food bank of western new york, inc. · food bank of western new york, inc. statement of activities...

FOOD BANK OF WESTERN NEW YORK, INC.

Financial Statements and Additional Information For the Year Ended June 30, 2015

with Independent Auditors' Report


TABLE OF CONTENTS

INDEPENDENT AUDITORS' REPORT

FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED JUNE 30,2015:

Statement of Financial Position Statement of Activities and Changes in Net Assets Statement of Cash Flows Notes to Financial Statements

ADDITIONAL INFORMATION FOR THE YEAR ENDED JUNE 30,2015:

Schedule of Functional Expenses Schedule of Expenditures of Federal Awards

Page

1 - 2

3 4 5

6 - 13

14 15

INDEPENDENT AUDITORS ' REPORT 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 16- 17

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

18 - 19

20 - 21

22

ChiatnpouTravis Besavv &Kershner LLP CERTIFIED PUBLIC ACCOU NTANTS & CONSULTANTS

45 Bryant Woods North I Amherst I New York 14228 I Phone 716 630 2400 Fax 716 630 2401 I chiampou.com

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Food Bank of Western New York, Inc. Buffalo, New York

Report on the Financial Statements

Charles W. Chiampou, CPA, JD Robert J. Travis, CPA

Kelly G. Besaw, CPA CVA Eugene G. Kershner, CPA

Gerald F. Pullano, CPA D. Scott Sutherland, CPA

Stephen R. Brady, CPA, JD Jon K. Pellish, CPA

Eric D. Colca, CPA, CVA Michael Schaffstall, CPA

Garret R. Alexin, CPA, MBA David A. Urban, CPA, MBA

Cheryl A. Jankowski, CPA Karen M. Antonelli, CCIFP

We have audited the accompanying financial statements of Food Bank of Western New York, Inc. (a nonprofit organization), which comprise the statement of financial position as of June 30, 2015, and the related statements of activities and changes in net assets, and of cash flows for the year 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.

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 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 from material misstatement.

An audit involves perfonning 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 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 inten1al control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Food Bank of Westen1 New York, Inc. as of June 30, 2015, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Report on Summarized Comparative Information

We have previously audited the Food Bank of Western New York, Inc. ' s 2014 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated September 17, 2014. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2014, is consistent in all material respects, with the audited financial statement from which it has been derived.

Other Matters

Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of functional expenses is presented for purposes of additional analysis and is not a required part of the financial statements. The accompanying schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and NonProfit Organizations, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 23, 2015, on our consideration of Food Bank of Western New York, Inc. ' s internal control over financial reporting and on 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Food Bank of Western New York, Inc.'s internal control over financial reporting and compliance.

September 23 , 2015


STATEMENT OF FINANCIAL POSITION JUNE 30,2015 (WITH COMPARATIVE TOTALS FOR 2014)

Unrestricted Temporarily Restricted

Agency Board Value of Total Assistance Designated Total Grants and Donated and Temporarily Total Total

Operating Program Plant Endowment Unrestricted Other USDA Food Restricted 2015 2014

ASSETS Cash and cash equivalents $ 2,402,255 $ 977,465 $ 200,345 $ - $ 3,580,065 $ 713,977 $ - $ 713,977 $ 4,294,042 $ 4,173,835

Grants and pledges receivable, net - - - 417,355 - 417,355 417,355 139,682

Accounts receivable 87,373 - - - 87,373 61,158 - 61,158 148,531 190,775

Due from other funds 484,930 - - - 484,930 - 484,930 151,491

Prepaid expenses 30,747 501 - 31,248 - - 31,248 15,622

Inventory: Donated - in-kind value - - - - - - 1,259,525 1,259,525 1,259,525 1,421 ,549 USDA - in-kind value - - - 372,645 372,645 372,645 583,179 Other 146,278 - - - 146,278 70,04 1 - 70,041 216,3 19 115,951

Long-term investments - - 1,531 ,902 1,53 1,902 - - - 1,531,902 1,348,832 Fixed assets, net - - 1,102,689 1,102,689 - - - 1,102,689 1,182,667

TOTAL ASSETS $ 3,151,583 $ 977,465 $ 1,303,535 $ 1,531 ,902 $ 6,964,485 $ 1,262,531 $ 1,632,170 $ 2,894,701 $ 9,859,186 $ 9,323,583 (.;.)

LIABILITIES AND NET ASSETS

LIABILITIES: Accounts payable $ 255,325 $ $ - $ $ 255 ,325 $ $ - $ - $ 255,325 $ 245,778

Accrued expenses 112,260 - - 112,260 - - - 112,260 91,575

Deferred income 36,981 - - - 36,981 2,559 - 2,559 39,540 31,091

Due to other funds - - - - - 484,930 - 484,930 484,930 151,491

Total liabilities 404,566 - - - 404,566 487,489 - 487,489 892,055 519,935

NET ASSETS:

Unrestricted: Net investment in plant - 1,102,689 - 1,102,689 - - - 1,102,689 1,182,667

Designated for agency assistance - 977,465 - - 977,465 - - 977,465 932,901

Designated for plant - - 200,846 - 200,846 - - - 200,846 283,406

Designated for endowment - - - 1,531 ,902 1,531,902 - - - 1,531,902 1,448,832

Undesignated 2,747,01 7 - - - 2,747,017 - - - 2,747,0 17 2,111 ,024

Total unrestricted 2,747,017 977,465 1,303,535 1,531,902 6,559,919 - - - 6,559,919 5,958,830

Temporarily restricted - - - - - 775,042 1,632,170 2,407,212 2,407,212 2,844,818

Total net assets __ 2,747,017 977,465 1,303,535 1,531 ,902 6,559,919 775,042 1,632,170 2,407,212 8,967,131 8,803,648

TOTAL LIABILITIES AND NET ASSETS $ 3,151,583 $ 977,465 $ 1,303 ,535 $ 1,531,902 $ 6,964,485 $ 1,262,53 1 $ 1,632, 170 $ 2,894,701 $ 9,859,186 $ 9,323,583

See notes to financial statements.


STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

FOR THE YEAR ENDED JUNE 30,2015 (WITH COMPARATIVE TOTALS FOR 2014)


Agency Board Value of Total

Assistance Designated Total Grants and Donated and Temporarily Total Total Operating Program Plant Endowment Unrestricted Other USDA Food Restricted 2015 2014

REVENUES, GAINS AND OTHER SUPPORT

Contributions: Fundraising and special events $ I ,530, 143 $ $ $ $ I ,530, 143 $ $ $ $ 1,530,143 $ 1,402,260 General contributions I ,056,343 55,000 33,399 1,144,742 562,402 562,402 I ,707,144 1,813,185 HPNAP grant 2,383,710 2,383,710 2,383,710 2,592, 121 EFSP/FEMA grant 185,704 185,704 185,704 I 03 ,396 Other government grants 210,783 210,783 20,757 20,757 231,540 332, 199 Private grants 459,876 459,876 189,366 189,366 649,242 732,99 1

In-kind contributions: General 53,927 53,927 53,927 83,038 Donated food and grocery items 13,182,902 13,182,902 13,182,902 14,69 1,437 USDA food 2,156,983 2, 156,983 2,156,983 2,247,1 14

Revenues: Shared maintenance and AAP fees 756,307 756,307 756,307 8 17,530 Program fees 566,369 566,369 566,369 588,890 Other revenue and reimbursements 37,742 37,742 37,742 16,475

~ Investment income 9,461 57,082 66,543 66,543 34,353 Gains on disposal of fixed assets 5,400

Net assets released from restrictions 19,119,430 19,119,430 (3,406,987) (15,712,443) (19, 119,430)

Total revenues, gains and other support 23,800,381 55,000 90,481 23,945,862 (65,048) (372,558) (437,606) 23,508,256 25,581,357

EXPENSES: Management and general 1,190,441 15,808 1,206,249 1,206,249 1,240,497

Program services 5,357,576 20 1,730 7,411 5,566,717 5,566,717 5,752,126 Agency assistance program 805,436 805,436 805,436 838,077 In-kind expenditures 15,766,371 15,766,371 15,766,371 16,332,540

Total expenses 22,314,388 805,436 217,538 7,4 11 23,344,773 23,344,773 24,163,240

CHANGES IN NET ASSETS 1,485,993 (805,436) (162,538) 83,070 601,089 (65,048) (372,558) (437,606) 163,483 I ,418,117

NET ASSETS, BEGINNING OF YEAR 2,111,024 932,901 1,466,073 1,448,832 5,958,830 840,090 2,004,728 2,844,8 18 8,803,648 7,385,531

TRANSFER OF NET ASSETS (850,000) 850,000

NET ASSETS, END OF YEAR $ 2,747,017 $ 977,465 $ 1,303,535 $ 1,53 1,902 $ 6,559,919 $ 775,042 $ 1,632, 170 $ 2,407,212 $ 8,967,131 $ 8,803,648


STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JUNE 30,2015 (WITH COMPARATIVE TOTALS FOR 2014)


Agency Board

Assistance Designated Grants and Total Total Operating Program Plant Endowment Other 2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Changes in net assets $ 1,485 ,993 $ (805,436) $ (162,538) $ 83,070 $ (65,048) $ 536,041 $ 729,068 Adjustments to reconcile changes in net assets to net cash

provided by (used in) operating activities :

Depreciation - I 94,263 - - 194,263 231 ,226

Gain on sale of fixed assets - - - (5 ,400) Net investment income - - 66,543 66,543 (120,968)

Changes in operating assets and liabilities:

Grants and pledges receivable, net - - - - (277,673) (277,673) 54,773

Accounts receivable 3,402 - 100,000 (61 ,158) 42,244 (85,576)

Due to/Due from other funds (333 ,439) - - - 333,439

Prepaid expenses (16,295) - 669 - - ( 15,626) 11 ,423

v. Inventory (92,317) - - (8 ,051) (100,368) (2,245)

Accounts payable 9,547 - - - 9,547 101 ,819

Accrued expenses 20,685 - - - - 20,685 6,939

Deferred income 5,993 - - 2,456 8,449 (2,065)

Interfund accounts, net of non-cash transfers (850,000) 850,000

Net cash provided by (used in) operating activities 233,569 44,564 32,394 249,613 (76,035) 484,105 918,994

CASH FLOWS FROM INVESTING ACTIVITIES :

Purchases of fixed assets - (114,285) - - (114,285) (40,092)

Proceeds from sale of fixed assets - - - - - 5,400

Investment purchases - - (1,918,351) (1 ,918,351) (2, 177, 147)

Proceeds from sale of investments - - 1,668,738 - 1,668,738 1,622,006

Net cash used in investing activities - - (114,285) (249,613) - (363 ,898) (589,833)

NET CHANGE IN CASH AND CASH EQUIVALENTS 233,569 44,564 (81 ,891) - (76,035) 120,207 329, 161

CASH AND CASH EQUIVALENTS :

BEGINNING OF YEAR 2,168,686 932,901 282,236 - 790,012 4,173 ,835 3,844,674 -

END OF YEAR $ 2,402,255 $ 977,465 $ 200,345 $ - $ 713 ,977 $ 4,294,042 $ 4, 173,835

See notes to financial statements.


NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2015

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations - The Food Bank of Western New York, Inc., (the "Organization") is a nonprofit organization dedicated to obtaining nutritious food and support from public and private sources and efficiently distributing these resources to the hungry in Western New York through its member agencies.

The Organization solicits donations of surplus food and grocery items from the food industry, public and private sources, and distributes these products to qualified 50l(c)(3) charities. The food is obtained from donors based in Western New York, national donors through an affiliation with Feeding America, and the United States Department of Agriculture (USDA). The Organization also distributes food purchased with funds from private contributions, private foundations and government grants, and respectfully provides food, training, education and hunger advocacy for its member agencies and clients.

Comparative Financial Information - The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles in the United States of America. Accordingly, such information should be read in conjunction with the Organization's financial statements for the year ended June 30, 2014, from which the summarized information was derived.

Basis of Accounting - The financial statements of the Organization have been prepared on the accrual basis of accounting and according to current accounting standards, which require that all nonprofit organizations provide a statement of financial position, a statement of activities, and a statement of cash flows. Classification of net assets and revenues, expenses, gains, and losses are based on the existence or absence of donor-imposed restrictions. It requires that the amounts for each of three classes of net assets- permanently restricted, temporarily restricted, and unrestricted - be displayed in a statement of financial position and that the amounts of change in each of those classes of net assets be displayed in a statement of activities. Management has determined that the Organization has no permanently restricted net assets, as defined by generally accepted accounting principles.

The Organization accounts for contributions in accordance with current accounting standards, which require an organization to recognize as revenue, contributions, including unconditional promises to give, when received. Current accounting standards also require nonprofit organizations to distinguish between contributions received that increase permanently restricted net assets, temporarily restricted net assets and unrestricted net assets, and require recognition of the expiration of donor-imposed restrictions in the period in which the restrictions expire.

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Activities - The Organization maintains individual categories of net asset groups according to their nature and reporting requirements. The Operating category includes all general activity of the Organization. The Agency Assistance Program (AAP) category includes all activity of the Board designated funds expended to assist affiliated nonprofit organizations in their mission of feeding the hungry by providing food preparation or storage equipment, payment of program site rent or utilities and providing food and grocery items for the agencies' clients. The Plant category accumulates all fixed asset transactions and accounts for financial resources to be used for the acquisition of equipment and facility upgrades. The Board Designated Endowment category includes all investment, contribution and disbursement activity related to the investments held within the endowment fund for the betterment of the Organization. Funds for the endowment are received from operating surpluses, unrestricted donations or grants. The Grants and Other category includes Federal, State, County and private grant supported activities. The Donated and USDA Food category includes the in-kind value of donated and United States Department of Agriculture food and grocery items received, distributed and held in inventory.

Net Assets - Unrestricted operating net assets represent the net assets of the Organization available for the furtherance of its general goals and objectives. Unrestricted AAP net assets represent the remaining Board designated funds and food inventory available for the furtherance of the Agency Assistance Ptogtam. Unrestricted plant net assets represent both the portion designated for future fixed asset acquisitions and the accumulated net investment in fixed assets.

During the year ended June 30, 2015, the Board authorized transfers of $850,000 from unrestricted operating net assets to unrestricted AAP net assets.

Temporarily restricted Grants and Other net assets represent net assets available to be used for the purchase and distribution of food, grocery items and/or services in accordance with donor restrictions. Temporarily restricted Donated and USDA Food net assets represent the in-kind value of the food and grocery items in inventory to be distributed.

Net Asset Classifications - Generally accepted accounting principles provide guidance on the net asset classification of donor-restricted endowment funds that are subject to the New York Prudent Management of Institutional Funds Act (NYPMIF A) and include required disclosures for all endowment funds, both donorrestricted and board-restricted, whether or not they are subject to NYPMIF A.

Under the terms of the governing documents, the Board of Directors has the ability to distribute as much of the corpus of any trust or separate gift, devise, bequest, or fund as the Board in its sole discretion shall determine. As a result of the ability to distribute corpus, all contributions not classified as temporarily restricted or permanently restricted are classified as unrestricted net assets for financial statement purposes. See Note 7 for the enhanced endowment fund disclosures.

Support Recognition- Substantially all of the Organization's support is derived from unrestricted donations or temporarily restricted grants and donations. Donations of cash and other assets are recognized as support when received. Government grant income is recognized when grant eligible expenses are incurred.

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, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

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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 are reported as restricted support. Absent 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.

Revenue Recognition- Substantially all of the Organization's revenue is derived from shared maintenance and program reimbursement fees which are recognized as revenue when earned.

Shared Maintenance - Through membership agreements, nonprofit agencies agree to share the cost of operations by contributing up to fourteen cents for each pound of donated product they receive. The Organization will not stop supplying an organization, which provides emergency relief, for failure to contribute to shared maintenance.

Program Reimbursement Fees - The Organization receives reimbursements under Federal, State, County and private grants for a portion of the costs incurred in receiving, storing and distributing purchased and USDA product.

Donated and In-Kind Services - Contributed services were received by the Organization and have been reflected as in-kind contributions in the accompanying statement of activities and changes in net assets in accordance with current accounting standards. The related expenses are included as in-kind expenses of $53,927 during the year ended June 30, 2015.

Additionally, a number of unpaid volunteers have made contributions of their time to develop and participate in the Organization's program. No accounting recognition is made for the fair market value of services provided by volunteer personnel as no objective basis is available to measure the value of such services.

Donated Food and Grocery Items - The primary function of the Organization is the collection and distribution of donated food and grocery items. This inventory is valued at a weighted average price per pound as determined by Feeding America's annual valuation study.

Cash and Cash Equivalents - The Organization's cash and cash equivalents include cash on hand and in banks. The Organization maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits at several of its banks. The Organization has not experienced any losses in such accounts. The Organization believes it is not exposed to any significant credit risk with regards to cash.

In accordance with certain grant agreements, the Organization is required to hold cash in a separate bank account. The Organization has complied with this requirement for the year ended June 30, 2015.

Accounts Receivable - Accounts receivable for shared maintenance and program reimbursement fees are stated at the amount management expects to collect from balances outstanding at year-end. Non-collectible receivables are expensed in the year they are determined to be uncollectible. Management closely monitors outstanding balances, and has concluded that no allowance for doubtful accounts is necessary at June 30, 2015.

Deferred Income- Publicly funded grant revenues received by the Organization are not recognized until the related expenses are incurred.

Investments - Investments in securities that have readily determinable fair values are measured at fair value in the statements of financial position with any investment income and realized and unrealized gains or losses reported in the statements of activities and changes in net assets.

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Generally accepted accounting principles establish a hierarchy for the determination of fair value, as well as disclosure requirements relative to those assets and liabilities. The hierarchy identifies three levels of input. Level 1 inputs are generally quoted market prices for identical assets or liabilities, which are actively traded on an exchange. Level 2 inputs generally consist of market prices for identical assets which are not actively traded or market prices of similar assets or liabilities which are actively traded, on an exchange. Level 3 inputs are referred to as unobservable inputs and consist primarily of information derived by management where Level 1 and Level 2 inputs are not available. These may include such things as present value of expected future cash flows or other valuation methodologies. Under the hierarchy, Level 1 inputs are the most preferred followed by Level 2, and Level 3. Level 3 inputs are to be used when neither Level 1 nor Level 2 inputs are available.

Fixed Assets- Fixed assets are recorded at cost at the date of acquisition, and in the case of donated assets, at fair value at the date of the gift. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets (3-20 years).

Shipping and Handling Costs - Expenditures for shipping and handling costs to agencies are classified in program services expenses in the accompanying statement of activities and changes in net assets.

Income Taxes - The Organization is a 501(c)(3) organization exempt from Federal income taxes under Section 501(a) of the Internal Revenue Code. The Organization's 2012 through 2015 tax years remain subject to examination by the Internal Revenue Service.

Accounting 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 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.

Subsequent Events - Management of the Organization has evaluated the effects of all subsequent events through September 23, 2015, the date which the financial statements were available to be issued, to determine if events or transactions occurring through that date require potential adjustment or disclosure in the financial statements.

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2. FAIR VALUE MEASUREMENTS

Assets subject to measurement at fair value on a recurring basis, and the basis for determining fair value as of June 30, 2015, are as follows:

Levell: Cash Exchange Traded Funds Fixed Income Bonds

Total investments at fair value

$ 8,483 1,126,312

397,107

$ 1.531.902

All investments were unrestricted and held for operating purposes at June 30, 2015.

The following schedule summarizes the activity related to investments reported in the statement of activities for the year ended June 30, 2015:

Interest and dividends Realized and unrealized gains

Total return on investments

$

$

47,485 19,058

66.543

Generally accepted accounting principles require that impaired investments, that is, investments for which the fair value is less than its cost, be evaluated as to whether such impairment is other than temporary. Since the Organization has the ability and the intent to hold the securities until a recovery in fair value occurs (or until maturity if necessary), no investments have been deemed impaired as of June 30, 2015.

3. FIXED ASSETS

Fixed assets consist of the following at June 30, 2015:

Land Building and improvements Warehouse equipment Furniture and equipment Vehicles

Less accumulated depreciation

Total

10

$ 88,887 2,948,904

505,343 204,259 665,383

4,412,776 3,310,087

$ 1.102.689

4. INVENTORY

Purchased Product- Food and grocery items that have been purchased with public and private funds, but which have not been distributed, are reported as inventory. The inventory of grant purchased food will be distributed at no charge to qualified organizations. This inventory is valued at cost. The cost of grant food and grocery items distributed in fiscal year 2015 amounted to approximately $1,437,000 and $398,000 under State and County, and private grant programs, respectively. Additional Federal (FEMA), County and Board Designated funds were made available to member agencies with which to purchase food and grocery items from the wholesale inventory, which is available for purchase year-round.

Donated Product- The majority of food and grocery items that are distributed have been donated. The following represents a summary of these products:

Inventory- beginning of year Donations received Less:

Distributed to WNY programs Distributed to other food banks Spoiled items (mostly perishable)

Less: Adjustments

Inventory - end of year

For the Year Ended June 30, 2015

Pounds

826,482 7,664,478

(6,684,049) (649,417) (408,106) (749,388)

(8,491)

740 897

Value

$ 1,421,549 13,029,613

(11,362,883) (1,104,009)

(693 ,780) ( 1 ,290,490)

(30,965)

$ 1.259 525

The June 30, 2015 in-kind value was determined using a rate of$1.70 per pound ($1.72 per pound at June 30, 2014) estimated by management using the rate per pound for the average value of donated food and grocery items from the Feeding America Product Valuation Report.

USDA Product- the following summarizes the activity of USDA food:

Inventory - beginning of year USDA received USDA distributed

Inventory- end of year

For the Year Ended June 30, 2015

Pounds

912,746 3,350,219

(3,625,982)

636.983

Value

$ 583,179 2,159,840

(2,370,374)

$ 372 645

The in-kind value of the United States Department of Agriculture products is supplied by the New York State Office of General Services (through the United States Department of Agriculture) for informational purposes in tracking their cost of the value of the food distributed.

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5. LINE OF CREDIT

The Organization has a $400,000 line of credit available at a bank with interest calculated at the bank's prime rate plus .5% (3.75% at June 30, 2015). The line of credit is secured by the assignment of pledges, accounts receivable, equipment, machinery, furniture and fixtures. The line of credit is subject to the ongoing review of the financial institution and availability may be restricted in the future. At June 30, 2015, no borrowings were outstanding under this arrangement.

6. RETIREMENT PLAN

The Organization maintains a traditional 401(k) profit sharing plan where all employees with more than one year of service are eligible to participate. All employees have the option to defer compensation under this 401 (k) plan. A discretionary contribution is approved by the Board of Directors as part of the annual budget. The contribution to this plan amounted to $112,140, or an 9o/o contribution, for the year ended June 30, 2015.

7. ENDOWMENT NET ASSETS

In December 2013, the Board of Directors created an unrestricted board designated endowment fund for the future betterment of the Organization in the amount of $1,370,513. The primary financial objective of the investment portfolio is to provide a sustainable level of revenue distribution in support of the operating budget, while preserving the purchasing power of the remaining investment assets by providing a real rate of return in excess of the rate of inflation. It is the overall objective of the Organization to maximize longterm investment returns within prudent limitations for each particular pool of investment assets.

The changes in the endowment net assets for the year ended June 30, 2015, are summarized as follows:

Unrestricted

Endowment net assets, beginning of year $ 1,448,832

Interest and dividends, net of fees 38,024

Net realized and unrealized investment gains 19,058

Contributions 33,399 Amounts appropriated for

expenditure (7,411) Change in endowment net assets 83,070

Endowment net assets, end ofyear $ 1 531~902

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8. TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets consisted of the following as of June 30, 2015:

Inventory of food and grocery items for distribution: • Private Restricted Contributions • New York State Restricted • Other Restricted Inventory • In-kind Inventory of Food and Grocery Items- Donated and U.S .

Department of Agriculture

Cash on hand for future expenditures: • Federal Emergency Management Agency I Emergency Food and

Shelter Program (FEMA/EFSP) • Private contributions

Grants receivable: • • •

Hunger Prevention and Nutrition Assistance Program (HPNAP) Erie County Department of Social Services (ECDSS) EFSP-FEMA Funds

Deferred income: • EFSP-FEMA Funds

Net amounts due to operating fund: • FEMA/EFSP • HPNAP • ECDSS

Total temporarily restricted net assets

9. OPERATING LEASES

$ 67 25,418 44,556

1,632,170

8,976 705,001

415,602 1,753

61,158

(2,559)

(67,576) (415,602)

(1,752)

$ 2.407 212

The Organization leases office equipment and vehicles under various noncancelable operating leases. Rental expense for these leases totaled approximately $64,000 for the year ended June 30, 2015. Future minimum lease payments related to the ongoing equipment and vehicle leases for each of the next five years are approximately as follows:

2016 2017 2018 2019 2020

* * * * * *

13

$ 64,000 63,000 59,000 38,000 13 ,000


SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30,2015 {WITH COMPARATIVE TOTALS FOR 20141

2015

Program Management Fund Total Services & General Raising Total 2014

Personnel $ 949,486 $ 393,080 $ 193,177 $ 1,535,743 $ 1,587,722 Payroll taxes 64,391 28,261 13,854 106,506 115,985 Retirement 69,232 31,021 11,887 112,140 100,511 Other benefits 173,552 71,942 35,199 280,693 290,839

Total personnel and related expenses 1,256,661 524,304 254,117 2,035,082 2,095,057

Agency Assistance Program (AAP) 805,436 805,436 838,077

Freight 78,841 78,841 96,143 Vehicles 161 ,6 11 161,611 183,811 Utilities 64,960 3,903 2,678 71,541 85,071 Travel 798 4,979 667 6,444 6,001 Conference and meetings 19,406 2,001 698 22,105 17,384 Membership and dues 12,720 10,355 23,075 21,850 Material and supplies 25,232 6,950 3,622 35,804 43,904 Insurance 41 ,322 41,322 39,856 USDA direct disbursement cost 21,504 21,504 11,552 Telephone/F AX/DSL service 16,317 4,403 1,414 22,134 19,532 Repairs and maintenance 39,664 39,664 30,266 Postage expense 830 2,534 39,716 43,080 35,083 Volunteer expenses 1,495 2,920 4,415 3,951 Equipment rental and maintenance 26,821 13,172 13,610 53,603 45,668 Printing and publications 595 842 82,592 84,029 74,020 Professional financial services 20,120 4,240 24,360 45,149 Professional and other fees 17,707 24,265 41,972 31,019 Fund raising activities 128,381 128,381 118,895 Repack, reprocess and value added 122,423 122,423 158,403 Other expenses 57,895 27,650 2,897 88,442 66,847 Endowment expenditures 7,411 7,411 3,166 Food grant expenditures 2,165,989 2,165,989 2,428,959 Other grant expenditures 416,033 416,033 339,297 Other food expenses 14,572 14,572 18,130 Restricted funds expenditures 824,866 824,866 742,383

Total other expenses 4,131,601 124,094 287,926 4,543,621 4,666,340

Total cash expenditures 6,193,698 648,398 542,043 7,384,139 7,599,474

In-kind value of donated food 13,344,926 13,344,926 14,018,777 In-kind value ofUSDA food 2,367,517 2,367,517 2,230,725 In-kind expenses 169 53,759 53,928 83,038

Total in-kind expenditures 15,712,612 53,759 15,766,371 16,332,540

Expenses before depreciation 21,906,310 648,398 595,802 23,150,510 23,932,014 Depreciation 178,455 15,808 194,263 231,226

TOTAL EXPENSES $ 22,084,765 $ 664,206 $ 595,802 $ 23,344,773 $ 24,163,240

Percentage of total expenses 94.6% 2.8% 2.6% 100.0% 100.0%

14


SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS FOR THE YEAR ENDED JUNE 30, 2015

Federal Agency or CFDA Pass-Through

FEDERAL GRANTOR PROGRAM TITLE (1) Number (2) Number

U.S. DEPARTMENT OF AGRICULTURE Passed through the State of New York Office of

General Services, Bureau of Donated Foods, Temporary Emergency Food Assistance Program:

Food Distribution ( 4) Erie County 10.569 Cattaraugus County 10.569 Chautauqua County 10.569 Niagara County 10.569

Sub-total food distribution Administrative fees 10.568

Total USDA Food Related Items

U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES Passed through the State ofNew York Office ofHealth:

TANF-Addition to HPNAP Grant 93.558 C-027389

U.S. DEPARTMENT OF HOMELAND SECURITY Passed through the United Way of Buffalo and Erie County:

Emergency Food and Shelter National Board Program -Phase 31, County of Erie 97.024 31-6156-004

Passed through the United Way of Southern Chautauqua County: Emergency Food and Shelter National Board Program -Phase 31,

County of Chautauqua 97.024 31-6140-014 Passed through the United Way of Buffalo and Erie County:

Emergency Food and Shelter National Board Program - Phase 32,

County ofErie 97.024 31-6156-004

Passed through the United Way of Southern Chautauqua County: Emergency Food and Shelter National Board Program -Phase 32,

County of Chautauqua 97.024 31-6140-0 14

Total Federal Awards (5)

STATE GRANTOR PROGRAM TITLE (6) Contract#

New York State Department of Health Bureau ofNutrition- Hunger Prevention and Nutrition Assistance Program (HPNAP) C-027389

New York State Transportation Grant C-016694

Total State Grants

( 1) Includes all federal award programs.

(2) Source: Catalog of Federal Domestic Assistance.

(3) Prepared on the "GAAP" basis of accounting and includes all program expenses.

(4) The Schedule of Expenditures of Federal Awards includes additional federal assistance in the form of commodities distributed

during the year. The value of such was determined by prices prescribed by the federal department making the award.

(5) A reconciliation to the financial statements is available.

(6) Grants received from New York State disclosed for additional information only.

(7) Total program administrative costs were $819,472, ofwhich $191 ,481 were reimbursed by the USDA.

15

Federal Expenditures (3)

$ 1,560,297 358,063 261,850 190,165

2,370,375 191,481 (7)

2,561,856

185,443

116,636

12,000

61,158

6,392

196,186

$ 2,943,485

State Expenditures (3)

$ 2,383,710 29,049

$ 2,412,759

ChiatnpouTravis Besa-w &Kershner LLP CE RTIFIED PUBLIC ACCO UN TA NT S & CONSULTANTS

45 Bryant Woods North I Amherst I New York 14228 I Phone 716 630 2400 Fax 716 630 2401 I chiampou.com

INDEPENDENT AUDITORS' REPORT 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

To the Board of Directors of Food Bank ofWesten1 New York, Inc. Buffalo, New York




Stephen R. Brady, CPA, JD Jon K. Pellish, CPA




We have audited, in accordance with the 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, the financial statements of Food Bank of Western New York, Inc. (a nonprofit organization), which comprise the statement of financial position as of June 30, 2015, and the related statements of activities and changes in net assets, and of cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated September 23 , 20 15.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Food Bank of Western New York, Inc.'s inten1al control over financial reporting (intemal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Food Bank of Westem New York, Inc.'s internal control. Accordingly, we do not express an opinion on the effectiveness ofthe Food Bank of Western New York, Inc.'s inten1al control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in inten1al control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

16

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Food Bank of Western New York, Inc.'s financial statements are free from 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.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Food Bank of Western New York, Inc.'s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Food Bank of Western New York, Inc.'s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

September 23, 2015

17

Chiam.pouTravis Besavv &Kershner LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS

45 Bryant Woods North I Amherst I New York 14228 I Phone 716 630 2400 Fax 716 630 2401 I chiampou .com

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

To the Board of Directors of Food Bank of Western New York, Inc. Buffalo, New York

Report on Compliance for Each Major Federal Program




Stephen R. Brady, CPA, JD Jon K. Pelt ish, CPA




We have audited Food Bank of Western New York, Inc.'s (a nonprofit organization) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Food Bank of Western New York, Inc.'s major federal programs for the year ended June 30,2015. Food Bank of Western New York, Inc.'s major federal programs are identified in the summary of auditors' results section ofthe accompanying Schedule of Findings and Questioned Costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditors' Responsibility

Our responsibility is to express an opinion on compliance for each of Food Bank of Western New York, Inc.'s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Food Bank of Western New York, Inc.'s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Food Bank of Western New York, Inc.'s compliance.

Opinion on Each Major Federal Program

In our opinion, Food Bank of Western New York, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal programs for the year ended June 30, 2015 .

18

Report on Internal Control Over Compliance

Management of Food Bank of Western New York, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Food Bank of Western New York Inc.'s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Food Bank of Western New York, Inc.'s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements ofOMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

September 23 , 2015

19


SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015

Part I- Summary of Auditors' Results

1. The independent auditors' report expresses an unmodified opinion on the financial statements ofFood Bank of Western New York, Inc.

2. No control deficiencies were disclosed during the audit of the financial statements of Food Bank of Western New York, Inc.

3. No instances of noncompliance material to the financial statements of Food Bank of Western New York, Inc. were disclosed during the audit.

4. No significant deficiencies were disclosed during the audit of internal control over major federal award programs ofFood Bank ofWestem New York, Inc.

5. The independent auditors' report on compliance for the major federal award programs for Food Bank of Western New York, Inc. expresses an unmodified opinion on all major federal programs.

6. The audit disclosed no findings and questioned costs required to be reported in accordance with Section 51 O(a) ofOMB Circular A-133.

7. The programs tested as major programs included:

Name of Federal Program CFDANumber

Food Distribution 10.569

8. The threshold for distinguishing Type A and Type B programs was $300,000.

9. Food Bank of Western New York, Inc. was determined to be a low-risk auditee.

Part II -Financial Statements Audit

1. Significant Deficiencies- No matters were identified as reportable.

2. Material Weaknesses- No matters were identified as reportable.

3. Instances ofNoncompliance- No matters were identified as reportable.

(Continued)

20


SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015

Part ITI- Major Federal Award Findings and Questioned Costs

1. Significant Deficiencies - No matters were identified as reportable.

2. Material Weaknesses- No matters were identified as reportable.

3. Instances ofNoncompliance - No matters were identified as reportable.

(Concluded)

21


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015

No prior audit findings were noted for the June 30, 2014 audit.

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