river bend food reservoir d/b/a river bend foodbank …riverben. · 2016-12-21 · 2 opinion in our...

RIVER BEND FOOD RESERVOIR d/b/a RIVER BEND FOODBANK

FINANCIAL AND COMPLIANCE REPORT (WITH INDEPENDENT AUDITORS’ REPORT THEREON)

DECEMBER 31, 2015

Table of Contents Page(s)

Independent Auditors’ Report ................................................................................... 1-2

Financial Statements

Statement Of Financial Position .............................................................................................. 3

Statement Of Activities And Changes In Net Assets ............................................................... 4

Statement Of Functional Expenses ......................................................................................... 5

Statement Of Cash Flows ....................................................................................................... 6

Notes To Financial Statements .......................................................................................... 7-14

Single Audit Section

Independent Auditors’ Report On Internal Control Over Financial Reporting And On Compliance And Other Matters Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards .................................... 16-17

Independent Auditors’ Report On Compliance For Each Major Federal Program And Report On Internal Control Over Compliance In Accordance With The Uniform Guidance ............................................................................................................ 18-19

Schedule Of Expenditures Of Federal Awards ..................................................................... 20

Schedule Of Findings And Questioned Costs ....................................................................... 21

Summary Schedule Of Prior Audit Findings .......................................................................... 22

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OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of River Bend Food Reservoir as of December 31, 2015, and the change in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 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 audit of the 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 Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated July 29, 2016 on our consideration of River Bend Food Reservoir’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering River Bend Food Reservoir’s internal control over financial reporting and compliance.

HONKAMP KRUEGER & CO., P.C.

July 29, 2016

RIVER BEND FOOD RESERVOIR STATEMENT OF FINANCIAL POSITION

See accompanying notes to financial statements 3

RIVER BEND FOOD RESERVOIR STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS


RIVER BEND FOOD RESERVOIR STATEMENT OF FUNCTIONAL EXPENSES


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RIVER BEND FOOD RESERVOIR STATEMENT OF CASH FLOWS


RIVER BEND FOOD RESERVOIR NOTES TO FINANCIAL STATEMENTS

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1. Nature Of The Organization And Significant Accounting Policies

River Bend Food Reservoir (d/b/a River Bend Foodbank) is a not-for-profit 501(c)(3)corporation organized in 1982 to collect donations of wholesome food from the food industryfor distribution to more than 300 charitable community organizations that support the hungryin 22 counties in western Illinois and eastern Iowa. In addition, in the Quad Cities Area ofIllinois and Iowa, the Organization provides direct service to hungry children through severalKids Cafés and it distributes backpacks of food to needy children on a weekly basis throughthe Backpack Program.

A summary of the Organization’s significant accounting policies follows:

Accounting Estimates

The preparation of financial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of public support, revenue andexpenses during the reporting period. Actual results could differ from those estimates.

Subsequent Events

In accordance with the Subsequent Events Topic of the Financial Accounting StandardsBoard (FASB) Accounting Standards Codification, in preparing these financial statements,River Bend Food Reservoir has evaluated events and transactions for potential recognitionor disclosure through July 29, 2016, the date the financial statements were available to beissued.

Basis Of Presentation

Financial statement presentation follows the guidance of the Not-for-Profit Entities Topic ofthe FASB Accounting Standards Codification. Under this Topic, the Organization is requiredto report information regarding its financial position and activities according to three classesof net assets depending on the existence and/or nature of any donor restrictions. Adescription of the three net asset categories follows:

Unrestricted - Net assets that are not subject to donor-imposed restrictions. Unrestricted net assets may be designated for specific purposes by action of the Board, and accordingly includes Board-designated for specific purposes and other funds.

RIVER BEND FOOD RESERVOIR Notes To Financial Statements (Continued)

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Temporarily Restricted - Net assets whose use is subject to donor-imposed restrictions that can be fulfilled by actions of the organization pursuant to those restrictions or that expire by the passage of time. When a restriction expires, that is, when a stipulated time restriction ends or a purpose 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. Permanently Restricted - Net assets subject to donor-imposed restrictions that they be maintained permanently. Generally, the donors of these assets permit the organization to use all or part of the income from these assets. River Bend Food Reservoir has no permanently restricted net assets.

Expenses are generally reported as decreases in unrestricted net assets. Expiration of donor-imposed restrictions that simultaneously increase one class of net assets and decrease another are reported as reclassifications between the applicable classes of net assets. Donor-imposed restrictions that are met in the same period the contribution was received are reported as unrestricted support.

Revenue Recognition

To help defray the storage and handling costs for donated food, the charitable community organizations served by River Bend Food Reservoir make a donation to the Organization, which is based on the weight and type of product they receive. Revenues generated by these distributions are referred to as Shared Maintenance in the accompanying financial statements and are recognized when the products are distributed.

Cash donations are recognized upon receipt.

Cash And Cash Equivalents

For purposes of reporting cash flows, the Organization includes all cash accounts, which are not subject to withdrawal restrictions or penalties, brokerage account cash reserves, undeposited funds, and all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts Receivable consist of balances due from charitable community organizations for shared maintenance. Management evaluates these receivables to identify any amounts that may be uncollectible and any accounts determined to be uncollectible are written off. There is no allowance for doubtful accounts as of December 31, 2015. For the year ended December 31, 2015, there were $2,746 of accounts written off.


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Investments

Investments in debt and equity securities are reported at fair value, based on quoted market prices, with realized and unrealized gains and losses included in the statement of activities and changes in net assets.

Board designated funds - endowment includes investments set aside by the Board of Directors to be used for an endowment; the earnings of which are designated to support operations.

Inventory

Inventory is valued based on weight. Donated inventory is valued at $1.70 per pound. Purchased inventory is valued at the average cost per pound.

Property And Equipment

Property and equipment is recorded at cost if purchased or at fair market value at the time such items were donated to the Organization. The Organization capitalizes all expenditure for property and equipment in excess of $3,000. Depreciation is computed by the straight-line and accelerated methods over various estimated useful lives of the assets as follows:

Buildings and improvements 15-40 yearsWarehouse equipment 5-20 yearsOffice equipment 3-5 yearsVehicles 3-5 years

Contributed Services

A number of unpaid volunteers have contributed significant amounts of their time to the Organization's activities. The value of this contributed time is not reflected in these statements since it is not susceptible to objective measurement or valuation.

Expense Allocation

The costs of providing the programs and other activities have been summarized on a functional basis in the statement of activities and changes in net assets and in the statement of functional expenses. Certain costs have been allocated between program services, management and general and fundraising classifications based on estimates made by the Organization’s management.


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Income Taxes

River Bend Food Reservoir is exempt from federal and state income taxes under Section 501(c)(3) of the Internal Revenue Code and comparable state law, and contributions to it are tax deductible within limitations prescribed by the Code. The Organization has been classified as a publicly supported Organization, which is not a private foundation under Section 509(a) of the Code. The Financial Accounting Standards Board has issued guidance on accounting for uncertainty in income taxes. Management evaluated the Organization’s tax positions and concluded that the Organization has maintained its tax-exempt status and has taken no uncertain tax positions that require adjustment to or disclosure in the financial statements. Therefore, no provision or liability for income taxes has been included in the financial statements.

Recent Accounting Pronouncement

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. The updated standard will be effective for annual reporting periods beginning after December 15, 2018. The Organization has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the financial statements.

2. Concentration Of Credit Risk

The Organization maintains its operating cash balances in one financial institution located inMoline, Illinois. The Federal Deposit Insurance Corporation insures the balances. TheOrganization maintains its investment account at a national brokerage firm. The SecuritiesInvestor Protection Corporation insures the balances. Although, at times, these balancesmay exceed the insured limits, management believes the credit risk related to thesedeposits is minimal.

3. Donated Food And Food Inventory

River Bend Food Reservoir receives most of its food products from commercial fooddistributors, wholesalers, and other donations. These donated products have been deemedunsuitable for retail sale for various reasons. The Organization also purchases someproducts in order to provide the agencies it serves with a greater variety.

The fair value of donated food is determined based on weight (pounds of product multipliedby $1.70). Beginning inventory is valued at $1.72 per pound. The value of one pound ofproduct donated through regular operations was provided by Feeding America, with whichthe Organization is affiliated.


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The value of purchased inventory is determined using the average cost per pound of product. For the year ended December 31, 2015, the value of purchased inventory is $0.72 per pound. The value of purchased inventory at the beginning of the year is computed at $0.69 per pound. The following table summarizes the changes in inventory, by major category, for the year ended December 31, 2015:

4. Fair Value Measurements And Investments

The Fair Value Measurements and Disclosures Topic of the FASB Accounting StandardsCodification establishes a framework for measuring fair value. That framework provides afair value hierarchy that prioritizes the inputs to valuation techniques used to measure fairvalue. The hierarchy gives the highest priority to unadjusted quoted prices in active marketsfor identical assets or liabilities (Level 1 and Level 2 measurements) and the lowest priorityto unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

Level 1 - Quoted prices in active markets for identical securities. Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Significant unobservable inputs.

The Organization holds investments in a brokerage account as shown below. These investments are measured at fair value, on a recurring basis during the year, using quoted market prices in active markets for identical assets (Level 1).


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The cost and fair value of these investments at December 31, 2015 are as follows:

Investments have been presented in the accompanying statement of financial position at December 31, 2015, as follows:

The following schedule summarizes investment income and expenses for the year ended December 31, 2015:

For the year ended December 31, 2015, investments were sold for total proceeds of $827,252 and the net realized gains on these sales was $41,695. For purposes of determining realized gains or losses, the cost of investments sold is based on the average cost basis of the investments sold. Net unrealized holding losses in the amount of $127,448 have been included in the accompanying statement of activities and changes in net assets for the year ended December 31, 2015.

The Organization’s investments in various investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near-term and that such a change could materially affect the amounts reported in the statements of financial position.


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5. Property And Equipment

Property and equipment is as follows:

6. Temporarily Restricted Net Assets

Temporarily restricted net assets represent a promise to give receivable in 2016. A summary of the temporarily restricted net assets is as follows at December 31, 2015:

Net Assets were released from donor restrictions by incurring expenses satisfying the restricted purpose or by the passing of time or occurrence of other events specified by donors during the year ended December 31, 2015, as follows:

7. Pension Plan

River Bend Food Reservoir sponsors a defined contribution plan for its full-time employees. Employees enter the Plan after one year of service to the Organization. The Plan is funded monthly in an amount equal to 3% of the covered employees’ wages for years of service 1-4, 4% of the covered employees’ wages for years 5-9, and 5% of the covered employees’ wages for 10 or more years. The Plan also includes life insurance, long-term care and disability insurance provisions. In 2015, the Organization contributed $12,054 to the Plan, on behalf of four employees.


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8. Operating Leases

Subsequent to December 31, 2015, River Bend Food Reservoir entered into a six-year non-cancelable operating lease. The lease agreement is for two refrigerated trucks and require the lessee to pay executory costs such as taxes, licenses, and routine maintenance over the lease term. There was no lease expense for the year ended December 31, 2015.

Future minimum lease commitments under the above non-cancelable lease agreement are due as follows:

9. Change of Fiscal Year

Effective January 1, 2016, the Organization intends to change its fiscal year end to June 30.

SINGLE AUDIT SECTION

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Compliance and Other Matters As part of obtaining reasonable assurance about whether River Bend Food Reservoir’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Organization’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Organization’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

July 29, 2016

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Opinion on Each Major Federal Program In our opinion, River Bend Food Reservoir complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2015.

Report on Internal Control over Compliance Management of River Bend Food Reservoir is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered River Bend Food Reservoir’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the River Bend Food Reservoir’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

July 29, 2016

RIVER BEND FOOD RESERVOIR SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

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RIVER BEND FOOD RESERVOIR SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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I. SUMMARY OF AUDITORS’ RESULTS

Financial Statements Type of auditor’s report issued: Unmodified

Internal control over financial reporting: Material weaknesses identified? Yes No Significant deficiencies identified? Yes None reported

Noncompliance material to financial statements noted? Yes No

Federal AwardsInternal control over major programs:

Material weaknesses identified? Yes No Significant deficiencies identified? Yes None reported

Type of auditor’s report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.561(a)? Yes No

Identification of Major Federal Programs: CFDA Number Name of Federal Program or Cluster Emergency Food Assistance Program Cluster:

10.568 Emergency Food Assistance Program (Administrative Costs) 10.569 Emergency Food Assistance Program (Food Commodities)

Dollar threshold used to distinguish between type A and type B programs: $ 750,000

Auditee qualified as a low-risk auditee? Yes No

II. Financial Statement Findings

No matters were reported.

III. Federal Award Findings

No matters were reported.

RIVER BEND FOOD RESERVOIR SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS

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There were no prior audit findings.

river bend food reservoir d/b/a river bend foodbank …riverben. · 2016-12-21 · 2 opinion in our...

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