loan through and including June 30, 2025, then there will be no loan payments due and the lien against the property will be released by the City. COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (21) NOTE 11 EMPLOYEE BENEFIT PLAN Effective January 1, 2017, the Organization adopted a 401(k)plan which covers employees who meet certain eligibility requirements. Previously the Organization had a simplified employee retirement (SEP) plan which covered employees who met certain eligibility requirements. The board of directors determines the annual contribution to the plan. For the years ended June 30, 2021 and 2020, the contribution to the plans was based on 5%of compensation paid to eligible employees, and amounted to $33,319 and $31,720, respectively. NOTE 12 DISCLOSURE ABOUT CERTAIN CONCENTRATIONS Cash Concentration The Organization maintains cash balances that exceed the maximum amount insured by the Federal Deposit Insurance Corporation. At June 30, 2020, the Organization had $1,634,931 of cash deposited in one bank. Management believes the credit risk related to the uninsured balance is minimal. Revenue Concentration The Organization has certain concentrations of support and revenue. For the years ended June 30, 2021 and 2020, the Organization received funding from the following major funding sources, defined as greater than 10% of total support and revenue. The approximate percentage of support and revenue and the amount of receivables from these sources is as follows: Receivable Percentage Receivable Percentage Funding Source A 90,757$ 13 %83,444$ 16 % Funding Source B - 12 150,000 12 Funding Source C 36,300 10 6,222 3 2021 2020 COMMUNITY CRISIS SERVICES AND FOOD BANK NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 (22) NOTE 13 COMMITMENTS AND CONTINGENCIES Lease Commitment The Organization has entered into an agreement for copier maintenance and service as part of a capital lease expiring in June, 2025 with monthly payments of $206. The Organization assumed a copier lease from a former tenant, lease expires in December, 2024, requiring monthly payments of $295.The Organization is also leasing a vehicle expiring in April 2024. The vehicle lease required a down payment of $1,506 and monthly payments of $400. Future minimum lease payments under these leases are as follows: Year Ending June 30,Amount 2022 10,813$ 2023 10,813 2024 8,899 2025 2,474 Total 32,999$ Total rental expense for the years ended June 30, 2021 and 2020 was $8,119 and $13,806, respectively. NOTE 14 RISKS AND UNCERTAINTIES In early March 2020, the COVID-19 virus was declared a global pandemic. The Organization cannot predict the length or severity of the pandemic, or the extent to which the disruption may interrupt operations. Management is closely monitoring the situation and has taken action to mitigate known vulnerabilities. No adjustments have been made to these financial statements as a result of this uncertainty. NOTE 15 SUBSEQUENT EVENTS Management evaluated subsequent events through November 18, 2021, the date the financial statements were available to be issued. Events or transactions occurring after June 30, 2021, but prior to November 18, 2021, that provided additional evidence about conditions that existed at June 30, 2021, have been recognized in the financial statements for the year ended June 30, 2021. Events or transactions that provided evidence about conditions that did not exist at June 30, 2021, but arose before the financial statements were available to be issued, have not been recognized in the financial statements for the year ended June 30, 2021.