NATIONAL MULTIPLE SCLEROSIS SOCIETY …. Wray Pearce, CPA PEARCE, BEVILL, LEESBURG, MOORE, P.C. Matt Andrews, CPA Justin K. Berry, CPA Brittany Bingel, CPA Harold L Bevill, CPA (1946-1992)

NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA CHAPTER

(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA-MISSISSIPPI CHAPTER)

FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

PEARCE, BEVILL, LEESBURG, MOORE, P.C. CERTIFIED PUBLIC ACCOUNTANTS

CONTENTS

Page

Independent Auditors' Report .................................................................................................... 3

Financial Statements

Statements of Financial Position ................................................................................................. 5

Statements of Activities and Changes in Net Assets ................................................................... 6

Statements of Cash Flows ............................................................................................................ 8

Statements of Functional Expenses ............................................................................................. 9

Notes to Financial Statements .................................................................................................... 11

Supplemental Information

Independent Auditors' Report on Supplemental Information ................................................ 23

Statement of Income from Special Events and New Campaigns ............................................... 24

Schedule of Amounts due National Multiple Sclerosis Society ................................................. 25

Schedule of Memberships and Contributions ............................................................................. 26


J. Wray Pearce, CPA PEARCE, BEVILL, LEESBURG, MOORE, P.C.

Matt Andrews, CPA Justin K. Berry, CPA Brittany Bingel, CPA

Harold L Bevill, CPA (1946-1992) Charles W. Leesburg, CPA, MBA Stephen L Moore, CPA Daisy B. Buck, CPA

Chase Campbell, CPA Patrick L. Dodd, CPA

Tommy B. Beam, CPA CERTIFIED PUBLIC ACCOUNTANTS W. Glenn Bridges, Jr., CPA, MBA Hal (Buzz) Coons, Ill, CPA Stephen B. Jones, JD, CPA, CVA Joseph M. Lassiter, CPA

110 Office Park Drive, Suite 100

Birmingham, Alabama 35223-2402

205-323-5440 I fax 205-328-8523

www.pearcebevill.com

Zach Evans, CPA James W. Ezell, Jr., CPA Delphine E. Ford, CPA Kelly Higginbotham, CPA Vaughan HoUand, CPA Tyler E. Jenkins, CPA, CFE Donna Jordan, CPA JacobE Julian, IV, CPA )PKaal,CPA

David 'I. Williams, CPA Jeffrey R. Thomton, CPA W. Robert Cook, CPA/ABV Michael B. Hawkins, CPA/ABV Carlos G. McDonald, CPA Robin A. Waldrup, CPA

Taylor Martin, CPA Dennis Mazingo, CPA Heather Melson, CPA Karen A. Moore, CPA Glover Graham Pope, CPA Sarah B. Propper, CPA Misti B. Rasmussen, CPA Rob Shirley, CPA

Members:

INDEPENDENT AUDITORS' REPORT

To the Board of Trustees National Multiple Sclerosis Society- Alabama Chapter (D/B/A National Multiple Sclerosis

Society- Alabama-Mississippi Chapter) Birmingham, Alabama

Emily E. Stein, CPA Jenna B. Stricklen, CPA Douglas K. Uhler, CPA, CVA, DABFA Chandler Wright, CPA Thomas C. Zoebelein, CPA, MBA

We have audited the accompanying financial statements of National Multiple Sclerosis SocietyAlabama Chapter, D/B/A National Multiple Sclerosis Society- Alabama-Mississippi Chapter (a nonprofit organization), which comprise the statements of financial position as of September 30, 2016 and 2015, and the related statements of activities and changes in net assets, cash flows and functional expenses 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 audits 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.

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II The American Institute of Certified Public Accountants II The Alabama Society of Certified Public Accountants II PCPS • The AICPA Alliance for CPA Firms II National CPA Health Care Advisors Association

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.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of National Multiple Sclerosis Society - Alabama Chapter, D/B/A National Multiple Sclerosis Society- Alabama-Mississippi Chapter as of September 30, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

December 14, 2016

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NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY:

ALABAMA - MISSISSIPPI CHAPTER) STATEMENTS OF FINANCIAL POSITION

SEPTEMBER 30, 2016 AND 2015

ASSETS 2016

CURRENT ASSETS: Cash and cash equivalents $ 198,573 $ Cash and cash equivalents - temporarily restricted 2,564 Pledges receivable 72,453 Prepaid assets 20,770

TOTAL CURRENT ASSETS 294,360

Property and equipment, at cost 72,727 Less accumulated depreciation (59,497)

Net property and equipment 13,230

Long-term pledges receivable 4,114 Interest in Society's pooled investment fund 158,394 Due from National Multiple Sclerosis Society

TOTAL ASSETS $ 470,098 $

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES: Due to National Multiple Sclerosis Society:

Payables due to home office $ 155 $ Due to other chapters

Accounts payable and accrued expenses 162,943 Deferred income 44,057

TOTAL CURRENT LIABILITIES 207,155

TOTAL LIABILITIES 207,155

NET ASSETS:

Unrestricted 260,379 Temporarily Restricted 2,564

TOTAL NET ASSETS 262,943

TOTAL LIABILITIES AND NET ASSETS $ 470,098 $

See independent auditors' report and accompanying notes to the financial statements. - 5 -


2015

172,578 6,549

163,101 18,712

360,940

80,811 (64,104) 16,707

6,127 147,901

3,017

534,692

4,852 207,966

15,804

228,622

228,622

299,521 6,549

306,070

534,692


ALABAMA- MISSISSIPPI CHAPTER) STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

FOR THE YEAR ENDED SEPTEMBER 30, 2016

Temporarily Unrestricted Restricted

Revenue Public support

Special events (includes in-kind donations of$149,040) $ 2,215,884 $ Less benefit to donors {345,6082

1,870,276

Contributions 175,224 33,374 Legacies and bequests 98,787

Total public support 2,144,287 33,374

Other revenue (expense) Investment income 3,591 Unrealized gain on investments 6,840 Realized gain 68 Service program fees 1,116 Miscellaneous income 300

Total other revenue 11,915

Net Assets Released from Restrictions 37,359 {37,3592

Total revenue 2,193,561 (3,985)

Expenses Program services

Research 492,276 Society activities 16,216 Client programs 347,010 Community programs 249,416 Professional education and training 60,809 Public education 395,591

Total program services 1,561,318

Supporting services Fundraising 500,489 Management and general 170,896

Total supporting services 671,385

Total expenses 2,232,703

Change in net assets (39,142) (3,985)

Net assets- beginning of year 299,521 6,549 Net assets- end of year $ 2602379 $ 2 564

See independent auditors' report and accompanying notes to financial statements. - 6-


Total

$ 2,215,884 {345,6082

1,870,276

208,598 98,787

2,177,661

3,591 6,840

68 1,116

300 11,915

2,189,576

492,276 16,216

347,010 249,416

60,809 395,591

1,561,318

500,489 170,896 671,385

2,232,703

(43,127)

306,070 $ 2622943


ALABAMA - MISSISSIPPI CHAPTER) STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS


Temporarily

Revenue JJnrestrjcted Restricted

Public support Special events (includes in-kind donations of $88,646) $ 2,118,982 $

Less benefit to donors p38,2652 1,780,717

Contributions 183,930 48,187 Legacies and bequests 41,542

Total public support 2,006,189 48,187

Other revenue Investment income 3,334 Unrealized loss in investements (10,636) Realized loss (310) Service program fees 8,945

Total other revenue 1,333

Net Assets Released from Restrictions 50,441 ~50,4412

Total revenue 2,057,963 (2,254)

Expenses Program services

Research 450,018 Client programs 385,907 Community programs 225,871 Professional education and training 59,314 Public education 410,637

Total program services 1,531,747

Supporting services Fundraising 402,227 Management and general 195,696

Total supporting services 597,923

Total expenses 2,129,670

Change in net assets (71 ,707) (2,254)

Net assets- beginning of year 371,228 8,803 Net assets- end of year $ 2992521 $ 6 549

See independent auditors' report and accompanying notes to financial statements. - 7-


Total

$ 2,118,982 ~338,2652

1,780,717

232,117 41,542

2,054,376

3,334 (10,636)

(310) 8,945 1,333

2,055,709

450,018 385,907 225,871

59,314 410,637

1,531,747

402,227 195,696 597,923

2,129,670

(73,961)

380,031 $ 3062070


ALABAMA - MISSISSIPPI CHAPTER) STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

2016 CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets $ (43,127) Adjustments to reconcile changes in net assets to net cash

provided by (used for) operating activities: Depreciation expense 7,068 Loss on disposal of fixed assets 161 Unrealized (gain) loss on pooled investments (6,840) Changes in assets and liabilities:

Pledges receivable 92,661 Contributions receivable from home office Contributions receivable from chapters Prepaid assets (2,058) Due from National Multiple Sclerosis Society 3,017 Due to National Multiple Sclerosis Society- remittance

due to home office 155 Due to National Multiple Sclerosis Society- due to

other chapters (4,852) Accounts payable and accrued expenses (45,023) Deferred income 28,253

CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 29,415

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of pooled investments 1,499 Cash paid for purchases of pooled investments (5,152) Cash paid for purchases of property and equipment (3,752)

CASH USED FOR INVESTING ACTIVITIES (7,405)

NET (DECREASE) INCREASE IN CASH 22,010

CASH AT BEGINNING OF YEAR 179,127

CASH AT END OF YEAR $ 201,137

See independent auditors' report and accompanying notes to the financial statements. - 8-


2015

$ (73,961)

6,911

10,636

(51,017) 6,988

617 (2,019) (3,017)

(1 ,971)

4,485 (4,763) (9,775)

(116,886)

45,988 (204,525)

(2,109)

(160,646)

(277,532)

456,659

$ 179,127

NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY: ALABAMA- MISSISSIPPI CHAPTER)

STATEMENT OF FUNCTIONAL EXPENSES SEPTEMBER 30,2016

Program Services Sueeort Sen·ices Professional Management Total Benefits

Society Client Communit) Education and Public and Programs to Donor Grand Research Activities Pr~rams Programs Training Education Total Fundraising General Total and Sueeort Costs Total

Salaries $ $ $ 95,348 $ 113,365 $ 19,771 $ 156,888 $ 385,372 $ 205,811 $ 83,606 $ 289,417 $ 674,789 $ $ 674,789 Employee benefits 7,249 8,618 1,503 11,927 29,297 15,646 6,356 22,002 51,299 51,299 Payroll taxes 6,825 8,115 1,415 11,231 27,586 14,733 5,985 20,718 48,304 48,304

Total salaries and related expenses 109,422 130,098 22,689 180,046 442,255 236,190 95,947 332,137 774,392 774,392

Printing, publications and artwork 3,842 127 21 11,345 15,335 14,484 90 14,574 29,909 29,909 Postage and shipping 1,379 1,241 217 2,947 5,784 7,756 920 8,676 14,460 14,460 Telephone 240 285 50 394 969 579 210 789 1,758 1,758 Supplies 4,688 1,586 277 2,195 8,746 4,840 1,170 6,010 14,756 27,857 42,613 Dues and memberships 457 734 84 669 1,944 918 357 1,275 3,219 3,219 Professional and other contraci service

fees 14,669 3,999 1,347 5,534 25,549 9,564 2,949 12,513 38,062 38,062 Donated public service announcement 123,429 123,429 123,429 123,429 Travel 4,342 12,151 535 2,300 19,328 17,550 1,505 19,055 38,383 136,970 175,353 Meetings 17,403 5,316 84 367 23,170 12,101 809 12,910 36,080 3,380 39,460 Occupancy 14,060 16,717 2,915 23,135 56,827 30,349 12,329 42,678 99,505 20,175 119,680 Furniture and equipment 2,336 2,777 484 3,844 9,441 5,042 2,048 7,090 16,531 16,531 Direct financial assistance 73,528 73,528 73,528 73,528 Prizes and promotional items 2,971 76 13 106 3,166 799 96 895 4,061 62,225 66,286 Miscellaneous expense 4,985 5,927 1,034 8,203 20,149 21,777 4,371 26,148 46,297 95,001 141,298 Depreciation and amortization 999 1,187 207 1,643 4,036 2,156 876 3,032 7,068 7,068 NPE additional allocation society activities 16,216 (2,291) 13,492 (475) (3,770) 23,172 (4,946) (2,009) (6,955) 16,217 16,217

Total expenses before public support to National 16,216 253,030 195,713 29,482 238,958 733,399 482,588 121,668 604,256 1,337,655 345,608 I ,683,263

Chapter support of Society activities 492,276 93,980 53,703 31,327 156,633 827,919 17,901 49,228 67,129 895,048 895,048

Total expenses 492,276 16,216 347,010 249,416 60,809 395,591 1,561,318 500,489 170,896 671,385 2,232,703 345,608 2,578,311

Less benefit to donor direct costs (345,608) __ (345,608)

Total expenses as reported on the statement of activities $ 492,276 $ 16,216 $ 347,010 $ 249,416 $ 60,809 $ 395,591 $ 1,561,318 $ 500,489 $ 170,896 $ 671,385 $ 2,232,703 $ $ 2,232,703

See independent auditors' report and accompanying notes to the financial statements.

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PEARCE, BEVILL, LEESBURG, MOORE, P.C.

CERTIFIED PUBLIC ACCOUNTANTS

NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER (0/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY: ALABAMA- MISSISSIPPI CHAPTER)

STATEMENT OF FUNCTIONAL EXPENSES SEPTEMBER 30, 2015

Program Services Supeort Services Professional Management Total Benefits

Client Community Education and Public and Programs to Donor Grand Research Pr~rams Programs Training Education Total Fund raising General Total and Supeort Costs Total

Salaries $ $ 92,230 $ 113,017 $ 17,781 $ 149,535 $ 372,563 $ 185,476 $ 100,228 $ 285,704 $ 658,271 $ $ 658,271 Employee benefits 8,272 10,137 I ,595 13,413 33,417 16,636 8,990 25,626 59,043 59,043 Payroll taxes 7,388 9,053 1,424 11,978 29,843 14,858 8,029 22,887 52,730 52,730

Total salaries and related expenses 107,890 132,207 20,800 174,926 435,823 216,970 117,247 334,217 770,040 770,040

Printing, publications and artwork 7,865 1,173 546 17,894 27,478 19,491 1,038 20,529 48,007 48,007 Postage and shipping 4,412 1,185 617 6,600 12,814 9,109 1,076 10,185 22,999 22,999 Telephone 228 380 44 370 1,022 526 248 774 1,796 1,796 Supplies 6,177 1,705 500 2,237 10,619 5,340 1,708 7,048 17,667 37,395 55,062 Dues and memberships 311 382 110 505 1,308 1,015 338 1,353 2,661 2,661 Professional and other contract service

fees 47,981 7,807 3,287 10,585 69,660 14,269 6,409 20,678 90,338 90,338 Donated public service announcement 48,060 48,060 48,060 48,060 Travel 10,153 9,516 965 2,397 23,031 19,419 3,203 22,622 45,653 152,688 198,341 Meetings 30,418 6,171 4,177 1,106 41,872 4,162 1,933 6,095 47,967 2,605 50,572 Occupancy 12,923 15,836 2,492 20,953 52,204 25,989 14,044 40,033 92,237 19,497 111,734 Furniture and equipment 3,578 4,384 690 5,801 14,453 7,195 3,888 11,083 25,536 25,536 Direct fmancial assistance 71,541 71,541 71,541 71,541 Prizes and promotional items 2,103 60 209 80 2,452 277 53 330 2,782 62,587 65,369 Miscellaneous expense 3,017 3,698 582 4,892 12,189 16,404 3,279 19,683 31,872 63,493 95,365 Depreciation and amortization 968 1,187 187 1,570 3,912 1,947 1,052 2,999 6,911 6,911

Total expenses before public support to National 309,565 185,691 35,206 249,916 780,378 390,173 155,516 545,689 1,326,067 338,265 1,664,332

Chapter support of Society activities 450,018 76,342 40,180 24,108 160,721 751,369 12,054 40,180 52,234 803,603 803,603

Total expenses 450,018 385,907 225,871 59,314 410,637 1,531,747 402,227 195,696 597,923 2,129,670 338,265 2,467,935

Less benefit to donor direct costs (338,265) __ (338,265)

Total expenses as reported on the statement of activities $ 450,018 $ 385,907 $ 225,871 $ 59,314 $ 410,637 $ 1,531,747 $ 402,227 $ 195,696 $ 597,923 $ 2,129,670 $ $ 2,129,670

See independent auditors' report and accompanying notes to the financial statements.

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NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA-MISSISSIPPI CHAPTER)

Notes to Financial Statements for the years ending September 30, 2016 and 2015

NOTE 1: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Organization

The National Multiple Sclerosis Society (the "Society") is a not-for-profit voluntary health and welfare agency that mobilizes people and resources so that everyone affected by multiple sclerosis can live their best lives as we stop MS in its tracks, restore what has been lost and end MS forever. The Alabama-Mississippi Chapter (the "Chapter") raises funds in Alabama and Mississippi. The Society has offices across the country and is governed by a national board of directors and local boards of trustees. The Society's mission is fulfilled through funding cutting-edge research, driving change through advocacy, facilitating professional education, collaborating with MS organizations around the world, and providing services designed to help people with MS and their families move their lives forward.

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis in accordance with standards adopted by theN ational Health Council and theN ational Assembly for Society Policy and Development.

Financial Statement Presentation and Net Asset Classifications

The Chapter has adopted Financial Accounting Standards Board ("F ASB") Accounting Standards Codification (ASC) 958-205, Presentation of Financial Statements, for not-for-profit organizations. Under FASB ASC 958-205, the Chapter 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.

Resources for various purposes are classified for accounting and financial reporting purposes into net asset categories established according to their nature and purpose as follows:

• Unrestricted Net Assets- Unrestricted net assets represent funds, which are fully available, at the discretion of management and the Board of Trustees, for the Chapter to utilize in any of its program or supporting service.

• Temporarily Restricted Net Assets - Temporarily restricted net assets are comprised of funds, which are restricted by donors for specific purposes. The restrictions are satisfied either by the passage of time or by actions of the Chapter.

• Permanently Restricted Net Assets - Permanently restricted net assets include resources with permanent donor-imposed restrictions, which require the assets to be maintained in perpetuity but permit the Chapter to expend all or part of the income derived from the donated assets.

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NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA-MISSISSIPPI CHAPTER)


NOTE 1: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

The Chapter does not hold any permanently restricted net assets. As permitted, the Chapter does not use fund accounting.

When both restricted and unrestricted resources are available for use, it is the Chapter's policy to use restricted resources first, then unrestricted resources as they are needed.

Revenue Recognition and Deferred Revenue

Contributions are recorded as revenue when received or promised (pledged) unconditionally, at their fair value. The fair value of long-term contributions receivable are measured based on the present value of future cash flows, with consideration of expectation about possible variations in the amount and/or timing of the cash flows and other specific factors that would be considered by market participants. The fair value measurements also consider donors' credit risk. Unconditional bequests (donations received under terms of a will) are reported as revenues when notification of the bequest is received, the amount is reasonably determinable and the probate court declares the will valid.

It is the Chapter's policy to record temporarily restricted contributions received and fulfilled in the same accounting period in the unrestricted net asset class. When a prior year's donor restriction expires, that is, when a time restriction ends or purpose restriction is fulfilled, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Conditional contributions are recognized as revenue when the conditions on which they depend have been substantially met.

All revenue received in advance for special events that are held subsequent to year-end is deferred and recognized in the year of the event.

Expense Allocations

Functional expenses that are not specifically attributable to program services or supporting services are allocated by management based on various allocation factors.

Concentration of Credit Risk

Deposits at the Chapter's financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. The Chapter has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its cash and investments.

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NOTE 1: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES- CONTINUED

Cash and Cash Equivalents

The Chapter considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Contributions and Other Receivables

Contributions and other receivables consist of accruals of public support received after year end that pertained to fundraising events held during fiscal 2016 and 2015, respectively. Receivables are recorded at net realizable value, net of an allowance for uncollectible amounts. The Chapter believes that the pledges receivable are fully collectible. There are no identifiable concentrations of credit risk related to these receivables. Donated securities are liquidated upon receipt and recorded as contributions at their fair value.

As of September 30, 2016, $4,114 of pledges receivable are due in more than one year.

Investments

The Chapter's investments in equity and debt securities are stated at their quoted market prices, with the net change in unrealized gains or losses included in the statement of activities.

Property and Equipment

Property and equipment are recorded at cost. Depreciation and amortization are provided on the straight-line basis over the estimated useful lives of the assets or the terms of the lease, as appropriate. Expenditures for maintenance and repairs are charged to operations as incurred. The Chapter capitalizes equipment purchases exceeding $1,000 with useful lives in excess of one year.

Furniture and fixtures Leasehold improvements Office equipment

5 to 8 years 5 years 3 to 7 years

For the years ended September 30,2016 and 2015, depreciation expense totaled $7,068 and $6,911, respectively.

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NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA-MISSISSIPPI CHAPTER)


NOTE 1: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Donated Goods and Services

Donated goods and services, including public service announcements and donate advertising, used by the Chapter in programs, special events, and supporting services are reflected as in-kind contributions and expensed in the accompanying financial statements at their estimated fair value at the date of receipt. Donated goods totaled $156,994 and $92,646 for the years ended September 30, 2016 and 2015, respectively.

Public service announcements and donated advertising received in fiscal year 2016 and 2015 totaled approximately $123,429 and $48,060, respectively, and are reflected above as donated goods and as fundraising expense in the accompanying statements of activities.

In addition, a number of volunteers have donated significant amounts of their time to the Chapter's program services and supporting services. No amounts have been reflected in the accompanying financial statements for those donated services, because they do not meet the criteria for revenue recognition established by F ASB ASC 958-605, Contributed Services.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("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 and the amounts of revenues and expenses during the reporting period. The most significant of which include the fair values assigned to certain financial instruments; collectability of contributions receivable; donated public service announcements; and, the useful lives assigned to property and equipment. Actual results could differ from those estimates.

Chapter Support of Society Initiatives (National Programs Expense)

The National Programs Expense ("NPE") is an allocation to chapters that funds a large portion of the Society's budget in areas such as nationwide programs, services, centralized functions and the Society's research investments as well as investments in the Society's unified plan. The Society's budget is determined through an inclusive budget planning process. The Budget Development Advisory Committee provides consensus advice to the CEO and is comprised of members of the Senior Leadership Team, members of the National Board of Directors and regional volunteer liaisons responsible for communicating with volunteer leadership in each region.

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NOTE 1: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES- CONTINUED

Revenue tiers with progressively higher percentages are used to determine the NPE allocation amounts. The remittance percentage is subject to adjustment each year to ensure that the Society meets its programmatic goals and that all donor restrictions are honored. In fiscal years 2016 and 2015, the Chapter's NPE was calculated to be $895,04 7 and $803,603, respectively. These amounts are reflected as Chapter Support of Society Initiatives in the accompanying statement of functional expenses. As the Society implements a single audit in fiscal2017 (Note 1 0), NPE will no longer be calculated after September 30, 2016.

Advertising Costs

The Chapter expenses advertising costs as incurred. Advertising expense for the years ended September 30, 2016 and 2015 was $124,047 and $51,198, respectively.

Reclassifications

Certain reclassifications have been made to the fiscal year 2015 balances to conform to the fiscal year 2016 presentation.

NOTE 2: INCOME TAXES

Guidance in the area of "Accounting for Uncertainty in Income Taxes" under the Financial Accounting Standards Board (the ''F ASB") Accounting Standards Codification, clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return, including issues relating to financial statement recognition and measurement. This standard provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is "more-likely-than-not" to be sustained, if the position were to be challenged by a taxing authority. The standard also provides guidance on measurement, classification, interest and penalties, and disclosure. The fiscal years ended 2013,2014,2015 and 2016 remain open to audit for both federal and state purposes. The Chapter has processes presently in place to ensure the maintenance of its tax-exempt status; to identify and report unrelated income; to determine its filing and tax obligations in jurisdictions for which it has nexus; and, to identify and evaluate other matters that may be considered tax positions.

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Notes to Financial Statements for the years ending September 30,2016 and 2015

NOTE 3: ALLOCATION OF JOINT COSTS

For the year ended September 30, 2015, the Chapter incurred joint costs of $2,084 for information materials and activities that included fundraising appeals. Such costs were allocated in accordance with the requirements ofFASB ASC 958-720 (formerly the American Institute of Certified Public Accountants Statement of Position 98-2), Accounting for Costs of Activities of Not-for-Profit Organizations and State and Local Government Entities that Include Fund-raising. Of these costs, $1,945 was allocated to fund-raising, and $139 to public education. There were no joint costs incurred for the year ended September 30, 2016.

NOTE 4: FAIR VALUE MEASUREMENTS

The Chapter adopted the provisions of ASC Section 820-10 (formerly known as F ASB Statement of Financial Accounting Standards No. 157), Fair Value Measurements ('FAS 157") effective October 1, 2008. F AS 157 establishes a fair value hierarchy for the inputs used to measure fair value based on the nature of the data input, which generally range from quoted prices for identical instruments in a principal trading market (Level 1) to estimates determined using related market data (Level 3). Multiple inputs may be used to measure fair value; however, the level of fair value of each financial asset or liability presented below is based on the lower significant input level within this fair value hierarchy.

Fair value measurements based on Levell inputs: Measurements that are most observable are based on quoted prices of identical instruments obtained from the principal markets in which they are traded. Closing prices are both readily available and representative of fair value. Market transactions occur with sufficient frequency and volume to ensure liquidity.

Fair value measurements based on Level 2 inputs: Measurements derived indirectly from observable inputs or from quoted prices from markets that are less liquid are considered Level 2. Measurements may consider inputs that other market participants would use in valuing a portfolio, quoted market prices for similar securities, interest rates, credit risks, and others.

Fair value measurements based on Level 3 inputs: Measurements that are least observable are estimated from related market data, determined from sources with little or no market activity for comparable contracts, or are positions with longer durations.

- 16-




NOTE 4: FAIR VALUE MEASUREMENTS- CONTINUED

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Chapter 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 provide the fair value hierarchy of the Chapter's financial assets as of September 30, 2016 and 2015:

Fair Value Measurements Using:

Levell Level2 Level3 Total September 30, 2016: Financial Assets

Cash and Cash Equivalents* $ 201,137 $ $ $ 201,137 Investments:

Interest in Society's Pooled Investment fund 158,394 158,394

$ 201.137 $ $ 158 394 $ 359.531

Fair Value Measurements Using:

Levell Level2 Level3 Total September 30, 2015: Financial Assets

Cash and Cash Equivalents* $ 179,127 $ $ $ 179,127 Investments:

Interest in Society's Pooled Investment fund 147 901 147,901

$ 179!127 $ $ 147,9Q1 $ 322,Q28

*Represents cash and cash equivalents that are interest-bearing and are included in cash and cash equivalents in the accompanying statement of financial position.

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NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA-MISSISSIPPI CHAPTER)


NOTE 4: FAIR VALUE MEASUREMENTS- CONTINUED

At September 30,2016 and 2015, the Society's pooled investment portfolio was classified within the FASB fair value hierarchy as 100% Level 1. While principally all of the underlying funds' investments are readily marketable, based on quoted fair market values, since the Chapter's share of the Society's pooled investment fund cannot be priced on an active exchange, the interests in the trust are classified as Level 3.

The table below sets forth a summary of the changes in the fair value of the Chapter's Level 3 financial assets for the years ended September 30:

Fair value, beginning of the year Deposits and reinvested dividends Withdrawals Fair value gains I (losses) Fair value, end of the year

$

$

NOTE 5: INTEREST IN POOLED INVESTMENT FUND

2016

147,901 5,152

(1 ,499) 6 840

158.394

2015

$ 204,525 (45,988) (102636)

$ 141!2Q1

As required by the Society's Reserves Policy, the Chapter transferred $155,539 into the Society's pooled investment fund during fiscal2015.

The Chapter holds a share of the overall portfolio of the Society's pooled investment fund rather than in the individual financial instruments and therefore has the same composition of investments as that of the Society's total pooled investment fund. The Chapter's share of the Society's pooled investment fund totaled $158,394, which represents 0.27% of the Society's total pooled investment fund.

Investment net income (loss) totaled $1 0,493 for the year ended September 30, 2016, which included interest and dividends of$5, 152, withdrawals of$(1 ,499), and net realized/unrealized gains (losses) of$6,840.

- 18 -




NOTE 6: PROPERTY AND EQUIPMENT

At September 30, furniture and equipment consist of the following:

Furniture and fixture Office equipment Leasehold improvements

Less accumulated depreciation

NOTE 7: COMMITMENTS AND CONTINGENCIES

2016

$ 23,811 38,411 10,505 72,727

(59,497) $ 13.230

2015

$ 24,371 45,935 10,505 80,811

(64,104) $ 16.707

Rental expense of Chapter office space and equipment for the year ended September 30, 2016 and 2015 was $96,816 and $88,496, respectively. This obligation represents future commitments and is included in the minimum annual rentals that follow:

Year ending September 30,

2017 2018 2019

NOTE 8: PENSION PLAN

$ 100,352 94,701 21,287

$ 216.340

Effective January 1, 2016, the Chapter participates in the Society's Defined Contribution Retirement Plan, which covers substantially all of the Chapter's employees, based on defined eligibility for covered employees. Temporary employees and independent contractors are not eligible. Upon the first day of employment, covered employees receive a 1 00% matching employer contribution for the first 3% of eligible compensation contributed and then 50% on the next 2% of eligible compensation contributed for a maximum of a 4% employer contribution. All employer contributions are 100% vested for participants who complete at least one hour of service on or after January 1, 2016. All employees who have terminated employment prior to January 1, 2016 are subject to a 5-year vesting schedule. Retirement expenses related to the plan are incurred by the Society rather than the Chapter.

- 19-




NOTE 8: PENSION PLAN- CONTINUED

Prior to January 1, 2016, the Chapter participated in the Society's noncontributory Defined Contribution Retirement Plan, which covered substantially all of the Chapter's employees, based on defined eligibility for covered employees. Temporary employees and independent contractors were not eligible. Employees became eligible on the first day of the first month after beginning employment and all covered employees received an annual contribution (after September 30) if they worked 1000 hours during the fiscal year and were employed on the last day of the fiscal year. The contribution rate for three months ended December 31, 2015 and fiscal20 15, as determined by the Society's President and CEO was 3% of gross annual salary. Chapter contributions to employees were vested over five years. In accordance with the Plan's provisions, contributions required in any given year were first offset by forfeitures of unvested Chapter contributions for terminated participants.

The Chapter's retirement expense for fiscal20 15 was $9,003 while the retirement expense for fiscal 2016 was incurred by the Society rather than the Chapter.

NOTE 9: TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets are available for specific client programs. Their use is limited by donor-imposed stipulations that either expire with the passage of time or the fulfillment of specific obligations. Temporarily restricted net assets are included in cash and cash equivalents and restricted for the following reasons as of September 30:

2016 2015 Program:

Youth Camp $ $ 3,139 MS Awareness Week 2,305 2,363 Education 259 1,047

Total $ 2,564 $ 6,549

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NOTE 9: TEMPORARILY RESTRICTED NET ASSETS- CONTINUED

Temporarily restricted net assets were released from restrictions as follows during the years ended September 30:

2016 2015 Progran1:

Youth Can1p $ 3,138 $ 3,050 MS Awareness Week 58 251 Education 34,163 47,140

Total $ 37,359 $ 50,441

NOTE 10: SOCIETY REALIGNMENT

As the Society continues to become unified, the organization is transitioning to a single Society entity, which will perform one audit and file a single IRS Form 990 under one federal employer's identification number ("EIN") effective October 1, 2016. The transition will better align Society resources so that the organization can maximize its impact. For accounting purposes, the transition will be treated as an acquisition of 100% of the assets and liabilities of the Alabama-Mississippi Chapter by the Society. No consideration was given in exchange for the interests.

The assets and liabilities of the Alabama-Mississippi Chapter were recorded at fair values as of October 1, 2016, which were estimated to approximate book value as recorded on the AlabamaMississippi Chapter's books.

Recognized amounts of identifiable assets and liabilities assumed by the Society on October 1, 2016:

Cash and Cash Equivalents Contributions Receivable Investments Prepaid Expenses and Other Assets Property and Equipment, net Accounts Payable and Accrued Expenses Deferred Revenue

$ $ $ $ $ $ $

201,137 76,567

158,394 20,770 13,230

(163,098) (44,057)

The excess fair value of assets received over liabilities assumed is reported as a contribution received in the acquisition of the Alabama-Mississippi Chapter on the statement of activities and changes in net assets of the realigned Society entity in fiscal 2017.

- 21 -


NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA-MISSISSIPPI CHAPTER)


NOTE 11: SUBSEQUENT EVENTS

In 2013, the Chapter submitted a claim for damages related to the Deepwater Horizon accident that occurred in the Gulf of Mexico in 2010. The Chapter received notice of settlement in November 2016 and, in accordance with FASB ASC 450-30, Gain Contingencies, will be recognized in the period in which the settlement is realized. Net proceeds from the settlement are expected to be $181,346.

The Chapter has evaluated subsequent events through December 14, 2016, which is the date the financial statements were available to be issued and concluded no other events or transactions occurred during that period requiring recognition or disclosure.

-22-


J. Wray Pearce, CPA Harold L. Bevill, CPA (1946-1992) Charles W. Leesburg, CPA, MBA Stephen L. Moore, CPA Tommy B. Beam, CPA W. Glenn Bridges, Jr., CPA, MBA Hal (Buzz) Coons, III, CPA Stephen B. Jones, JD, CPA, CVA Joseph M. Lassiter, CPA David T. Williams, CPA Jeffrey R. Thornton, CPA W. Robert Cook, CPA/ABV Michael B. Hawkins, CPA/ABV Carlos G. McDonald, CPA Robin A. Waldrup, CPA Justin K. Berry, CPA James R. (Rob) Shirley, CPA James Norris, CPA

To the Board of Trustees


II 0 Office Park Drive, Suite I 00

Birmingham, Alabama 35223-2402

205-323-5440 I fax 205-328-8523

www.pearcebevill.com

INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION

National Multiple Sclerosis Society- Alabama Chapter (D/B/A National Multiple Sclerosis

Society- Alabama-Mississippi Chapter) Birmingham, Alabama

Matt Andrews, CPA Brittany Bingel, CPA Shannon D. Browne, CPA Daisy B. Buck, CPA Chase Campbell, CPA Patrick L. Dodd, CPA James W. Ezell, Jr., CPA Delphine E. Ford, CPA Kelly Higginbotham, CPA Tyler E. Jenkins, CPA, CFE Donna Jordan, CPA Jacob E Julian, IV. CPA Taylor Martin, CPA Emily L. McEuen, CPA Heather Melson, CPA Karen A. Moore, CPA Samantha Peters, CPA Glover Graham Pope, CPA, CITP Sarah B. Propper, CPA Misti B. Rasmussen, CPA Tony L. Raycraft, CPA, CGMA JefferyS. Smith, CPA Emily E. Stein, CPA Jenna B. Stricklen, CPA Douglas K. Uhler, CPA, CVA, DABFA Matthew H. Young, CPA Thomas C. Zoebelcin, CPA, MBA, CGMA

We have audited the financial statements ofNational Multiple Sclerosis Society- Alabama Chapter, D/8/ A National Multiple Sclerosis Society- Alabama-Mississippi Chapter as of and for the years ended September 30, 2016 and 2015, and our report thereon dated December 14, 2016, which contained an unmodified opinion on those financial statements, appears on page 3. Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

December 14, 2016

Members: Ill The American Institute of Certified Public Accountants Ill The Alabama Society of Certified Public Accountants IIIII PCPS - The AICPA Alliance for CPA Firms IIIII National CPA Health Care Advisors Association

-23-

Name of event

MS Walk $

Challenge Walk BikeMS One Day Bike Dinner of Champions

Other Leadership Events Legacy of leadership events Class

Total other leadership events

Other Special Events Galas and Auctions Wine auction Marathon Strides Other Special Events

Total other special events

Total $

NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY: ALABAMA- MISSISSIPPI CHAPTER)

STATEMENT OF INCOME FROM SPECIAL EVENTS AND NEW CAMPAIGNS

Sponsorship Cash In-kind

74,661 $ 111,285 740

28,500 11,219 -

9,000 112,901 122,504

80,233 17,500 -

97,733 -

6,125 17,000

1,959 26,536 25,084 26,536

235,718 $ 149,040


Total Other Sponsorship and

Restricted Other Restricted Campaign Income Income Income

$ - $ 185,946 $ 670,094 740 15,587

- 39,719 329,303 - - -

9,000 33,990 235,405 1,048,974

- 80,233 305,667

- 17,500 161,033 - 97,733 466,700

6,125 19,736 17,000 240,659

- 28,495 55,057 - 51,620 315,452

$ - $ 384,758 $ 1,831,126

See independent auditors' report on supplemental infonnation. -24-

Total

$ 856,040 16,327

369,022

42,990 1,284,379

385,900 178,533 564,433

25,861 257,659

83,552 367,072 -

$ 2,215,884



Benefit to

Donor Costs

$ 64,790 5,478

97,131 13,657 12,534

193,590

78,109 19,500 97,609

9,742 35,690

8,977 54,409

$345,608

Other Event Total Costs Costs

$ 118,037 $ 182,827 1,716 7,194

21,686 118,817 522 14,179

3,481 16,015 145,442 339,032

2,124 80,233 6,817 26,317 8,941 106,550

818 10,560 6,186 41,876

21,590 30,567 28,594 83,003

$ 182,977 $ 528,585

NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER (D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY: ALABAMA

MISSISSIPPI CHAPTER) SCHEDULE OF AMOUNTS DUE NATIONAL MULTIPLE SCLEROSIS SOCIETY


Remittance: Total Fiscal Year 2016 National Program Expense per Remittance Invoice

Chapter Payments: October 2015 through September 2016

Total paid for Fiscal Year 2016

Total remittance balance due National Chapter at September 30,2016

Other Payables (Receivables) Due to (from) National Multiple Sclerosis Society

$

$

Convio credit memo $

Convio usage Due to National Multiple Sclerosis Society- Other

See independent auditors' report on supplemental infonnation. ~ 25 ~


$

895,047

895,047 895,047

(441) 596 155


ALABAMA- MISSISSIPPI CHAPTER) SCHEDULE OF MEMBERSHIPS AND CONTRIBUTIONS


Temporarily Unrestricted Restricted Total

Individual Contributions General gifts $ 39,425 $ 3,902 $ 43,327 Tributes and memorials Workplace giving/ United Way

24,024 32,774

24,024 32,774

96,223 3,902 100,125

. Corporate Contributions

Foundation Gifts and Grants

Other Campaign Income Community (third party)

event income Other

75,954

2,392 655

29,472 105,426

2,392 655

$ 175,224 $ 33,374 $ 208,598

See independent auditors' report on supplemental information. - 26-


Documents

NATIONAL MULTIPLE SCLEROSIS SOCIETY …. Wray Pearce, CPA PEARCE, BEVILL, LEESBURG, MOORE, P.C. Matt Andrews, CPA Justin K. Berry, CPA Brittany Bingel, CPA Harold L Bevill, CPA (1946-1992)