FY1994/95 Financial Statements ti BOARD OF COUNTY COMMISSIONERS
, - � MAYOR Shirle Freeman, District 3
AUNTY 0 MAN ROE U. �:�� Mayor Pro tem . ack London, District 2
KEY WEST FLORIDA 33040 _ y *+ v .4
4 �; Wilhelmina Harvey. District I
(305)294 -4641 0
r 'f ., Keith Douglass. District 4
Ate: — Mary Kay Reich. District 5
Office of Management & Budget i5 ' ~'
5100 College Road �.....-
F Ji 4
Key West , FL 33040 p i 3 �,ii
voice: (305) 292 -4470 V: � MVN
fax: (305) 295 -4320 ,"'
MEMORANDUM
Date: June 28, 1996
To: Danny Kolhage, Clerk of Courts
From: John Carter, OMB Director -
■
Through: James Roberts, County Administrate v
Subject: Upper Keys Red Cross
I have reviewed the American Red Cross Greater Miami Chapter financial statements and
accountant's report, copy attached, as requested. It is my opinion that the audited financial
statements, together with the independent auditor's report for the years ended June 30, 1995 and •
1994, satisfies the County's requirements for independently audited financial statements and
provides reasonable assurance that the information is free of material misstatement. j
R
r
Please continue to process bill payments for the Upper Keys American Red Cross in accordance 1
with the normal contract provisions.
E
Please refer questions to me on 292 -4482.
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AMERICAN RED CROSS,
GREATER MIAMI CHAPTER
Financial Statements and Supplemental
Schedules for the Years Ended
June 30, 1995 and 19g and
Independent Auditors Report
DeloitbeTouche
Tohmatsu
International
♦ t
AMERICAN RED CROSS, GREATER MIAMI CHAPTER
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Balance Sheets as of June 30, 1995 and 1994 3
Statement of Support, Revenues, Expenses
and Changes in Fund Balances for the
Year Ended June 30, 1995 (with Comparative
Totals for 1994) 4
Statement of Functional Expenses for the
Year Ended June 30, 1995 (with Comparative
Totals for 1994) 5
Notes to Financial Statements 6 -12
SUPPLEMENTAL SCHEDULES:
Schedule of Current Restricted Funds Assets,
Liabilities, Deferred Revenues and Fund
Balances as of June 30, 1995
(with Comparative Totals for 1994) 13
Schedule of Current Restricted Funds Support,
Revenues, Expenses and Changes in Fund
Balances for the Year Ended June 30, 1995
(with Comparative Totals for 1994) 14
}
•
Deloitte &
Touche «P
/\ Certified Public Accountants Suite 2500
100 Southeast Second Street
Miami, Florida 33131 -2135
Telephone: (305) 358 -4141
Facsimile: (305) 372 -3160
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of the American Red Cross,
Greater Miami Chapter:
We have audited the accompanying balance sheets of the American Red Cross, Greater Miami Chapter
(the "Chapter ") as of June 30, 1995 and 1994, and the related statements of support, revenues, expenses
and changes in fund balances, and of functional expenses for the years then ended referred to in the
foregoing Table of Contents. These financial statements are the responsibility of the Chapter's
management. Our responsibility is to express an opinion on these financial statements based on our
audits. -
We conducted our audits in accordance with generally accepted auditing standards and Government
Auditing Standards issued by the Comptroller General of the United States. Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
- supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of
the Chapter at June 30, 1995 and 1994, and the results of its operations and changes in its fund balances
for the years then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated August 18, 1995
on our consideration of the Chapter's internal control structure and a report dated August 18, 1995 on
its compliance with laws and regulations.
•
DeloitteTouche
Tohmatsu
International
Our audits were made for the purpose of forming an opinion on the financial statements taken as a
whole. The accompanying supplemental schedules listed in the foregoing Table of Contents, which are
also the responsibility of the management of the Chapter, are presented for purposes of additional •
analysis and are not a required part of the basic financial statements of the Chapter. Such supplemental
schedules have been subjected to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, are fairly presented in all material respects when considered in relation to .
the basic financial statements taken as a whole.
DA1 tPAAL LLf
August 18, 1995
•
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AMERICAN RED CROSS, GREATER MIAMI CHAPTER
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1995 (WITH COMPARATIVE TOTALS FOR 1994)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The accompanying financial statements include only the accounts of the American Red
Cross, Greater Miami Chapter (the "Chapter ") and not the accounts of the Blood Services South Florida
Region operations ('Blood Services ") of the American National Red Cross (see Note 8). The Chapter
provides programs of education and assistance to the public.
All assets of the Chapter, as shown on the balance sheets, are held by the Chapter as agent of and in trust
for the benefit of the American National Red Cross ( "National ") and are subject to the rules and
regulations of a special authority granted by the Board of Governors of National.
Fund Accounting - To ensure observance of limitations and restrictions placed on the use of the
resources available to the Chapter, the accounts of the Chapter are maintained in accordance with the
principles of fund accounting. This is the procedure by which resources for various purposes are
classified for accounting and reporting purposes into funds according to their nature and purpose.
Separate accounts are maintained for each fund; however, in the accompanying financial statements,
funds that have similar characteristics have been combined into fund groups.
Externally restricted funds may only be utilized in accordance with the purposes established by the source
of such funds and are in contrast with unrestricted funds over which the Board of Directors retains full
control. Externally restricted amounts received but not yet earned are reported as restricted deferred
revenues.
Land, buildings and equipment funds include resources that have been or are to be invested in land,
buildings and equipment.
Endowment funds represent funds that are subject to restrictions of gift instruments requiring in perpetuity
that the principal be invested and the income only be used.
Inventories - Supplies inventories purchased for use in the Chapter are carried at cost, which is less than
the estimated fair market value.
Investments - Investments are recorded at cost or, if received as a gift, at fair value at date of gift and are
subsequently carried at the lower of aggregate cost or market. Realized gains or losses are determined by
the specific identification method and are recorded in the fund which owns the investments.
Land, Buildings and Equipment - Land, buildings and equipment are recorded at cost, if purchased, or
at estimated market value at the date of the gift, if donated. The Chapter follows the practice of
capitalizing all expenditures for land, buildings and equipment with an estimated useful life of three or
more years and cost in excess of $1,000. Depreciation is computed using the straight -line method over
the estimated useful lives of the assets, which range from three to forty-five years. Depreciation expense
approximated $64,800, and $16,800, for the fiscal years ended June 30, 1995"and 1994, respectively.
-6-
Chapter Assessment - The Chapter is required to pay to National a fixed monthly fee. Such fee is
determined by National based upon demographic data and past operating history and is intended to reflect
the Chapter's fair share of the cost of services provided and programs administered both nationally and
internationally by National (see Note 7).
Shared Expenses - The Chapter and the operations of the American Red Cross, Blood Services,
South Florida Region shared common facilities, equipment and certain personnel for a portion of fiscal
year 1995 and all of fiscal year 1994. These costs are allocated between the Chapter and Blood Services
using a basis appropriate for the shared service (see Note 9).
Donated Materials - Donated materials and equipment are reflected as contributions in the accompanying
statements at their estimated value at date of receipt.
Donated Services - No amounts have been reflected in the financial statements for donated services
inasmuch as no objective basis is available to measure the value of such services; however, a substantial
number of volunteers have donated significant amounts of their time to the Chapter. -
Other Gifts, Grants and Support - Unrestricted gifts, restricted gifts and grants are recorded as revenue
when received unless specifically restricted by the contributor for use in a future period. Gifts other than
cash are recorded at their estimated fair market value at the date of contribution. Special events and
membership contributions are recorded net of related expenditures.
Income Taxes - The Chapter is exempt from income taxes under Section 501(c)(3) of the Internal
Revenue Code. Accordingly, no provision for federal or state income taxes has been made in the financial
- statements.
New Accounting Pronouncements - During 1993, the Financial Accounting Standards Board (FASB)
issued the Statement of Financial Accounting Standards No. 116, Accounting for Contributions Received
and Contributions Made ( "SFAS No. 116 ") and the Statement of Financial Accounting Standards
No. 117, Financial Statements ofNot- For - Profit Organizations ( "SFAS No. 117 ").
SFAS No. 116 establishes accounting standards for contributions. The provisions of this statement
require that contributions received, including unconditional promises to give (pledges), be recognized as
revenues in the period pledged at their fair value. It will also require an entity to recognize donated
services in certain instances. This statement is effective for fiscal years ending after December 15, 1995.
SFAS No. 117 establishes standards for general purpose external financial statements provided by a
not - for - profit organization. This statement is effective for annual financial statements issued for fiscal
years beginning after December 15, 1994. -
SFAS No. 117 and No. 116 have not been adopted by the Chapter as of June 30, 1995. The impact of
adopting these pronouncements are not expected to have a material impact on total fund balance except
for the classification and presentation of net assets.
•
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2. INVESTMENTS
Investments include participation units in the endowment fund of National. National's endowment fund
provides for separate investments in fixed income and/or equity stocks or equivalents.
Carrying values, quoted market values and unrealized appreciation at June 30, 1995 and 1994, are
summarized as follows:
1995 1994
Carrying Market Unrealized Carrying Market Unrealized
Values Value Appreciation Values Value Appreciation
Unrestricted Fund:
Barnett Bank Emerald
Money Market Fund S251,002 S 251,002 S366,509 $366,509
Endowment Fund:
American National
Red Cross:
Fund "B" 8,672 9,021 S 349 8,672 8,779 S 107
Fund "C" 3,688 8,535 4,847 3,688 7,470 3,782
Fund "E" 1,654 4,128 2,474 1,654 3,427 1,773
Total 14,014 21,684 7,670 14,014 19,676 5,662
Total S265,016 S 272,686 S7,670 S380,523 S386,185 S5,662
3. LAND, BUILDINGS AND EQUIPMENT
Land, buildings and equipment at June 30, 1995 and 1994, are summarized as follows:
1995 1994
Land $ 295,000
Buildings and improvements 598,881
Furniture and equipment 307,081 $ 204,163
Transportation vehicles 138,712 144,340
Total 1,339,674 348,503
Less accumulated depreciation 207,453 149,800
Total $ 1,132,221 $ 198,703
During the year ended June 30, 1994, the Chapter received and expended restricted contributions
approximating $138,000 for the purchase of four Emergency Response Vehicles. During fiscal year 1994
and the first half of fiscal year 1995, the Chapter's Financial Development Department rented space on a
month -to -month basis in a facility which is leased by Blood Services. Rent expense for the years ended
June 30, 1995 and 1994, was $13,930 and $20,209, respectively, and included a proportionate allocation
for maintenance costs, property taxes and insurance premiums.
-8-
The Chapter also leases office space for its branches as well as a warehouse. The leases are
noncancelable and are accounted for as operating leases. Future minimum lease payments required under
operating noncancelable leases at June 30, 1995 are as follows:
Year Ending June 30, -
•
1996 - $12,500
1997 - 12,900
1998 13,300
1999 10,200
Total $ 48,900
Rent expense on operating leases approximated $18,300 during the year ended June 30, 1995.
During the fiscal year ended June 30, 1992, the Chapter sold a building. Under the terms of the sale
agreement, the Chapter received a $150,000 note receivable from the purchaser secured by a first
mortgage on the building, bearing interest at a variable rate equal to prime plus 2% (8 1/2% at June 30,
1995 and 1994) over a -tern of seven years. Annual payments of $28,500 are due to the Chapter in
monthly installments which commenced on July 1, 1992.
On August 24, 1992, the Chapter's Homestead branch located in Dade County, Florida was destroyed as
a result of Hurricane Andrew. Consequently, the Chapter received approximately $389,900 in proceeds
from a settlement with its insurance company during the year ended June 30, 1993. Management decided
not to rebuild the Chapter's Homestead Branch and earmarked a portion of these monies for the purchase
of a new building for the Chapter's headquarters offices.
During the fiscal year ended June 30, 1994, the Chapter sold the Homestead Branch property for
approximately $78,000 and recognized a gain of approximately $70,500, which is included in other
revenues in the land, buildings and equipment fund.
On July 13, 1995, the Chapter purchased a building for its headquarter offices at a purchase price of
approximately $660,000. In connection with the purchase, the Chapter obtained a mortgage with a local
bank for $688,500 (see Note 4). The Chapter expended approximately $225,000 for improvements to the
building.
•
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4. MORTGAGE NOTE PAYABLE
In connection with the purchase of a headquarters building on July 13, 1995, the Chapter obtained a
mortgage note payable from a local bank for $688,500, bearing interest at a fixed rate of 8.25 %. The
note is payable over five years with annual payments of $70,398 (including interest) due in monthly
installments commencing on August 1, 1994 through June 30, 1999. A balloon payment of $576,335 for
the unpaid principal balance is also due on June 30, 1999. The note is secured by the headquarters' land
and building and tenant leases. Scheduled principal payments for the fiscal years ending June 30 are as
follows:
Amount
1996 $ 17,072
1997 18,546
1998 20,135
1999 598,196
Total principal due $ 65 .— 9 9
5. GIFTS AND GRANTS
United Way approves an allocation of funds raised in its annual fund campaign to the Chapter, prior to
the end of the Chapter's current fiscal year. These funds are to be used by the Chapter in the subsequent
• fiscal year. The United Way then remits monthly donations to the Chapter on a pro rata basis. The
Chapter records the allocation as a receivable and deferred contribution designated for future periods at
the time of grant (approximately four months prior to the Chapter's fiscal year end) and recognizes the
contribution as public support on a pro rata basis over the fiscal year in which the funds are received.
The Chapter receives various federal, state and local cash awards which are reported in the restricted
fund. In addition, the Chapter receives noncash awards in the form of food commodities from the State of
Florida, Department of Agriculture and Consumer Services (the "State ") for distribution to eligible needy
households through the Emergency Food Assistance Program. All distribution is performed through
various community centers located in South Florida. During the year ended June 30, 1995, the Chapter
distributed approximately $707,696 in food commodities and at June 30, 1995, the Chapter held no food
in inventory. The Chapter does not record these commodities in its financial statements as the Chapter
only distributes and administers the program.
6. DISASTER RELIEF FROM NATIONAL
• During the year ended June 30, 1995, the Chapter expended $267,912 to assist families in local disasters.
National reimburses the Chapter for certain recurring disaster relief expenses above the Chapter's
budgeted amount which was $192,000 for 1995. Fiscal year 1995 will be the last year the Chapter is
reimbursed for recurring disasters. Non- recurring disasters are reimbursed 100 %.
During the year ended June 30, 1994, the Chapter expended $282,054 to assist families in local disasters.
- 10 -
7. CHAPTER ASSESSMENT
As discussed in Note 1, the Chapter is required to pay National a fixed monthly fee which is determined -
by National based on the Chapter's demographic data and past operating history. The Chapters'
assessment amounted to $540,159 and $469,788 for the years ended June 30, 1995 and 1994,
respectively. In 1995, management negotiated a forgiveness of $257,000 in the amounts due to National
resulting from the fiscal years ended June 30, 1993 and 1992 Chapter assessments. The assessments due
to National at June 30, 1995 are as follows:
Fiscal
Year Unpaid
Assessment Balance
1992 $ 51,759
1993 432,363
1994 -0-
1995 170,159
Total $ 654,281
Such amount is included in the balance of due to National and other Red Cross affiliates at June 30, 1995
in the accompanying financial statements.
Future Chapter assessments are to be paid ratably throughout each year except the 1993 and 1995
assessment due of $602,522 at June 30, 1995 and $197,000 of the total 1996 assessment of $597,000 will
be deferred to 1999. The Chapter has an agreement with National to pay $80,000 a year for 10 years
beginning in 1999. If the Chapter has more than 75 days of cash at June 30 in any given fiscal year, the
excess cash must be paid to National to reduce the debt outstanding. The 1992 remaining assessment
balance of $51,759 will be eliminated through future Combined Federal Campaign Contributions (CFC)
credits.
8. RETIREMENT PLAN
The Chapter participates in a defined benefit retirement plan (the "Plan ") administered by the Retirement
System of National that covers substantially all full -time employees.
For funding purposes under the Plan, normal pension costs are determined by the projected unit credit
method and are funded currently. The Plan provides a pension funded by the employer. Voluntary
contributions may be made by active members to fund an optional annuity benefit. Defined benefits are
based on years of service and/or age and the employee's financial average compensation, which is
calculated using the highest consecutive 48 months of the last 120 months' service before retirement.
Annual contributions equal four percent of the Chapter's total annual payroll expense for fiscal year 1995.
National is a single corporate legal entity composed of approximately 2,200 operating units (chapters,
regional blood services regions and the national sector). Accordingly, the Plan includes numerous
participating chapters and regional blood services regions. It is not practicable for the actuary to compute
accumulated and projected benefit obligations for individual chapters or regional blood services regions.
Accumulated and projected benefit obligations and other required disclosures for National (including all
participating chapters, regional blood services and the national sector) are presented in the combined
financial statements of National.
- 11 -
•
9. RELATED PARTIES
As discussed in Note 1, the Chapter and Blood Services share expenses for the use of common facilities,
equipment and certain personnel. Shared expenses for the year ended June 30, 1995 and 1994
approximated $67,239 and $129,400, respectively. At June 30, 1995 and 1994, the Chapter owed Blood
Services approximately $28,530 and $36,000, respectively, for shared expenses and other reimbursable
expenses which are included in Due to National and other Red Cross affiliates in the accompanying
financial statements.
10. POSTRETIREMENT BENEFITS
National provides medical and dental benefits to eligible retirees and their eligible dependents. Generally,
retirees and employer units pay a portion of the premium costs and the medical and dental plans pay a
stated percentage of expenses reduced by deductibles and other coverage. National has the right to
modify cost- sharing provisions at any time. In addition, life insurance benefits of $5,000 are provided
with no contributions required from the retirees. Life insurance benefits are generally provided by
insurance contracts.
Postretirement benefits are accrued over the period the employer provides services to the organization.
Since Red Cross is one corporate entity and most retirees participate in the single Red Cross benefits plan,
providing separate disclosures for retirees associated with individual chapters or Blood Services regions is
not practicable. Annual postretirement benefits expenses are recorded and disclosed for the entire
American Red Cross in its consolidated financial statements.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS •
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments for which it is practicable to estimate that value:
• Cash and short-term investments - The carrying amount approximates fair value because of the
short maturity of those instruments.
•
• Long -term debt and due to National - The fair value is estimated based on current rates offered
for debt of the same remaining maturities.
• Accounts receivables and payables - The carrying amount approximates fair value due to the
short-term nature of these accounts.
•
The estimated fair values of financial instruments are as follows:
1995
Carrying Fair
Amount Value
Cash $ 125,214 $ 125,214
Investments 265,016 272,686
Long -term debt (653,949) (653,949)
Due to National (650,527) (450,000)
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