FINANCIAL STATEMENTS OF SHENANDOAH VALLEY ACADEMY
June 30, 2014, 2013, 2012, 2011, and 2010
Audited Financial Statements SHENANDOAH VALLEY ACADEMY June 30, 2014, 2013, 2012, 2011, and 2010
TABLE OF CONTENTS
Auditor’s Opinion on the Financial Statements ........................................................................................ 1 - 2 Statements of Financial Position ................................................................................................................... 3 Statements of Changes in Net Assets .......................................................................................................... 4 Statements of Cash Flows ............................................................................................................................ 5 Notes to the Financial Statements ......................................................................................................... 6 - 16
To the Constituents Shenandoah Valley Academy New Market, Virginia
We have audited the accompanying financial statements of Shenandoah Valley Academy (Organization), which comprise the statements of financial position as of June 30, 2014, 2013, 2012, 2011, and 2010, and the related statements of changes in net assets and statements of 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 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 qualified audit opinion.
1
Basis for Qualified Opinion The Organization included in these financial statements the cost and accumulated depreciation of land, land improvements, and buildings to which a related entity holds legal title. Accounting principles generally accepted in the United States of America require the cost and accumulated depreciation of land, land improvements, and buildings to be included in the financial statements of the Organization that owns them. In the absence of a written agreement stating otherwise, land improvements and buildings are considered to be owned by the legal title-holder of the land upon which they are located. The effects of including these properties in the financial statements of the Organization are to overstate total assets and net assets by $5,361,833, 5,607,045, $5,823,663, $6,056,454, and $6,263,354 at June 30, 2014 and 2013, 2012, 2011, and 2010, respectively, and to understate the change in net assets by $245,212, $216,618, $232,791, $237,915, and $182,768, respectively, for the years then ended. Qualified Opinion In our opinion, except for the effects of the matter discussed in the Basis for Qualified Opinion paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Shenandoah Valley Academy as of June 30, 2014 and 2013, 2012, 2011, and 2010, 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.
July 24, 2015
2
SHENANDOAH VALLEY ACADEMY Statements of Financial Position June 30, 2014, 2013, 2012, 2011, and 2010
2014 Total ASSETS Current assets Cash and cash equivalent (Note 2) Accounts receivable, net (Note 4) Inventory (Note 5) Prepaid expense Cash held for agency accounts (Note 2) Total current assets
$
Plant assets, net (Note 6) Other assets Cash held for: (Note 2) Unexpended plant Endowment fund Investments (Note 3) Beneficial interest in Potomac Conference endowment (Note 4) Accounts receivable (Note 4) Columbia union revolving fund deposits at 1.25% Total other assets Total assets LIABILITIES Current liabilities Accounts payable (Note 7) Agency funds Capital lease liability, current portion (Note 9) Deferred income Total current liabilities
$
$
Other liabilities Notes payable, plant (Note 8) Accrued retirement allowance (Note 7) Long-term payable (Note 7) Total other liabilities Total liabilities NET ASSETS Unrestricted: unallocated Unrestricted: allocated Unrestricted: net invested in plant Total unrestricted Temporarily restricted (Note 12) Permanently restricted (Note 13) Total net assets Total liabilities and net assets
$
2013 Total
2012 Total
2011 Total
2010 Total
82,384 119,359 39,580 25,622 39,688 306,632
77,836 31,825 24,781 81,299 215,741
141,795 33,024 25,948 31,313 232,080
92,034 293,579 36,001 24,604 59,924 506,142
206,676 188,381 115,141 25,220 65,762 601,180
5,823,149
6,150,159
6,494,686
6,806,912
7,039,380
13,678 57,719 817,178
13,690 39,734 294,528
46,483 36,018 44,296
8,178 23,885 31,202
11,424 32,720 30,376
167,517 694,004 1,750,096 7,879,877
185,138 1,082,495 1,615,585 7,981,485
155,941 120,000 1,292,536 1,695,274 8,422,040
150,475 120,290 1,254,115 1,588,145 8,901,199
114,162 140,343 1,082,910 1,411,935 9,052,495
437,023 39,688 58,844 535,555
180,336 82,297 3,000 265,633
647,439 75,528 1,850 724,817
542,148 59,924 62,926 664,998
387,765 65,762 13,603 467,130
253,156 63,461 1,106,108 1,422,725 1,958,280
326,358 44,034 857,574 1,227,966 1,493,599
368,046 40,758 408,804 1,133,621
431,153 35,881 467,034 1,132,032
521,172 20,550 541,722 1,008,852
(1,589,119) 5,569,993 3,980,874 233,829 1,706,894 5,921,597 7,879,877
(1,190,108) 5,823,801 4,633,693 189,875 1,664,318 6,487,886 7,981,485
(646,642) 6,126,640 5,479,998 167,347 1,641,074 7,288,419 8,422,040
(477,420) 55,577 6,375,759 5,953,916 218,822 1,596,429 7,769,167 8,901,199
(105,620) 55,513 6,518,208 6,468,101 180,589 1,394,953 8,043,643 9,052,495
*Inter-fund borrowing is eliminated in the combined totals. See accompanying notes. 3
SHENANDOAH VALLEY ACADEMY Statements of Changes in Net Assets For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
CHANGES IN UNRESTRICTED NET ASSETS Unrestricted revenues and support Tuition Fees Investment income Miscellaneous income Total educational and general income Auxiliaries Contributed services (Note 14) Total unrestricted revenues Released from restrictions - operating Total unrestricted revenues and support
2014 Total $
Expenses and losses Educational and general program services Instructional Student services Student financial aid Total program services Supporting services Fund raising Institutional support Total education and general operating expense Auxiliaries Total operating expenses and losses Net increase (decrease) without subsidy Unrestricted subsidies received (Note 10) Net Increase (decrease) from operations Nonoperating activity Nonoperating revenue (Note 11) Nonoperating expense (Note 11) Net gain (loss) on investments (Note 11) Net gain (loss) on sale of assets (Note 11) Released from restrictions - capital Net increase (decrease) from nonoperating activity Increase (decrease) unrestricted net assets CHANGES IN TEMPORARILY RESTRICTED NET ASSETS Restricted operating donations Restricted capital donations Total restricted income Released from restrictions - operating Released from restrictions - capital Increase (decrease) Temporarily restricted net assets CHANGES IN PERMANENTLY RESTRICTED NET ASSETS Endowment fund donations (Note 17) Change in beneficial interest in Potomac Conference (Note 17) Increase (decrease) Permanently restricted net assets Increase (decrease) in net assets Net assets, beginning of year Prior period adjustment (Note 19) Net assets, end of year
$
2013 Total
2012 Total
2011 Total
2010 Total
1,926,263 272,170 382 105,568 2,304,383 1,398,630 40,118 3,743,131 623,422 4,366,553
1,762,252 190,241 260 112,957 2,065,710 1,286,477 42,146 3,394,333 274,280 3,668,613
2,141,867 266,139 1,459 126,513 2,535,978 1,795,529 43,491 4,374,998 270,898 4,645,896
2,113,938 216,103 2,686 105,411 2,438,138 2,324,248 29,341 4,791,727 184,006 4,975,733
2,158,197 220,530 4,601 107,825 2,491,153 2,162,303 29,372 4,682,828 403,535 5,086,363
2,002,468 141,238 1,107,562 3,251,268
1,844,678 162,472 864,049 2,871,199
1,941,281 195,254 1,048,631 3,185,166
1,896,632 174,362 1,120,102 3,191,096
1,824,146 189,301 1,008,576 3,022,023
51,725 781,661 4,084,654 1,896,431 5,981,085 (1,614,532) 912,363 (702,169)
71,134 651,385 3,593,718 1,897,315 5,491,033 (1,822,420) 942,000 (880,420)
105,225 724,139 4,014,530 2,028,804 6,043,334 (1,397,438) 841,997 (555,441)
88,867 691,411 3,971,374 2,316,687 6,288,061 (1,312,328) 752,994 (559,334)
86,213 699,697 3,807,933 2,171,820 5,979,753 (893,390) 747,996 (145,394)
(91,183) (14,295) 118,182 8,458 28,188 49,350 (652,819)
34,058 (16,857) 232 300 16,382 34,115 (846,305)
25,263 (24,277) 2,784 (2,840) 80,593 81,523 (473,918)
30,180 (33,671) 825 500 47,315 45,149 (514,185)
(38,319) 5,857 78,510 46,048 (99,346)
688,394 7,170 695,564 (623,422) (28,188)
275,810 37,380 313,190 (274,280) (16,382)
218,084 81,932 300,016 (270,898) (80,593)
242,239 27,315 269,554 (184,006) (47,315)
390,588 58,510 449,098 (403,535) (78,510)
43,954
22,528
(51,475)
38,233
(32,947)
42,576
23,244
39,364
165,163
67,008
-
-
5,281
36,313
10,065
42,576
23,244
44,645
201,476
77,073
(566,289)
(800,533)
(480,748)
(274,476)
(55,220)
6,487,886 5,921,597
See accompanying notes. 4
7,288,419 6,487,886
7,769,167 7,288,419
8,043,643 7,769,167
7,994,766 104,097 8,043,643
SHENANDOAH VALLEY ACADEMY Statements of Cash Flows For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
2014 Total CASH FLOWS FROM OPERATING ACTIVITIES Increase (decrease) in net assets Adjustments to reconcile change in net assets to net cash provided Depreciation expense (Note 6) Provision for uncollectable accounts receivable (Gain) loss on sale of plant assets Realized and unrealized (gain) loss on investments Write off bookstore inventory (Increase) decrease accounts receivable (Increase) decrease inventories and prepaid Increase (decrease) accounts payable Increase (decrease) deferred income (Increase) decrease agency fund cash Increase (decrease) agency fund liability Net cash provided (used) by operating
$
2013 Total
2012 Total
2011 Total
2010 Total
(566,289)
(800,533)
(480,748)
(274,476)
(55,220)
372,153 (6,003) (8,458) (118,182) (35,520) (8,596) 524,648 55,844 41,611 (42,609) 208,600
385,982 7,024 (300) (232) 176,935 2,366 393,747 1,150 (49,986) 6,769 122,922
394,059 (8,328) 2,840 (2,784) 160,402 1,633 110,168 (61,076) 28,611 15,604 160,381
381,691 (12,129) (500) (825) 46,779 (73,017) 32,977 169,714 62,926 5,838 (5,838) 333,140
335,046 (108,278) 191,425 36,720 14,720 (127) 127 414,413
CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease, endowment fund cash (Increase) decrease, unexpended plant cash (Increase) decrease, non-operating investments Change in value of beneficial interest in Potomac Conference endowment New notes receivable Payments received on notes receivable Proceeds from sale of plant assets Purchases of investments Purchases of plant assets Net cash provided (used) by investing
(17,985) 14 -
(3,716) 32,793 -
(12,133) (38,305) (10,310)
17,621 (36,649) 425,140 14,422 (404,468) (51,109) (53,014)
(29,197) (40,720) 250,761 3,001 (250,000) (44,156) (81,234)
(5,466) (48,356) 9,935 2,237 (86,910) (189,308)
(36,313) (210,428) 39,223 1,500 (150,223) (344,160)
(110,647) (125,688) (236,897)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from external borrowing Principal payments on notes payable Net cash provided (used) by financing
12,289 (85,491) (73,202)
41,215 (82,903) (41,688)
7,312 (70,419) (63,107)
30,934 (134,556) (103,622)
(90,753) (90,753)
92,034 -
(92,034) 92,034 -
(114,642) 206,676 92,034
86,763 119,913 206,676
16,082
23,221
31,737
37,952
Increase (decrease) cash and equivalents Cash and cash equivalents, beginning Cash and cash equivalents, ending
$
82,384 82,384
Supplemental cash flow data Cash paid for interest (Note 11)
$
12,289
See accompanying notes. 5
8,835 3,246 -
398 (960) -
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 1 – Organization description and summary of significant accounting policies Organization description Shenandoah Valley Academy (Organization) is operated by the Potomac Conference (Conference) of Seventh-day Adventists to provide a Christian education in a boarding school environment to secondary level students within its territory. The Organization receives most of its revenue in the form of tuition and other charges from the parents or guardians of its students. It also receives operating and capital subsidies from the Potomac Conference of Seventh-day Adventists. The Organization is a religious not-for-profit organization, and is exempt from federal, state, and local income taxes under provisions of Section 501(c)(3) of the Internal Revenue Code, and corresponding sections of applicable state and local codes; except for taxes on unrelated business income as described in sections 511-514 of the Internal Revenue Code. Summary of significant accounting policies (a) Basis of accounting: The significant accounting policies of the Organization are essentially the same as generally accepted accounting principles for not-for-profit organizations as promulgated by the Financial Accounting Standards Board. The significant policies are described below to enhance the usefulness of the financial statements. The financial statements of the Organization have been prepared on the accrual basis of accounting. The Organization has evaluated events that occurred subsequent to the financial statement date, up to July 24, 2015, which is the date the financial statements were available to be issued. (b) Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. (c) Restricted resources: The Organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. The Organization reports gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. (d) Plant assets and depreciation: Plant assets are recorded at cost when purchased or at fair market value at date of gift. Depreciation of land improvements, buildings, and equipment is provided over the estimated useful lives of the respective assets on a straight-line basis. Depreciation expense is reported by various program and supporting services in the Statement of Changes in Unrestricted Net Assets. The Organization capitalizes assets greater than $1,000. See Note 6 for disclosure of the estimated useful lives the Organization has established for its various classes of plant assets. (e) Cash and equivalents: Cash equivalents are highly-liquid assets of the operating fund, which are readily convertible to cash and have a maturity date of less than three months from date of acquisition. Cash and investments of funds other than operating are not classified as cash and cash equivalents. The increase or decrease in nonoperating cash and investments is reported in the statement of cash flows from investing activities. (f) Fair value of financial instruments: Following are the major methods and assumptions used to estimate fair values: Short-term financial instruments are valued at their carrying amounts included in the statement of financial position, which are reasonable estimates of fair value due to the relatively short period to maturity of the instruments. This applies to cash, cash equivalents, accounts receivable, and certain current liabilities. Investment securities are valued at the quoted market price or other reasonably obtainable market value estimate at the reporting date for those or similar securities. The difference between aggregate market value and cost for each type of investment is recorded in a valuation account. The change in this account each year is recognized as gain or loss. (g) Student accounts receivable are deemed non-current when a student is no longer enrolled at the Organization. Current student balances must be paid in full before returning for the fall semester. Students enrolled in the monthly payment program could be suspended for financial reasons if payments are more than one month in arrears. Semester-by-semester payee balances must be paid in full by the first month of each semester; full annual payee balances must be paid in full by the first month of the school year. Semester and annual payees who do not meet these deadlines are converted to monthly payment plans. (h) Provision for uncollectable accounts: An allowance for uncollectable accounts is recorded based on an analysis of the collectability of accounts. Factors considered include historical collection experience, the aging of receivables, and facts and circumstances surrounding specific accounts. (i) Inventory: Inventories are presented at the lower of cost or market using the first-in first-out method. (j) Current assets and liabilities: Assets and liabilities are classified as current or long-term, depending on their characteristics. This excludes from current assets, cash and claims to cash that are: restricted to use for other than current operations, committee allocated for the acquisition or construction of plant assets. This excludes from current liabilities: long-term portion of all debt. Working capital (current assets less current liabilities) for the Organization usually reflects working capital of only the operating fund, since usually no assets or liabilities of the endowment fund are classified as current. (k) Permanently restricted net assets: The Organization records all donor-restricted perpetual endowments as permanently restricted net assets. The Organization interprets state law to require it to record all other endowments, absent donor stipulations, as permanently restricted net assets.
6
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 1 – Organization description and summary of significant accounting policies (continued) (l) Investment income: Ordinary income from investments, loans, and the like is accounted for in the fund owning the assets, except for the endowment fund. Unrestricted income on endowment fund investments is accounted for as income of the operating fund. Restricted income on endowment fund investments is accounted for as restricted support and temporarily restricted net assets until spent for the restricted purpose designated by the endowment instrument. (m) Related organizations: The Organization is an affiliate of the Potomac Conference Corporation of Seventh-day Adventists (Conference) by reason of the following circumstances: 1. The officers of the Conference, and certain other members of the Conference staff, are members of the Board of Trustees of the Organization. 2. Legal title to all real property of the Organization is vested in the Conference. Asset values and related depreciation accounts are maintained on the Organization's records. 3. A significant degree of financial support for operating purposes is received by appropriation from the Conference. Details of the amounts are set forth in Note 10. Details of amounts due from or payable to the Conference, and financial transactions, other than those in the ordinary course of business, between the Organization and the Conference, are set forth in Notes 4 and 7. Financial instruments that potentially subject the Organization to concentrations of credit risk include cash and cash equivalents, investments, and accounts receivable. The Organization places its cash with FDIC insured financial institutions. Although such balances may exceed federally insured limits at certain times during the year, they are, in the opinion of management, subject to minimal risks. Investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risks associated with investment securities, it is at least reasonably possible that changes in values will occur in the near term. See note 4 for information regarding outstanding receivables. (n) Concentrations of risk: The Organization receives most of its revenue from student-related activity. Budget and staff employment decisions each year typically must be made before actual enrollment is known. There is a risk that enrollment will be less than anticipated, which would reduce the ability of the Organization to finance its budgeted level of operations. (o) Fund accounting: To ensure observance of limitations and restrictions placed on the use of resources available to the Organization, the accounts are maintained in accordance with the principles of fund accounting. Resources are classified for accounting and reporting into funds established according to their nature and purposes. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds have been combined into groups, and totals are presented for the Organization as a whole. The funds and fund groups are described in further detail below. Operating funds: Include unrestricted and restricted resources available for current operations. These funds reflect the educational and general, auxiliaries, and independent operations operating activities. Additionally, they include plant assets acquired, respective accumulated depreciation, and respective debt. Since the amount is not material, the operating fund also shows the total held as fiscal agent for others. Endowment funds: Are assets subject to restrictions of gift instruments requiring that the principal be held in perpetuity, be invested, and only the income from such investments be used. The principal of true endowments is reported as permanently restricted net assets. Unspent income is recorded as unrestricted or temporarily restricted net assets.
Note 2 – Cash Operating funds Imprest cash Cash on hand Checking accounts Money market accounts Savings accounts Less: cash held for agency Total operating cash
Other than operating funds Checking accounts* Total other funds cash
2013 Total 4,406 36,605 19,481 20,807 (81,299) -
2012 Total 3,024 3,921 3,810 20,558 (31,313) -
2011 Total
$
2014 Total 4,406 79,912 615 37,139 (39,688) 82,384
$ $
2014 Total 111,085 111,085
2013 Total 134,723 134,723
2012 Total 113,814 113,814
2011 Total 91,987 91,987
$
787 62,926 18,636 3,890 65,719 (59,924) 92,034
2010 Total 4,406 130,747 33,937 103,348 (65,762) 206,676 2011 Total 109,906 109,906
*The Organization is required to maintain a minimum balance of $2,500 in the endowment fund checking account with SunTrust Bank to avoid bank fees.
7
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 3 – Investments 2014 Investments held for other than operating Corporate stocks Corporate bonds General Conference Investments Fund Total cost for other than operating Unrealized appreciation (decline) investment value Carrying amount at fair value
Cost 10,310 33,000 655,000 698,310 118,868 817,178
$
$
2013 Cost 10,310 33,000 250,000 293,310 1,218 294,528
Market 8,090 33,269 775,819
817,178 2012
Investments held for other than operating Corporate stocks Corporate bonds Total cost for other than operating Unrealized appreciation (decline) investment value Carrying amount at fair value
Cost 10,310 33,000 43,310 118,868 162,178
$
$
Cost 33,000 33,000 (1,798) 31,202
44,296
$
$ 2014 Total $
$
294,528
2011 Market 11,461 32,835
Investments held for other than operating Corporate bonds Total cost for other than operating Unrealized appreciation (decline) investment value Carrying amount at fair value
Composition of investment return Investment income Unrealized gain (loss) in value of investments Net gain (loss) on investments for which carrying value is fair value* Total investment return
Market 8,700 31,927 253,901
2013 Total
382 118,182
260 232
2012 Total 1,459 2,784
118,182 118,564
232 492
2,784 4,243
2010 Cost 33,000 33,000 (2,624) 30,376
Market 31,202
31,202
Market 30,376
30,376
2011 Total 2,686 825
2010 Total 4,601 5,857
825 3,511
5,857 10,458
* The Organization did not have any gain or loss on investments for which carrying value is not fair value. The Organization is subject to accounting principles that require disclosure about the information used to determine fair values for assets and liabilities that are subject to fair value accounting on either a recurring or non-recurring basis. This information is separated into three "levels" of inputs, as follows: Level 1: Observable quoted market prices in active markets for identical assets or liabilities. Level 2: Direct or indirect observable market data, such as quoted prices in inactive markets for identical assets or liabilities, quoted prices in active markets for similar assets or liabilities, and other observable market data correlated to identical or similar assets or liabilities. Investments in General Conference Investment Funds are valued at net asset value (NAV) as reported by the General Conference investment office. Level 3: Unobservable inputs and assumptions based on the best information available to the entity.
8
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 3 – Investments (continued) The Organization used the following inputs to determine fair values of assets valued on a recurring basis. Corporate stocks Corporate bonds General Conference Investments Fund Totals
$
$
The Organization used the following inputs to determine fair values of assets valued on a recurring basis. Corporate stocks Corporate bonds General Conference Investments Fund Totals
$
$
The Organization used the following inputs to determine fair values of assets valued on a recurring basis. Corporate stocks Corporate bonds Totals
$ $
The Organization used the following inputs to determine fair values of assets valued on a recurring basis. Corporate bonds Totals
Level 1 8,090 8,090
Level 1 8,700 8,700
Level 1 11,461 11,461
The Organization used the following inputs to determine fair values of assets valued on a recurring basis. Corporate bonds Totals
$ $
2013 Level 2
-
Level 3
31,927 253,901 285,828 2012 Level 2
-
Level 3 -
32,835 32,835
-
-
2010 Level 2 30,376 30,376
Level 1
Level 3
33,269 775,819 809,088
2011 Level 2 31,202 31,202
Level 1 $ $
2014 Level 2
Level 3 -
Level 3 -
Note 4 – Accounts receivable Operating fund Current student accounts Former student accounts Total student accounts Less: allowance for uncollectable accounts Net student accounts Operations Potomac Conference Other denominational organizations Faculty and staff accounts Trade accounts Pledges receivable Miscellaneous Net current accounts receivable
$
Pledges receivable, $20,000 within 1 year (received) Total operating fund accounts receivable Endowment fund Beneficial interest in Potomac Conference endowment Total accounts receivable
$
Note 5 – Inventory Bookstore Cafeteria Total inventory
2014 Total 66,881 39,745 106,626 (86,201) 20,425 27,600 66,384 750 4,200 119,359
2013 Total 89,237 33,161 122,398 (92,204) 30,194 42,083 3,375 1,950 234 77,836
$
2011 Total 117,996 39,344 157,340 (93,508) 63,832 48,726 2,050 145,386 20,000 13,585 293,579
2010 Total 70,932 87,933 158,865 (105,637) 53,228 11,040 38,020 20,000 66,093 188,381
119,359
77,836
120,000 261,795
120,290 413,869
140,343 328,724
167,517 286,876
185,138 262,974
155,941 417,736
150,475 564,344
114,162 442,886
2011 Total 1,391 34,610 36,001
2010 Total 81,963 33,178 115,141
2014 Total $
2012 Total 52,412 67,309 119,721 (85,180) 34,541 28,451 988 100 57,715 20,000 141,795
2013 Total
742 38,838 39,580
742 31,083 31,825
9
2012 Total 742 32,282 33,024
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 6 – Plant assets Educational, general, and auxiliaries Land Land improvements (lives of 10 to 20 years) Buildings (lives of 25 to 75 years) Equipment (lives of 3 to 10 years) Total educational, general, and auxiliaries
2014
$
Total Cost 37,106 770,573 7,600,535 2,312,980 10,721,194
Accumulated Depreciation 443,767 2,776,705 1,861,491 5,081,963
Net Value 37,106 326,806 4,823,830 451,489 5,639,231
Depreciation Expense 57,094 174,043 124,838 355,975
3,926 469,179 93,427 566,532
3,926 295,089 83,599 382,614
174,090 9,828 183,918
14,075 2,103 16,178
11,287,726
5,464,577
5,823,149
372,153
Total Cost 37,106 770,573 7,600,535 2,273,488 10,681,702
Accumulated Depreciation 386,673 2,602,662 1,751,325 4,740,660
Net Value 37,106 383,900 4,997,873 522,163 5,941,042
Depreciation Expense 50,555 173,970 146,969 371,494
3,926 469,179 116,377 589,482
3,926 281,014 95,425 380,365
188,165 20,952 209,117
14,075 413 14,488
11,271,184
5,121,025
6,150,159
385,982
Total Cost 37,106 748,590 7,600,535 2,255,815 10,642,046
Accumulated Depreciation 336,118 2,428,691 1,606,157 4,370,966
Net Value 37,106 412,472 5,171,844 649,658 6,271,080
Depreciation Expense 50,555 173,557 155,459 379,571
3,926 469,179 116,377 589,482
3,926 266,938 95,012 365,876
202,241 21,365 223,606
14,075 413 14,488
11,231,528
4,736,842
6,494,686
394,059
Total Cost 37,106 748,590 7,595,140 2,199,700 10,580,536
Accumulated Depreciation 285,564 2,255,134 1,471,020 4,011,718
Net Value 37,106 463,026 5,340,006 728,680 6,568,818
Depreciation Expense 50,555 173,285 141,413 365,253
3,926 469,179 116,377 589,482
3,926 252,863 94,599 351,388
216,316 21,778 238,094
14,075 2,363 16,438
11,170,018
4,363,106
6,806,912
381,691
Independent operations Land improvements (fully depreciated) Buildings (lives of 25 to 33 years) Equipment (lives of 3 to 10 years) Total independent operations Total plant assets
$
2013 Educational, general, and auxiliaries Land Land improvements (lives of 10 to 20 years) Buildings (lives of 25 to 75 years) Equipment (lives of 3 to 10 years) Total educational, general, and auxiliaries
$
Independent operations Land improvements (fully depreciated) Buildings (lives of 25 to 33 years) Equipment (lives of 3 to 10 years) Total independent operations Total plant assets
$
2012 Educational, general, and auxiliaries Land Land improvements (lives of 10 to 20 years) Buildings (lives of 25 to 75 years) Equipment (lives of 3 to 10 years) Total educational, general, and auxiliaries
$
Independent operations Land improvements (fully depreciated) Buildings (lives of 25 to 33 years) Equipment (lives of 3 to 10 years) Total independent operations Total plant assets
$
2011 Educational, general, and auxiliaries Land Land improvements (lives of 10 to 20 years) Buildings (lives of 25 to 75 years) Equipment (lives of 3 to 10 years) Total educational, general, and auxiliaries
$
Independent operations Land improvements (fully depreciated) Buildings (lives of 25 to 33 years) Equipment (lives of 3 to 10 years) Total independent operations Total plant assets
$
10
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 6 – Plant assets (continued)
2010 Total Cost 37,106 748,590 7,564,123 2,025,404 59,087 10,434,310
Accumulated Depreciation 235,009 2,081,848 1,270,519 59,087 3,646,463
Net Value 37,106 513,581 5,482,275 754,885 6,787,847
Depreciation Expense 1,769 167,155 150,329 319,253
3,926 469,179 122,327 595,432
3,926 238,787 101,186 343,899
230,392 21,141 251,533
13,843 1,950 15,793
11,029,742
3,990,362
7,039,380
335,046
2014 Total 267,037 1,106,108 104,818 28,109 41 37,018 1,543,131 63,461 1,606,592
2013 Total 52,909 857,574 78,370 23,887 25,170 1,037,910 44,034 1,081,944
2012 Total 183,615 325,060 87,684 35,050 16,030 647,439 40,758 688,197
2011 Total 159,029 183,307 133,880 40,587 25,345 542,148 35,881 578,029
2010 Total 131,199 113,381 104,353 32,405 6,427 387,765 20,550 408,315
2014 Total
2013 Total
2012 Total
2011 Total
2010 Total
Educational, general, and auxiliaries Land Land improvements (lives of 10 to 20 years) Buildings (lives of 25 to 75 years) Equipment (lives of 3 to 10 years) Equipment under capital lease Total educational, general, and auxiliaries
$
Independent operations Land improvements (fully depreciated) Buildings (lives of 25 to 33 years) Equipment (lives of 3 to 10 years) Total independent operations Total plant assets
$
Note 7 – Accounts payable Commercial accounts Potomac Conference Student credit balances Accrued vacation/labor Taxes Payable Miscellaneous Current accounts payable Accrued retirement allowance Total accounts payable
$
$
Note 8 – Notes payable Secured, Columbia Union Revolving Fund @ 4.25% Total plant-related notes payable
$ $
253,156 253,156
326,358 326,358
368,046 368,046
Payments due on principal during the next five years are as follows:
431,153 431,153 2015 $ 2016 2017 2018 2019 Future Total $
521,172 521,172 76,205 79,508 64,166 8,726 9,105 15,446 253,156
Note 9 – Capital lease liability The Organization is the lessee of several capital leases. The assets and liabilities under capital lease are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are depreciated over the lower of their related lease terms or their estimated productive lives. Depreciation of the assets under capital lease is included in depreciation expense for 2011 and 2010. 2014 Total Dell Computers @ 10.41%, $1,025.87 per mo. IKON Copiers @ 7.00%, $1,170 per month Total capital lease - net present value
$ $
2013 Total -
2012 Total -
11
2011 Total -
-
2010 Total 3,823 9,780 13,603
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 10 – Subsidies received General operating subsidies - Potomac Conference Total unrestricted subsidies received
2014 Total $ $
912,363 912,363
Investment income Nonoperating revenue
$ $
2014 Total (91,183) (91,183)
Interest paid on debt Miscellaneous expense Nonoperating expenses
$ $
(12,289) (2,006) (14,295)
Unrealized gain (loss) investment value Net gain (loss) on investments
$ $
118,182 118,182
Proceeds from sale of plant assets Net value of plant assets sold Net gain (loss) on sale of assets
$
Total nonoperating activity
Note 11 – Nonoperating activity
2013 Total
2012 Total
2011 Total
2010 Total
942,000 942,000
841,997 841,997
752,994 752,994
2013 Total 34,058 34,058
2,012 Total 25,263 25,263
2011 Total 30,180 30,180
(16,082) (775) (16,857) 232 232
$
14,422 (5,964) 8,458
3,001 (2,701) 300
$
21,162
17,733
(23,221) (1,056) (24,277) 2,784 2,784 2,237 (5,077) (2,840) 930
(31,737) (1,934) (33,671) 825 825 1,500 (1,000) 500 (2,166)
747,996 747,996
2010 Total (37,952) (367) (38,319) 5,857 5,857 (32,462)
Note 12 – Temporarily restricted net assets Temporarily restricted net assets are available for the following purposes or periods Operating funds Instructional SVA Mission Campus beautification Student aid Orchard donations Institutional advancement Total operating temporarily restricted net assets Restricted capital donations, educ. and general Total temporarily restricted net assets
$
Balance 6/30/14 3,200 61,047 2 4,943 21,043 90,235
Balance 6/30/13 3 21,625 2 3,633 25,263
Balance 6/30/12 4,156 16,898 1,120 1 2,678 24,853
Balance 6/30/11 1,711 18,359 1,120 56,477 77,667
Balance 6/30/10 1,710 4,149 13,575 19,434
$
143,594 233,829
164,612 189,875
142,494 167,347
141,155 218,822
161,155 180,589
$
Balance 6/30/14 1,551,138
Balance 6/30/13 1,508,562
Balance 6/30/12 1,485,318
Balance 6/30/11 1,445,954
Balance 6/30/10 1,280,791
$
155,756 1,706,894
155,756 1,664,318
155,756 1,641,074
150,475 1,596,429
114,162 1,394,953
Note 13 – Permanently restricted net assets
SVA true endowment Beneficial interest in Potomac Conference endowment Total permanently restricted net assets
12
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 14 – Contributed services Under provisions of Financial Accounting Standards Board's Accounting Standards Codification Section 958-605-25-16, contributions of services shall be recognized if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. The Organization has received the services of the General Conference Auditing Service who have assisted in the audit of the financial statements for the years ended June 30, 2014, 2013, 2012, 2011, and 2010. The amount of contributed services recognized as revenues and recorded as administrative expense for the periods are $40,118, $42,146, $43,491, $29,341, and $29,372 for the years then ended, respectively. These amounts are product of the number of person-hours spent in performing the audit and the costrecovery rate established by the General Conference of Seventh-day Adventists. The cost of these services is paid 50% by General Conference of Seventh-day Adventists, North American Division and 50% by Columbia Union Conference of Seventh-day Adventists.
Note 15 – Pension and other post-retirement benefits Defined benefit plans The Organization participates in the following non-contributory, defined benefit plans: 1. The defined benefit pension plan known as the Seventh-day Adventist Retirement Plan of the North American Division (NADRP). This plan, which covers substantially all employees of the Organizations, is administered by the General Conference of Seventh-day Adventists, North American Division (NAD), in Silver Spring, Maryland, and is exempt from the Employee Retirement Income Security Act of 1974 as a "multipleemployer" plan of a church-related agency. This plan provides primarily monthly pension benefits based on years of service and other factors. The NAD Committee voted to freeze accrual of service credit in NADRP effective December 31, 1999, except for employees who chose the career completion option, and to start a new defined contribution plan effective January 1, 2000. Certain employees will continue to be eligible for future benefits under this plan. The Organizations continue to make contributions to this plan, at rates determined annually by the plan. 2.
The defined benefit health care plan known as the General Conference of Seventh-day Adventist North American Division Retiree Auxiliary Healthcare Assistance and Death Benefit Plan (RAHAP). This plan, which covers substantially all employees of the Organization, is administered by NAD in Silver Spring, Maryland, and is exempt from the Employee Retirement Income Security Act of 1974 as a “multiple-employer” plan of a church-related agency. This plan provides primarily health-care benefits which supplement Medicare benefits. The extent of these benefits is based on years of service and the beneficiary’s monthly contribution.
Accounting standards define these plans as “multiemployer” plans. As such, it is not required, nor is it possible, to determine the actuarial value of accumulated benefits or plan net assets for employees of the Organization apart from other plan participants. Information about the required contributions to these plans, the actuarial obligation for future benefits, and the funded status of these plans, is presented in the tables below. Required contributions from the Organization: For the year ended June 30, 2014 For the year ended June 30, 2013 For the year ended June 30, 2012 For the year ended June 30, 2011 For the year ended June 30, 2010
$ $ $ $ $
NADRP 65,162 53,976 58,877 43,791 46,733
RAHAP 61,640 51,058 55,695 41,424 44,208
Because the following information is not publicly available, it is required to be disclosed on the basis of information received from each plan. Total contributions received from all employers: For the plan year ended December 31, 2014 For the plan year ended December 31, 2013 For the plan year ended December 31, 2012 For the plan year ended December 31, 2011 For the plan year ended December 31, 2010
$ $ $ $ $
101,806,557 91,820,841 88,114,315 88,687,413 86,381,495
37,344,915 35,959,775 32,072,730 32,212,355 31,037,165
Whether the Organization’s contributions were more than or less than 5% of the total contributions received by each plan: For the plan year ended December 31, 2014 For the plan year ended December 31, 2013 For the plan year ended December 31, 2012 For the plan year ended December 31, 2011 For the plan year ended December 31, 2010
13
less than less than less than less than less than
less than less than less than less than less than
TOTAL 126,802 105,034 114,572 85,215 90,941
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 15 – Pension and other post-retirement benefits, continued Plan net assets available for benefits: For the plan year ended December 31, 2014 For the plan year ended December 31, 2013 For the plan year ended December 31, 2012 For the plan year ended December 31, 2011 For the plan year ended December 31, 2010
$ $ $ $ $
Actuarial obligation and funded status Because the following information is not publicly available, it is required to be disclosed on Date of plan year-end for latest actuarial information Actuarial liability for future benefits $ Value of net assets available for benefits $ Plan funded status as of date of last actuarial data
NADRP 218,023,700 209,924,999 193,148,475 185,118,134 198,283,923
RAHAP 66,446,449 71,035,285 62,771,811 59,165,497 62,164,536
12/31/2013 1,481,982,124 209,924,999 Less than 65%
12/31/2012 1,013,326,701 62,771,811 Less than 65%
Risks and other information The risks of participating in multiemployer plans are different from single-employer plans, in the following aspects: ● Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. ● If a participating employer stops contributing to a plan, the unfunded obligations of the plan may be borne by the remaining participating employers. ● If the Organization chooses to stop participating in a multiemployer plan, the Organization may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. Other information about risks and contingencies related to these plans are as follows: ● Information about the plans is not publicly available, so no “certified zone status” has been determined. ● The Organization's required contributions are not the subject of any collective bargaining agreement. ● No funding improvement plans or rehabilitation plans had been implemented or were pending. ● The Organization has not paid any “surcharge” to either of the plans. ● No minimum contribution for future periods has been determined or required of the Organization. Note 16 – Uncertain tax positions Tax positions are taken based on interpretation of federal, state and local income tax laws. Management periodically reviews and evaluates the status of uncertain tax positions and makes estimates of amounts, including interest and penalties, ultimately due or owed. No amounts have been identified, or recorded as uncertain tax positions. Federal, state, and local tax returns generally remain open for examination by the various taxing authorities for a period of three to four years.
Note 17 – Endowments The Organization is subject to the provisions of the Virginia Prudent Management of Institutional Funds Act (VPMIFA) and has chosen to preserve the fair value of the original gift of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result, the Organization classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Organization. The Organization 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 Investment earnings from donor-restricted endowment funds are classified as unrestricted income absent explicit donor stipulations to the contrary. In the event that the fair value of donor-restricted endowment funds falls below the level required to be maintained in perpetuity, the resulting deficiency is recorded as a reduction of unrestricted net assets. Appreciation recorded during the years ended June 30, 2014, 2013, 2012, 2011, and 2010 amounted to $118,182, $232, $2,784, $825, and $5,867, respectively. Endowment investment policies – return objectives, risk parameters, and strategies: The Organization recognizes the perpetual nature of endowments and the need to maintain an investment return sufficient to support the program for which the principal was given, the Endowment Pool principal will be invested in those assets which have the highest statistical probability of preserving , in real rather than nominal terms, the principal, while simultaneously generating the maximum possible rate of return. Endowment spending policies and relation to investment objectives: The Organization will allocate 80% of the average of the prior three year returns net of the Organization's tuition inflation rate for scholarship funding. The residual 20% would be retained to permit scholarship funding during years in which the endowment earnings were flat. There will be a minimum allocation of $5,000 per year for scholarship funding.
14
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 17 – Endowments (continued) Endowment net asset composition Endowments by type Donor-restricted endowments, June 30, 2014
$
Unrestricted (55,715)
Permanently Restricted 1,706,894
Total 1,651,179
Donor-restricted endowments, June 30, 2013
$
(82,423)
1,664,318
1,581,895
Donor-restricted endowments, June 30, 2012
$
(117,283)
1,641,074
1,523,791
Donor-restricted endowments, June 30, 2011
$
(145,510)
1,596,429
1,450,919
Donor-restricted endowments, June 30, 2010
$
(175,872)
1,394,953
1,219,081
Changes in endowment net assets are as follows:
$
(82,423)
Permanently Restricted 2014 1,664,318
$
(91,183) 118,182 26,999 (291) (55,715)
42,576 1,706,894
(91,183) 118,182 26,999 42,576 (291) 1,651,179
$
(117,283)
2013 1,641,074
1,523,791
$
34,058 232 34,290 570 (82,423)
23,244 1,664,318
34,058 232 34,290 23,244 570 1,581,895
$
(145,510)
2012 1,596,429
1,450,919
$
25,263 2,784 28,047 180 (117,283)
39,364 5,281 1,641,074
25,263 2,784 28,047 39,364 5,281 180 1,523,791
$
(175,872)
2011 1,394,953
1,219,081
$
30,180 825 31,005 (643) (145,510)
165,163 36,313 1,596,429
30,180 825 31,005 165,163 36,313 (643) 1,450,919
$
(181,362)
2010 1,317,880
1,136,518
$
37,672 5,856 43,528 (38,038) (175,872)
67,008 10,065 1,394,953
37,672 5,856 43,528 67,008 10,065 (38,038) 1,219,081
Unrestricted Endowment net asset, July 1, 2013 Investment return: Investment income Net appreciation (appreciation) realized and unrealized Total investment return Contributions Appropriation of endowment assets for expenditure Endowment net asset, June 30, 2014
Endowment net asset, July 1, 2012 Investment return: Investment income Net Appreciation (decline) realized and unrealized Total investment return Contributions Appropriation of endowment assets for expenditure Endowment net asset, June 30, 2013
Endowment net asset, July 1, 2011 Investment return: Investment income Net Appreciation (decline) realized and unrealized Total investment return Contributions Increase in value of beneficial interest in Potomac Conference endowment Appropriation of endowment assets for expenditure Endowment net asset, June 30, 2012
Endowment net asset, July 1, 2010 Investment return: Investment income Net Appreciation (decline) realized and unrealized Total investment return Contributions Increase in value of beneficial interest in Potomac Conference endowment Appropriation of endowment assets for expenditure Endowment net asset, June 30, 2011
Endowment net asset, July 1, 2009 Investment return: Investment income Net Appreciation (decline) realized and unrealized Total investment return Contributions Increase in value of beneficial interest in Potomac Conference endowment Appropriation of endowment assets for expenditure Endowment net asset, June 30, 2010
15
Total 1,581,895
SHENANDOAH VALLEY ACADEMY Notes to the Financial Statements For the years ended June 30, 2014, 2013, 2012, 2011, and 2010
Note 17 – Endowments (continued) Composition of restricted endowment assets SVA true endowment Beneficial interest in Potomac Conference endowment Total endowment assets classified as permanently restricted net assets
$
$
2014 Total 1,551,138
2013 Total 1,508,562
2012 Total 1,485,318
2011 Total 1,445,954
2010 Total 1,280,791
155,756
155,756
155,756
-
-
1,706,894
1,664,318
1,641,074
1,445,954
1,280,791
2013 Total 215,741 (265,633) (49,892) 2,241,496 (2,291,388)
2012 Total 232,080 (724,817) (492,737) 1,482,651 (1,975,388)
2011 Total 506,142 (664,998) (158,856) 1,629,065 (1,787,921)
2010 Total 601,180 (467,130) 134,050 1,619,274 (1,485,224)
-8.96%
-2.23%
-33.23%
-9.75%
8.28%
0.57
0.81
0.76
1.29
Note 18 – Working capital and liquidity - operating funds 2014 Working capital Total Total current assets $ 306,632 Total current liabilities (535,555) Actual working capital (228,923) Recommended working capital* 2,553,717 Working capital excess (deficit) $ (2,782,640) Percent of recommended working capital Current ratio Liquidity Cash and investments Accounts receivable - Conference Total liquid assets Current liabilities Allocated net assets Total commitments Liquid assets surplus (deficit)
$
$
Percent liquid assets to commitments * Calculation of recommended working capital 15% of operating expense Long-term payables Temporarily restricted net assets Total recommended working capital
$
$
0.32
82,384 66,384 148,768 (535,555) (535,555) (386,787)
42,083 42,083 (265,633) (265,633) (223,550)
28,451 28,451 (724,817) (724,817) (696,366)
92,034 92,034 (664,998) (55,577) (720,575) (628,541)
206,676 206,676 (467,130) (55,513) (522,643) (315,967)
27.78%
15.84%
3.93%
12.77%
39.54%
897,163 1,422,725 233,829 2,553,717
823,655 1,227,966 189,875 2,241,496
906,500 408,804 167,347 1,482,651
943,209 467,034 218,822 1,629,065
896,963 541,722 180,589 1,619,274
Note 19 – Prior period adjustment for beneficial Interest in endowment Accounting principles generally accepted in the United States require the Organization to record as a non-current asset, and as permanently restricted net assets, the net present value of the beneficial interest in the Potomac Conference of Seventh-day Adventists (Conference) endowments. During 2011, it was determined that the Organization has a beneficial interest in an endowment held by the Conference. The cumulative effect of the prior period adjustment at July 1, 2009 was to increase non-current assets and permanently restricted net assets by $104,097. The financial activity for the year ended June 30, 2010, has been restated to reflect an increase in the value of this beneficial interest of $10,065.
16