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Audit - 2015/2016 I I I I I I I COMMUNITY ACCESS TELEVISION OF SALINA, INC. IFINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2016 AND 2015 TOGETHER WITH REPORT OF INDEPENDENT AUDITORS I I I I I I I I I I I ICOMMUNITY ACCESS TELEVISION OF SALINA, INC. I FINANCIAL STATEMENTS DECEMBER 31, 2016 and 2015 1 Table of Contents 1 Independent Auditor's Report 1 - 2 Financial Statements: 1 Statements of Assets, Liabilities and Net Assets- Modified Cash Basis 3 1 Statements of Support, Revenue and Expenses- Modified Cash Basis 4 Statements of Functional Expenses-Modified Cash Basis 5 -6 IStatements of Cash Flows- Modified Cash Basis 7 INotes to Financial Statements 8- 12 I I I I 1 I I I I I I 1 218 S.Santa Fe Avenue S S Summers, SpencereSalina,Kansas 67401 & Company PA. Phone 785.825.5479 Y� Fax 785.825.2446 ;'CERTIFIED-PUBLIC ACCOUNTANTS SSCcpas.com I II Independent Auditor's Report To the Board of Directors Community Access Television of Salina, Inc. We have audited the accompanying financial statements of Community Access Television of Salina, Inc. (a nonprofit organization), which comprise the statements of assets, liabilities and net assets— modified cash basis as of December 31, 2016, and the related statements of support, revenue and expenses- modified cash basis, cash flows — modified cash basis, and functional expenses — modified cash basis, for the year 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 the modified cash basis of accounting as described in Note 2; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for 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 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 auditor's 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. II 1 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects,the assets, liabilities, and net assets of Community Access Television of Salina, Inc. as of December 31, 2016, and its support, revenue, and expenses for the years then ended in accordance with the modified cash basis of accounting as described in Note 2. Basis of Accounting We draw attention to Note 2 of the financial statements, which describes the basis of accounting.The financial statements are prepared on the modified cash basis of accounting,which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Prior Period Financial Statements The financial statements as of December 31, 2015, were audited by Clubine and Rettele, Chartered who merged with Summers, Spencer& Company, P.A. as of November 1, 2017, and whose report dated ' November 28, 2016 expressed an unmodified opinion on those statements. l a‘ISummers, Spencer& Company, P.A. ',Q. 4 Salina, Kansas February 12, 2018 1 1 1 1 1 1 1 1 ICOMMUNITY ACCESS TELEVISION OF SALINA, INC. I STATEMENTS OF ASSETS, LIABILITIES AND NET ASSETS MODIFIED CASH BASIS 1 December 31, 2016 2015 ASSETS I Current assets Cash $ 127,376 $ 64,197 Donated facilities,current portion 96,200 ITotal current assets 127,376 160,397 I Property and equipment, net 88,502 122,249 Total assets $ 215,878 $ 282,646 ILIABILITIES AND NET ASSETS Current liabilities I Accrued payroll taxes and withholdings1,547 2,672 Credit card payable 661 2,459 Notes payable- current portion 5,509 5,086 ITotal current liabilities 7,717 10,217 INotes payable- noncurrent portion 7,008 12,517 Total liabilities 14,725 22,734 INet assets Unrestricted 201,153 163,712 I Temporarily restricted net assets - 96,200 Total net assets 201,153 259,912 ITotal liabilities and net assets $ 215,878 $ 282,646 I I I I I IThe accompanying notes are an integral part of the financial statements. 3 II COMMUNITY ACCESS TELEVISION OF SALINA, INC. I STATEMENTS OF SUPPORT, REVENUE AND EXPENSES MODIFIED CASH BASIS 1 For the year ended December 31, 2016 2015 I Changes in unrestricted net assets: Revenues, support and gains City ordinance revenue $ 268,358 $ 165,241 ICounty revenue 15,000 15,000 Contributions 1,558 150 Underwriting and sponsorship 2,641 2,571 I Membership 45 120 Merchandise/duplication/course fees/production 2,655 580 I Government meeting reimbursement 1,680 4 1,590 Interest 20 Donated facilities interest 543 214 ITotal support and revenue 292,484 185,486 Net assets released from restrictions I Satisfaction of facility usage restrictions 96,200 96,530 Total net assets released from restrictions 96,200 96,530 Total support,revenue and reclassifications 388,684 282,016 IExpenses Program services 314,627 313,578 I Management and general 30,872 35,153 Fundraising 4,449 4,009 Total expenses 349,948 352,740 ILoss on disposal of equipment 1,295 2,425 Total expenses and losses 351,243 355,165 IChange in unrestricted net assets 37,441 (73,149) Changes in temporarily restricted net assets: I Support Donated facilities 192,730 I Net assets released from restriction (96,200) (96,530) Change in temporarily restricted net assets (96,200) 96,200 IChange in total net assets (58,759) 23,051 Net assets, beginning of year 259,912 236,861 INet assets,end of year $ 201,153 $ 259,912 IThe accompanying notes are an integral part of the financial statements. I 4 ICOMMUNITY ACCESS TELEVISION OF SAUNA, INC. I STATEMENTS OF FUNCTIONAL EXPENSES MODIFIED CASH BASIS For the year ended December 31, _ 2016 ISupporting Services Program Services Management Fundraising Total I &General Salaries $ 121,456 $ 9,425 $ 1,467 $ 132,348 I Employee benefits 13,240 2,704 544 16,488 Payroll taxes 8,210 1,681 339 10,230 Accounting - 4,930 - 4,930 Dues and subscriptions 823 822 - 1,645 IOffice supplies 1,519 312 63 1,894 Production supplies 12,628 - - 12,628 Telephone and cable 8,053 1,649 330 10,032 I Bank fees - 1,449 - 1,449 Interest - 1,293 - 1,293 Donated facilities rent 96,743 - - 96,743 I Repairs and maintenance 4,650 4,650 Community relations 1,553 1,552 3,105 Travel and meals 713 713 - 1,426 I Advertising 1,386 - 220 220 154 1,540 Staff development 440 Insurance 10,433 1,159 - 11,592 I Underwriting usage 325 32 - - 325 Depreciation ,675 4,515 37,190 Total expenses $ 314,627 $ 30,872 $ 4,449 $ 349,948 I I I I I I I I 1 The accompanying notes are an integral part of the financial statements. 5 1 COMMUNITY ACCESS TELEVISION OF SALINA, INC. I STATEMENTS OF FUNCTIONAL EXPENSES MODIFIED CASH BASIS IFor the year ended December 31, 2015 Supporting Services I Program Services Management &General Fundraising Total I Salaries $ 120,407 $ 9,425 $ 1,369 $ 131,201 Employee benefits 10,597 2,164 436 13,197 Payroll taxes 9,904 2,028 408 12,340 I Contract labor - 5,250 - 5,250 Accounting 3,375 3,375 Dues and subscriptions 710 710 - 1,420 Office supplies 1,589 326 65 1,980 IProduction supplies 8,934 8,934 Telephone and cable 4,844 992 199 6,035 Bank fees - 1,934 - 1,934 I Interest - 1,330 - 1,330 Donated facilities rent 96,744 96,744 Repairs and maintenance 5,542 - - 5,542 ICommunity relations 1,390 1,390 2,780 Travel and meals 1,053 1,053 2,106 Advertising 1,278 - 142 1,420 I Staff development 171 13 170 - 341 Insurance ,981 1,553 15,534 Underwriting usage 1,408 - - 1,408 I Depreciation 35,027 4,842 39,869 Total expenses $ 313,578 $ 35,153 $ 4,009 $ 352,740 I I I I I I 1 IThe accompanying notes are an integral part of the financial statements. 6 ICOMMUNITY ACCESS TELEVISION OF SAUNA, INC. I STATEMENTS OF CASH FLOWS MODIFIED CASH BASIS I For the year ended December 31, 2016 2015 Cash flows from operating activities Change in net assets $ (58,759) $ 23,051 1 Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation 37,190 39,869 I Loss on disposal of assets 1,295 2,425 (Increase)decrease in assets Donated facilities 96,200 (96,200) 1 Increase (decrease) in liabilities Credit cards payable (1,798) 2,459 Payroll liabilities (1,125) 1,169 INet cash provided by(used in)operating activities 73,003 (27,227) I Cash flows from investing activities Purchase of property and equipment (4,738) 1 Net cash used in investing activities (4,738) - Cash flows from financing activities IPayments on debt (5,086) (3,941) Net cash used in financing activities (5,086) (3,941) INet increase (decrease) in cash and cash equivalents 63,179 (31,168) Cash and cash equivalents, beginning of year 64,197 95,365 ICash and cash equivalents, end of year $ 127,376 $ 64,197 I I I I I I IThe accompanying notes are an integral part of the financial statements. 7 COMMUNITY ACCESS TELEVISION OF SALINA, INC. NOTES TO FINANCIAL STATEMENTS Note 1—Organization and nature of operations Community Access Television of Salina,Inc.was organized as a Kansas not-for-profit corporation with exempt status under Internal Revenue Code Section 501(c)(3) on April 15, 1991. The organization operates cable television channels to distribute noncommercial, educational, community-based media programs and information to local citizens and provides equipment and technical knowledge for local citizens who produce the programs. The date to which events occurring after December 31, 2016, the date of the most recent statement of financial position, have been evaluated for possible adjustment to the financial statements or disclosure is February 12, 2018, which is the date the financial statements were available to be issued. Note 2—Summary of significant accounting policies Method of accounting The accounting records are maintained and the financial statements prepared on the modified cash basis of accounting. Under the cash basis, receipts are recognized when collected and disbursements are recognized when paid rather than when incurred. This method is modified to include a provision for depreciation of property and equipment, accrued payroll taxes,credit card transactions, note payable and donated facilities. Basis of presentation Financial statement presentation follows the recommendations of the Financial Accounting Standards Board in its FASB ASC Topic 958, Not-for-Profit Entities. Under ASC Topic 958,the Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted,temporarily restricted, and permanently restricted. Use of estimates The preparation of financial statements in conformity with the modified cash basis of accounting 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 and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents 1 For purposes of the statement of financial position and the statement of cash flows, cash is defined as demand deposits including checking and a money market account. Property and equipment Property and equipment are carried at cost. Depreciation is determined using the straight-line method over estimated lives of 5 to 15 years. Expenditures resulting in an asset having an estimated useful life that extends beyond the year of acquisition and a cost greater than $500 are capitalized 1 I 8 COMMUNITY ACCESS TELEVISION OF SALINA, INC. NOTES TO FINANCIAL STATEMENTS Contributions All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net 1 asset classes. When a temporary restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Income taxes The organization is exempt from federal income taxes under IRS Code Section 501(c)(3)except on net income derived from unrelated business activities. The Organization believes that it has no reportable unrelated business activities, and as such, does not have any uncertain tax positions that are material to the financial statements.All required tax filings are up to date. Tax returns filed for years ending after December 31,2013 are considered open tax years and subject to examination by the IRS. Functional allocation of expenses The costs of providing various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Advertising The Organization engages in non-direct response advertising. Advertising costs are expensed as incurred. Pending accounting pronouncements In February 2016, FASB issued Accounting Standards Update (ASU) 2016-02, Leases, which, among other things, requires the recognition of lease assets and lease liabilities for operating leases on the statement of financial position for lessees,and the disclosure of key information about leasing arrangements.The standard is effective for fiscal years beginning after December 15, 2019. Early application is permitted. The standard will need to be applied retrospectively in the year adopted. It is managements responsibility to ensure appropriate adoption of ASU 2016-02. In August 2016, the FASB issued Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities: Presentation of Financial Statements of Not-for-Profit Entities, which changes presentation and disclosure requirements for not-for-profit entities to provide more relevant information about their resources(and the changes in those resources) to donors, grantors, creditors and other users. These include qualitative and quantitative requirements in the following areas: net asset classes, investment return, expenses and liquidity and availability of resources. The standard is effective for fiscal years beginning after December 15, 2017. Early application is permitted. The standard will need to be applied retrospectively in the year adopted. It is managements responsibility to ensure appropriate adoption of ASU 2016-14. Reclassifications Certain reclassifications have been made to conform to prior year financial statements to confirm to classifications used in the current year. 1 1 1 9 COMMUNITY ACCESS TELEVISION OF SALINA, INC. NOTES TO FINANCIAL STATEMENTS Note 3- Property and equipment Property and equipment at December 31 consists of: 2016 2015 Equipment $ 391,136 $ 409,484 Leasehold improvements 218,225 218,225 Total property and equipment 609,362 627,709 Less accumulated depreciation (520,860) (505,460) Net property and equipment $ 88,502 $ 122,249 Depreciation expense for the years ended December 31, 2016 and 2015 was $37,190 and $39,869, respectively. Note 4—City of Salina contract A contract with the City of Salina dated November 28, 2011, provided for funds to be paid to Community Access Television of Salina, Inc. in exchange for providing the services in Note 1, along with additional 1 oversight and reporting requirements. The most recent contract was signed December 29,2014,with a term commencing January 1, 2015, and ending December 31, 2016. The contract will automatically be renewed for sequential renewal terms of one year each, unless either party provides the other with written notice on or before July 1st of its intent to terminate this Agreement effective the following December 31st. The current contract renewal expires December 31, 2018. Under the terms of the agreement, the City of Salina furnishes a building and utilities for the operations of Community Access Television of Salina, Inc. The estimated fair rental value for the life of the new contract is estimated to be $192,730, and is recognized as temporarily restricted revenue in 2015. In 2016 and 2015, the revenue released from restrictions was $96,200 and $96,530, respectively, and is shown as a reclassification. The expense for the years ended 2016 and 2015 of $96,743 and $96,744, respectively, is shown under the caption"Donated facilities rent"on the Statements of Functional Expenses-Modified Cash Basis, in accordance with FASB ASC 958-605, Revenue Recognition. The City of Salina maintains a security interest in all assets and upon termination of the agreement, all real estate, equipment, deposit accounts or other assets become the property of the City of Salina. Note 5—City of Salina revenue Revenues from the city ordinance represent a percentage of fees paid to the City of Salina by the cable franchisee. These are remitted quarterly to Community Access Television of Salina, Inc. The third and fourth quarter payments for 2015 of $55,947 and $53,779, were not paid until 2016, due to a computer and software upgrade at the City of Salina. The fourth quarter funding is generally paid during the first quarter of the subsequent year. From time to time, additional funds may be provided by the City of Salina for equipment purchases at the request of Community Access Television of Salina, Inc. This revenue is recorded under the caption "City 1 equipment reserve"when received. In 2016 and 2015, no such funds were received. All of the revenues from the City of Salina are subject to the perpetuity of the contract mentioned in Note 4. 10 COMMUNITY ACCESS TELEVISION OF SALINA, INC. NOTES TO FINANCIAL STATEMENTS Note 6-Operating leases In 2014, the Organization entered into an operating lease with 360 Document Solutions to provide a copy machine. The lease payments recognized in 2016 and 2015 are $2,039 and $2,039, respectively. The minimum value of future lease payments are: Year Ending December 31, Amount ' 2017 $ 2,039 2018 2,039 2019 680 $ 4,758 Note 7—Retirement plan The organization sponsors a Simple IRA Plan for eligible employees which began January 1, 1999. Contributions to the pension plan were$1,247 and$1,284 for the years ended December 31,2016 and 2015, respectively. Note 8—Concentrated risks The Organization is primarily supported through contributions from the City of Salina and Saline County, Kansas. For the years ended December 31, 2016 and 2015,these entities contributed 98.6%of total revenue. The City of Salina has expressed through their contract with the Organization their desire for the Organization to seek out additional revenue streams. It would severely impact the Organization's operations if the City of Salina were to discontinue, or significantly reduce,their current contribution level. Note 9—Notes payable On February 19, 2015 the Organization entered into a capital lease agreement with Balboa Capital to finance the purchase of a new HVAC system in their studio area. The original cost of the new system was $21,542. The system was financed for 48 months at 8.010%with a$1 purchase option at the end of the lease. Interest expense was $1,293 and $1,330 in 2016 and 2015, respectively. The current and long-term portions of the debt are expressed in the Statements of Assets, Liabilities and Net Assets. The cost of the system is included in property and equipment. The future scheduled maturities of long-term debt are as follows: Year Ending December 31, Amount 2017 $ 5,509 2018 5,967 1 2019 1,041 $ 12,517 1 1 11 COMMUNITY ACCESS TELEVISION OF SALINA, INC. NOTES TO FINANCIAL STATEMENTS Note 10—Broadcast television Community Access Television of Salina, Inc. enables Salina and Saline County citizens to express creative ideas, document community events, enhance understanding of local government, and foster freedom of speech through television and the internet. The Organization is a nonprofit organization designed to manage local cable channels(Channel 20 and Channel 21)as Public, Education and Government access channels. The Organization operates through a franchise agreement between Cox Cable and the City of Salina. The Organization depends on franchise fees raised by Cox Cable and community sponsors to continue its mission. The Organization believes the community's access to television is a logical extension of the First Amendment right to communicate using emerging technological media at the local level. Community Access Television of 1 Salina allows producers to speak for themselves and will create procedures to ensure a variety of points of view. The community access channel is available for noncommercial programming. Volunteer community producers are solely responsible for the content of their program. There are no license agreements with patrons for particular programming and, therefore, no assets or liabilities recorded relating to broadcast licensing agreements. i 1 1 1 1 1 1 1 1 1 1 12