The Pacifica Foundation Financial Statements and Independent
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The Pacifica Foundation Financial Statements and Independent Auditors’ Report September 30, 2018 and 2017 The Pacifica Foundation Financial Statements September 30, 2018 and 2017 Contents Independent Auditors’ Report .............................................................................................. 1-2 Financial Statements Statements of Financial Position .......................................................................................... 3 Statements of Activities ....................................................................................................... 4-5 Statements of Functional Expenses ..................................................................................... 6-7 Statements of Cash Flows .................................................................................................... 8 Notes to Financial Statements .............................................................................................. 9-28 Supplementary Information Schedules of Financial Position by Division ....................................................................... 29-30 Schedules of Activities by Division ..................................................................................... 31-32 Schedules of Expenses by Division ..................................................................................... 33-34 Rogers & Company PLLC Certified Public Accountants 8300 Boone Boulevard Suite 600 Vienna, Virginia 22182 703.893.0300 voice 703.893.4070 facsimile www.rogerspllc.com INDEPENDENT AUDITORS’ REPORT To the Board of Directors of The Pacifica Foundation We were engaged to audit the accompanying financial statements of The Pacifica Foundation (“the Foundation”), which comprise the statements of financial position as of September 30, 2018 and 2017; the related statements of activities, functional expenses, and cash flows 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 controls 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 conducting the audits in accordance with auditing standards generally accepted in the United States of America. Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Basis for Disclaimer of Opinion As explained in Note 9 to the financial statements, the Foundation is the sponsor of two distinct pension plans covering substantially all employees. Both plans are delinquent in obtaining audited financial statements as required by the Internal Revenue Service (IRS) and the Employee Retirement Income Security Act of 1974 (ERISA). Additionally, both plans are delinquent with filing tax returns with the IRS. As of the date of the Independent Auditors’ Report, July 16, 2020, audits of the plans for years 2018 and 2017 had not been completed. We were thus unable to obtain sufficient appropriate audit evidence about the correct pension accruals, penalties, and fines for the years ended September 30, 2018 and 2017. 1 Basis for Disclaimer of Opinion (continued) Additionally, we were unable to obtain audit evidence to support the amounts and disclosures in the September 30, 2017 financial statements due to difficulties in obtaining sufficient supporting documentation from some of the locations. Some of the data from these stations could not be fully verified because it was missing. As a result, we were unable to determine whether any adjustments were necessary to make relating to the Foundation’s September 30, 2017 statement of financial position; and the elements making up the statements of activities, functional expenses, and cash flows for the year then ended. Disclaimer of Opinion Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on these financial statements. Substantial Doubt About the Organization’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Foundation will continue as a going concern. As discussed in Note 12 to the financial statements, the Foundation has suffered recurring losses from operations and has a net deficit that raises substantial doubt about its ability to continue as a going concern. Management’s evaluation of the events and conditions, and management’s plans regarding those matters, are described in Notes 12 and 13. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Other Matters We were engaged for the purpose of forming an opinion on the basic financial statements as a whole. The supplementary schedules included on pages 29-34 are presented for the purposes of additional analysis and are not a required part of the financial statements. Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, it is inappropriate to and we do not express an opinion on the supplementary information referred to above. Vienna, Virginia July 16, 2020 2 The Pacifica Foundation Statements of Financial Position September 30, 2018 and 2017 2018 2017 Assets Current assets: Cash and cash equivalents $ 1,246,285 $ 809,806 Accounts receivable 24,171 269,325 Prepaid expenses 7,891 31,806 Inventory 23,910 15,771 Total current assets 1,302,257 1,126,708 Non-current assets: Restricted cash 859,964 573,915 Other assets 41,620 42,120 Property and equipment, net 1,706,477 1,914,722 Total non-current assets 2,608,061 2,530,757 Total assets $ 3,910,318 $ 3,657,465 Liabilities and Net Assets (Deficit) Liabilities Accounts payable $ 2,932,066 $ 2,971,113 Accrued expenses and payroll benefits 2,187,052 2,880,461 Accrued rent - 2,418,169 Deferred revenue 25,000 - Equipment loan payable 121,297 - Notes payable 3,265,000 - Total liabilities 8,530,415 8,269,743 Net Assets (Deficit) Unrestricted (5,736,152) (5,794,133) Temporarily restricted - 65,800 Permanently restricted 1,116,055 1,116,055 Total net deficit (4,620,097) (4,612,278) Total liabilities and net deficit $ 3,910,318 $ 3,657,465 See accompanying notes. 3 The Pacifica Foundation Statement of Activities For the Year Ended September 30, 2018 Temporarily Permanently Unrestricted RestrictedRestricted Total Revenue and Support Listener support and donations, net $ 8,272,007 $ - $ - $ 8,272,007 Grants and contributions 1,555,331 9,000 - 1,564,331 Sub-carrier income 276,919 - - 276,919 Community events 218,028 - - 218,028 Gain on sale of property, net 727,457 - - 727,457 Other revenue 470,337 - - 470,337 Interest income 114,370 - - 114,370 Released from restrictions 74,800 (74,800) - - Total revenue and support 11,709,249 (65,800) - 11,643,449 Expenses Program services 5,333,802 - - 5,333,802 Supporting services: Management and general 5,232,008 - - 5,232,008 Fundraising and development 1,085,458 - - 1,085,458 Total supporting services 6,317,466 - - 6,317,466 Total expenses 11,651,268 - - 11,651,268 Change in Net Assets 57,981 (65,800) - (7,819) Net (Deficit) Assets, beginning of year (5,794,133) 65,800 1,116,055 (4,612,278) Net (Deficit) Assets, end of year $ (5,736,152) $ - $ 1,116,055 $ (4,620,097) See accompanying notes. 4 The Pacifica Foundation Statement of Activities For the Year Ended September 30, 2017 Temporarily Permanently Unrestricted Restricted Restricted Total Revenue and Support Listener support and donations, net $ 8,663,786 $ - $ - $ 8,663,786 Grants and contributions 1,138,438 - - 1,138,438 Sub-carrier income 276,215 - - 276,215 Community events 179,663 - - 179,663 Other revenue 580,037 - - 580,037 Interest income 99,434 - - 99,434 Total revenue and support 10,937,573 - - 10,937,573 Expenses Program services 5,007,252 - - 5,007,252 Supporting services: Management and general 4,917,298 - - 4,917,298 Fundraising and development 1,099,663 - - 1,099,663 Total supporting services 6,016,961 - - 6,016,961 Total expenses 11,024,213 - - 11,024,213 Change in Net Assets (86,640) - - (86,640) Net (Deficit) Assets, beginning of year (5,707,493) 65,800 1,116,055 (4,525,638) Net (Deficit) Assets, end of year $ (5,794,133) $ 65,800 $ 1,116,055 $ (4,612,278) See accompanying notes. 5 The Pacifica Foundation Statement of Functional Expenses For the Year Ended September 30, 2018 Supporting Services Program Management Fundraising and Total Services and General Development Expenses Personnel costs: Salaries and wages $ 2,997,163 $ 1,098,705 $ 463,874 $ 4,559,742 Payroll taxes 279,491 98,958 44,107 422,556 Employee benefits 337,601 644,578 31,485 1,013,664 Pension and 403(b) contributions 63,026 29,938 10,976 103,940 Advertising and promotion 20 4,517 21,676 26,213 Associations and periodicals 434 1,043 5,583 7,060 Audit and accounting - 145,517 - 145,517 Bank charges and credit card fees (4,992) 119,346 78,759 193,113 Board