ST. JOHN THE BAPTIST CATHOLIC CHURCH
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30.2015
WITH REPORT OF CERTIFIED PUBLIC ACCOUNTANTS Peters^Chandler, p.c
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
To the Audit Committee of St. John the Baptist Catholic Church
We have audited the accompanying financial statements of financial position of St. John the Baptist Catholic Church, which comprise the statement of assets, liabilities, and net assets - modified cash basis as ofJune 30, 2015, and the related statement ofrevenue, expenses, and other changes in net assets - modified cash bases for the year then ended, and the related notes to the financial statements.
Management's Responsibilityfor the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting as described in Note 1; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of these financial statements in the circumstances. Management is also responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment ofthe risks of material misstatement ofthe 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 expressingan opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positionofSt. John the Baptist Catholic Church, as ofJune 30, 2015, and the changes in its net assets forthe yearthen ended in accordance with the modified cash basis ofaccounting as described in Note 1.
Basis ofAccounting
We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified in respect to that matter.
CERTIFIED PUBLIC ACCOUNTANTS
Oklahoma City, Oklahoma April 19,2016 Page 3 ST. JOHN THE BAPTIST CATHOLIC CHURCH
STATEMENT OF ASSETS. LIABILITIES. JUNE 30.2015 AND NET ASSETS - MODIFIED CASH BASIS
ASSETS
Cash and Cash Equivalents $ 532,677 Investments (Note 3) 2,591,937 Property and Equipment (Note 2) Other Assets 9,329
Total Assets $ 3,133,943
LIABILITIES AND NET ASSETS
Rental Property Deposits $ 3,489
Total Liabilities $ 3,489
Net Assets Unrestricted Undesignated $ 852,684 Board Designated 1,154,681 Temporarily Restricted (Note 7) 751,981 Permanently Restricted (Note 7) 371,108
Total Net Assets $ 3,130,454
Total Liabilities and Net Assets $ 3,133,943
The accompanying notes are an integral part ofthese statements. Page 4 ST. JOHN THE BAPTIST CATHOLIC CHURCH
STATEMENT OF REVENUE, EXPENSES, AND OTHER FOR THE YEAR ENDED JUNE 30, 2015 CHANGES IN NET ASSETS - MODIFIED CASH BASIS
UNRESTRICTED AND TEMPORARILY PERMANENTLY
BOARD DESIGNATED RESTRICTED RESTRICTED TOTAL
Revenue and Other Support
Sunday and Holy Day Collections $ 3,370,938 $ $ - $ 3,370,938
Other Collections 82,954 - 50,000 132,954
Parish Departmental Revenues 169,245 - - 169,245 Special Gifts, Bequests and Drives
Peru Mission - 448,357 - 448,357
Samaritan House - 150,345 - 150,345
Project Gabriel - 4,415 - 4,415
Cooks' Night Out - 5,222 - 5,222
High School Scholarships - 22,182 - 22,182
PTO - 118,215 - 118,215
UCO - 33,225 - 33,225
Athletics - 46,078 - 46,078
St. Elizabeth Ann Seton School 1,744,162 110,005 - 1,854,167
Child Development 445,779 - - 445,779
Scrip 178,355 - - 178,355
Rental Property 65,173 - - 65,173
Interest and Investment Activity (Note 6) 55,207 14,379 - 69,586
Release from Restriction 831,499 (831,499) - -
Total Revenues and Other Support $ 6,943,312 $ 120,924 $ 50,000 $ 7,114,236
Expenses
Parish $ 2,392,215 $ $ - $ 2,392,215
Program 1,331,167 - - 1,331,167
St. Elizabeth Ann Seton School 2,215,810 - - 2,215,810
Child Development 409,704 - - 409,704
Scrip 154,807 - - 154,807
Rental Property 48,619 - - 48,619
Total Expenses $ 6,552,322 $ - $ - $ 6,552,322
Net from Operations $ 390,990 $ 120,924 $ 50,000 $ 561,914
Other Revenue (Expenses')
Insurance Proceeds $ 6,379 $ • $ • $ 6,379 Capital Expenditures (Note 2) (305,028) (305,028)
Total Other Revenue (Expenses) $ (298,648) $ _ $ _ $ (298,648)
Change in Net Assets $ 92,341 $ 120,924 $ 50,000 $ 263,265
Net Assets - Beginning of Period $ 1,915,023 $ 631,057 $ 321,108 $ 2,867,188
Net Assets - End ofPeriod $ 2,007,364 $ 751,981 $ 371,108 $ 3,130,453
The accompanying notes are an integral part ofthese statements. Page 5 ST. JOHN THE BAPTIST CATHOLIC CHURCH
NOTES TO FINANCIAL STATEMENTS JUNE 30,2015
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
St. John the Baptist Catholic Church ("the Parish") was founded in 1905 and is owned and governed by the Catholic Archdiocese of Oklahoma City. The Parish's mission statement declares that it is a Catholic Christian Community, called to be faithful, caring, enthusiastic disciples, who build up the kingdom of God by worshipping and praising God, proclaiming the good news of Jesus Christ in word and witness, giving loving service to neighbors and strengthening the parish community. The Parish has many ministries, divided into pillars: worship, formation, outreach, stewardship and community life, and administration. The Parish also includes St. Elizabeth Ann Seton Catholic School ("SEAS"), a private Catholic school in Edmond, Oklahoma.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the modified cash basis of accounting; consequently, certain support and revenue are recognized when received rather than when earned and certain expenses are recognized when paid rather than when the obligation is incurred. This is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Modifications to the cash basis include recognition of investments at fair value and recognition of Scrip inventory. Net assets, revenues and expenses are classified based on the existence or absence of donor- imposed restrictions. Accordingly, net assets ofthe Parish are classified and reported as follows:
Unrestricted Net Assets
Net assets that are not subject to donor-imposed stipulations.
Temporarily Restricted Net Assets
Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Parish and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. At June 30, 2015, the Parish had a temporarily restricted net asset balance of $751,981.
Permanently Restricted Net Assets
Net assets subject to donor-imposed stipulations require that the net assets contributed be permanently maintained by the Parish. At June 30,2015, the Parish had a permanently restricted net asset balance of$371,108. Page 6 ST. JOHN THE BAPTIST CATHOLIC CHURCH
NOTES TO FINANCIAL STATEMENTS JUNE 30.2015
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
CASH EQUIVALENTS
The Parish considers all highly liquid investments with an original maturity ofthree months or less to be cash equivalents.
INVENTORIES
SEAS sells gift cards under the Scrip program and receives a rebate from the sale to pay for operating expenses for the school. Scrip gift cards on hand at June 30, 2015 totaled $7,531, and are included in other assets.
INVESTMENTS
The Parish has funds invested at the Catholic Archdiocese of Oklahoma City (the "Archdiocese") in the Parish Deposit Loan Fund ("PDLF") as well as funds invested in the Catholic Foundation of Oklahoma, Inc. ("CFO"). The PDLF investment pool is used by the Archdiocese to provide financing to members of the Archdiocese. Funds deposited with the PDLF earn interest based on the monthly average rate of two-year U.S. Treasury Notes plus 0.25%. The investment pool with the PDLF is generally comprised of cash or equity/fixed income securities. The Parish's investments with the Archdiocese have no withdrawal restrictions. The CFO's pooled fund investments are held and managed by a trust company affiliated with a major regional bank which has investment authority over the investment transactions subject to investment policies which are established and periodically updated by the Board of Directors of the CFO. The investment pool is generally comprised of money funds, corporate bonds, government bonds, and equity securities.
CONTRIBUTIONS
All contributions are considered available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires or is satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement ofactivities as net assets released from restrictions.
CAPITAL EXPENDITURES
Buildings, furniture, and equipment are considered a capital expenditure on the statement of revenue, expenses, and other changes in net assets - modified cash basis, and are not depreciated. The Parish transfers the ownership all fixed assets to the Archdiocese ofOklahoma City. Page 7 ST. JOHN THE BAPTIST CATHOLIC CHURCH
NOTES TO FINANCIAL STATEMENTS JUNE 30.2015
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
FAIR VALUE MEASUREMENTS
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels offair value hierarchy under FASB ASC 820 are described as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs that are derived principally from or corroborated by observable market data; Level 3 - Inputs that are unobservable and significant to the overall fair value measurement.
INCOME TAXES
The Parish operates under an exemption from federal income taxes under the Internal Revenue Code Section 501(c)(3) granted to all organizations under the umbrella of the Catholic Church. Accordingly, no provision for federal or state income tax is included in the financial statements.
The Parish follows the disclosure requirements ofASC 740, which addresses the accounting for uncertainty in income taxes. Management has evaluated the Parish's tax positions and concluded that the Parish has taken no uncertain tax positions that require disclosure in the footnotes to the financial statements to comply with the provisions of this guidance. The Parish is not subject to income tax examinations by the U.S. federal, state, or local tax authorities before 2011.
USE OF ESTIMATES
The preparation of financial statements in conformity with the modified cash basis of accounting requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
NOTE 2 - CAPITAL EXPENDITURES
Capital expenditures include the cost of significant construction or replacement projects of capital assets. These costs are charged to capital expenditure expenses in the year paid due to the transfer of ownership to the Archdiocese ofall such assets, and consist ofthe following for the year ended June 30,2015:
SEAS Gym Renovation $ 25,912 Vehicles 8,900 Parish Equipment and Furniture 125,920 House Used for Peru Mission Collection Site 92,328 House Used to Provide Counseling Services 51,968
$ 305,028 Page 8 ST. JOHN THE BAPTIST CATHOLIC CHURCH
NOTES TO FINANCIAL STATEMENTS JUNE 30.2015
NOTE 3 - FAIR VALUE MEASUREMENTS
The Parish uses quoted market prices to determine the fair value ofan asset or liability when available. If quoted market prices are not available, the Parish determines fair value using valuation techniques that use market-based or independently-sourced market data, such as interest rates. The following methods and assumptions were used to estimate the fair value ofassets in the financial statements.
Investments held by the CFO are stated at fair value determined by the fund manager. Investments held by the Archdiocese through PDLF are stated at fair value, which is determined by original investment value, plus reinvested interest net ofdistributions received.
Assets measured at fair value on a recurring basis are classified within the fair value hierarchy as follows:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
Pooled investment accounts: Catholic Foundation ofOklahoma $ -0- $ 1,703,744 $ -0- $ 1,703,744 Parish Deposit Loan Fund -0- 888,193 -0- 888,193
$ -0- $ 2,591,937 $ -0- $ 2,591,937
NOTE 4 - CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Parish to concentrations ofcredit risk consist principally ofcash and cash equivalents. As of June 30, 2015, the Parish had approximately $755,000 of funds in excess of federally insured limits subject to credit risk. The Parish places its cash and cash equivalents with high credit quality financial institutions and, therefore, does not believe significant credit risk exists with these deposits.
NOTE 5 - ENDOWMENT ASSETS
The Parish endowments consist of five individual funds established for a variety of purposes. Its endowments include both donor restricted funds and funds designated by the Parish to function as endowments. As required by generally accepted accounting principles, net assets associated with endowment funds, including designated by the Parish to function as endowments, are classified and reported based on the existence or absence ofdonor- imposed restrictions.
The Parish has interpreted the Uniform Prudent Management of Institutional Funds Act as requiring the preservation of the fair value of a donation as of the date on which the donation was made, except where the donor provides different instructions or conditions in connection with the donation. Consistent with this interpretation, the Parish has classified its permanently restricted net assets in the amount of the original value of donations made to the permanent endowment as well as the original value of subsequent donations made to the permanent endowment. The remaining portion of the donor-restricted endowment fund that is not classified as permanently restricted net assets is classified as temporarily restricted net assets until those amounts are approved for distribution by the Parish in a manner consistent with the standards set forth in the Act. In accordance with the Act, the Parish considers the following factors in making a determination to maintain or distribute donor-restricted endowment funds: (1) the duration and preservation of the fund, (2) the purposes of the Parish and the donor-restricted endowment fund, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation/depreciation of investments, (6) other resources ofthe Parish, and (7) the investment policies ofthe Parish. Page 9 ST. JOHN THE BAPTIST CATHOLIC CHURCH
NOTES TO FINANCIAL STATEMENTS JUNE 30.2015
NOTE 5 - ENDOWMENT ASSETS (Continued)
The Parish invests its endowment funds with the Catholic Foundation of Oklahoma (the Foundation). In doing so, the Parish has inherently accepted the investment policies of the Foundation. The Parish believes the investment policies of the Foundation, when applied to the endowment funds, facilitate the Parish's ability to provide funding for programs and provide adequate returns for invested funds. Endowment assets include those assets ofdonor-restricted funds that the Parish must hold in perpetuity or for a donor-specified period as well as board designated funds. Under the Foundation's investment policy, the endowment assets are invested in a manner that is intended to provide acceptable investment returns, while assuming a moderate level of investment risk. This investment policy expects its endowment funds, over time, to provide an average rate of return that is consistent with historical returns of assets allocated 60% equity and 40% fixed income and non-equity investments. Actual returns in any given year are dependent on market conditions and other factors, and they may vary from the expected investment return. To satisfy its long-term rate-of-return objectives, the Parish relies on the Foundation's investment policy, which has a strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends).
Endowment net asset composition and changes in endowment net assets for the year ended June 30, 2015 is as follows:
TEMPORARILY PERMANENTLY
UNRESTRICTED RESTRICTED RESTRICTED TOTAL Endowment Net Assets bv Type ofFund Donor-Restricted Endowment Funds $ $ 211,036 $ 371,108 $ 582,144 Board-Designated Endowment Funds 1,121,600 1,121,600
Total Endowment Net Assets bv Type ofFund $ 1,121,600 $ 211,036 $ 371,108 $ 1,703,744
TEMPORARILY PERMANENTLY
UNRESTRICTED RESTRICTED RESTRICTED TOTAL
Endowment Net Assets. Beginning ofYear $ 1,115,615 $ 209,885 $ 321,108 $ 1,646,608
Contributions $ 690 $ - $ 50,000 $ 50,690
Investment Return:
Investment Income $ 20,358 $ 10,748 $ . $ 31,106
Net Appreciation (Realized and Unrealized) 11,569 6,018 - 17,587
Total Investment Return $ 31,927 $ 16,766 $ - $ 48,693
$ (26,632) $ (15,615) $ - $ (42,247)
Total Endowment Funds at June 30. 2015 $ 1,121,600 $ 211,036 $ 371,108 $ 1,703,744 Page 10 ST. JOHN THE BAPTIST CATHOLIC CHURCH
NOTES TO FINANCIAL STATEMENTS JUNE 30.2015
NOTE 6 - INTEREST AND INVESTMENT ACTIVITY
Interest and investment income activity consists ofthe following for the year ended June 30,2015:
Unrestricted: Interest and Dividends $ 50,447 Net Realized and Unrealized Gain (Loss) 11,569 Less: Management and Custodial Fees (6,809) $ 55,207 Temporarily Restricted: Interest and Dividends $ 10,748 Net Realized and Unrealized Gain (Loss) 6,018 Less: Management and Custodial Fees (2,387) $ 14,379
$ 69,586
NOTE 7 - RESTRICTED NET ASSETS
Temporarily restricted net assets are available for the following purposes or periods as ofJune 30,2015:
Peru Mission $ 153,939 Samaritan House (A) Project Gabriel 8,226 Cooks'Night Out 3,367 High School Scholarships 62,199 PTO 96,665 UCO 40,283 Athletics 21,426 Fr. John Petuskey Scholarship 208,449 St. Elizabeth Ann Seton School 157,427 $ 751,981
(A) The balance of $-0- as of June 30, 2015 for Samaritan House is due to spending more funds for the operations ofthe Samaritan House then the Parish received as restricted funds. The excess expenditures were paid for with unrestricted funds.
Permanently restricted net assets consist of endowment funds restricted by donors for investment in perpetuity, and include assets held by Catholic Foundation of Oklahoma for the Parish's benefit. Distributions from perpetual trusts and earnings on endowment funds are available for the purposes specified by the donors, or in certain cases, for the Parish's unrestricted use. The permanently restricted net assets balances, classified by restriction on the use ofearnings, are as follows at June 30, 2015:
Endowment Fr. John Petuskey Scholarship $ 371,108
Total Permanently Restricted Net Assets $ 371,108 Page 11 ST. JOHN THE BAPTIST CATHOLIC CHURCH
NOTES TO FINANCIAL STATEMENTS JUNE 30.2015
NOTE 8 -PROFESSIONAL SERVICES
Professional services include the cost of services performed by outside parties for the Parish. These costs are charged to professional services expenses in the year paid and consist of the following for the year ended June 30,2015:
Security Personnel $ 18,952 Planning/Architectual Fees 34,547 Audit Services 6,000 IT Services 67,917
$ 127,416
NOTE 9 -RETIREMENT PLAN
The Archdiocese sponsors a tax sheltered annuity plan covering all lay employees of the diocese (including affiliated entities) who are at least 18 years of age and who have completed one year of service. The plan is funded by a combination of employer contributions, voluntary employee contributions and employer matching contributions. Employer contributions are 3% ofa participant's compensation. The plan provides for employer matching contributions of 50% of voluntary employee contributions up to a maximum of 2%. Plan participants are fully vested at all times in their voluntary contributions, gradually vest in employer contributions, and are fully vested in all contributions upon completion of six years of service. Forfeitures reduce future employer contributions. Retirement expense under the plan for the year ended June 30, 2015 was $86,354.
NOTE 10 - RELATED PARTY TRANSACTIONS
St. John the Baptist Catholic Church is wholly owned by the Archdiocese ofOklahoma City. The Parish acquires property and auto insurance, workers compensation insurance, and employee health insurance from the Archdiocese. Payments for these items during the year ended June 30, 2015 totaled $557,447. Additionally, as noted in Note 9, the Archdiocese sponsors the Parish's retirement plan.
NOTE 11 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through April 19, 2016, the date the financial statements were available to be issued. Peters^Chandler, p.c
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS* REPORT ON SUPPLEMENTARY INFORMATION
To the Audit Committee of St. John the Baptist Catholic Church
We have audited the financial statements ofSt. John the Baptist Catholic Church, as ofand for the year ended June 30, 2015, and our report thereon dated April 19, 2016, which expressed an unmodified opinion in these financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The statement of expenses 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 audit of the financial statements and certain additional procedures, which include 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.
PCERTIFIED PUBLIC ACCOUNTANTS
Oklahoma City, Oklahoma April 19,2016 Page 13 ST. JOHN THE BAPTIST CATHOLIC CHURCH
STATEMENT OF EXPENSES FOR THE YEAR ENDED JUNE 30.2015
ST ELIZABETH ANN CHILD PARISH PROGRAM SETON SCHOOL DEVELOPMENT SCRIP RENTAL PROPERTY TOTAL
Salaries and Wages $ 1,023,449 35 $ 1,163,387 $ 250,238 $ „. $ - $ 2,437,074
Payroll Taxes 70,334 - 82,608 18,420 - - 171,362
Employee Benefits 262,586 - 276,901 67,211 - - 606,698
Advertising and Marketing 24,900 5,928 9,613 885 - - 41,326
Dues and Subscriptions - 1,018 415 - - - 1,433
Insurance 59,833 - 47,516 6,419 - - 113,768
Janitorial 165,650 - 71,344 125 - - 237,119
Repairs and Maintenance 133,577 - 181 - - 21,497 155,255
Office Expenses 59,947 118 6,751 - - - 66,816
Professional Services 59,499 - 67,917 - - - 127,416
Supplies 95,550 224,257 68,369 28,132 - - 416,308
Taxes and Fees 206,262 - 8,969 - - 16,979 232,210
Training and Development 1,783 9,322 3,085 2,033 - - 16,223
Travel, Meetings, and Field Trips 33,339 52,200 - 2,531 - - 88,070
Utilities 149,681 - 100,490 - - 10,143 260,314
Athletics - - 54,860 - - - 54,860
Back to School - - 26,368 - - - 26,368
CFO - 57,625 - - - - 57,625
Food and Food Service Expense - - 134,888 29,345 - - 164,233
Grant Expenses - - 3,852 - - - 3,852
High School Scholarships - 20,500 - - - - 20,500
Mission - 540,295 - - - - 540,295
Outreach - 175,885 - - - - 175,885
PTO - - 79,368 - - - 79,368
Samaritan House - 209,749 - - - - 209,749
School subsidies 32,840 - - - - - 32,840
Scrip - - - - 154,807 - 154,807
UCO - 34,159 - - - - 34,159
Other Administration Expense 12,985 111 8,928 4,365 - - 26,389
Total Expenses Included in the Expense Section on the Statement ofActivities $ 2,392,215 S5 1,331,167 $ 2,215,810 $ 409,704 $ 154,807 $ 48,619 $ 6,552,322