financial statements june 30, 2014 30,2013 audited financial...)Æ cpas and f4anagement consultants...
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KIPP: ST. LOUIS
FINANCIAL STATEMENTS
June 30, 2014 and June 30,2013
KTPP: ST. LOUIS
TABLE OF'CONTENTS
Page
IIndependent Auditorso Report
Financial Statements
Statements of Financial Position
Statements of Activities
Statements of Cash Flows
Notes to Financial Statements
Supplementary Information
Schedule of Revenues, Expenditures and Changes in Fund Balances -Modified Cash Basis - Governmental Funds - Unaudited
Schedule of Revenues Collected by Source - Modified Cash Basis -Governmental Funds - Unaudited
Schedule of Expenditures Paid by Object - Modified Cash Basis -Governmental Funds - Unaudited
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CPAs andf4anagement Consultants
One South Memorial Drive, Ste.900St. Louis, MO 63 I 02-2439ph. 314.231.6232fax 3 14.880.9307Kerber, Eck & Braeckel .'-'www.kebcpa.com
Independent Auditors' Report
Board of DirectorsKIPP: St. Louis
Report on the Financial Statements
We have audited the accompanying financial statements of KIPP: St. Louis (a nonprofitorgarlization), which comprise the statements of financial position as of June 30,2014 and June 30,
2013, and the related statements of activities and cash flows for the years then ended, and the related
notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financialstatements in accordance with accounting principles generally acceped in the United States ofAmerica; this includes the design, implementation, and maintenance of internal control relevant tothe preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or enor.
Auditors' 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 UnitedStates of America and the standards applicable to financial audits contained ín Governmental
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 financialstatements 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 auditors' judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or effor. In making those risk assessments, the auditor considers internal controlrelevant 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, ws 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.
Other Locations
Belleville, lL . Carbondale, lL . Jacksonville, lL . Litchfìeld, lL . Springfìeld, lL . Cape Girardeau, MO . Milwaukee,Wl
Opinion
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of KIPP: St. Louis as of June 30,2014 and 2013 andthe changes in
its net assets and its cash flows for the years then ended in accordance with accounting principles
generally accepted in the United States of America.
Other Matters
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements as
a whole. The supplementary information on pages 13 through 15, which are the responsibility ofmanagement, are presented for purposes of additional analysis and are not a required part of the
f,rnancial statements. Such information has not been subjected to the auditing procedures applied inthe audit of the financiai statements, and accordingly, we do not express an opinion or provide any
assurance on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 9,2014 on our consideration of KIPP: St. Louis'intemal control over financial reporting
and on 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 ofinternal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards inconsidering KIPP: St. Louis' internal control over financial reporting and compliance.
K"þ.Ee/r f ìr**hr-tuPSt. Louis, MissouriDecember 9,2014
KIPP: ST. LOUIS
STATEMENTS OF FINANCIAL POSITIONJune 30, 2014 and June 30,2013
2014
$ 1,849,806
2,834,884169,412
77,15t11,500
1,010,962
$ 240,088
37,60290,400
460,827
828,917
1,861,769
3,263,029
$ 1,040,116
1,029,218
75,981
53,444
11,500
886,653
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ASSETS
Cash and cash equivalents
Pledges receivable - net
Federal grants receivable
Prepaid expenses
Deposits on buildingProperty and equipment - net
Total assets
LIABILITIES AND NET ASSETS
LiabilitiesAccounts payable
Accrued expenses
Deferred rentLong-term debt
Total liabilities
Net assets
UnrestrictedTemporarily restricted
Total net assets
Total liabilities and net assets
$ 5,953,715 g 3,096,912
$
39,767
109,400
531,900
681,067
1,386,628
1,029,217
5,124,798 2,415,845
$ 5,953,715 _$ 3,096912
See notes to financial statements
a)
KIPP: ST. LOUIS
STATEMENT OF ACTIVITIESYear ended June 30,2014
UnrestrictedTemporarilyRestricted Total
REVENUES, GAINS AND OTHER SUPPORT
Federal revenue
State revenue
Local revenue
ContributionsOtherNet assets released from restrictions
Total revenues, gains and other support
EXPENSESProgram services
Management and general
Development
Total expenses
CHANGE IN NET ASSETS
Net assets at July 1,2013
Net assets at June 30,2014
6,066,067 2,233,812 8,299,879
$ 780,063
3,085,763
371,4581,115,610
73,173
700,000
2,933,812
(700,000)
$ 780,063
3,085,763
371,458
4,049,422
13,173
$
4,329,1541,091,524
170,248
4,329,1541,091,524
170,248
5,590,926 5,590,926
475,141 2,233,812 2,709,953
1,386,628 7,029,217 2,415,845
$ 1,861,769 s 3,263,029 S 5,124,799
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KIPP: ST. LOUIS
STATEMENT OF ACTIVITIESYear ended June 2013
REVENUES, GAINS AND OTHER SUPPORT
Federal revenue
State revenue
Local revenue
ContributionsOther
Net assets released from restrictions
Total revenues, gains and other support
EXPENSES
Program services
Management and general
Development
Total expenses
CHANGE IN NET ASSETS
Net assets at July 1,2012
Net assets at June 30,2013
Total
s 677,7572,952,363
268,099
1,338,860
19,908
(887,457)
5,269,543 (11,556) 5,256,987
Unrestricted
TemporarilyRestricted
s 677,757
2,952,363268,099
462,95919,908
887,457
875,901
$
3,885,579
734,797
148,685
3,885,579
734,797148,685
4,769,061 4,769,061
499,482 (1 1,556) 487,926
1,040,773 1,927,919
$ 1,396,628 S 1,029,217 g 2,415,845
887,146
See notes to fìnancial statements.
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KIPP: ST. LOUIS
STATEMENTS OF CASH FLO\ilSYear ended June 30,2014 and June 30,2013
Increase (decrease) in cash and cash equivalents
Cash flows from operating activitiesChange in net assets
Adjustments to reconcile change in net assets to net cash
provided by operating activitiesDepreciation
(Increase) decrease in assets
Pledges receivable
Federal grants receivable
Prepaid expenses
Increase (decrease) in liabilitiesAccounts payable
Accrued expenses
Deferred rentTotal adjustments
Net cash provided by operating activities
Cash flows from investing activityCapital expenditures
Cash flows from financing activityPrincipal payments on long-term debt
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for interest
See notes to financial statements.
20r4 20r3
s 2,708,953 $ 487,926
r99,t70 232,r83
(1,805,666)
(93,431)(23,707)
240,088(2,r65)
(19,000)
11,556
50,030
(3,167)
(16,94t)5,13 8
(19,000)
(1,504,711) 259 199
r,204,242 741,725
(323,479) (136,630)
(71,073) (67,480)
809,690 543,615
1,040,116 496,501
$ 1,849,806 $ 1,040,116
s 24,995 $ 29,891
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KIPP: ST. LOUIS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 _ SUMMARY OF ACCOUNTING POLICIES
Nature of Organization
KIPP: St. Louis (KIPP), a not-for-profit corporation, is an independent publicly supportedcharter school located in the metropolitan area of the St. Louis Missouri Public School District.KIPP was organized in 2008 under Chapter 355 Revised Statutes of Missouri (RSMo) andgoverned by Senate Bill No. 781 of the 89th General Assembly of the Missouri legislature.
Under the RSMo, Washington University (Sponsor) granted KIPP a charter effective untilJune 30, 2018. The sponsorship agreement has a term of ten years and is renewable by mutualagreement provided that KIPP is in ccmpliance with the terms of the charter agreement andunless a written notice of non-renewal is given by either party. During the term of the charter,the Sponsor may also terminate the charter if good cause is shown.
The Organization's charter provides for the education of low income, disadvantaged, at-risk boysand girls. KIPP provided education at the fifth through eighth grade levels for the 2013-2014school year with approximately 330 students in attendance.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with maturities, whenacquired, of three months or less.
Net Assets
Unrestricted net assets are not restricted by donors or the donor-imposed restrictions haveexpired. Temporarily restricted net assets contain donor-imposed restrictions that permit KIPPto use or expend the assets as specified. The restrictions are satisfied either by the passage oftime or by action of KIPP. Permanently restricted net assets contain donor-imposed restrictionsthat stipulate the resources be maintained permanently but permit KIPP to use or expend part orall of the income derived from the restricted assets for either specified or unspecified purposes.
Governmental Funding
Revenue from federal, state, or local grants and contracts are recognized as revenue by KIPPwhen expenses are incurred and billed.
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KIPP: ST. LOUIS
NOTES TO FINANCIAL STATEMENTS
Contributed Services
Contributed services are reported as contributions at their fair value if such services create orenhance nonfinancial assets or would have been purchased ifnot provided by donation, requirespecial skills and are provided by individuals possessing such skills. A number of volunteershave made a contribution of their time to KIPP to develop academic and other programs and toserve on the board of trustees. The value of this contributed time is not reflected in the financialstatements as such services either do not require specialized skills or would not typically be
purchased had they not been provided as donations.
Pledges Receivable
Unconditional promises to give are recorded as a receivable and revenue when the promise ismade, and reduced by an allowance for uncollectible pledges as determined by management.
Long-term pledges are discounted using the net present value of future cash flows.
Property and Equipment
Property and equipment are recorded at cost. KIPP capitalizes all purchases of property and
equipment in excess of $500. Depreciation is computed using the straight-line method over the
estimated useful lives of the respective assets which range from 3 to 10 years.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates and
assumptions that affect the reported assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those estimates.
Income Taxes
KIPP is a not-for-profit organization under Section 501(c)(3) of the Internal Revenue Code and
is exempt from income taxes on related income under Section 501(a) of the Code. KIPP filesfederal informational retums. The statutes of limitation for informational returns filed for theyears ended June 30, 2011 through 2014 have not expired and therefore are subject toexamination.
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KIPP: ST. LOUIS
NOTES TO FINANCIAL STATEMENTS
NOTE 2 _ PROPERTY AND EQUIPMENT
Property and equipment consists of the following at June 30,2014 and June 30,2013:
2014 2013
Fumiture and fixturesLeasehold improvements
$ 711,3601,236,472
$ 537,010
1,087,343
7,947,932(936,870)
r,624,353Less accumulated depreciation (73 7,700)
$ 1,010,962 $ 886,653
Depreciation expense was $199,170 and5232j83 for the years ended June 30,2014 and June
30, 2013, respectively.
NOTE 3 - LEASE COMMITMENTS
Building
KIPP has entered into an operating lease agreement for the lease of educational facilities ownedby St. Francis de Sales Oratory located at 2647 Ohio Avenue, St. Louis, Missouri. The lease
expires in May 2019. The lease is automatically terminated in the case of cancellation orrevocation of KIPP's charter. KIPP incurred lease expenses for the building in the amount of$122,050 and$142,667 for the years ended June 30, 2014 and June 30, 2013, respectively.
Regional Office
KIPP has entered into an operating lease agreement for the lease of regional offices owned bySt. Francis de Sales Oratory located at 2647 Ohio Avenue, St. Louis, Missouri. The Lease
expired in May 2014 and has not been renewed. KIPP continues to pay its monthly rent based onthe expired lease until a new lease is signed. KIPP incurred lease expenses for the regionaloffices in the amount of $21,210 and $15,000 for the years ended June 30,2014 and June 30,
2013, respectively.
Equipment
KIPP is party to various agreements for the leasing of certain articles of school office equipment.The minimum payments vary from $397 to $3,025 per month over the lives of the leases, whichend June 2020. KIPP incurred lease expense for these articles in the amount of approximately$45,000 and $23,000 for the years ended June 30,2014 and June 30,2013, respectively.
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KTPP: ST. LOUIS
NOTES TO FINANCIAL STATEMENTS
Minimum Lease Commitments
Future facilities and equipment minimum lease commitments as of June 30, are as follows:
Year EndingJune 30, Total Facilities Equipment
201520r620t720r820t92020
$ $ $206,064206,064193,964
169,764
169,764
4,764
165,000
165,000
165,000
lo),uuu165,000
41,064
4r,06428,964
4,764
4,764
4,764
$ 950,384 $ 825,000 $ 125,384
NOTE4_LONG-TERMDEBT
Long-term debt consists of a note payable to IFF. The note is payable in monthly installments of$8,006, including interest at 5.0o/o per annum through December l, 2014 at which time interest
will be recalculated from this date through maturity of December 1,2019. The loan is secured
by a leasehold deed of trust in and to KIPP's real estate lease as well as its security agreement on
personal property of the school.
The following is a summary of principal maturities on the long-term debt:
Year EndingJune 30, Principal
201520t62017
2018
20192020
$ 74,707
78,53284,549
86,773
91,21245,054
Total
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_ï 460,W
KIPP: ST. LOUIS
NOTES TO FINANCIAL STATEMENTS
NOTE 5-RISKMANAGEMENT
KIPP is exposed to various risks of loss from torts, theft of, damage to, and destruction of assets;
injuries to employees; and natural disasters. KIPP maintains commercial insurance, withlimitation, to protect KIPP from such risks.
NOTE 6 _ CONTINGENCY
Amounts received or receivable from grants or contracts by outside agencies are subject to audit
and adjustment by grantor agencies, principally the Missouri Department of Elementary and
Secondary Education and the federal government. Any disailowed amounts, including amounts
already collected, may constitute a liability of KIPP. The amorurts, if any, which may be
disallowed by any grantors cannot be determined at this time. Management believes any such
amount would not have a material effect on the accompanying financial statements.
NOTET_RETIREMENTPLAN
KIPP contributes to the Public School Retirement System of the City of St. Louis, a cost-sharing,
multi-employer defined benefit pension plan. Participation is mandatory under Missouri Revised
Statues, Chapter I05 &,169.
The Retirement System members are required to contribute 5.00% of their annual covered salary
for the year 2014. KIPP was required to contribute 15.07olo of covered school compensation for
July 1 , 2013 to December 3l , 2013 and 16 .5%o for the period January I , 2014 through June 3 0,
20i4. The employer contribution rates are determined annually as part of the Annual Valuation
Report made by the Plan's actuary and the employee contribution rate is determined by the
statute.
The total employer contributions for the years ended June 30, 2014 and June 30, 2013 were
$73 8,87 1 and 5234,228, respectively.
NOTE 8 . RECLASSIFICATIONS
Certain accounts in the prior-year financial statements have been reclassified for comparative
pufposes to conform with the presentation in the current-year financial statements.
NOTE 9 _ SUBSEQUENT EVENTS
In preparing the financial statements, KIPP has evaluated events and transactions for potential
recõgtrition or disclosure through December 9, 2014, the date the financial statements were
available to be issued.
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SUPPLEMENTARY INFORMATION
KIPP: ST. LOUIS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES.
MODIFIED CASH BASIS - GOVERNMENTAL FUNDS - UNAUDITED
Year ended June 2014
General
SpecialRevenue
Capital
Projects
TotalFunds
Revenues
LocalState
Federal
Expenditures
CurrentInstructionHealthy, psych, speech and audio
Improvement of instruction
Executive administration
Building level administration
Business services
Operation of plant
Pupil transportationFood services
Central officeDebt service
PrincipalInterest
Total expenditures
Excess ofrevenues over (under)
expenditures
Other financing sources (uses)
Transfers
Fund balances at July 1,2013
Fund balances at June 30,2014
$ 2,190,388
3,085,763686,633
$ 60,000 $ 378,000 $ 2,628,388
3,085,763
686,633
60,000 378,000 6,400,7845,962,784
636,503
28,553
17,280
699,272
220,392
177,672
245,401
285,322
288,303
59,382
1,799,186 70,512
48
579,823
7,300
159,433
224,843
2,488
I,l0l
2,506,20128,55317,280
706,620800,215
177,672
404,834
285,322
290,791
285,326
71,07324.995
71,07324,995
2,6 58,080 2,603,900 336,902 5,598,882
3,304,704 (2,543,900) 41,098 801,902
(2,543,900) 2,543,900
1,0 10.304 1,010,304
$ 1,771,108 $ $ 41,098 $1, 812,206
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KIPP: ST. LOUIS
SCHEDULE OF REVENUES COLLECTED BY SOURCE -MODIFIED CASH BASIS - GOVERNMENTAL FUNDS - UNAUDITEDYear ended June 30, 2014
General
Special
Revenue
CapitalProjects
TotalFunds
LOCALProp C
Earnings on investments
Food service program
Student activities
Other
Total local
STATE
Basic formula
Transportation
Food service
Total state
FEDERAL
Medicaid
IDEA Entitlement Funds, Part B IDEA
Food service
Title I - ESEA
Title II, Part A, ESEA
Other
Total federal
Total revenues
$ 339,363
s29
1,667
29,8gg
l,g l g,g30
2,190,388
$
60,000
60,000
$ 339,363
529
1,667
29,899
378,000
378,000 2,628,388
$
3,03 1,3 l052,805
1,648
3,031,310
52,805
1,648
3,095,763 3,085,763
37,759
42,963
219,420
247,259
33,551
105,681
37,759
42,963
219,420
247,259
33,551
105,681
686,633 686,633
s 5,962,784 $ 60,000 $ 378,000 $ 6,400 ,784
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KIPP: St. Louis
SCHEDULE OF EXPENDITURES PAID BY OBJECT. MODIFIED CASH BASIS -
GOVERNMENTAL FUNDS . UNAUDITEDYear ended June 30,201.4
General
SpecialRevenue
CapitalProjects
TotalFunds
Salaries
Employee benefits
Purchased services
Supplies and materials
Capital outlay
Principal
Interest
$ 471,400 81,920,402 $
229,981 683,498
r,671,5r0
s 2,397,802
9t3,479
1,671,510
279,189 279,t89
240,834 240,834
71,073 71,073
24,995 24,995
$ 2,658,080 $ 2,603,900 s 336,902 $ 5,598,882
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