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Report of Independent Auditors
Board of Trustees
Shawnee State University Development Foundation
Portsmouth, Ohio
We have audited the accompanying statements of net assets of
Shawnee State University Development Foundation (a not-for-profit
component unit of Shawnee State University) as of June 30, 2005 and
2004, and the related statements of activities and cash flows for the
years then ended. These financial statements are the responsibility of
the Shawnee State University Development Foundation’s management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
Shawnee State University Development Foundation as of June 30, 2005
and 2004, and the changes in its net assets and cash flows for the
years then ended in conformity with accounting principles generally
accepted in the United States of America.
In accordance with Government Auditing Standards, we have also
issued our report dated September 1, 2005, on our consideration of the
Foundation’s internal control over financial reporting and our tests
of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control
over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the internal control over
financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards
and should be considered in assessing results of our audit.
Crowe Chizek and Company LLC
Columbus, Ohio
September 1, 2005
Statement of Net Assets
June 30, 2005 and 2004
|
Assets: |
2005 |
2004 |
|
Cash and Cash Equivalents |
$ 545,552 |
$ 500,096 |
|
Investments |
9,536,926 |
9,084,185 |
|
Ohter assets |
121,295 |
112,819 |
|
Contributions recievable |
132,866 |
172,126 |
|
Beneficial interest in trusts held by others |
1,373,700 |
1,317,484 |
|
Total assets |
$ 11,710,339 |
$ 11,186,710 |
|
|
|
Liabilities and Net Assets: |
|
Liabilities: |
|
Accounts payable |
$ 4,995 |
9,710 |
|
Deposits held and due to others |
38,435 |
39,441 |
|
annuity payment liability |
122,441 |
131,377 |
|
Total liabilities |
$ 165,871 |
180,528 |
|
|
|
|
|
Net Assets: |
|
Unrestricted |
$ 549,724 |
$ 980,708 |
|
Temporarily restricted |
5,543,307 |
4,758,712 |
|
Permanently restricted |
5,451,437 |
5,266,762 |
|
Total Net Assets |
11,544,468 |
11,006,182 |
|
|
|
|
|
Total Liabilities and net assets |
$ 11,710,339 |
$ 11,186,710 |
Statement of Activities
Year ended June 30, 2005 with comparative
2004 totals
| |
Unrestricted |
Temporarily
Restricted |
Permanently Restricted |
Total
2005 |
Total
2004 |
|
Revenues, gains, and other support |
|
|
|
|
|
|
Contributions |
$ 26,914 |
$ 218,575 |
$ 184,675 |
$ 430,164 |
$ 822,833 |
|
Investment income, net |
53,174 |
725,523 |
|
778,697 |
930,133 |
|
Net assets released from restrictions |
159,503 |
(159,503) |
|
|
|
Total revenues, gains, and other
supports |
239,591 |
784,595 |
$ 184,675 |
1,208,861 |
1,752,966 |
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
Scholarship and other student aid |
147,923 |
|
|
147,923 |
153,804 |
|
Institutional Support |
390,401 |
|
|
390,401 |
261,821 |
|
Guest speakers and lecturers |
9,930 |
|
|
9,930 |
18,570 |
|
Management and general expenses |
122,321 |
|
|
122,321 |
117,063 |
|
Total expenses and losses |
670,575 |
|
|
670,575 |
551,258 |
|
|
|
|
|
|
|
|
Change in net assets |
(430,984) |
784,595 |
$ 184,675 |
538,286 |
1,201,708 |
|
Net assets at beginning of year |
980,708 |
$ 4,758,712 |
$ 5,266,762 |
$11,006,182 |
$9,804,474 |
|
Net assets at end of year |
$ 549,724 |
$ 5,543,307 |
$ 5,451,437 |
$11,544,468 |
$11,006,182 |
Statement
of Activities
Year ended June 30, 2004
| |
Unrestricted |
Temporarily
Restricted |
Permanently Restricted |
Total |
|
Revenues, gains, and other support |
|
|
|
|
|
Contributions |
$ 178,888 |
$ 105,120 |
$ 538,825 |
$822,833 |
|
Investment income, net |
77,229 |
852,904 |
|
930,133 |
|
Net assets released from restrictions |
395,651 |
(395,651) |
|
|
Total revenues, gains, and other
supports |
651,768 |
562,373 |
$ 538,825 |
1,752,966 |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Scholarship and other student aid |
153,804 |
|
|
153,804 |
|
Institutional Support |
261,821 |
|
|
261,821 |
|
Guest speakers and lecturers |
18,570 |
|
|
18,570 |
|
Management and general expenses |
117,063 |
|
|
117,063 |
|
Total expenses and losses |
551,258 |
|
|
551,285 |
|
|
|
|
|
|
|
Change in net assets |
100,510 |
562,373 |
$ 538,825 |
1,201,708 |
|
Net assets at beginning of year |
880,198 |
$ 4,196,339 |
$4,727,937 |
$9,804,474 |
|
Net assets at end of year |
$ 980,708 |
$ 4,758,712 |
$5,266,762 |
$11,006,182 |
Statement of Cash Flows
Years ended June 30, 2005 and 2004
|
|
2005 |
2004 |
|
Cash flows from operating activities: |
|
|
|
Change in net assets |
$ 538,286 |
$ 1,201,708 |
|
Adjustments to reconcile change in net assets to
net cash from operating activities: |
|
|
|
Non Cash contributions |
(31,688) |
(74,958) |
|
Unrealized (gains) on investments |
(673,190) |
(834,124) |
|
Contributions restricted for long-term purposes |
(184,675) |
(538,825) |
|
Changes in assets and liabilities |
|
|
|
Contributions recievable |
39,260 |
(12,530) |
|
Other assets |
(9,560) |
(11,171) |
|
Funds held in trust by others |
(56,216) |
(211,070) |
|
Accounts payable |
(4,715) |
(1,066) |
|
Deposits held and due to others |
(1,006) |
17,376 |
|
Annuity obligations |
(8,936) |
52,391 |
|
Net cash from operating activities |
(392,440) |
(412,269) |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
Purchase from sales of investments |
4,381,832 |
9,425,005 |
|
Purchase of investments |
(4,128,611) |
(9,560,461) |
|
Net cash from investing activities |
253,221 |
(135,456) |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
Proceeds from contributions restricted for
long-term investment |
184,675 |
538,825 |
|
Net cash from financing
activities |
184,675 |
538,825 |
|
Net change in cash and cash equivalents |
45,456 |
(8,900) |
|
Cash and cash equivalents, beginning of year |
500,096 |
508,996 |
|
Cash and cash Equivalents, End of year |
$ 545,552 |
$ 500,096 |
Notes to the Financial Statements
June 30, 2005 and 2004
Note 1 – Significant Accounting and Reporting
Policies
Organization • Shawnee State University Development
Foundation (the “Foundation”) was incorporated as a not-forprofit
organization in the State of Ohio on November 4, 1987. The Foundation
was formed to raise funds exclusively for the benefit of Shawnee State
University. The primary source of revenues for the Foundation is donor
contributions. The Foundation is a legally separate entity from the
University and maintains a self appointing board of trustees.
Financial Statement Presentation • The accompanying financial
statements have been prepared on the accrual basis of accounting in
accordance with Financial Accounting Standards Board Statement of
Financial Accounting Standards (SFAS) No. 117, “Financial Statements
of Not-For-Profit Organizations.” Under SFAS No. 117, the Foundation
is required to report information regarding its financial positions
and activities according to three classes of net assets: unrestricted
net assets, temporarily restricted net assets, and permanently
restricted net assets.
Cash and Cash Equivalents • The Foundation considers all highly
liquid investments purchased with a maturity of three months or less
to be cash equivalents.
Investments • Investments are carried at fair value in accordance
with Statement of Financial Accounting Standards (SFAS) No. 124,
“Accounting for Certain Investments Held by Not-for-Profit
Organizations.” Investments received by gifts are recorded at fair
value on the date of gift. Realized investment gains and losses
represent the difference between the proceeds on sales of investments
and their cost when acquired. Investment return includes interest,
dividends, and both realized and unrealized gains and losses.
In accordance with SFAS No. 117, the Foundation has recorded net
appreciation (both realized and unrealized) on endowment funds as
unrestricted net assets unless the use of such income has been
temporarily or permanently restricted by the donor or by law. In cases
where such donor-imposed restrictions exist, net appreciation is
recorded in the same manner as the corresponding income.
The Foundation’s endowment consists of assets, which are invested
to provide income to support education and related activities, either
as a result of donor-imposed restrictions or as a result of
designations by the Board of Trustees. Endowment contributions are
generally invested on a pooled basis and managed so as to achieve
maximum long-term total return.
Contributions • Contributions to the Foundation are recognized and
reported as revenue at fair value upon the earlier of the period in
which a pledge becomes unconditional or the period in which the
contribution is received. Contributions with donor-imposed
restrictions are reported as temporarily or permanently restricted
support, while contributions without donor-imposed restrictions are
reported as unrestricted support.
Net Assets • Unrestricted Net Assets represent funds, which
can be used by the Foundation for any purpose authorized by the Board
of Trustees.
Temporarily Restricted Net Assets represent
funds, which are restricted for a specific purpose determined by the
donor. A donor-imposed restriction permits the Foundation to expend
the donated assets as specified and is satisfied either by the passage
of time or by actions of the Foundation. The Foundation maintains
separate balances in its accounting records to account for the amounts
available for such restricted purposes.
Permanently Restricted Net Assets represent
contributions in which the donor has stipulated, as a condition of the
gift, that the principal be maintained intact and only the earnings of
the fund be expended as the donor has specified.
During fiscal year 1990, the Foundation was awarded$500,000 by the
U.S. Department of Education for an Endowment Challenge Grant.
Significant provisions of the Grant required the Foundation to secure
$500,000 in matching funds from private sources. The Foundation is
temporarily restricted from spending more than 50% of the income on
the investment of the Endowment Challenge Grant for a twenty-year
period. After the twenty-year period, all income earned and the
Grant’s corpus may be spent by the Foundation for educational
purposes.
Expiration of Donor-Imposed Restrictions • The expiration of a
donor-imposed restriction on a contribution or
on endowment income is recognized in the period in which the
restriction expires and at that time the related resources are
reclassified to unrestricted net assets. A restriction expires when
either the stipulated time has elapsed or when the stipulated purpose
for which the resource was restricted has been fulfilled, or both.
Contributions of land, buildings, and equipment without donor
stipulations concerning the use of such long-lived assets are reported
as revenues of unrestricted net assets. Contributions of cash or other
assets to be used to acquire land, buildings, and equipment with such
donor stipulations are reported as revenues of temporarily restricted
net assets. The restrictions are considered to be released at the time
of acquisition of such long-lived assets.
Net assets are released from donor restrictions by incurring
expenses satisfying the restricted purposes or by occurrence of events
specified by the donors or by the change of restrictions specified by
the donors. Generally, the releases of restrictions are for
scholarships and capital projects.
Federal Income Tax • The Internal Revenue Service has ruled
that the Foundation is exempt from federal income taxes under Section
401(a) of the Internal Revenue Code as a public charity described in
Section 501(c)(3).Annuities Payable •
The carrying value of annuities payable is actuarially determined
based on the present value of the discounted estimated future cash
flows using current market interest rates.
Use of Estimates • The preparation of
financial statements in conformity with accounting principles
generally accepted in the United States of America requires management
to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Note 2 — Investments
The fair value of investments held by the Foundation at June 30,
2005 and 2004 is summarized as follows:
| |
2005 |
2004 |
|
U.S. Government securities |
$ 1,448,103 |
$ 1,779,515 |
|
Mutual funds |
|
|
|
Equity |
1,827,798 |
1,303,726 |
|
Fixed income |
978,352 |
1,063,167 |
|
Common stock |
5,282,673 |
4,937,777 |
|
Total |
$ 9,536,926 |
$ 9,084,185 |
Investment income for the fiscal years
ended June 30, 2005 and 2004 is composed of the following:
| |
2005 |
2004 |
|
Interest and dividends |
$ 174,729 |
$ 153,709 |
|
Investment fees |
(69,222) |
(57,700) |
|
Net realized and unrealized gains on investments |
673,190 |
834,124 |
|
Total |
$ 778,697 |
$ 930,133 |
Note 3 — Contributions Receivable
Contributions receivable at June 30, 2005 and 2004 are promises to
give from various donors that are unconditional. Pledges that will not
be received in the subsequent year have been discounted to present
value using interest rates ranging from 1.6% to 5.3%. Contributions
receivable are due as follows:
|
|
2005 |
2004 |
|
Less than one year |
$ 6,862 |
$ 5,805 |
|
One to five years |
71,947 |
98,539 |
|
More than five years |
57,464 |
72,196 |
|
Total contributions receivable |
136,273 |
176,540 |
|
Less: provision for uncollectible pledges |
(3,407) |
(4,414) |
|
Net contributions receivable |
$ 132,866 |
$ 172,126 |
As of June 30, 2005 and 2004, the Foundation had
cash surrender value of insurance policies of $121,295 and 112,816
respectively. These amounts are shown as other assets on the statement
of financial position. The face value of these policies as of June 30,
2005 and 2004 of $1,056,773 and 1,056,221 is not reflected in the
statement of financial position.
The Foundation has received conditional promises to give totaling
approximately $2,400,000 as of June 30, 2005 that have not been
recognized as assets in the statement of financial position. These
gifts are primarily in the form of bequests, which are deemed
conditional due to their revocable nature.
Note 4 — Split-Interest Agreements
The Foundation has been named charitable remainder beneficiary in
various charitable remainder trusts administered by an outside
trustee. These trusts provide, among other matters, that the trustee
shall pay to beneficiaries periodic payments until either the assets
of the trust have been exhausted or death of the beneficiaries. Upon
death of the beneficiaries, the Foundation’s designated share of all
property in the trust will be transferred to the Foundation in
accordance with the agreements.
The Foundation accounts for such agreements by
recording the fair market value of assets donated netted against the
present value of the annuities payable, based on the terms of the
agreement as contributions receivable from remainder trusts. The
excess of the fair market value of the donated assets over the
liability is recorded as unrestricted support in the year of the gift,
unless the donor has placed restrictions on the use of the gift, in
which case the excess is recorded as an addition to temporarily or
permanently restricted net assets.
Note 5 — Restricted Net Assets
Temporarily and permanently restricted net assets at June 30, 2005
are restricted for the following purposes:
| |
Temporarily
Restricted |
Permanently
Restricted |
|
Federal matching grant funds |
$ 1,571,538 |
|
|
Scholarships and student aid |
1,017,279 |
$ 1,844,780 |
|
Irrevocable charitable trusts |
1,344,683 |
|
|
University facilities and programs |
1,609,807 |
3,606,657 |
|
Total |
$ 5,543,307 |
$ 5,451,437 |
Temporarily and permanently restricted
net assets at June 30, 2004 are restricted for the following purposed:
| |
Temporarily
Restricted |
Permanently
Restricted |
|
Federal matching grant funds |
$ 1,390,170 |
|
|
Scholarships and student aid |
985,693 |
$ 1,810,822 |
|
Irrevocable charitable trusts |
475,675 |
|
|
University facilities and programs |
1,907,174 |
3,455,940 |
|
Total |
$ 4,758,712 |
$ 5,266,762 |
Note 6 — Concentration of Credit Risk
Financial instruments, which potentially subject the Foundation to
a concentration of credit risk, consist primarily of
contributions receivable and investments.
The Foundation maintains a custodial account with U.S. Bank N.A.,
Private Client, Trust and Asset Management Division. U.S. Bank
maintains insurance coverage against major losses. Policies currently
in place include an errors and omission policy, employee fidelity
bond, blanket lost original instruments bond, and master trust
property policy. Coverage is provided by insurance companies which
U.S. Bank management believes to be financially sound, and is
maintained at levels which U.S. Bank considers reasonable given the
size and scope of its operations. Insurance coverage is approved
annually by the U.S. Bank Board of Directors.
Note 7 — Distribution to Shawnee State University
The Foundation made distributions to, or on behalf of the
University of $548,254 during the year ended June 30, 2005 and
$434,195 during the year ended June 30, 2004. Administrative expenses
of $122,321 in fiscal year 2005 and $117,063 during fiscal year 2004
were reimbursed to Shawnee State University for direct costs,
including an appropriate allocation of salary and benefits, incurred
in the management of the Foundation’s endowment funds.
Report of Independent Auditors
on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
Board of Trustees
Shawnee State University Development Foundation
Portsmouth, Ohio
We have audited the financial statements of Shawnee State
University Development Foundation (the Foundation) as of and for the
year ended June 30, 2005, and have issued our report thereon dated
September 1, 2005. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United
States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the
Foundation’s internal control over financial reporting in order to
determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and not to provide an opinion on
the internal control over financial reporting. Our consideration of
the internal control over financial reporting would not necessarily
disclose all matters in the internal control over financial reporting
that might be material weaknesses. A material weakness is a reportable
condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level
the risk that misstatements caused by error or fraud in amounts that
would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control over financial
reporting and its operation that we consider to be material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the
Foundations’ financial statements are free of material misstatement,
we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which
could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit
and, accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance or other matters
that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the
Board of Trustees and management, and is not intended to be and should
not be used by anyone other than these specified parties.
Crowe Chizek and Company LLC
Columbus, Ohio
September 1, 2005 |
