FINANCIAL STATEMENTS MAY 31, 2008

GENESIS WORLD MISSION, INC.

GENESIS WORLD MISSION, INC. Table of Contents

Page INDEPENDENT AUDITORS’ REPORT FINANCIAL STATEMENTS Statement of Financial Position Statement of Activities Statement of Functional Expenses Statement of Cash Flows Notes to Financial Statements 1 2 4 5 7 8

Morris W. Grigg, CPA Thomas J. Ritter, MS, CPA Duane Brash, CPA John J. Mahler, CPA

American Institute of Certified Public Accountants Idaho Society of Certified Public Accountants

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors Genesis World Mission, Inc. Garden City, Idaho We have audited the accompanying statement of financial position of Genesis World Mission, Inc. (an Idaho nonprofit organization) as of May 31, 2008 and the related statements of activities, functional expenses and cash flows for the year then ended. These financial statements are the responsibility of the Organization’s management. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Organization has not included in-kind revenue and expenses in the accompanying Statement of Activities and Statement of Functional Expenses for donated medicine. In our opinion, accounting principles generally accepted in the United States of America require that such donated items be recorded at their fair value at the date of receipt. It was not practicable to determine the effect of the unrecorded items on the financial statements. In our opinion, except for the effects of the matters discussed in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Genesis World Mission, Inc. as of May 31, 2008, and the changes in its net assets and its cash flows for the years then ended are in conformity with accounting principles generally accepted in the United States of America.

November 3, 2008 Boise, Idaho

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GENESIS WORLD MISSION, INC.
STATEMENT OF FINANCIAL POSITION MAY 31, 2008

ASSETS CURRENT ASSETS Cash and cash equivalents Grants receivable Pharmacy and supply inventory Total current assets PROPERTY AND EQUIPMENT, at cost Land Building and improvements Equipment and software Less accumulated depreciation

$

54,985 24,523 97,275 176,783

85,000 480,738 47,212 (47,572) 565,378 $ 742,161

See accompanying notes to financial statements

2

GENESIS WORLD MISSION, INC.
STATEMENT OF FINANCIAL POSITION MAY 31, 2008

LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable Accrued liabilities Note payable, current portion Total current liabilities LONG-TERM LIABILITIES Note payable, less current portion NET ASSETS Unrestricted Temporarily restricted Permanently restricted

$

114 12,702 13,230 26,046 278,407 304,453 397,873 39,835 437,708

$

742,161

See accompanying notes to financial statements

3

GENESIS WORLD MISSION, INC.
STATEMENT OF ACTIVITIES YEAR ENDED MAY 31, 2008

Unrestricted REVENUES, GAINS AND OTHER SUPPORT Foundation and corporate grants State grants Contributions and support Fundraising events Interest income Contracted revenue Other In-kind labor In-kind materials and supplies Net assets released from restrictions Temporarily restricted Total revenues, gains and other support EXPENSES Garden City Community Clinic Medical program Dental program Total Garden City Community Clinic Warehouse Volunteer Physicians Network International programs Administration Fundraising Total expenses CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR $

Temporarily Restricted

Total

$

82,247 161,203 65,512 2,240 9,388 17,000 310,559 142,766 130,459 921,374

$

31,406 13,150 25,137 1,519 (130,459) (59,247)

$

113,653 13,150 186,340 65,512 2,240 9,388 18,519 310,559 142,766 862,127

384,193 36,961 421,154 1,790 30,799 175,220 71,983 93,885 794,831 126,543 271,330 397,873 $

(59,247) 99,082 39,835 $

384,193 36,961 421,154 1,790 30,799 175,220 71,983 93,885 794,831 67,296 370,412 437,708

See accompanying notes to financial statements

4

GENESIS WORLD MISSION, INC.

STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED MAY 31, 2008

Garden Garden City City Community Community Clinic Clinic (Medical) (Dental) Personnel $ 243,120 Utilities and building maintenance 9,443 Interest expense 7,454 Professional fees 89,858 Direct international Medications and supplies 16,119 Fundraising events 351 Depreciation and amortization 7,458 Insurance 1,513 Postage and delivery 598 Printing and reproduction 1,582 Advertising 327 Travel and entertainment 2,866 Repairs, maintenance and minor equipment 1,155 Other 2,349 $ 384,193 $ 17,980 3,727 4,160 785 3,982 53 4,163 719 85 121 34 285 197 670 $ 36,961

Total Garden City Community Clinic $ 261,100 13,170 11,614 90,643 20,101 404 11,621 2,232 683 1,703 361 3,151 1,352 3,019 $ 421,154

Warehouse $ 1,396 164 64 42 94 5 11 14 $ 1,790

Volunteer Physicians Network $ 24,440 905 1,040 679 169 53 1,040 182 198 595 756 515 227 $ 30,799

See accompanying notes to financial statements

5

GENESIS WORLD MISSION, INC.

STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED MAY 31, 2008

International Medical Missions Personnel $ 37,135 Utilities and building maintenance 1,740 Interest expense 2,254 Professional fees 1,247 Direct international 106,914 Medications and supplies 1,195 Fundraising events 227 Depreciation and amortization 2,255 Insurance 535 Postage and delivery 294 Printing and reproduction 878 Advertising 508 Travel and entertainment 19,125 Repairs, maintenance and minor equipment 472 Other 441 $ 175,220

Administration $ 60,476 2,477 1,907 2,246 221 67 1,908 826 202 803 43 807 $ 71,983

Fundraising $ 33,692 603 520 779 593 50,487 520 78 1,687 2,907 418 661 691 249 $ 93,885

Total $ 418,239 19,059 17,335 95,658 106,914 22,321 51,238 17,344 3,947 3,069 6,897 2,086 24,259 2,756 3,709 $ 794,831

See accompanying notes to financial statements

6

GENESIS WORLD MISSION, INC.
STATEMENT OF CASH FLOWS YEAR ENDED MAY 31, 2008

CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets Adjustments to reconcile increase in net assets to net cash provided by operating activities: Donated capital assets Depreciation and amortization Increase (decrease) in: Prepaid expenses Accounts receivable Grants receivable Inventory Accounts payable Accrued expenses Net cash used by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of capital assets Net cash used by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Payments on long-term debt DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid Non-cash financing and investing activities Donated capital assets

$

67,296 (54,945) 17,344 849 4,800 17,363 (97,275) (4,424) (1,051) (50,043) (49,445) (49,445)

(16,729) (116,217) 171,202 $ 54,985

$ $

19,078 54,945

See accompanying notes to financial statements

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GENESIS WORLD MISSION, INC.
NOTES TO FINANCIAL STATEMENTS MAY 31, 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities Genesis World Mission, Inc ("Organization") is a non-profit, faith based organization providing medical, physical and spiritual care for the underserved. The organization operates a medical and dental clinic in Garden City, Idaho and manages a county-wide Volunteer Physicians Network. It also works to provide sustainable humanitarian medical aid internationally and operates a warehouse to supply both the clinic and international projects. In 2008, the organization helped establish and continues to help operate a medical clinic in Ndumberi, Kenya in partnership with a separate in-country organization. Cash and Cash Equivalents Cash and cash equivalents include cash on hand as well as checking and savings accounts with financial institutions. The Organization considers all short-term investments purchased with a maturity of three months or less to be cash equivalents. Cash is maintained in a Boise area financial institution. Pledges and Grants Receivable Pledges and grants receivable are stated at unpaid balances, less an allowance for uncollectible amounts. Balances are non-interest bearing. The allowance is based on experience. It is the Organization’s policy to charge off uncollectible receivables when management determines the receivable will not be collected. There was no allowance at May 31, 2008 as all amounts are deemed collectible. Inventories Pharmaceutical and medical supplies are either donated or purchased. The values of pharmaceutical donations are not recorded in the financial statements, except the year end balance. As of May 31, 2008, the value of purchased items and donated medical supplies have been capitalized as supplied inventory at the lower of cost or market. Property and Equipment Purchased property, equipment and software is recorded at cost. Donated property, equipment and software are valued in the financial statements when used on Organization projects. Other donated property and equipment which is passed through the warehouse to other organizations are not valued in the financial statements. Purchased property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets. Federal and State Income Taxes Under Section 501(c)(3) of the Internal Revenue Code, as well as under Idaho state law, the Organization is considered to be a nonprofit organization and is therefore exempt from federal and state income taxes. It has been classified as an organization that is not a private foundation under Section 509(a)(2) of the Internal Revenue Code.

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GENESIS WORLD MISSION, INC.
NOTES TO FINANCIAL STATEMENTS MAY 31, 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.) Concentration of Credit Risk For the fiscal year ended May 31, 2008, the Organization has maintained various bank accounts with Idaho financial institutions. At times during the year, the bank balances were in excess of the $100,000 federal depository insurance coverage. In-Kind Contributions The Organization records donated services for volunteers who perform work similar to salaried personnel and are a significant and integral part of the efforts of the Organization. Contributions of donated non-cash assets are recognized at fair value in the financial statements. Use of Estimates The Organization uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. It is at least reasonably possible that the estimates will change within the next year. Promises to Give Contributions and grants are recognized when the donor or grantor makes an unconditional promise to give to the Organization. All donor-restricted contributions and grants are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Restricted Funds The Organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Grant Revenues All grants, except for expenditure reimbursement grants, are recognized as income when the grantor agency agrees to provide the funds to the Organization. Expenditure reimbursement grants are recognized as income when the related expenditures are made. NOTE 2 - PATIENT GOODS AND SERVICES REVENUE The Organization operates the Garden City Community Clinic and has a policy of providing free medical care to patients who do not have third-party coverage. Therefore, no revenue from medical services is recorded. Eligibility is based on household size and income based on 200% of the Federal Poverty Guidelines.

9

GENESIS WORLD MISSION, INC.
NOTES TO FINANCIAL STATEMENTS MAY 31, 2008

NOTE 3 - NOTE PAYABLE During 2006, the Organization acquired the building and associated land they were previously leasing for a purchase price of $425,000 resulting in a long-term note payable of $415,000. During 2007, an unscheduled principal payment of $100,000 was made on the note from funds provided by a grant from the Laura Moore Cunningham Foundation. Terms of the note are as follows:
Note payable to the Ashley's, interest at 7.0% amortized over 30 years, with monthly payments of principal and interest of $2,761 through April 1, 2016 with a balloon payment due April 1, 2016, collateralized by land and building. Less current portion $ At May 31, 2008, maturities of long-term debt are as follows: 2009 2010 2011 2012 2013 Thereafter $ 13,230 14,186 15,212 16,311 17,490 215,208 291,637

$

291,637 13,230 278,407

$

NOTE 4 - TEMPORARILY RESTRICTED NET ASSETS At May 31, 2008, the following net assets are temporarily restricted for specific use purposes:
John F Nagel Digital X Ray Funds John F Nagel GAPMed Funds Laura Moore Cunningham Building Funds Harry Morrison Foundation (Fire Equipment) Funds Rotary Transportation Funds Rotary Hygiene Funds Kiwanis Clinic Equipment Funds Kenya Trip Funds $ 13,434 7,570 8,363 8,122 653 500 634 559 39,835

$

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GENESIS WORLD MISSION, INC.
NOTES TO FINANCIAL STATEMENTS MAY 31, 2008

NOTE 5 – RELATED PARTY TRANSACTIONS The Organization has valued the in-kind services of five of its board members for professional services provided during the year (outside of board responsibilities.) The value of said services, as determined by management, is $61,195 and is reflected in the financial statements. The Organization also accepts cash and in-kind donations (such as tangible goods and fundraising auction items) from board members and employees. The value of cash donations by board members and employees is $57,056; the value of in-kind donations by the same is $5,796. In-kind amounts are determined by management and are reflected in the financial statements.

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