SMITH BUNDAY BERMAN BRITTON, P.S. KBCS 91.3 FM COMMUNITY RADIO (A Service of Bellevue College) FINANCIAL STATEMENTS JUNE 30, 2019 AND 2018 SMITH BUNDAY BERMAN BRITTON, P.S. CERTIFIED PUBLIC ACCOUNTANTS January 13, 2020 To the Management of KBCS 91.3 FM Community Radio Independent Auditor’s Report We have audited the accompanying financial statements of KBCS 91.3 FM Community Radio (a service of Bellevue College) (“the Station”), which comprise the statement of financial position as of June 30, 2019 and 2018, and the related statements of activities and changes in net assets, 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 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 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. 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. -1- 11808 Northup Way, Suite 240 ● Bellevue, Washington 98005-1959 Phone (425) 827-8255 ● Fax (425) 827-0641 ● www.sbbb.com SMITH BUNDAY BERMAN BRITTON, P.S. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of KBCS 91.3 FM Community Radio as of June 30, 2019 and 2018, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. -2- KBCS 91.3 FM COMMUNITY RADIO STATEMENT OF FINANCIAL POSITION Assets June 30, 2019 2018 Assets: Cash and cash equivalents $227,771 $ - Receivable from Corporation for Public Broadcasting 34,278 - Donations receivable 8,244 2,928 Pledges receivable - Note 2 56,786 13,614 Prepaid expenses 28,008 32,590 Capital improvements and equipment, net of accumulated depreciation - Note 3 13,699 28,495 Total assets $368,786 $77,627 Liabilities and Net Assets Liabilities: Book overdraft $ - $17,759 Accounts payable 3,575 7,757 Accrued payroll and related liabilities 19,398 30,523 Total liabilities 22,973 56,039 Commitment and contingencies - Notes 7 and 9 Net assets: Without donor restrictions 220,813 21,588 With donor restrictions 125,000 - Total net assets 345,813 21,588 Total liabilities and net assets $368,786 $77,627 See auditor's report and accompanying notes to financial statements - 3 - KBCS 91.3 FM COMMUNITY RADIO STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS For the year ended June 30, 2019 2018 Changes in net assets without donor restrictions: Revenues and support: KBCS listener support $580,694 $615,994 Corporation for Public Broadcasting - community service grant 114,259 114,023 Bellevue College appropriations and other support 330,595 181,917 Underwriter contributions 148,966 131,992 Foundations, non-profit and local government support 140,341 89,520 Total revenues and support without donor restrictions 1,314,855 1,133,446 Expenses: Program services 563,582 525,140 Management and general 287,084 501,456 Fundraising 182,754 201,709 Underwriting 82,210 93,956 Total expenses 1,115,630 1,322,261 Increase (decrease) in net assets without donor restrictions 199,225 (188,815) Changes in net assets with donor restrictions: Community support 125,000 - Increase in net assets with donor restrictions 125,000 - Increase (decrease) in total net assets 324,225 (188,815) Net assets at beginning of year 21,588 210,403 Net assets at end of year $345,813 $21,588 See auditor's report and accompanying notes to financial statements - 4 - KBCS 91.3 FM COMMUNITY RADIO STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2019 Program Services Supporting Services Program Programming information and Total Program Management and production Broadcasting promotion Services and general Fundraising Underwriting Total Salaries and wages $266,367 $51,663 $47,820 $365,850 $81,070 $69,594 $42,452 $558,966 Benefits 62,296 15,637 16,176 94,109 26,476 23,915 16,313 160,813 Facilities - administrative indirect - - - - 118,595 - - 118,595 Other, advertising and miscellaneous 33,359 - - 33,359 2,245 13,223 6,060 54,887 Rentals and leases - 38,966 - 38,966 - - - 38,966 Printing and reproduction - - 2,250 2,250 - 31,825 - 34,075 Memberships and subscriptions 10,931 6,831 - 17,762 3,321 657 6,950 28,690 Software licenses and maintenance - 121 198 319 - 14,263 10,350 24,932 Purchased services 1,415 5,210 1,885 8,510 15,897 260 - 24,667 Bank charges - - - - 18,520 - - 18,520 Depreciation - - - - 14,796 - - 14,796 Supplies and materials (19) 227 2,249 2,457 582 8,000 85 11,124 Communication and telecommunications - - - - - 10,020 - 10,020 Employee professional development - - - - 4,275 2,095 - 6,370 Fundraising expense - - - - - 7,642 - 7,642 Travel - - - - 1,307 1,260 - 2,567 Total expenses $374,349 $118,655 $70,578 $563,582 $287,084 $182,754 $82,210 $1,115,630 See auditor's report and accompanying notes to financial statements - 5 - KBCS 91.3 FM COMMUNITY RADIO STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2018 Program Services Supporting Services Program Programming information and Total Program Management and production Broadcasting promotion Services and general Fundraising Underwriting Total Salaries and wages $219,007 $49,123 $65,526 $333,656 $161,684 $124,700 $73,299 $693,339 Benefits 49,936 16,152 20,859 86,947 54,924 41,174 20,657 203,702 Facilities - administrative indirect - - - - 149,917 - - 149,917 Memberships and subscriptions 37,057 - 1,208 38,265 4,551 - - 42,816 Rentals and leases - 37,943 - 37,943 386 - - 38,329 Purchased services 18,295 - 1,511 19,806 15,251 - - 35,057 Overhead - - - - 33,358 - - 33,358 Supplies and materials 3,320 345 - 3,665 15,853 6,513 - 26,031 Bank charges - - - - 19,085 - - 19,085 Printing and reproduction - - - - 11,806 6,147 - 17,953 Software licenses and maintenance - - - - 14,863 - - 14,863 Depreciation - - - - 14,796 - - 14,796 Fundraising expense - - - - - 10,407 - 10,407 Communication and telecommunications - - - - 1,917 4,481 - 6,398 Employee professional development 3,360 - - 3,360 1,308 1,434 - 6,102 Other, advertising and miscellaneous (1,485) - - (1,485) 951 5,941 - 5,407 Travel 1,185 1,184 614 2,983 806 320 - 4,109 Repairs and maintenance - - - - - 592 - 592 Total expenses $330,675 $104,747 $89,718 $525,140 $501,456 $201,709 $93,956 $1,322,261 See auditor's report and accompanying notes to financial statements - 6 - KBCS 91.3 FM COMMUNITY RADIO STATEMENT OF CASH FLOWS For the year ended June 30, 2019 2018 Cash flows from operating activities: Change in net assets $324,225 ($188,815) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation 14,796 14,796 Increase in allowance on pledges receivable 4,530 1,157 Changes in operating assets and liabilities: Receivable from Corporation for Public Broadcasting (34,278) - Donations receivable (5,316) (1,409) Promises to give (47,702) (14,380) Prepaid expenses 4,582 (1,943) Book overdraft (17,759) 17,759 Accounts payable (4,182) 3,395 Accrued payroll and related liabilities (11,125) (10,309) Net cash provided by (used in) operating activities 227,771 (179,749) Net increase (decrease) in cash and cash equivalents 227,771 (179,749) Cash and cash equivalents at beginning of year - 179,749 Cash and cash equivalents at end of year $227,771 $ - See auditor's report and accompanying notes to financial statements. - 7 - KBCS 91.3 FM COMMUNITY RADIO NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Organization and Operations - KBCS 91.3 FM Community Radio (the “Station”) is a non-commercial radio station in the Seattle metropolitan market, licensed to the Bellevue College (BC) in Bellevue, Washington. The Station began broadcasting in 1973 as a public service of Bellevue College to entertain, educate and involve a diverse community of listeners with a variety of music, cultural and public affairs programs. This summary of significant accounting policies of the Station is presented to assist in understanding the Station’s financial statements. The financial statements and notes are representations of the Station’s management, who are responsible for their integrity and objectivity.