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Hope for the Children of Haiti, Inc. Woburn, Massachusetts
CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Statement of Financial Position 2
Statement of Activities 3
Statement of Functional Expenses 4
Statement of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6-10
Cocio & Richardson • Certified Public Accountants
Cocio & ) 6\ ichardson Certified Public Accountants
21 Franklin Street • Quincy, MA 02169 (617) 773-5875 • Fax (617) 773-7898
To the Board of Directors of Hope for the Children of Haiti, Inc. Woburn, Massachusetts
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying financial statements of Hope for the Children of Haiti, Inc. (a nonprofit corporation), which comprise the statement of financial position as of December 31, 2013 and the related statements of activities, functional expenses and cash flows 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 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 an opinion 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. 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 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 financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hope for the Children of Haiti, Inc. as of December 31, 2013 and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Cocio & Richardson, CPA November 10, 2014
1
HOPE FOR THE CHILDREN OF HAITI, INC.
STATEMENT OF FINANCIAL POSITION
December 31, 2013
Assets
Current Assets: Cash Cash - restricted
Cash Total (Note 1 & 3)
Other current assets
Total Current Assets
Net Property, Plant and Equipment (Note 1 & 2)
Total Assets
2013
$ 100,298 111,061 211,359
12,811
224,170
365,881
$ 590,051
Liabilities and Net Assets
Current Liabilities: Accounts payable $ 22,517
Other current liabilities 2,014
Total Current Liabilities 24,531
Concentrations and Contingencies (Note 6)
Net Assets (Note 1 & 3): Temporarily Restricted 111,061
Unrestricted 454,459
Total Net Assets 565,520
Total Liabilities and Net Assets $ 590,051
The accompanying Notes are an integral part of the financial statements.
2 Cocio & Richardson • Certified Public Accountants
HOPE FOR THE CHILDREN OF HAITI, INC.
STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2013
•
Earned Revenue (Note 1 & 4): School Tuition & Fees $
Investment Income Currency Conversion
Total Earned Revenue
Contributed Support (Note 1, 4, 5 & 6):
Unrestricted Temporarily Restricted Total
82,385 6
7,175
$ $ 82,385 6
7,175
89,566 89,566
Interns & Volunteers 1,970 1,970
Contributed Services & Goods 51,529 51,529
Child Feeding Program 51,430 51,430
Mission Teams 86,330 86,330
Construction Projects 49,630 49,630
Donations 141,922 141,922
Post Secondary Education 35,615 35,615
Child Sponsorship 47,191 47,191
Total Contributed Support 193,451 272,166 465,617
Net Assets Released from Restrictions (Note 3): Satisfaction of Program Restrictions 245,018 (245,018)
Total Revenues 528,035 27,148 555,183
Expenses: Program Expense 479,708 479,708
Fundraising Expense 16,236 16,236
• Management and General Expense 31,761 31,761
Total Expenses 527,705 527,705
Change in Net Assets before Prior Year Adjustment 330 27,148 27,478
Prior Year Adjustment (Note 7) (13,166) (13,166)
Change in Net Assets after Prior Year Adjustment (12,836) 27,148 14,312
Net Assets - January 1, 2013 467,295 83,913 551,208
Net Assets - December 31, 2013 $ 454,459 $ 111,061 $ 565,520
• The accompanying Notes are an integral part of the financial statements.
Cocio & Richardson • Certified Public Accountants - 3 -
AP HOPE FOR THE CHILDREN OF HAITI, INC.
STATEMENT OF FUNCTIONAL EXPENSES
For the Year Ended December 31, 2013
Wages, Benefits & Payroll Taxes
Occupancy / Facilities
Supplies - General
Program Fundraising General &
Management Total
$ 200,402
30,025
39,101
$ 11,065
279
$ 11,508
2,920
602
$ 222,975
32,945
39,982
• Supplies - School 27,668 27,668
Post Secondary Program 29,704 29,704
Mission Teams (Note 4) 74,827 74,827
Depreciation (Note 1) 16,978 16,978
Food, Water & Medical 51,199 51,199
Office & Printing Expense 4,711 8,191 12,902
Professional Fees 5,500 5,500
Travel & Transportation 3,855 181 504 4,540
Other 252 2,536 2,788
Community Ministry Fund 2,947 2,947
• Special Events 2,750 2,750
TOTAL EXPENSES $ 479,708 $ 16,236 $ 31,761 $ 527,705
The accompanying Notes are an integral part of the financial statements.
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• Cocio & Richardson • Certified Public Accountants
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HOPE FOR THE CHILDREN OF HAITI, INC.
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2013
Increase (Decrease) in Cash and Cash Equivalents
Cash Flows from Operating Activities
Change in Net Assets after Prior Year Adjustment
Adjustments needed to reconcile net cash flows: Non-cash items included in income
$ 14,312
Depreciation 16,978
Change in current assets and liabilities:
Change in other current assets 9,218
Change in accounts payable 3,247 Change in other current liabilities 2,014
Net Cash Flows Provided by Operations 45,769
Cash Flows from Investing Activities
Purchase of fixed assets (67,421)
Net Cash Flows (Used in) Investing (67,421)
Net Increase (Decrease) in Cash and Cash Equivalents (21,652)
Cash and Cash Equivalents - January 1, 2013 233,011
Cash and Cash Equivalents - December 31, 2013 $ 211,359
The accompanying Notes are an integral part of the financial statements.
5 Cocio & Richardson • Certified Public Accountants
Hope for the Children of Haiti, Inc. Notes to Financial Statements
December 31, 2013
Note 1: Nature of Activities and Summary of Significant Accounting Policies
Nature of Activities:
Hope for the Children of Haiti, Inc. (a non-profit corporation) was established in 1989 in the Commonwealth of Massachusetts to provide for the physical, emotional, and spiritual needs of neglected and abandoned children in the Caribbean Island of Haiti. The Organization's mission, to provide certain Haitian children opportunity to become well-
• rounded adults who are self-sufficient in Christ, is accomplished by providing healthy meals and living conditions, medical care, and an education which emphasizes scholarship, leadership and social, moral and spiritual development, so the children may achieve their greatest potential. Since 1996, the Organization has operated its program in the community of Bolosse, Port-au-Prince, Haiti. Substantially all efforts in the United States have been devoted to planning, raising support, coordinating volunteers and administration of the programs.
Basis of Accounting:
The financial statements of the Organization have been prepared on the accrual basis of accounting.
Basis of Presentation:
Financial statement presentation follows the recommendations of the Financial Accounting Standards Board within Accounting Standards Code (ASC) 958, Not-for-Profit Entities. Under FASB ASC 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.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
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Hope for the Children of Haiti, Inc. Notes to Financial Statements
December 31, 2013
Note 1: Activities and Summary of Significant Accounting Policies - Continued
Cash and Cash Equivalents:
Cash and cash equivalents include all monies in bank and highly liquid investments with a maturity of three months or less when purchased.
Property and Equipment:
Acquisitions of property and equipment in excess of $2,000 are capitalized. Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed using the straight-line method over the estimated useful life of the assets.
Revenue Recognition:
Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted supports, depending on the existence and/or nature of any donor restrictions.
All donor-restricted contributions are reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a restriction expires (that is, when a stipulated time restriction ends or the purpose of the restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.
Revenue is recognized within the financial statements for certain specific skilled contributed services required by the Organization and of measurable fair value. A substantial amount of services donated by its supporters, including the missions teams, have not been reflected in the financial statements since they do not meet the criteria for recognition under accounting standards for Contributions Received and Contributions Made within FASB ASC 958 Not-for-Profit Entities.
Income Taxes:
The Organization is exempt from federal and state income taxes under Internal Revenue Code Section 501(c) (3).
7 Cocio & Richardson • Certified Public Accountants
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•
• Hope for the Children of Haiti, Inc.
Notes to Financial Statements December 31, 2013
Note 2: Property and Equipment
Property owned by the Organization as of December 31, 2013 included the orphanage and school facility in Bolosse, Haiti and over 16 acres of undeveloped land in Bon Repos, Haiti where the Organization originally planned to build a larger campus style facility. See Note 6 regarding contingency loss of Bon Repos land in Haiti.
Land - Bolosse, Haiti Land - Bon Repos, Haiti Building - Bolosse, Haiti Building Improvements - Bolosse, Haiti Computer License and Other - U.S.
Less Accumulated Depreciation
$ 20,000 136,750 95,472
234,615 2,603
489,440
(123,559)
•
Total $ 365,881
Note 3: Temporarily Restricted Net Assets
Temporarily restricted net assets are available for the following purposes or periods:
Prepaid Sponsor Donations Interns / Volunteers School Feeding Program Building / Rebuilding Temporarily Restricted Net Assets
$ 1,757 7,936
51,368 50,000
$ 111,061
Net assets were released from donor restrictions by incurring expenses satisfying the purpose of the program restrictions specified by donors as follows:
Construction Projects $ 49,630 School Children Feeding Program 62 Post Secondary Program 37,960 Internship / Volunteers 17,568 Mission Trips 86,580 Sponsored Children - Basic Needs 53,218
Total Net Assets Released from Restrictions $ 245,018
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Hope for the Children of Haiti, Inc. Notes to Financial Statements
December 31, 2013
Note 4: Revenues and Support
The Organization reports revenues in three classifications: Earned Revenue, Fundraising and Contributed Support. Earned revenues included investment income, tuition and fees paid by private students, and certain other revenues. Fundraising income is generated by periodic special events held by volunteers. These revenues are a smaller but important portion of the total revenues.
The primary source of support is contributions from individuals and churches. Many contributions are received for the general mission of the Organization and are reported as unrestricted contributions.
The Organization periodically requests funds for specific special purposes.
Mission teams represent another source of support of funds and volunteer services. The teams provide their own funds necessary for travel, meals, lodging and the project performed during their time spent in Haiti.
The Organization receives many monthly, annual or other periodic contributions for the sponsorship of a specific child in Haiti. This contribution is understood by the donor to represent the minimum costs associated with providing the most basic needs of the child. Sponsorship revenue is therefore reported as restricted revenues.
Note 5: Contributed Services & Goods
The Organization recognized contribution revenue for contributed services related to operating the orphanage and school in Haiti. Contribution revenue from services was measured based on the fair value of those services. The amount recognized for the Director of Operations compensation expense and contribution revenue was $8,250.
In addition, a substantial amount of both skilled and unskilled volunteer hours were provided by interns, mission teams, and others in Haiti for which no value has been assigned.
The Organization recognized contribution revenue for donated goods related to operating the orphanage and school in Haiti. Contribution revenue from goods was measured on their fair value. The amount recognized for equipment ($8,526), food ($2,984), medicine ($4,072), school supplies ($4,019), and other program supplies ($23,678) totaled $43,279.
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• Cocio & Richardson • Certified Public Accountants
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Hope for the Children of Haiti, Inc. Notes to Financial Statements
December 31, 2013
Note 6: Concentrations and Contingencies
The Organization relies heavily upon the goodwill and charitable gifts of its volunteers and supporters. Charitable gifts are donated based on the specific opportunity to enhance and change the lives of children in Haiti. Nearly all program services are performed in Haiti, a country which has experienced years of economic and political instability. $365,881 of property and equipment (net value) are located in Haiti. With real estate, sponsored children, and its program structure in this environment, there are potential
• unknown consequences for the Organization to continue its mission and raise support if foreign operations were interrupted or closed.
In 2012, the Organization was notified the government of Haiti was going to exercise its right to involuntarily convert approximately 35% of the Hope for the Children of Haiti, Inc. owned land in Bon Repos to government ownership for the purpose of constructing a hospital. The hospital building appears to infringe on a small percentage of the land acreage but it consists of frontage which holds the highest value of the owned acres. The timing of the ownership transfer and the amount of compensation to be received from the government, if any, is unknown. The compensation is expected to be less than the fair market value of the real estate but any potential loss is currently not measurable.
Note 7: Prior Year Adjustment
In 2012, the Organization was notified certain electricity costs received in 2012 and in prior years were either billed incorrectly or not billed at all. The actual usage and related cost was discussed and negotiated with the supplier. The Board authorized to settle the matter for $16,340 of which $13,166 was estimated to have been incurred before 2013. A lump sum payment of $9,546 was paid in 2013. The remaining liability will be paid in
• monthly installments of $335 until satisfied.
Note 8: Subsequent Events
These subsequent events are updated through the date of the auditor's report on the financial statements — November 10, 2014.
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• Cocio & Richardson • Certified Public Accountants