Audit - 2013
SALINA DOWNTOWN, INC.
Financial Statements
And
Independent Accountants’ Review Report
December 31, 2013
Table of Contents
Page
Independent Accountants’ Review Report 3
Statement of Financial Position 4
Statement of Activities & Net Assets 5
Statement of Cash Flows 8
Notes to the Financial Statements 9
BENSON ACCOUNTING, CPA, PA
JOEL BENSON, CPA - MARY BENSON, CPA
1929 S. Ohio St.
SALINA, KS 67401
PH: 785-827-3157 FAX: 785-827-3159
Independent Accountants’ Review Report
To the Board of Directors of
SALINA DOWNTOWN, INC.
Salina Downtown,
We have reviewed the accompanying statement of financial position of
Inc.
(a nonprofit organization) as of December 31, 2013, and the related statements of
activities and cash flows for the year then ended. A review includes primarily applying
analytical procedures to management’s financial data and making inquiries of Organization
management. A review is substantially less in scope than an audit, the objective of which
is the expression of an opinion regarding the financial statements as a whole. Accordingly,
we do not express such an opinion.
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with accounting principles generally accepted in the United
States of America and for designing, implementing, and maintaining internal control
relevant to the preparation and fair presentation of the financial statements.
Our responsibility is to conduct the review in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified Public
Accountants. Those standards require us to perform procedures to obtain limited
assurance that there are no material modifications that should be made to the financial
statements. We believe that the results of our procedures provide a reasonable basis for
our report.
Based on our review, we are not aware of any material modifications that should be made
to the accompanying financial statements in order for them to be in conformity with
accounting principles generally accepted in the United States of America.
BENSON ACCOUNTING, CPA, PA
By:
Joel Benson, CPA
June 25, 2014
Salina, KS
SALINA DOWNTOWN, INC.
STATEMENT OF FINANCIAL POSITION
As OfDecember 31, 2013
ASSETS
Current Assets
Cash on Hand $ 167
Cash in Banks 141,389
Accounts Receivable 14,098
$ 155,654
Current Notes Receivable – DIP New Business Loans $ 5,123
Total Current Assets $ 160,777
Notes Receivable – DIP New Business Loans $ 10,014
Property and Equipment, Net $ 281
Total Assets $ 171,072
LIABILITIES & NET ASSETS
Current Liabilities
Accounts Payable $ 8,678
Façade grant Payable 17,991
Payroll taxes Payable 1,708
$ 28,377
Total Liabilities $ 28,377
Net Assets
Unrestricted $ 66,672
Temporarily Restricted $ 76,023
$ 142,695
Total Liabilities and Net Assets $ 171,072
See accompanying notes and independent accountants’ review report.
4
SALINA DOWNTOWN, INC.
STATEMENT OF ACTIVITIES & NET ASSETS
For the Year Ended December 31, 2013
UNRESTRICTED NET ASSETS
Revenues
Service Fees $ 83,326
Organization Contribution 58,100
Friends of the River 42,831
Business Support & Recruitment 9,330
Destination Marketing 7,299
Interest 461
Total Revenue $ 201,347
Program Expenses
Organizational Expenses
Salaries, Wages & Payroll Tax $ 83,519
Outside Professional Services 11,220
Utilities 3,493
Computer Supplies & Maintenance 3,260
Insurance 1,539
Communications 1,480
General Marketing 1,465
Office Supplies 1,443
Equipment & Building Maintenance 1,166
Dues & Subscriptions 996
Meeting Expense 623
Postage & Printing 491
Depreciation 322
Taxes & Fees 261
Professional Development 104
Other Expenses 73
Office Rent 0
Total Organizational Expenses $ 111,455
See accompanying notes and independent accountants’ review report.
5
SALINA DOWNTOWN, INC.
STATEMENT OF ACTIVITIES & NET ASSETS (CONTINUED)
For the Year Ended December 31, 2013
Program Expenses (Continued)
Committee Expenses
Business Support Expenses
Holiday Lighting 14,877
Cluster Marketing $ 9,957
Other 2,028
Sculpture Tour 376
Total Business Support Expenses $ 27,238
Destination Marketing Expenses
Friends of the River $ 47,331
Marketing 10,804
Special Events 7,780
Total Destination Marketing Expenses $ 65,915
Total Committee Expenses $ 93,153
Total Program Expenses $ 204,608
Change in Unrestricted Net Assets $ (3,261)
Unrestricted Net Assets – Beginning of Year $ 69,933
Unrestricted Net Assets – End of Year $ 66,672
See accompanying notes and independent accountants’ review report.
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SALINA DOWNTOWN, INC.
STATEMENT OF ACTIVITIES & NET ASSETS (CONTINUED)
For the Year Ended December 31, 2013
TEMPORARILY RESTRICED NET ASSETS
RESTRICTED FAÇADE GRANTS:
Façade Grant Revenues $ 47,500
Façade Grant Adjustments – Prior Years 19,125
Façade Grant (Expenses)/Returns (49,584)
Change in Temporarily Restricted Façade Net Assets $ 17,041
Temporarily Rest. Façade Net Assets – Beginning of Year 30,200
Temporarily Rest. Façade Net Assets – End of Year $ 47,241
RESTRICTED KHC-WEB BASED HISTORC TOURS:
KHC Grant Revenues $ 0
KHC Grant (Expenses)/Returns (3,947)
Change in Temporarily Restricted KHC Net Assets $ (3,947)
Temporarily Rest. KHC Net Assets – Beginning of Year 3,947
Temporarily Rest. KHC Net Assets – End of Year $ 0
RESTRICTED NEW BUSINESS LOAN POOL (NBL):
NBL Grant Revenues $ 0
NBL Interest Income 527
NBL Grant (Expenses/Write-off’s)/Returns (12,068)
Change in Temporarily Restricted Net Assets $ (11,541)
Temporarily Rest. NBL Net Assets – Beginning of Year 40,323
Temporarily Rest. NBL Net Assets – End of Year $ 28,782
RESTRICTED USDA KITCHEN INCUBATOR – KITCHEN 4 HIRE (K4H):
K4H Grant Revenues $ 44,664
K4H Grant (Expenses)/Returns (44,664)
Change in Temporarily Restricted K4H Net Assets $ 0
Temporarily Rest. K4H Net Assets – Beginning of Year 0
Temporarily Rest. K4H Net Assets – End of Year $ 0
TOTAL TEMPORARILY RESTRICTED NET ASSETS: $ 76,023
See accompanying notes and independent accountants’ review report.
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SALINA DOWNTOWN, INC.
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Service Fees & Organization Contributions $ 191,130
Façade Grant Received 47,500
Other Grants Received 44,664
Interest Received 988
Other Grants Paid (44,664)
Façade Grant Paid (30,456)
Cash Paid to Suppliers & Others (224,338)
Net Cash Provided / (Used) by Operations $ (15,176)
CASH FLOWS FROM INVESTING ACTIVITIES:
Long Term Loan Investments Made (Notes Receivable) $ (5,000)
Long Term Loan Payments Received (Notes Receivable) 5,820
Net Cash Provided / (Used) by Investing $ 820
CASH FLOWS FROM FINANCING ACTIVITIES:
Long Term Borrowings (Start-up Kansas) $ 0
Repayment of Long Term Debt (Start-up Kansas) (100)
Net Cash Provided/(Used) by Financing $ (100)
NET INCREASE/ (DECREASE) IN CASH $ (14,456)
CASH AT BEGINNING OF YEAR $ 156,012
CASH AT END OF YEAR $ 141,556
RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Increase/(Decrease) in Net Assets $ (1,708)
Add Non-cash Expense, Depreciation/Loss 12,400
Net (Increase)/Decrease in Receivables (9,948)
Net (Decrease)/Increase in Payables (15,920)
Net Cash Provided / (Used) by Operations $ (15,176)
See accompanying notes and independent accountants’ review report.
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SALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS
For the Year Ended December 31, 2013
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Salina Downtown, Inc
A summary of the significant accounting policies of . is as follows:
Salina Downtown, Inc.
Business Activity – The function of is to improve the image of
downtown Salina, Kansas through cooperation, promotion, business retention, recruitment
and enhancement of physical appearance. The Organization primarily receives funds in
the form of assessments to businesses located in the Business Improvement District.
These assessments are invoiced and collected by the City of Salina and paid to the
Organization. Due to the volume of business conducted with the City of Salina, and due to
the joint efforts undertaken, the City of Salina is considered to be a related party.
Salina Downtown, Inc.
Taxes – is exempt from federal and state income taxes under
Internal Revenue Code Section 501(c)(6) and similar state provisions. The Organization
prepares its financial statements on the accrual method of accounting.
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
740-10-05 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements. This topic prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. This topic also provides guidance
on de-recognition, classification, interest and penalties, accounting in interim periods,
disclosure and transition. The Organization has not identified any uncertainties in federal
or state income taxes for any open tax years as of December 31, 2013. The Organization
is no longer subject to federal and state tax examinations by tax authorities for years
before 2010. No authorities have commenced income tax examinations as of December
31, 2013.
Revenue Recognition – All revenues are considered available for the Organization’s use
unless specifically restricted by the donor or by contractual agreement. All revenues are
recorded as the funding is made available to them.
Method of Accounting – The Organization prepares its financial statements according to
Accounting Standards Codification (ASC) Topic No. 958, “Financial Statements for Not-
For-Profit Organizations”. Under ASC Topic No. 958, 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. In addition, the Organization is required to present a statement of
cash flows.
The Organization also follows ASC Topic No. 958-605-25, “Accounting for Contributions
Received and Contributions Made”, whereby contributions received are recorded as
unrestricted, temporarily restricted, or permanently restricted support depending on the
existence and/or nature of any donor restrictions. Restricted net assets are reclassified to
unrestricted net assets upon satisfaction of the time or purpose restrictions.
See independent accountants’ review report.
9
SALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 2013
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Salina Downtown, Inc
Accounts Receivable – . considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts is required. If amounts
become uncollectible, they will be charged to operations when that determination is made.
Through City of Salina ordinance, all accounts are to be billed and collected by the City of
Salina Downtown, Inc
Salina for distribution to . Therefore, all accounts uncollected by
the City will remain on the receivables list of the City, and not the books of Salina
Salina Downtown, Inc
Downtown, Inc. Accounts receivable included on the books of .
include only those payments actually received from Business Improvement District patrons
through the end of the year which have not been paid to Salina Downtown, Inc.
Depreciation – Capital assets are recorded at cost. Depreciation is determined using both
straight-line and accelerated methods over the estimated useful life of each asset.
Use of estimates – The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect certain reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and certain reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Date of Management’s Review – Management has evaluated subsequent events through
June 25, 2014, the date on which the financial statements were available to be issued.
NOTE B – CONCENTRATIONS OF CREDIT RISK
The Organization derives the vast majority of its revenues from the City of Salina, Kansas
Salina
either through special budgeted funds or through sales tax revenues allotted to
Downtown, Inc.
The Organization conducts all of its business and derives all of its
funding as it relates to the geographical downtown district of Salina, Kansas.
NOTE C – ORGANIZATION CONTRIBUTION
The Organization has entered into an agreement with the City of Salina, KS to merge
private efforts with city government efforts toward the development of plans and programs
to assure the vitality and prosperity of Salina’s Central Business District, with no further
Salina Downtown, Inc.
restriction. The agreement provides the City and will jointly fund
these programs. Contributions from the City of Salina for 2013 totaled $38,000. During
the year ended December 31, 2013, the member organization Salina Regional Health
Center also contributed $20,000 without restriction to assist with similar efforts.
See independent accountants’ review report.
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SALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 2013
NOTE D – LEASES
The Organization has entered into a lease agreement with the current landlord (Salina
Area Chamber of Commerce) spanning a period sufficient for the base rent to cover the
cost of premises alterations incurred by landlord in order to accommodate the
Organization beginning on November 1, 2009. This remodeling cost totaled $17,427.
Base rental shall be paid in the amount of $570 per month. As this total cost has been
recovered, there is no lease expense for 2013, nor are there any future minimum lease
payments; however, the Organization is still responsible for a proportionate share of
utilities and incidentals.
Salina Downtown, Inc.
Facilities and personnel are shared between and the Salina Area
Chamber of Commerce. The value of this arrangement is not readily determinable.
NOTE E – FUNCTIONAL CLASSIFICATION OF EXPENSES
Salina Downtown Inc.’s
expenses are primarily program related with an insignificant
amount of expenses related to administration and fund raising. Thus, the statement of
functional expenses is not presented.
NOTE F – CASH ON HAND AND IN BANKS
Cash on the Statement of Cash Flows includes the following:
Cash on hand $ 167
Cash in Bank – Certificates of Deposit 105,365
Cash in Bank – Debit Card Account 676
Cash in Bank – Operating 35 348
$ 141,556
For purposes of the Statement of Cash Flows, the Organization considers all highly liquid
investments with a maturity of three months or less to be cash equivalents.
NOTE G – PROPERTY AND EQUIPMENT
A detail of property and equipment, recorded at cost, is as follows:
Furniture and Fixtures $ 7,552
Less Accumulated Depreciation (7,271)
Net Property and Equipment $ 281
It is the policy of the Organization to capitalize assets with useful lives beyond 1 year and
a cost in excess of $500.
See independent accountants’ review report.
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SALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 2013
NOTE H – NOTES RECEIVABLE DIP – NEW BUSINESS LOANS
The Organization has previously received an FHLBank Topeka Jobs Grant to be used to
assist in the funding of new and small businesses. The original grant award was for
$25,000, to which the Organization internally designated another $10,000 in 2011 and
$5,000 in 2012. These funds have been designated for this specific use of making no
interest loans and low interest loans to eligible downtown businesses. This is a temporary
restriction as indicated on the Statement of Activities and Net Assets.
Interest earned on these temporarily restricted funds totaled $527 for 2013, and is
intended to increase the available funding. $12,078 in loaned funds was determined to be
uncollectible in 2013, with collection efforts to continue. Compounded with related
additional earned fees of $10, and as indicated on the statement of net assets, the result is
a restricted total of $28,782 as of December 31, 2013. During the year ended December
31, 2013, a total of $5,000 was loaned to qualifying borrowers with varying payment terms.
The total outstanding balance of loans made at December 31, 2013 is $15,137.
Remaining funding available for loan awards is $13,645 at December 31, 2013.
NOTE I – COMMITMENTS AND CONTINGENCIES
The Organization, through its involvement in the “Forgivable Loan” Development Incentive
Program indicated above, holds an obligation from award winning organizations to
maintain the improvements and to occupy the same location for a three year period from
the date of the agreement for which the award was granted. The obligation is reduced by
1/36 for each whole month after the award date. As of December 31, 2013, incentive
recipients were contingently obligated to the Organization in the aggregate amount of
$45,444. As this award is ultimately funded through the City of Salina, KS, any return of
the awarded loans would be an amount that is obligated to the City of Salina, KS upon
receipt.
NOTE J – DEVELOPMENT INCENTIVE PROGRAM (FAÇADE GRANT)
Salina Downtown, Inc
The City of Salina, KS has joined resources with . in an effort to
improve the aesthetics of the Business Improvement District through the repair and
maintenance of exterior building façades. Property owners and/or tenants who are in
good standing with the Business Improvement District (service fees are current) are
eligible to apply. There are 2 levels of grants available. “Mini Grants” are available for up
to $3,499 per award; “Forgivable Loans” are available for grants of $3,500 up to $15,000
per award. See Note I above for additional restrictions on “Forgivable Loan” awards.
There are annual limits to the aggregate of each type of incentive grant as determined by
the board of directors.
See independent accountants’ review report.
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SALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 2013
NOTE J – DEVELOPMENT INCENTIVE PROGRAM (FAÇADE GRANT) - (CONTINUED)
During the year ended December 31, 2013, there was $47,500 in City contributions to
Salina Downtown, Inc
. for this program. Grants awarded to Downtown Patrons, but not
paid as of December 31, 2013 amounted to $17,991.
As of December 31, 2013, $47,241 has not been awarded to qualifying businesses. This
received but un-awarded amount is subject to return to the City of Salina, KS upon
request, but may be rolled into the following year’s grant allocation total. The City has
agreed to allow that allocation to be awarded in the year ending December 31, 2014.
The façade grant activity is included in the accompanying financial statements as
Temporarily Restricted activities due to the specificity of use of these funds.
NOTE K – WEB BASED HISTORIC TOURS
The Organization received a grant in 2011 from the Kansas Humanities Council to be used
in promoting Salina’s Downtown through the use of a web based walking tour to
encourage more visitors. These funds have been restricted for this specific use, and have
been indicated as such on the Statement of Activities and Net Assets under temporarily
restricted funds. The grant amount was $7,420, of which $7,420 has been expended
through the year ended December 31, 2013.
NOTE L – KDA KITCHEN INCUBATOR – KITCHEN FOR HIRE (K4H)
The Organization has applied for and received a grant to be used in promoting Salina’s
Downtown through the utilization of an entrepreneurial facilitation focused on making a
commercial kitchen available to prospective entrepreneurs. This project, funded in part by
the grant awarded by the KS Department of Agriculture in the amount of $70,050, and in
partnership with the Masonic Center in Salina, is intended to provide food based
entrepreneurs with access to a commercial kitchen in which to process their goods. The
grant is structured such that grant income is recognized to the extent of related expenses
and is intended as an expense reimbursement grant.
During the year ended December 31, 2012, the total amount funded and expended for this
project was $5,334. The total amount funded and expended under this program during the
year ended December 31, 2013 was $41,989. The remaining available funding for 2014 is
$22,727. This activity is temporarily restricted and is included in the Temporarily
Restricted segment of the Statement of Activities and Net Assets.
Included in the program related expenditures is lease expense in the amount of $21,600
which is directly related to this temporarily restricted program. There are no future
minimum lease payments associated with this arrangement as the program lease was
through December 31, 2013, and is currently operating on a month to month basis.
See independent accountants’ review report.
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SALINA DOWNTOWN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 2013
NOTE M – RETIREMENT BENFITS
The Organization maintains a SIMPLE retirement plan in which employees with over 2
years employment and who earn over $5,000 are eligible to participate. The plan states
that the Employer will match employee withholdings up to a total of 3% for each calendar
year. For the year ended December 31, 2013, the total amount of employer matching
contributions is $1,206 and is included in the financial statements with Salaries, Wages
and Payroll taxes.
NOTE N – COMPENSATED ABSENCES
The Organization maintains a policy for paid time off (PTO) based on an accrual of a set
fraction of an hour per hour worked employee. This fraction differs by length of service. It
is available to all employees. An employee can carry forward up to one half of their annual
PTO earned. As of the December 31, 2013, no employee had a significant bank of PTO
remaining, and no liability has been recognized.
See independent accountants’ review report.
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