unavco, inc. · 2014. 5. 11. · audi t. assets cash and cash equivalents 553,901$ ... inc ur re d...

UNAVCO, INC.

BOULDER, COLORADO

FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2006

TABLE OF CONTENTS

Page

INDEPENDENT AUDITORS’ REPORT 1

FINANCIAL STATEMENTS:

STATEMENT OF FINANCIAL POSITION —DECEMBER 31, 2006 3

STATEMENT OF ACTIVITIES —YEAR ENDED DECEMBER 31, 2006 4

STATEMENT OF CASH FLOWS —YEAR ENDED DECEMBER 31, 2006 5

NOTES TO THE FINANCIAL STATEMENTS 6

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 12

NOTE TO SUPPLEMENTALSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 13

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROLOVER FINANCIAL REPORTING AND ON COMPLIANCE ANDOTHER MATTERS BASED ON AN AUDIT OF FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 14

INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITHREQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAMAND ON INTERNAL CONTROL OVER COMPLIANCE INACCORDANCE WITH OMB CIRCULAR A-133 15

SCHEDULE OF FINDINGS AND QUESTIONED COSTS 17

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 20

Saltzman Hamma nelSon maSSaro llpCertified Public Accountants and Consultants

An Independent Firm Associated with AGN International

1660 Lincoln Street Suite 2000 Denver, CO 80264Voice (303) 698-1883 Fax (303) 777-4458 www.shnm.com

INDEPENDENT AUDITORS’ REPORT

To the Board of DirectorsUNAVCO, Inc.Boulder, Colorado

We have audited the accompanying statement of financial position of UNAVCO, Inc.(“UNAVCO”) as of December 31, 2006, and the related statements of activities and cashflows for the year then ended. These financial statements are the responsibility ofUNAVCO’s management. Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all materialrespects, the financial position of UNAVCO, Inc. as of December 31, 2006, and thechanges in its net assets and its cash flows for the year then ended in conformity withaccounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report datedMay 21, 2007 on our consideration of UNAVCO’s internal control over financial reportingand our tests of its compliance with certain provisions of laws, regulations, contracts, andgrant agreements and other matters. The purpose of that report is to describe the scopeof our testing of internal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reportingor on compliance. That report is an integral part of an audit performed in accordance withGovernment Auditing Standards and should be considered in assessing the results of ouraudit.

ASSETS

Cash and cash equivalents 553,901$ Membership contributions receivable 5,149 Federal grant awards receivable 1,940,422 Other receivables 197,765 Prepaid expenses 55,758 Property and equipment, net of accumulated

depreciation of $394,548 413,707 Security deposits 45,117

TOTAL ASSETS 3,211,819$

LIABILITIES AND NET ASSETS

Liabilities:Accounts payable 1,533,289$ Accrued liabilities 1,020,332Capital lease obligation 386,867

Total Liabilities 2,940,488

Net Assets:Unrestricted 271,331

TOTAL LIABILITIES AND NET ASSETS 3,211,819$

UNAVCO, INC.STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2006

The accompanying notes are an integral part of these financial statements.3

SUPPORT AND REVENUEFederal grant awards 32,327,295$ Membership contributions 24,000 Miscellaneous income 381,310 Total support and revenue 32,732,605

EXPENSES:Program services-

PBO 24,415,932 Facility 3,612,867 Existing networks 1,651,563 Education and outreach 98,430 Workshops 11,982

Total Program Services 29,790,774 Supporting Services-General and administrative 2,362,011

Total Expenses 32,152,785

CHANGE IN NET ASSETS 579,820

Net Assets, Beginning of Year (308,489)

NET ASSETS, END OF YEAR 271,331$

UNAVCO, INC.STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED DECEMBER 31, 2006


CASH FLOWS FROM OPERATING ACTIVITIESChange in net assets 579,820$

Adjustments to reconcile change in net assets tonet cash provided by operating activities:Depreciation expense 129,448 Disposal of assets (16,578)

Changes in assets and liabilities-(Increase) in federal grants receivable (788,424) Decrease in membership fees receivable 851 (Increase) in other receivables (163,355) (Increase) in prepaid expenses (8,907) (Increase) in security deposits (600) Increase in accounts payable 364,192 Increase in accrued liabilities 371,508

Net cash provided by operating activities 467,955

CASH FLOWS FROM FINANCING ACTIVITIESPayments on capital leases (102,244) Net cash used by financing activities (102,244)

NET CHANGE IN CASH AND CASH EQUIVALENTS 365,711$

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 188,190$

CASH AND CASH EQUIVALENTS - END OF YEAR 553,901$

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest 37,023$

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING TRANSACTIONS:

Acquisition of property and equipment by capital leases 142,495$

UNAVCO, INC.STATEMENT OF CASH FLOWS



UNAVCO, INC.NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006

6

NOTE 1 – NATURE OF THE ORGANIZATION

UNAVCO, Inc. (“UNAVCO”) is a non-profit membership-governed organization thatsupports and promotes Earth science by advancing high-precision geodetic and straintechniques such as the Global Positioning System. UNAVCO is a community-centeredorganization committed to providing services that benefit the community through savingsin the cost of scientific research and by enhancing communication both within thecommunity and with sponsors. The organizational structure is designed to accommodateanticipated growth and breadth in the application of geodetic research in Earth science bythe governance of its member representatives.

UNAVCO was formed in response to community support of its role as lead organization forcommunity-based planning and management of new initiatives such as the Plate BoundaryObservatory. The incorporation is intended to enable better community oversight of andinput into UNAVCO activities. It will also enable application and receipt of funds fromfederal agencies, such as the National Science Foundation (“NSF”), for support of thesecommunities.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Method of Accounting: The financial statements of UNAVCO have been prepared on theaccrual basis.

Basis of Presentation: Financial statement presentation follows the recommendations ofthe Financial Accounting Standards Board in its Statement of Financial AccountingStandards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. UnderSFAS No. 117, UNAVCO is required to report information regarding its financial positionand activities according to three classes of net assets: unrestricted net assets, temporarilyrestricted net assets, and permanently restricted net assets. As of December 31, 2006,UNAVCO had no temporarily or permanently restricted net assets.

Use of Estimates: The preparation of financial statements in conformity with generallyaccepted accounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of support, revenues and expenses during thereported period. Actual results could differ from those estimates.

Cash and Cash Equivalents: For purposes of the statement of cash flows, cash and cashequivalents includes cash on hand and demand deposit accounts. UNAVCO considersall cash and other highly liquid investments with initial maturities of three months or lessto be cash equivalents.


DECEMBER 31, 2006

7

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment: Property and equipment is stated at cost, or fair value ifcontributed. Expenditures for maintenance, repairs and minor replacements are chargedto operations, and expenditures for major replacements and betterments with a useful lifein excess of one year are capitalized. Property and equipment are stated at cost anddepreciated over the following estimated useful lives using the straight-line method:

EstimatedUseful Lives

Leasehold improvements 5 yearsFurniture and fixtures 5 yearsComputer software and equipment 3 yearsVehicles 5 years

The capitalization policy of UNAVCO is to capitalize purchases of $5,000 and greater andto expense purchases under $5,000.

Equipment with title vested in the federal government is not recorded in the statements offinancial position, see Note 5.

Contributions: UNAVCO accounts for contributions in accordance with therecommendations of the Financial Accounting Standards Board in SFAS No. 116,Accounting for Contributions Received and Contributions Made. In accordance withSFAS No. 116, contributions received are recorded as unrestricted, temporarily restrictedor permanently restricted support, depending on the existence or nature of any donorrestrictions.

Support that is restricted by the donor is reported as an increase in unrestricted net assetsif the restriction expires in the reporting period in which the support is recognized. All otherdonor-restricted support is reported as an increase in temporarily or permanently restrictednet assets depending on the nature of the restriction. When a restriction expires (that is,when a stipulated time restriction ends or purpose restriction is accomplished), temporarilyrestricted net assets are reclassified to unrestricted net assets and reported in thestatement of activities as net assets released from restrictions.


DECEMBER 31, 2006

8

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition: Revenue from federal awards is deemed to be earned whenUNAVCO has incurred costs or other expenditures which satisfy the terms imposed by therespective grants or contracts. Funds received from federal sources in excess of costsincurred are reported as deferred revenues. For costs incurred in excess of funds receivedfrom sources, revenue and related receivables are recognized to the extent of such costs.

Other revenue is recognized when earned.

Functional Allocation of Expenses: The costs of providing the various programs andactivities have been summarized on a functional basis in the statement of activities.Accordingly, certain costs have been allocated among the program and supporting servicesbenefitted.

NOTE 3 – TAX EXEMPT STATUS

UNAVCO has previously received notice from the Internal Revenue Service of exemptionfrom income tax under Section 501(c)(3) of the Internal Revenue Code. It has beenclassified as an organization that is not a private foundation under Section 509(a) of theInternal Revenue Code. As such, donors are entitled to a charitable deduction for theircontribution to UNAVCO. Accordingly, the accompanying financial statements contain noprovision for income taxes.

NOTE 4 – CONCENTRATION OF CREDIT RISK

The majority of UNAVCO’s support and revenue is derived from federal grant awards.During the year ended December 31, 2006, the National Science Foundation providedapproximately 99% of UNAVCO’s funding. The ability of UNAVCO to continue functioningat its current level of operations is dependent upon its ability to generate similar futurefunding.

UNAVCO has contracted with an Austrailian company (the “Company”) to manufacturespecialized equipment. The Company is the sole producer of this type of equipment.UNAVCO has mitigated its risk by requiring the Company to implement a succession planif the key employee (who is the owner and chief scientist) was unable to continue due tohealth or other problems. Additionally, UNAVCO has placed a lien against the inventoryused to produce such equipment. If the Company were unable to deliver the finalproducts, UNAVCO would own the inventory which would allow UNAVCO to find analternative to producing the specialized equipment.


DECEMBER 31, 2006

9

NOTE 4 – CONCENTRATION OF CREDIT RISK (Continued)

UNAVCO’s cash demand deposits are held at financial institutions at which deposits areinsured up to $100,000 per institution by the FDIC. As of December 31, 2006, the balanceat the financial institution exceeded the FDIC limit by approximately $901,466, in total.

NOTE 5 – PROPERTY AND EQUIPMENT

Property with title vested in UNAVCO, including property designated as to a particularpurpose, is recorded in the financial statements. Property and equipment consisted of thefollowing as of December 31, 2006:

Leasehold improvements $ 50,337Furniture and fixtures 5,245Computer software and equipment 118,671Vehicles 634,002

808,255Less: accumulated depreciation and amortization (394,548)

Net property and equipment $ 413,707

Depreciation expense for 2006 was $129,448.

As of December 31, 2006, the gross amount for vehicles under capitalized leasearrangements is $629,188, and the accumulated amortization amounted to $249,243.

Equipment with title vested in the U.S. Government and other sponsors is not recorded inthe statement of financial position. Purchases of equipment are recorded as expenses inthe statement of activities. Expenses recorded in 2006 were $5,841,480 and theaccumulated total as of December 31, 2006 was approximately $14,431,050. UNAVCOhas the responsibility of maintaining property records and reporting balances to therespective government agency.


DECEMBER 31, 2006

10

NOTE 6 – CAPITAL LEASE OBLIGATION

UNAVCO has entered into various capital lease arrangements for the purchase of eighteenvehicles. These arrangements require a minimum lease payment of principal and interest,totaling $163,335 per year, through 2011. The imputed interest rates on the leases rangefrom 7.3% to 17% and are secured by the vehicles.

Total future payments $ 434,855Less: interest (47,988)Present value of minimum lease payments 386,867Less: current portion (156,441)

Total long-term obligation $ 230,426

Future annual maturities of capital lease obligations outstanding at December 31, 2006,are as follows:

Year EndingDecember 31,

2007 $ 156,4412008 173,2802009 34,9802010 13,7302011 8,436

$ 386,867

Interest expense incurred for the year ended December 31, 2006, was $37,023.


DECEMBER 31, 2006

11

NOTE 7 – COMMITMENTS

UNAVCO leases office space under various operating lease agreements. UNAVCO is ableto terminate the operating lease agreements if they do not receive their annual fundingfrom NSF. UNAVCO also leases other equipment under separate operating leaseagreements. The term of these operating lease agreements ranges from two - five years.The future minimum operating lease payments, under all of these leases, are as follows:

Year EndingDecember 31,

2007 $ 446,3912008 333,4662009 15,894

Total minimum lease payments $ 795,751

Rent expense and related charges for the year ended December 31, 2006 was $ 635,028.

As of December 31, 2006, UNAVCO had unfilled purchase order commitments ofapproximately $8,706,589.

NOTE 8 – LINE OF CREDIT

In August 2006, UNAVCO renewed it’s revolving line of credit agreement in the amount of$250,000 with a bank. The line of credit has an Irrevocable Letter of Credit with the USDAForest Service for $62,000 as part of a performance bond to clean up a site. As ofDecember 31, 2006, no amount was outstanding or drawn on. This line of credit issecured by assets of the Organization.

NOTE 9 – EMPLOYEE BENEFIT PLAN

Permanent employees of UNAVCO participate in the Teachers Insurance AnnuitiesAssociation’s College Retirement Equities Fund (TIAA/CREF). For UNAVCO employeeswho make their minimum contribution to TIAA/CREF, UNAVCO also contributes 10% ofthe employee’s salary. UNAVCO’s contributions to the TIAA/CREF for the year endedDecember 31, 2006 were $627,116.

Federal Grantor and Program Title

Federal CFDA

NumberIdentifying

NumberFederal

Expenditures

The National Science Foundation - **Support for UNAVCO, Inc. and Support for Existing Western U.S. GPSNetworks

47.050 EAR-0318549 64,916$

Support for UNAVCO, Inc. and Support of UNAVCO Community andFacility Activities

47.050 EAR-0321760 3,569,105

Support for UNAVCO, Inc. and Collaborative Research: EarthScope-Acquisition, Construction, Facility Management, Operations andMaintenance/Plate Boundary Observatory (PBO)

47.050 EAR-0323700 25,252,054

Support for UNAVCO, Inc. and Collaborative Research: Earthscope-FacilityOperations and Maintenance (PBO)

47.050 EAR-0323704 1,149,663

Support for UNAVCO, Inc. and Workshops for Establishing a Stable NorthAmerican Reference Frame (SNARF) to Enable Geophysical and GeodeticStudies with EarthScope

47.050 EAR-0346147 7,578

Support for UNAVCO, Inc. and Workshops for Establishing a Stable NorthAmerican Reference Frame (SNARF # 2) to Enable Geophysical andGeodetic Studies with EarthScope

47.050 EAR-0545870 4,449

Support for UNAVCO, Inc. and ITR Collaborative Research: GEON: AResearch Project to Create Cyberinfrastructure for the Geosciences

47.050 EAR-0408228 69,905

Support for UNAVCO, Inc. and PBO Nucleus: Support for an IntegratedExisting Geodetic Network in the Western U.S.

47.050 EAR-0453975 1,667,503

Support for UNAVCO, Inc. and Track 2 Research and Education in SolidEarth Science for Students (RESESS): Adapting SOARS to Solid Earth

47.050 GEO-0503613 78,075

Support for UNAVCO, Inc. and Collaborative Research: Development of aPower and Communication System for Remote Autonomous GPS andSeismic Stations in Antartica

47.050 ANT-0619908 49,751

Support for UNAVCO, Inc and Support for Using Earthscope Data inSecondary Classrooms: A Pilot Workshop to Engage Teachers andScientists in Cascadia Curriculum Development

47.050 EAR-0637157 29,159

Total National Science Foundation 31,942,158$

Department of EnergyPass-through from California Institute of Technology

Support for the Yucca Mountain Project 81.065 65W-1070107 41,414$ Total Pass-through programs for Department of Energy 41,414

TOTAL 31,983,572$

**Major Program

UNAVCO, INC.SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


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NOTE TO SUPPLEMENTAL SCHEDULEOF EXPENDITURES OF FEDERAL AWARDS


13

NOTE 1 – METHOD OF ACCOUNTING

The supplemental schedule of expenditures of federal awards has been prepared on anaccrual basis. The information in this schedule is presented in accordance with therequirements of OMB Circular A-133, Audits of States, Local Governments, and Not-For-Profit Organizations. Therefore, some amounts presented in this schedule may differ fromamounts presented in, or used in the preparation of, the basic financial statements.




INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTSAPPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL

OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

To the Board of Directors ofUNAVCO, Inc.

Compliance

We have audited the compliance of UNAVCO, Inc. with the types of compliancerequirements described in the U.S. Office of Management and Budget (OMB) CircularA-133 Compliance Supplement that are applicable to each of its major federal programsfor the year ended December 31, 2006. UNAVCO, Inc.’s major federal programs areidentified in the summary of auditors’ results section of the accompanying schedule offindings and questioned costs. Compliance with the requirements of laws, regulations,contracts, and grants applicable to each of its major federal programs is the responsibilityof UNAVCO, Inc.’s management. Our responsibility is to express an opinion on UNAVCO,Inc.’s compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generallyaccepted in the United States of America; the standards applicable to financial auditscontained in Government Auditing Standards, issued by the Comptroller General of theUnited 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 andperform the audit to obtain reasonable assurance about whether noncompliance with thetypes of compliance requirements referred to above that could have a direct and materialeffect on a major federal program occurred. An audit includes examining, on a test basis,evidence about UNAVCO, Inc.’s compliance with those requirements and performing suchother procedures as we considered necessary in the circumstances. We believe that ouraudit provides a reasonable basis for our opinion. Our audit does not provide a legaldetermination of UNAVCO, Inc.’s compliance with those requirements.

In our opinion, UNAVCO, Inc. complied, in all material respects, with the requirementsreferred to above that are applicable to each of its major federal programs for the yearended December 31, 2006.

Internal Control Over Compliance

The management of UNAVCO, Inc. is responsible for establishing and maintainingeffective internal control over compliance with the requirements of laws, regulations,contracts, and grants applicable to federal programs. In planning and performing our audit,

A. Summary of Auditors’ Results

Financial Statements

Type of auditors' report: Unqualified

Internal Control over financial reporting:Material weakness(es) identified? Yes X No

Yes X None reported

Yes X No

Federal Awards

Internal control over major program:

Material weakness(es) identified? Yes X No

Yes X None reported

Unqualified

Yes X No

Type of auditors' report issued on compliance formajor program:

Any audit findings disclosed that are required to bereported in accordance with section 510(a) ofCircular A-133?

UNAVCO, INC.SCHEDULE OF FINDINGS AND QUESTIONED COSTS


Reportable condition(s) identified that are notconsidered to be weakness(es)?

Noncompliance material to financial statementsnoted?

Reportable condition(s) identified that are notconsidered to be weakness(es)?

17

Identification of major program:

CFDA Number

47.050

47.050

47.050

47.050

47.050

47.050

47.050

47.050

47.050

47.050

47.050

Dollar threshold used to distinguish between type A and type B programs: $300,000

Auditee qualified as low-risk auditee? X Yes No

UNAVCO, INC.SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)


Support for UNAVCO, Inc. and PBO Nucleus: Support for an IntegratedExisting Geodetic Network in the Western U.S.

Support for UNAVCO, Inc. and Collaborative Research: EarthScope-Acquisition, Construction, Facility Management, Operations andMaintenance/Plate Boundary Observatory (PBO)

Support for UNAVCO, Inc. and Collaborative Research: Earthscope-Facility Operations and Maintenance (PBO)

Support for UNAVCO, Inc. and Support for Existing Western U.S. GPSNetworks

Support for UNAVCO, Inc. and Collaborative Research: Development ofa Power and Communication System for Remote Autonomous GPS andSeismic Stations in Antartica

Support for UNAVCO, Inc and Support for Using Earthscope Data inSecondary Classrooms: A Pilot Workshop to Engage Teachers andScientists in Cascadia Curriculum Development

Name of Federal Program

Support for UNAVCO, Inc. and Track 2 Research and Education in SolidEarth Science for Students (RECESS): Adapting SOARS to Solid Earth

Support for UNAVCO, Inc. and ITR Collaborative Research: GEON: AResearch Project to Create Cyberinfrastructure for the Geosciences

Support for UNAVCO, Inc. and Workshops for Establishing a Stable North American Reference Frame (SNARF) to Enable Geophysical andGeodetic Studies with EarthScope

Support for UNAVCO, Inc. and Workshops for Establishing a Stable North American Reference Frame (SNARF # 2) to Enable Geophysical andGeodetic Studies with EarthScope

Support for UNAVCO, Inc. and Support of UNAVCO Community andFacility Activities

18

B. Financial Statement Findings

No matters were reported.

C. Federal Award Findings and Questioned Costs

No matters were reported.

UNAVCO, INC.SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)


19

There were no prior audit findings.

UNAVCO, INC.SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


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unavco, inc. · 2014. 5. 11. · audi t. assets cash and cash equivalents 553,901$ ... inc ur re d...

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