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GIRL SCOUTS OF CENTRAL INDIANA, INC. FINANCIAL STATEMENTS September 30, 2018


GIRL SCOUTS OF CENTRAL INDIANA, INC. Indianapolis, Indiana FINANCIAL STATEMENTS September 30, 2018

CONTENTS

INDEPENDENT AUDITOR’S REPORT .................................................................................................

1

FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION ........................................................................................

3

STATEMENT OF ACTIVITIES .........................................................................................................

4

STATEMENT OF FUNCTIONAL EXPENSES .................................................................................

5

STATEMENT OF CASH FLOWS .....................................................................................................

6

NOTES TO FINANCIAL STATEMENTS ..........................................................................................

7

SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL, STATE, AND LOCAL AWARDS ........................ 21


Crowe LLP Independent Member Crowe Global

INDEPENDENT AUDITOR’S REPORT

The Board of Directors Girl Scouts of Central Indiana, Inc. Indianapolis, Indiana

Report on Financial Statements We have audited the accompanying financial statements of the Girl Scouts of Central Indiana, Inc. (Council), which comprise the statement of financial position as of September 30, 2018, and the related statement of activities, functional expenses, and cash flows for the nine-month period 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 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.

(Continued) 1.


Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Girl Scouts of Central Indiana, Inc. as of September 30, 2018, and the changes in its net assets and its cash flows for the nine-month period then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, the Council adopted Accounting Standards Update (ASU) 2016-14 – Not-For-Profit Entities (Topic 958): Presentation of Financial Statements of Not-For-Profit Entities. Our opinion is not modified with respect to this matter. Other Matter 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, state, and local awards is presented for purpose 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 schedule of expenditures of federal, state, and local awards has been subjected to the auditing procedures applied in the audit of the financial statements and certain other 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 information is fairly stated, in all material respects, in relation to the financial statements as a whole.

Crowe LLP Indianapolis, Indiana March 8, 2019

2.


GIRL SCOUTS OF CENTRAL INDIANA, INC. STATEMENT OF FINANCIAL POSITION September 30, 2018

ASSETS Cash and cash equivalents Accounts and other receivables Pledges receivable, net (Note 3) Inventories Prepaid expenses Investments (Note 4) Beneficial interest in assets held by others (Note 5) Beneficial interest in perpetual trust (Note 5) Land, buildings, and equipment, net (Note 6) Total assets

$

1,460,791 125,435 185,493 473,930 58,998 6,144,098 116,215 400,656 10,939,315

$ 19,904,931

LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses Due to Girl Scouts USA Deferred revenue Annuity payment liability Capital lease payable (Note 8) Long-term debt (Note 9) Total liabilities

$

331,077 30,497 229,034 44,500 49,999 3,811,735 4,496,842

Net assets Without donor restrictions With donor restrictions (Note 10) Total net assets

13,571,274 1,836,815 15,408,089

Total liabilities and net assets

$ 19,904,931

See accompanying notes to financial statements. 3.


GIRL SCOUTS OF CENTRAL INDIANA, INC. STATEMENT OF ACTIVITIES Nine-month period ended September 30, 2018

Without Donor Restrictions Public support and revenues Public support Contributions United Way allocations Revenues Program, product and Showcase sales revenue, net Program service fees Investment income Other revenue Net assets released from restrictions Total public support and revenues

$

281,172 197,206

With Donor Restrictions

$

Total

123,173 -

$

404,345 197,206

7,547,273 659,956 99,474 31,776 1,251,392

(1,251,392)

7,547,273 659,956 99,474 31,776 -

10,068,249

(1,128,219)

8,940,030

Expenses Program services General and administrative Fundraising

7,731,158 971,299 443,292

-

7,731,158 971,299 443,292

Total expenses

9,145,749

-

9,145,749

Change in net assets before other income, gains and losses Other income, gains and losses Gain on sale of fixed assets Unrealized gain on investments Realized gain on investments Change in value of beneficial interest in assets held by others Change in value of beneficial interest in perpetual trust Change in net assets Net assets, beginning of period Net assets, end of period

922,500

(1,128,219)

(205,719)

10,000 162,481 12,016

-

10,000 162,481 12,016

7,413

-

7,413

191,910

479 479

479 192,389

1,114,410

(1,127,740)

12,456,864

2,964,555

15,421,419

1,836,815

$ 15,408,089

$ 13,571,274

$

(13,330)

See accompanying notes to financial statements. 4.


GIRL SCOUTS OF CENTRAL INDIANA, INC. STATEMENT OF FUNCTIONAL EXPENSES Nine-month period ended September 30, 2018

Program Services Salaries and benefits Professional fees and services Supplies and program expenses Telecommunications Postage and shipping Occupancy Equipment expense Printing and publications Travel and meetings Awards, grants and assistance Interest expense Insurance Other Total expenses before depreciation

$

Depreciation Total expenses

$

3,893,001 111,655 621,001 103,908 36,126 490,018 156,710 178,475 379,963 931,920 103,857 128,894 212,847

General and Administrative $

705,107 121,903 24,855 4,584 7,986 9,894 22,081 4,922 22,195 2,896 372 11,443 7,776

Fundraising $

359,433 17,682 2,089 2,823 3,749 249 4,488 6,908 11,497 1,471 4,331 20,611

Total $

4,957,541 251,240 647,945 111,315 47,861 500,161 183,279 190,305 413,655 936,287 104,229 144,668 241,234

7,348,375

946,014

435,331

8,729,720

382,783

25,285

7,961

416,029

7,731,158

$

971,299

$

443,292

$

9,145,749

See accompanying notes to financial statements. 5.


GIRL SCOUTS OF CENTRAL INDIANA, INC. STATEMENT OF CASH FLOWS Nine-month period ended September 30, 2018

Cash flows from operating activities Change in net assets Adjustments to reconcile change in net assets to net cash from operating activities Depreciation and amortization Gain on disposal of property and equipment Net realized/unrealized gain on investments Change in value of beneficial interest in funds held by others Change in value of beneficial interest in perpetual trust Contributions restricted for long-term investment Change in assets and liabilities Accounts and other receivable Pledges receivable Inventories Prepaid expenses Accounts payable and accrued expenses Deferred Revenue Due to Girl Scouts USA Net cash from operating activities

$

(13,330)

416,029 (10,000) (174,497) (7,413) (479) (10,900) 16,699 67,729 (79,575) (48,710) (168,870) 229,034 13,489 229,206

Cash flows from investing activities Purchases of property and equipment Proceeds from sale of equipment Withdrawals from beneficial interests in assets held by others Purchases of investments Proceeds from sales and maturities of investments Net cash from investing activities

(10,197) 10,000 5,901 (1,134,198) 1,605,605 477,111

Cash flows from financing activities Principal payments on mortgages payable Repayment on bonds payable Repayment on capital lease obligations Payment on annuity obligation Contributions restricted for long-term investment Net cash from financing activities

(59,691) (126,599) (18,888) (3,250) 10,900 (197,528)

Net change in cash and cash equivalents

508,789

Cash and cash equivalents, beginning of year

952,002

Cash and cash equivalents, end of year

$

1,460,791

Supplemental disclosure of cash flow information Cash paid during the year for interest Donated stock

$

104,229 5,000

(Continued) 6.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 1 - DESCRIPTION OF COUNCIL Girl Scouts is the preeminent leadership development organization for girls and the leading authority on girls’ healthy development. Girl Scouting builds girls of courage, confidence, and character, who make the world a better place. Girl Scouts of Central Indiana (Council) is a non-profit organization chartered by Girl Scouts of the USA (GSUSA) to deliver local and regional program opportunities. Girl Scouts of Central Indiana serves more than 40,000 girls in 45 counties across central Indiana. During 2018, the Council changed its reporting year end to September 30 from December 31. These financial statements reflect the nine-month period from January 1, 2018 through September 30, 2018.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting: The Council maintains its accounts on the accrual basis of accounting and prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP). Basis of Presentation: The Council reports information regarding its financial position and activities according to two classes of net assets: Net assets without donor restrictions - Net assets that are not subject to donor-imposed stipulations. Net assets with donor restrictions - Net assets subject to donor-imposed stipulations that may or will be met, either by actions of the Council and/or passage of time. Also included in this category are net assets subject to donor-imposed stipulations that assets be maintained in perpetuity by the Council. Generally, the donors of these assets permit the Council to use all or part of the income earned on any related investments for general or specific purposes. Cash Equivalents: For the purpose of the statement of cash flows, the Council considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents, unless the Board has designated the funds to be reinvested and held for long-term purposes. Girl Scouts Service Areas and Troops establish bank accounts under the Council’s tax identification number. All funds are maintained for the benefit of the girls in the respective Service Areas and Troops. These funds are not under the financial control of the Council and have not been included in the financial statements. Accounts Receivable: Accounts receivable includes amounts owed to the Council from individual Girl Scouts and other parties. The Council does not charge interest on past due accounts. Pledges Receivable: Pledges receivable that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on those amounts are computed using a discount rate commensurate with the risks involved. Amortization of discounts is included in contribution revenue.

(Continued) 7.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Allowances: The Council estimates and records an allowance for uncollectible accounts and pledges receivables. The allowances are based upon prior experience and management’s analysis of specific receivables and promises to give. Losses are charged off to the reserve when management deems further collection efforts will no longer produce additional recoveries. The Council currently considers accounts and other receivables to be fully collectible. Management has established an allowance for doubtful accounts related to pledges receivable. As of September 30, 2018, management has recorded an allowance for doubtful accounts of $22,625 related to pledges receivable. Inventories: Girl Scout supplies and merchandise for resale are stated at the lower of cost or net realizable value on a first-in, first-out basis (FIFO). Investments: Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position. Realized and unrealized gains and losses are included in the change in net assets. Investment income and gains restricted by donors are reported as increases in net assets without restrictions if the restrictions are met (either by passage of time or use) in the reporting period in which the income and gains are recognized. Land, Buildings and Equipment: Expenditures for land, buildings and equipment and items in excess of $5,000 which substantially increase the useful lives of existing assets are capitalized at cost or at fair value at date of gift. Repairs and maintenance costs are expensed as incurred. Depreciation has been computed on straight-line method at rates designed to depreciate the costs of assets over their estimated useful lives as follows: Buildings and improvements Furniture, fixtures and equipment Transportation equipment

10-40 years 3-10 years 5 years

Leasehold improvements and capital leased assets are depreciated over the shorter of the asset’s useful life or the lease term. Revenue Recognition: Public support in the form of contributions, including unconditional pledges and bequests, is recognized when received, net of an allowance for uncollectible pledges. All contributions and bequests, unless specifically restricted by the donor, are considered available for general expenditure. Donor designated United Way funds are also accounted for as contributions. For the nine-month period ended September 30, 2018, there was approximately $44,600 of donor designated funds included in contribution revenue. All donor-restricted contributions are recorded as increases in net assets with donor restrictions. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), net assets are reclassified to net assets without donor restrictions and reported in the statement of activities as net assets released from restrictions. Revenue from program product sales, consisting of Girl Scout Cookies and fall product sales, is recognized when such products are delivered. Such revenue is recorded net of gross receipts allocated to troops and product and related costs. Showcase sales, consisting of the sale of uniforms, pins, badges and other supplies, are recognized at the time of sale and are recorded net of cost of goods sold and product discounts. United Way allocations are recognized over the period designated by the local United Way. Program service fees are recognized when such program services are provided. Program fees received in advance are classified as deferred revenue.

(Continued) 8.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A substantial number of volunteers have donated significant amounts of their time in relation to the Council’s program services; however, no amounts have been reflected in the accompanying financial statements for the value of these donated services because they do not meet the recognition criteria. Deferred Revenue: Deferred revenue consists of advances for event sponsorships and camp and program fees. Revenue is recognized upon the period in which services are rendered or the event is held. Advertising: The Council expenses advertising costs as incurred. Functional and Allocated Expenses: Expenses are charged directly to activities when specifically identifiable. All other costs are allocated to the activities based upon various actual statistical bases. Salaries and related expenses are charged based on the relative amount of time historically spent by personnel. Business and Credit Concentrations: Financial instruments, which potentially subject the Council to concentrations of credit risk, consist principally of temporary cash investments and other marketable securities and investments. The Council places its temporary cash investments with high credit quality financial institutions and from time to time balances may exceed federally insured limits. The Council manages risk on investments by maintaining a diversified portfolio of investments and placing its investments in high quality financial institutions and funds. In addition, the Council utilizes investment consultants to assist in review of investment activity and performance. Program product sales account for a significant portion of the Council’s revenue. Program product sales include the sale of Girl Scout Cookies. Impairment of Long-Lived Assets: On an ongoing basis, the Council reviews its long-lived assets for impairment whenever events or circumstances indicate that the carrying amount may be overstated. The Council recognizes impairment losses if the undiscounted cash flows expected to be generated are less than the carrying value of the related asset. If impaired, the assets are adjusted to fair value based on the discounted cash flows. Management does not believe any long-lived assets are impaired as of September 30, 2018. Income Taxes: The Council is exempt from income taxes on income from related activities under Section 501(c)(3) of the U. S. Internal Revenue Code and corresponding state tax law. Accordingly, no provision has been made for federal or state income taxes. Additionally, the Council is not considered to be a private foundation under Section 509(a) of the Internal Revenue Code. The Council follows guidance issued by the Financial Accounting Standards Board (FASB) with respect to accounting for uncertainty in income taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit will be recorded. The Council does not expect the total amount of unrecorded tax benefits to significantly change in the next 12 months. The Council recognizes interest and/or penalties related to income tax matters in income tax expense. The Council did not have any amounts accrued for interest and penalties at September 30, 2018.

(Continued) 9.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses. Actual results could differ from those estimates. New Accounting Standards: On August 18, 2016, FASB issued ASU 2016-14, Not-for-Profit Entities (Topic 958) – Presentation of Financial Statements of Not-for-Profit Entities. The update addresses the complexity and understandability of net asset classification, deficiencies in information about liquidity and availability of resources, and the lack of consistency in the type of information provided about expenses and investment return. The Council adopted the standard during 2018 and has adjusted the presentation of these financial statements accordingly. Subsequent Events: Management has performed an analysis of the activities and transactions subsequent to September 30, 2018, to determine the need for any adjustments or disclosures to the audited financial statements for the nine-month period ended September 30, 2018. Management has performed their analysis through March 8, 2019, the date the financial statements were available to be issued. NOTE 3 - PLEDGES RECEIVABLE At September 30, 2018, pledges receivable consist of unconditional promises to give from various donors. Pledges that are expected to be collected beyond one year are recorded as present value using a discount rate of 2%. Management determined an allowance for uncollectible pledges of approximately 10% was necessary for the nine-month period ended September 30, 2018. The following is the detail of the pledges receivable balances at September 30, 2018: Amounts Receivable in: Less than one year One to five years Greater than five years

$

88,471 130,000 217,603 (9,485) (22,625)

$

185,493

Less: unamortized present value discounts Less: allowance for doubtful accounts Pledges receivable, net

The Council did not recognize any bad debt expense related to pledges receivable for the nine-month period ended September 30, 2018. NOTE 4 - INVESTMENTS At September 30, 2018, the Council’s investments consist of the following: Equity mutual funds Money market funds Corporate bonds Certificates of deposit Municipal bonds

$

4,131,310 492,860 1,398,439 102,280 19,209

$

6,144,098

Investment fees expense was $20,658 for the nine-month period ended September 30, 2018. (Continued) 10.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 5 - BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS The Council maintains a quasi-endowment fund with a number of Community Foundations throughout the state. The original principal of the funds cannot be committed, granted or expended by the Community Foundations. The funds are shown as an asset on the Council’s financial statements, and an allocation of earnings is available for distribution. The fair value of these beneficial interests at September 30, 2018 is $116,215. Gains of $7,413 on these beneficial interests are included in the statements of activities for the nine-month period ended September 30, 2018. The funds are included in net assets without donor restrictions on the statement of financial position. The Council is also the sole income beneficiary of a perpetual trust administered by an outside party. Under the terms of the trust, the Council has the irrevocable right to receive 100% of the income earned on the trust’s assets in perpetuity, but will never receive the assets held in trust. The marketable securities in the trust are valued at quoted fair values of the underlying bonds and equity investments. The Council’s estimated value of the expected future cash flows from the trust is $400,656 as of September 30, 2018. The change in value of this perpetual trust was $479 for the nine-month period ended September 30, 2018, which is reflected in the statement of activities.

NOTE 6 - LAND, BUILDINGS AND EQUIPMENT At September 30, 2018, the carrying value of land, buildings and equipment consists of the following: Land Buildings and improvements Transportation vehicles Furniture, fixtures and equipment Leasehold improvements

$

Less: accumulated depreciation

509,600 15,651,149 305,210 1,391,642 56,679 17,914,280 (6,974,965)

$ 10,939,315 NOTE 7 - OPERATING LEASES The Council leases office space under non-cancelable operating leases that expire at various dates through November 2022. The Council also leases certain equipment under various non-cancelable operating leases, which expire at various dates through November 2022. Future minimum lease payments under operating leases at September 30, 2018, are as follows: 2019 2020 2021 2022 2023

$

74,949 74,557 52,048 42,451 3,246

Total future minimum payments

$

247,251

Operating lease expenses for the nine-month period ended September 30, 2018 were $58,052.

(Continued) 11.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 8 - CAPITAL LEASE PAYABLE In 2015, the Council entered into a capital lease agreement for copiers, which expires in November 2020. Principal and interest payments of $2,653 are due monthly. In 2016, the Council entered into a capital lease agreement for optic fibers, which expires in May 2021. Principal and interest payments of $449 are due monthly. The amount of equipment and related amortization recorded under the capital leases are as follows: Furniture, fixtures and equipment Accumulated amortization

$

113,739 (61,897)

$

51,842

Amortization of assets held under capital leases is included with depreciation expense. Future minimum lease payments under the capital lease at September 30, 2018, are as follows: 2019 2020 2021 Total

$

Interest due

25,181 25,181 3,594 53,956 (3,977)

$

49,999

NOTE 9 - LONG-TERM DEBT Long-term debt consists of the following at September 30, 2018: Series 2015A bond payable with interest only monthly payments starting on December 1, 2015 at a fixed interest rate of 3.10%, with principal payments starting on December 1, 2017, secured by real estate and maturing November 2027.

$ 1,601,996

Series 2015B bond payable with interest only monthly payments starting on December 1, 2015 at a variable interest rate of 65% of the 1-month LIBOR plus 1.30% until November 1, 2017 when the rate increases to 2.25% plus the 1-month LIBOR (3.62% at September 30, 2018). Principal payments beginning on December 1, 2027, secured by real estate and maturing November 2042.

1,750,000

Mortgage payable in monthly payments, including variable interest at the one year treasury weekly average plus 3.00% (5.44% at September 30, 2018), secured by real estate and maturing August 2024.

51,645

Mortgage payable in monthly payments of $6,609, including interest at 3.28% as of September 30, 2018, respectively, secured by real estate and maturing August 2025. Bond issuance cost, net of accumulated amortization Total long-term debt

480,044 3,883,685 (71,950) $ 3,811,735

(Continued) 12.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 9 - LONG-TERM DEBT (Continued) On November 18, 2015, the Indiana Finance Authority (IFA) issued Educational Facilities Revenue Bonds, Series 2015A and Series 2015B, totaling $3,500,000 to the Council to fund the construction of the Leadership and Adult Learning Center at Camp Dellwood. The bonds are funded as draws as requested by the Council. The bonds are a direct purchase by a financial institution and do not require a letter of credit. The bond issuances are subject to certain covenants, primarily financial coverage ratios, with which the Council has reported compliance. Long-term debt is presented on the statement of financial position net of bond issuance costs related to the bonds payable of $71,950 for the nine-month period ended September 30, 2018. Estimated future principal payments due on long term debt are: 2019 2020 2021 2022 2023 Thereafter

$

227,716 235,144 242,900 250,918 258,019 2,668,988

$ 3,883,685 Interest expense was $104,229 for the nine-month period ending September 30, 2018.

NOTE 10 - NET ASSETS WITH DONOR RESTRICTIONS Net assets with donor restrictions are restricted for the following purposes or periods: 2018 Subject to expenditure for specified purposes: Membership outreach Capital campaign Capital improvements Other

$

Subject to the Council’s spending policy and appropriation: Endowment funds restricted in perpetuity

Illiquid assets not subject to the Council’s spending policy or appropriation: Land Beneficial interest in perpetual trust

Total net assets with donor restrictions

806,253 173,542 7,600 102,018 1,089,413

106,746

240,000 400,656 640,656 $ 1,836,815

(Continued) 13.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 10 - NET ASSETS WITH DONOR RESTRICTIONS (Continued) Net assets released from donor restrictions are as follows: 2018 Membership outreach Capital campaign Capital improvements Other

$ 1,059,685 50,184 17,535 123,988 $ 1,251,392

NOTE 11 - PENSION PLAN The Council participates in the Retirement Plan of the GSUSA, a noncontributory defined benefit multiemployer pension plan (Plan) sponsored by GSUSA. The risks of participating in this multi-employer plan are different from single-employer plans in the following respects: a) Assets contributed to the Plan by one employer may be used to provide benefits to employees of other participating employers. b) If a participating employer stops contributing to the Plan, the unfunded obligations of the plan may be borne by the remaining participating employers. c) If the Council chooses to stop participating in the Plan, the Council may be required to pay those plans an amount based on the Council’s proportionate share of unfunded vested plan benefits, referred to as a withdrawal liability. The National Board of GSUSA voted to freeze the plan to new entrants and to freeze future benefit accruals for all current participants under the plan effective July 31, 2010. The plan covers substantially all of the employees of various Girl Scout councils who were eligible to participate in the plan prior to the plan freeze. Accrued and vested benefits prior to July 31, 2010 are based on years of service and salary levels. The Council’s participation in the plan is outlined in the table below. “EIN/Pension Plan Number” provides the Employee Identification Number (EIN) and the three-digit plan number. “FIP/RP Status” indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. There have been no significant changes that affect the comparability of 2018 contributions. Plan Pension Fund

Retirement Plan of the Girl Scouts of the USA

EIN/Pension Plan Number Council Contributions – Nine-month period - 9/30/2018 Plan Year-End of Most Recent Form 5500 Filing FIP/RP Status Surcharge Imposed Council Contributed more than 5% of Total Contributions

13-1624016 $438,156 12/31/2017 N/A No No

(Continued) 14.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 11 - PENSION PLAN (Continued) Due to the nature of the Plan, it is not practicable to determine the extent to which the assets of the Plan cover the actuarially computed value of vested benefits for the Council as a stand-alone operation. In addition, because the Plan is considered a multi-employer plan, it is only subject to certain minimum reporting requirements. As of December 31, 2017, the date for which the most current information is available, the Retirement Plan of the Girl Scouts of the USA had assets of $441,603,963 and liabilities of $553,558,827 for a net funded status of $(111,954,864). The Council expects to make contributions totaling approximately $584,000 to the Plan during the year ending September 30, 2019. NOTE 12 - RETIREMENT PLAN The Council maintains a 403(b) thrift plan that matches 3% of contributions made by employees. In addition, the Council makes contributions of 2% and 4% based on years of service. The Council contributed $126,402 to the plan for the nine-month period ended September 30, 2018. NOTE 13 - RELATED PARTY Girl Scouts of Central Indiana is chartered by GSUSA to use the name, marks and programs of the national organization. The Council collected and subsidized annual dues on behalf of GSUSA totaling $347,160 for the nine-month period ending September 30, 2018, and passed through the amounts to GSUSA. In addition, the Council purchased uniforms and other sales items from GSUSA Equipment totaling $440,214 and paid $72,153 for software licenses for the nine-month period ending September 30, 2018. NOTE 14 - EMPLOYEE SELF-INSURANCE PROGRAM The Council has adopted a partially self-funded insurance plan for employee medical and prescription drug insurance. Expenses are recorded as incurred. Insurance policies in force at September 30, 2018 limit the Council’s maximum claims cost to approximately $807,000 and the maximum claim liability per covered individual to $40,000. Actual claims costs were $641,984 for the nine-month period ended September 30, 2018. The Council’s portion of the predetermined funding provision is charged to expense each month. Unpaid claims incurred prior to September 30 and filed within three months of year-end are accrued at September 30. This liability is part of accrued expenses on the statement of financial position. NOTE 15 - COMMITMENTS AND CONTINGENCIES The Council is involved, from time to time, in claims and legal actions arising in the course of operations. At September 30, 2018, there are no matters that have a material effect on the Council’s financial statements. NOTE 16 - COST OF SALES Net product sales for the nine-month period ended September 30, 2018:

Sales Cost of sales Net Sales

Cookie Sales

Product Sales

Showcase Sales

Total

$ 12,859,257 (5,521,388)

$

2,471 -

$

590,471 (383,538)

$ 13,452,199 (5,904,926)

$ 7,337,869

$

2,471

$

206,933

$ 7,547,273

(Continued) 15.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 17 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the Council’s principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, the Council uses the fair value hierarchy. GAAP describes three levels of inputs that may be used to measure fair value: Level 1: Inputs include quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Inputs include significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs include significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. Pursuant to the adoption of ASU 2015-07, Fair Value Measurement, those investments which are valued at net asset value are excluded from the fair value hierarchy. The fair value of mutual funds and money market funds are based on quoted prices in active markets. This is considered a level 1 input. The fair value of the certificates of deposit, U.S. Treasury bills, corporate and municipal bonds are based on similar investments over the same period at specific rates. These are considered a level 2 input. The valuations of the level 2 investments are determined using the market or income approach. The fair value of beneficial interest in assets held by various community foundations is based upon the Council’s proportionate share of the community foundations’ pooled investment portfolio. The Council's management reviews the valuations and returns in comparison to industry benchmarks and other information provided by the community foundations. The Council uses the net asset value (NAV) to determine beneficial interest in assets valuation using the market approach. The Council does not have the ability to redeem the beneficial interests in assets on a short-term basis. Withdrawals are limited to the terms of the Council's agreements with the various community foundations.

(Continued) 16.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 17 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) The fair value of beneficial interest in trust assets (or any type of beneficial interest) is based on a valuation model that calculates the present value of estimated distributed income. The valuation model incorporates assumptions that market participants would use in estimating future distributed income. The Council is able to compare the valuation model inputs and results to widely available published industry data for reasonableness. If not readily comparable to published data, then the Council would have to develop a model similar to the above for a Level 3 input. Since the Council does not have the ability to redeem these beneficial interests on a short-term basis, they are classified as Level 3 valuations. Assets measured at fair value on a recurring basis for 2018 are summarized below: Fair Value Measurements Level 1 Assets: Money market funds Equity mutual funds Certificates of deposit Corporate bonds Municipal bonds Total investments

$

492,860 4,131,310 4,624,170

Beneficial interest in assets held by others Beneficial interest in perpetual trust Total

Level 2 $

Funds Valued at NAV

Level 3

102,280 1,398,439 19,209 1,519,928

$

-

$

-

-

-

-

116,215

-

-

400,656

-

$ 4,624,170

$ 1,519,928

$

400,656

$

116,215

The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine-month period ended September 30, 2018: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Beneficial Interest in Perpetual Trusts Beginning balance Withdrawals and fees Change in value of beneficial interest

$

400,177 (10,628) 11,107

Ending balance

$

400,656

(Continued) 17.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 18 - ENDOWMENT COMPOSITION DISCLOSURE The Council’s endowment contains funds held for the benefit of the Council at various community foundations in Indiana. It has been determined that all amounts contributed to the foundations were from the Council’s own contributions to the funds and are considered to be part of the without donor restriction portion of the endowment. The endowment also includes other restricted funds which are held as part of the Council’s investments. The allocated interest for this endowment is considered to be available for general expenditure. A beneficial interest in a perpetual trust has been included in the with donor restrictions piece of the endowment. However, the beneficial interest in perpetual trust is not legally subject to SPMIFA, because the Board does not have the ability to control the investments and spending policy of this trust. As of September 30, 2018, the Council had the following endowment net asset composition by type of fund: Without Donor Restrictions Donor-restricted endowment funds Beneficial interest in perpetual trust Board designated funds held by community foundations Total funds

$

$

-

With Donor Restrictions

$

Total

106,746

$

106,746

-

400,656

400,656

116,215

-

116,215

116,215

$

507,402

$

623,617

Changes in endowment net assets for nine-month period ended September 30, 2018: Without Donor Restrictions Net assets, beginning of year Net investment return Gifts Appropriation of endowment assets for expenditure Net assets, end of year

$

$

114,703 6,027 (4,515) 116,215

Original Gift Amount $

$

506,923 479 507,402

Total $

$

621,626 6,506 (4,515) 623,617

Interpretation of SPMIFA: The Council has interpreted the State Prudent Management of Institutional Funds Act (SPMIFA) as requiring the preservation of the fair value of the original gift as of the date of the donor-restricted endowment funds, unless there are explicit donor stipulations to the contrary.

(Continued) 18.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 18 - ENDOWMENT COMPOSITION DISCLOSURE (Continued) As a result of this interpretation, the Council retains in perpetuity (a) the original value of initial and subsequent gifts donated to the endowment, and (b) any accumulations to the endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added. Donor-restricted amounts not retained in perpetuity are subject to the appropriation for expenditure by the Council in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Council considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) The duration and preservation of the fund (2) The purposes of the organization 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 of investments (6) Other resources of the organization (7) The investment policies of the organization Spending Policies of the Endowment Funds: The endowments held at the various community foundations have adopted a spending policy based on the guidance of the community foundations. On average, the community foundations set a suggested spending policy of 5% of the fund balance. This policy is subject to change based on market and other factors. The endowments held as part of the pooled investments have been designated as net assets with donor restrictions. All but one of the donor-restricted funds has allowed the income from these funds to be available for general expenditure. One of the donor-restricted funds has a restriction based on the donor guidance. The Council has adopted the policy that interest and dividends only will be allocated to the fund and held as net assets with donor restriction until appropriated for expenditure. Return Objectives and Risk Parameters: The Council has adopted investment and spending policies for endowment assets that attempt to preserve the capital, maximize the return within reasonable and prudent levels of risk, and provide a return to the restricted funds. Endowment assets are comprised of the assets of donor-restricted funds that the organization must hold in perpetuity. Under this policy, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield a return while assuming a moderate level of investment risk. Actual returns in any given year may vary from this amount. Strategies Employed for Achieving Objectives: To satisfy its long-term rate-of-return objectives, the Council relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). Funds with Deficiencies: As of September 30, 2018, the Council did not have any funds with deficiencies.

19.


GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2018

NOTE 19 - LIQUIDITY AND AVAILABILITY The Council’s financial assets available for general expenditure, that is, without donor or other restrictions limiting their use, within one year of the statement of financial position date comprise the following: Financial assets at year-end: Cash and cash equivalents Accounts and other receivables Pledges receivable, net Investments Beneficial interest in assets held by others Beneficial interest in perpetual trust Total financial assets

$ 1,460,791 125,435 185,493 6,144,098 116,215 400,656 8,432,688

Less amounts not available for general expenditure within one year: Pledges receivable restricted by donor Donor-restricted endowment funds Beneficial interest in assets held by others Beneficial interest in perpetual trust

185,493 106,746 110,404 400,656

Financial assets not available to be used within one year

803,299

Financial assets available to meet general expenditures within one year

$ 7,629,389

The Council has certain donor-restricted assets limited to use which are available for general expenditures within one year in the normal course of operations. Accordingly, these assets have been included in the quantitative information above for financial assets to meet general expenditures within one year. As part of the Council’s liquidity management plan, the Council invests its financial assets to be available as its general expenditures, liabilities, and other obligations come due.

20.


SUPPLEMENTARY INFORMATION


GIRL SCOUTS OF CENTRAL INDIANA, INC. SCHEDULE OF EXPENDITURES OF FEDERAL, STATE, AND LOCAL AWARDS Nine-month period ended September 30, 2018

Grantor/ Program Title Department of Education Passed through the Indiana Department of Education: Summer Food Service Program for Children

CFDA Number

10.559

Amount

$

37,822

21.

Profile for Girl Scouts of Central Indiana

2018 Financial Statement  

2018 Financial Statement  

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