ACRM Audited Financial Statements 2012

ATLANTIC CITY RESCUE MISSION, INC. AND AFFILIATE

COMBINED FINANCIAL STATEMENTS

WITH SUPPLEMENTARY INFORMATION

YEAR ENDED DECEMBER 31, 2012

AND

INDEPENDENT AUDITORS’ REPORT


TABLE OF CONTENTS Page Independent Auditors’ Report 1 Combined Financial Statements Statement of Financial Position 3 Statement of Activities and Changes in Net Assets 4 Statement of Cash Flows 5 Statement of Functional Expenditures 6 Notes to Combined Financial Statements 7 Information Required Under Government Auditing Standards (GAS)

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 18 Schedule of Expenditures of Federal Awards 20 Schedule of Expenditures of State Awards 21 Notes to Schedules of Expenditures of Federal and State Awards 22 Summary of Auditors’ Results and Findings 23

Other Supplementary Information - Combining

Statement of Financial Position 24 Statement of Activities and Changes in Unrestricted Net Assets 25 Schedule of Program Services 26 Statement of Cash Flows 27

(Continued)

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INDEPENDENT AUDITORS’ REPORT To the Board of Trustees Atlantic City Rescue Mission, Inc. and Affiliate We have audited the accompanying combined financial statements of Atlantic City Rescue Mission, Inc. and Affiliate, a nonprofit organization, which comprise the statement of financial position as of December 31, 2012, and the related combined statements of activities and changes in net assets, cash flows and functional expenditures for the year then ended, and the related notes to combined 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. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 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 internal 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.

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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 combined financial statements referred to above present fairly, in all material respects, the financial position of Atlantic City Rescue Mission, Inc. and Affiliate as of December 31, 2012, 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. Other Matter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, schedule of expenditures of state awards and the other combining supplementary information are presented for purposes of additional analysis and are 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 26, 2013 on our consideration of Atlantic City Rescue Mission, Inc. and Affiliate’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 Atlantic City Rescue Mission, Inc. and Affiliate’s internal control over financial reporting and compliance.

September 26, 2013


COMBINED STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2012

ASSETSCurrent assets

Cash and cash equivalents 696,719$ Accounts receivable 194,566Accounts receivable - related party 11,500Prepaid expenses and deposits 62,853

Total current assets 965,638

Noncurrent assetsProperty and equipment - at cost, less accumulated depreciation 4,106,338Construction in progress 149,391Investments 223,403

Total noncurrent assets 4,479,1325,444,770$

LIABILITIES AND NET ASSETSCurrent liabilities

Accounts payable and other liabilities 124,065$ Accrued expenses 89,565Deferred revenue 84,541Line of credit 250,000

Total current liabilities 548,171

Noncurrent liabilitiesGift annuities payable 65,911

614,082

Commitments

Net assetsUnrestricted

Net investments in land, buildings and equipment 4,106,338 Designated for long-term investment 223,403 Undesignated 359,244 Total unrestricted 4,688,985

Temporarily restricted 137,408 Permanently restricted 4,295

Total net assets 4,830,688 5,444,770$

See notes to financial statements. 3


Temporarily PermanentlyUnrestricted Restricted Restricted Total

Revenues and other supportContributions 1,806,026$ 343,163$ -$ 2,149,189$ Legacies 170,827 - - 170,827 Donated food, clothing and supplies 895,451 - - 895,451 Donated services 6,715 - - 6,715 Special events 15,488 - - 15,488 Shelter/welfare income 1,030,506 - - 1,030,506 Client fees 74,812 - - 74,812 Contract income 549,964 - - 549,964 Investment income (loss) 26,544 - (151) 26,393 Adjustment of actuarial liability 8,477 - - 8,477 Miscellaneous 17,323 - - 17,323 Net assets released from restriction

for use in programs 277,064 (277,064) - - Total revenues and other support 4,879,197 66,099 (151) 4,945,145

Expenditures and lossProgram services

Men’s Ministry 1,061,206 - - . 1,061,206 Family Life Center 452,012 - - 452,012 Single Women’s Ministry 436,324 - - 436,324 Barnabas House 159,155 - - 159,155 Community Service 339,631 - - 339,631 Kitchen 1,144,395 - - 1,144,395 Street Outreach 209,870 - - 209,870 Mid-Atlantic Resources for the Poor 19,219 - - 19,219 Total program services 3,821,812 - - 3,821,812

Supporting servicesManagement and general 509,132 - - 509,132 Development 831,426 - - 831,426 Total supporting services 1,340,558 - - 1,340,558 Total expenditures before loss 5,162,370 - - 5,162,370

Loss on disposal of equipment 1,168 - - 1,168 Total expenditures and loss 5,163,538 - - 5,163,538

Change in net assets (284,341) 66,099 (151) (218,393)

Net assets, beginning of year 4,973,326 71,309 4,446 5,049,081 Net assets, end of year 4,688,985$ 137,408$ 4,295$ 4,830,688$


COMBINED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

See notes to financial statements.

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Cash flows from operating activitiesChange in net assets (218,393)$ Adjustments to reconcile change in net assets

to net cash used in operating activitiesRealized gain on investments (7,692) Unrealized gain on investments (17,892) Loss on disposal of equipment 1,168 Depreciation 221,786 Changes in assets and liabilities

Accounts receivable 952 Prepaid expenses and deposits 524 Accounts payable and other liabilities (101,987) Accrued expenses 32,571 Deferred revenue 84,541

Net cash used in operating activities (4,422)

Cash flows from investing activitiesPurchase of property and equipment (2,700) Investment in construction in progress (63,488) Proceeds from sale of investments 282,936 Gift annuities payable (4,044)

Net cash provided by investing activities 212,704

Cash flows from financing activitiesProceeds from short-term borrowings (line of credit) 250,000

Net increase in cash and cash equivalents 458,282

Cash and cash equivalents, beginning of year 238,437

Cash and cash equivalents, end of year 696,719$

Supplemental cash flow disclosuresInterest paid 6,448$

Noncash investing activitiesUtilization of deposit on property and equipment acquisition 15,432


COMBINED STATEMENT OF CASH FLOWS



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TotalProgram Management Supporting TotalServices and General Development Services Expenditures

Salaries and wages 1,376,937$ 254,234$ 192,985$ 447,219$ 1,824,156$ Employee benefits 325,667 64,047 46,173 110,220 435,887 Payroll taxes 107,265 19,452 15,121 34,573 141,838 Books and literature 405 - - - 405 Community relations 101 12 158,289 158,301 158,402 Continuing education 411 564 21 585 996 Depreciation 170,664 28,766 22,356 51,122 221,786 Donor acquisition - - 79,278 79,278 79,278 Dues/subscriptions 4,152 597 3,590 4,187 8,339 Donor appeals - - 158,442 158,442 158,442 Food service - GIK 863,731 - - - 863,731 Food service - Other 50,312 1,798 1,397 3,195 53,507 Emergency Assistance and HPRP 151,708 - - - 151,708 Health and program services - GIK 31,720 - - - 31,720 Health and program services - Other 33,666 838 1,446 2,284 35,950 Insurance 78,719 10,788 8,386 19,174 97,893 Interest expense and bank fees 246 17,347 2,127 19,474 19,720 Office supplies 7,802 1,798 1,774 3,572 11,374 Mailings and postage 1,599 1,604 48,913 50,517 52,116 Printing - 1,028 7,189 8,217 8,217 Professional fees 87,331 21,373 5,181 26,554 113,885 Donated services 5,167 871 677 1,548 6,715 Property and equipment maintenance 107,104 10,548 9,377 19,925 127,029 Property taxes - 4,430 - 4,430 4,430 Utilities 211,391 32,508 25,265 57,773 269,164 Refuse removal 24,974 4,209 3,272 7,481 32,455 Rentals 112,478 14,901 11,581 26,482 138,960 Telephone 25,834 4,213 3,193 7,406 33,240 Travel 37,948 3,413 4,595 8,008 45,956 Software and services 3,407 9,653 20,640 30,293 33,700 Special events and public relations - - 48 48 48 Miscellaneous 1,073 140 110 250 1,323

Total expenditures 3,821,812$ 509,132$ 831,426$ 1,340,558$ 5,162,370$


COMBINED STATEMENT OF FUNCTIONAL EXPENDITURES


Supporting Services


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NOTES TO COMBINED FINANCIAL STATEMENTS 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization Atlantic City Rescue Mission, Inc. (the “Mission”) is the unifying corporate body for two organizations, the Atlantic City Rescue Mission, Inc. and its affiliate, Mid-Atlantic Resources for the Poor. The combined financial statements present the combined assets, liabilities, net assets and activities for the two organizations. All material intercompany balances and transactions have been eliminated in the combination. Atlantic City Rescue Mission, Inc. is a non-denominational organization exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The purpose of the Mission is to provide the ministry of rehabilitation for those who are addicted to gambling, alcohol, and drugs. Meals and shelter are also provided for needy transients, which include single men, single women, mothers and their children. Mid-Atlantic Resources for the Poor is an organization exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The purpose of Mid-Atlantic Resources for the Poor is to provide benevolent and charitable relief to needy persons by providing rental housing, bill-paying assistance, and vocational training to enhance employment opportunities. Reference to the Mission in these notes refers to both organizations unless otherwise indicated. Basis of Presentation The accompanying financial statements have been presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Net assets, support and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. To ensure the observance of limitations and restrictions placed on the use of resources available to the Mission, resources for various purposes are classified for accounting purposes into classes established according to their nature and purpose. Net assets of the Mission are divided into three classes: unrestricted, temporarily restricted, and permanently restricted. Unrestricted net assets are net assets that are neither permanently restricted nor temporarily restricted by donor-imposed stipulations and include board-designated funds, or funds that have been segregated by the board to be spent only on specified purposes. Temporarily restricted net assets result from contributions whose use is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Mission pursuant to these stipulations. Net assets may be temporarily restricted for various purposes, such as use in future periods or use for specified purposes.

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NOTES TO COMBINED FINANCIAL STATEMENTS 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of Presentation (Continued) Permanently restricted net assets are those that are subject to donor-imposed restrictions which will never lapse, thus requiring that the funds be permanently retained. Generally, the donors of these funds permit the organization to use all or parts of the income earned on the related investments, and the net capital appreciation thereon, for general or specific purposes. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statement of cash flows, the Mission considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents, with the exception of money market funds which are included with investments. Accounts Receivable Accounts receivable are stated at the amounts management expects to collect. Management evaluates its accounts receivable and records an allowance for doubtful accounts, when deemed necessary, based on a combination of historical experience, aging analysis, and information on specific accounts. Based on the Mission’s review of accounts receivable, no allowance for doubtful accounts was considered necessary at December 31, 2012. Promises to Give/Pledges Unconditional promises to give represent pledges which have been made by donors but have not yet been received by the Mission. They are recognized as revenues or gains in the period received and as assets, decreases of liabilities or expenses, depending on the form of the benefits received. Conditional promises to give are recognized when the conditions on which they depend are substantially met.

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Investment Valuation GAAP defines fair value, provides guidance for measuring fair value, and requires certain disclosures, based on a fair value hierarchy. This fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either

directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the Mission’s own assumptions.

Investments in equity securities with readily determinable fair values and all investments in debt securities are reported at fair value based on quoted prices in active markets (national security exchanges) for identical assets, with gains and losses included in the statement of activities and changes in net assets. Donated investments are reflected as contributions at their fair values at date of receipt. Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Government obligations, mutual funds and money market funds. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Intermission Gift Annuity Investments The Mission has established a gift annuity plan whereby donors may contribute assets to the organization, in exchange for the right to receive a fixed dollar annual return during their lifetimes. This transaction provides for a portion of the transfer to be considered a charitable contribution for income tax purposes. The difference between the amount of the annuity and the liability for future payments, determined on an actuarial basis, is recognized as income at the date of the gift. Upon the death of the annuitant (or the last joint annuitant), income distributions cease. The actuarial liability for annuities payable is evaluated annually (giving effect to the investment income and payments to annuitants) and any surplus or deficiency is recognized in the statement of activities and changes in net assets.

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Intermission Gift Annuity Investments (Continued) Fair value is estimated at the present value of the future distributions expected to be received over the term of the agreements. Due to the nature of the valuation inputs, the investment is classified within Level 2 of the hierarchy. Property and Equipment Property and equipment are stated at cost, or, if donated, at the estimated fair market value at the date of donation. Depreciation is recorded using the straight-line method at various rates calculated to allocate the cost of the respective items over their estimated useful lives.

Estimated useful lives are: Land improvements 40 years Buildings 40 years Building improvements 15 - 20 years Furniture, fixtures and equipment 5 - 10 years Automobiles and trucks 3 - 5 years

The Mission capitalizes purchases and donations with a value over $5,000 and a usable life of at least 5 years. Planned major maintenance activities and their estimated cost are presented to the board for approval when a necessity is recognized. Restricted and Unrestricted Revenue and Support Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. All donor restricted support is reported as an increase in temporarily or permanently restricted net 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), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities and changes in net assets as net assets released from restrictions. Depending on the terms of the grant, certain restricted grants received are recorded as refundable advances until they are expended for the purposes of the grant, at which time they are recognized as revenue. If, at the end of the grant term, the funding agency requests a return of unexpended monies, such funds are then reclassified as due to grantor. Bequests are recorded as revenue based on valid wills with measurable proceeds.

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Donated Food, Clothing, Supplies and Services Donations of property and equipment are recorded as support at their estimated fair value at the date of donation. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use are reported as restricted support. If there are no donor stipulations regarding how long those donated assets must be maintained, the Mission reports expirations of donor restrictions when the donated or acquired assets are placed in service. The Mission reclassifies temporarily restricted net assets to unrestricted net assets at that time. Included in unrestricted contributions and program services expense is the estimated value of donated food, clothing and supplies received and utilized by the Mission in the amount of $895,451. The Mission also received donated services totaling $6,715 toward the cost of professional, various ministry related services, such as chiropractic care and technical support, and repair and maintenance of the building. These donated services are reflected as contributions and expenditures in the accompanying financial statements and are valued based on the estimated cost of services that otherwise would have had to be purchased. In addition, the Mission receives a significant amount of donated services from unpaid volunteers who assist in program services and fund raising projects. No amounts have been recognized in the statement of activities and changes in net assets for these unpaid volunteers because the criteria for recognition under GAAP have not been satisfied. During 2012, approximately 26,000 volunteer hours were donated. Income Tax Status The Mission qualifies as a tax-exempt organization under Section 501 (c)(3) of the Internal Revenue Code, and has been classified as an organization that is not a private foundation under Section 509(a)(2), and therefore qualifies for the charitable contribution deduction under Section 170(b)(1)(a). Federal and state information returns for years prior to 2009 are no longer subject to examination by tax authorities. Subsequent Events These financial statements were approved by management and available for issuance on September 26, 2013. Management has evaluated subsequent events through this date.

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NOTES TO COMBINED FINANCIAL STATEMENTS 2 - PROGRAM AND SUPPORTING SERVICES

Expenses are allocated to programs and supporting services on the basis of time and expense analysis. The following program and supporting services are included in the accompanying financial statements: Men’s Ministry / Single Women’s Ministry This is a long-term program that is offered to men and an emergency shelter service to single women. It is a multi-faceted program for those seeking release from alcohol, drug and gambling addiction. The program consists of in-depth personal counseling, class sessions, discussion groups, basic Bible studies, in-house work therapy and work readiness training. Family Life Center The Family Life Center is a haven for homeless mothers and children. Up to 11 families can stay as long as they need to until they can move back into permanent housing. Safe shelter, meals, counseling, parenting classes for mothers, and homework help for the children are all available. Barnabas House Barnabas House is a transitional housing facility in Wildwood, New Jersey, for male graduates of addiction recovery programs. All graduates must find outside employment and contribute a portion of their pay towards the program (client fees). In addition, graduates must attend regular meetings as well as individual counseling sessions. Community Service Community service consists of housing location and placement, transportation assistance, information and referral services, and community outreach. Kitchen Breakfast, lunch and dinner are prepared 7 days a week; in addition food baskets are given to the local needy. Over 400,000 meals a year are provided. Street Outreach Seven days a week, in conjunction with local police and government agencies, attempts are made to bring the homeless into the shelter of the Mission, and to save lives during freezing weather.

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NOTES TO COMBINED FINANCIAL STATEMENTS 2 - PROGRAM AND SUPPORTING SERVICES (Continued)

Mid-Atlantic Resources for the Poor (MARP) Benevolent and charitable relief is extended to needy persons by providing emergency shelter and affordable rental housing. Educational and vocational training is also provided to enhance employment opportunities. Other Meals, shelter and clothing are a homeless person’s immediate needs, but they also need services to help them get back on their feet again. Some of the other programs offered include the Goshen Farm where the Mission runs a 3-1/2 acre farm. Clients along with volunteers harvest over 30,000 pounds of low-cost, healthy produce for the shelter. Liaisons with rehabilitative and therapeutic agencies include the onsite AtlantiCare Behavioral Health clinic and AtlantiCare Mission Healthcare, also onsite. General and Administrative General and administrative services include those functions necessary to obtain and manage the Mission’s financial and other resources, ensure an adequate working environment, develop and administer Mission programs and services and, in conjunction with the Board, oversee the articulation of Mission policies and procedures, as well as long-term Mission strategies. Development Development includes those functions necessary to encourage and secure private financial support from individuals, foundations and corporations.

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NOTES TO COMBINED FINANCIAL STATEMENTS 3 - INVESTMENTS

The following table presents the fair value measurements of assets recognized in the accompanying statement of financial position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the value measurement falls at December 31, 2012.

Fair Value Measurement Using

Fair Value

Quoted Prices in Active

Markets for Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant Unobservable

Inputs (Level 3)

Money market funds $ 33,210 $ 33,210 $ - $ - Equities 7,099 7,099 - - Mutual funds 51,929 51,929 - - Intermission gift annuity investments 131,165 - 131,165 - Total investments $ 223,403 $ 92,238 $ 131,165 $ -0-

Investment income and adjustment of actuarial liability was earned and recorded as follows:

Net Investment

Income

Adjustment of Actuarial

Liability Total Interest and dividend income $ 7,427 $ 5,459 $ 12,886 Realized gain on investments 6,218 1,474 7,692 Unrealized gain on investments 12,748 5,144 17,892 Payment to annuitants - (7,692) (7,692) Adjustment of actuarial calculation - 4,092 4,092 Total $ 26,393 $ 8,477 $ 34,870

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NOTES TO COMBINED FINANCIAL STATEMENTS 4 - PROPERTY AND EQUIPMENT Property and equipment at December 31, 2012 consisted of the following:

Land $ 1,174,402 Land improvements 409,936 Building and improvements 5,164,266 Furniture, fixtures and equipment 611,353 Automobiles and trucks 150,361 7,510,318 Less - Accumulated depreciation and amortization 3,403,980 Total $ 4,106,338

5 - LINE OF CREDIT The Mission has a line of credit secured by a first lien mortgage on property located in

Wildwood, New Jersey. The amount of commitment available is $250,000, bearing interest at a variable rate (4.5% at December 31, 2012). As of December 31, 2012, the balance outstanding was $250,000.

6 - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consist of funds restricted by donors to be used for the following

specific purposes:

Client assistance and services $ 11,350 Hurricane Sandy relief 126,058

$ 137,408 7 - PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets consist of donated stock that is to be invested in perpetuity, the

income from which is available for unrestricted program services.

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NOTES TO COMBINED FINANCIAL STATEMENTS 8 - OPERATING LEASE COMMITMENTS The Mission entered into a lease agreement to rent a single-family home to provide temporary

housing to individuals and families that are in need of housing assistance. The lease was for one year and expired on December 31, 2012. The monthly rent (including sewer) was $1,032. Total rent expense for 2012 for this unit was $11,334.

The Mission’s second lease agreement is for space located near the Mission, with a lease term of

three years commencing February 1, 2011 and ending January 31, 2014. The monthly rent for this location is $6,500. Total rent expense for 2012 was $78,000.

Future minimum lease payments for the space located near the Mission is as follows:

Year Ending December 31,

2013 $ 78,000 2014 6,500 Total $ 84,500

The Mission also paid rental expense for other locations and on equipment leases that are month

to month and do not have specific end dates. The rent expense incurred for these leases in 2012 was $36,886.

9 - CONCENTRATION OF CREDIT RISK FOR CASH

Financial instruments which potentially subject the Mission to concentration of credit risk consist principally of cash balances in financial institutions which are insured by the Federal Deposit Insurance Corporation or Securities Investor Protection Corporation, subject to certain limitations.

10 - ECONOMIC DEPENDENCY The Mission receives support from federal and state government agencies in the form of aid and

specific grants and contracts. A significant reduction in the level of this support could have an effect on the Mission’s programs and activities. See Note 12.

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NOTES TO COMBINED FINANCIAL STATEMENTS

11 - RELATED PARTIES During 2012, an officer purchased an automobile from the Mission for $11,500. The terms of the

sale require sixty monthly installments, commencing January 2013, of $192, with no interest. As a result, there is a related party receivable of $11,500 on the statement of financial position as of December 31, 2012.

Included in Construction in Progress at December 31, 2012 is $75,000 for the Barnabas House Renovation project, which was paid in late 2010 to the same officer’s construction company. During 2012, the Mission also recognized payments of $15,432, previously made in 2010 to the same officer’s construction company, for work on the Interior Mezzanine 2nd Floor Food Warehouse, which was completed and placed in service in 2012. During 2012, $2,700 was paid to another officer for rent of their condominium, while a client who was displaced from their home stayed there.

12 - SUBSEQUENT EVENTS During March 2013, the line of credit was converted into a $250,000 loan. Beginning April 1, 2013, monthly installments of $2,660 are due, based on a fixed interest rate of 5% and a five-year amortization. A final payment of all principal plus interest is due at that time. On March 1, 2018, the interest rate will adjust to 300 basis points in excess of the weekly average rate for five-year U.S. Treasury securities (adjusted for constant maturities) prevailing 30 days prior to the said anniversary. The maturity date is March 1, 2023. During April 2013, the relationship with MARP was dissolved and the Mission no longer provides any oversight of MARP funds. As of September 2013, no funding has been received from Comprehensive Emergency Assistance Services (“CEAS”) and Emergency Assistance (“EA”) contracts. The Mission is uncertain whether they will receive any funding from these contracts in 2013. Management plans to increase revenue by increasing contributions through fundraising efforts in an attempt to avoid decreasing related program services.

INFORMATION REQUIRED UNDER GOVERNMENT AUDITING STANDARDS

(Continued)

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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 Trustees Atlantic City Rescue Mission, Inc. and Affiliate 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 Atlantic City Rescue Mission, Inc. and Affiliate (the “Mission”) (a nonprofit organization), which compromise the statement of financial position as of December 31, 2012, and the related combined statements of activities and changes in net assets, cash flows and functional expenditures for the year then ended, and the related notes to combined financial statements, and have issued our report thereon dated September 26, 2013. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Mission’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing an opinion on the effectiveness of the Mission’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Mission’s internal 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 Mission’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 internal control 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.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the Mission’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 the 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 Mission’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 Mission’s internal control and compliance. Accordingly, this communication is not suitable for any other purposes.

September 26, 2013

Federal Federal ProgramFederal Grantor/Pass-through Grantor/ CFDA Contract Grant or Award Revenue ExpendituresProgram Title Number Number Period Amount Recognized Recognized

Federal Assistance

U.S. Department of Housing and Urban DevelopmentPassed through City of Atlantic City 3/18/09-

Homeless Prevention and Rapid Re-housing Program (HPRP) 14.239 3/18/2012 539,602$ 59,866$ 59,866$

Passed through Atlantic County 3/18/09-Homeless Prevention and Rapid Re-housing Program (HPRP) 14.239 SO9UY340024 3/18/2012 518,596 28,171 28,171

Passed through New Jersey Department of Community Affairs 14.231 2012-100-022-5020 10/1/11 - 97,332 63,488 63,488Emergency Solutions Grant Program (ESG) 7/31/2013


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


See notes to schedules of expenditures of federal and state awards and Independent Auditors’ Report.

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Accounts State Program Receivable or

State Grantor/Pass-through Grantor/ Contract Grant or Award Revenue Expenditures (Refundable Program Title Number Period Amount Recognized Recognized Advances)

State Assistance

State of New JerseyDepartment of Human Services: 1/1/12-

Renewal Contract for Homeless Services K.12.93 12/31/2012 271,306$ 271,293$ 271,293$ 6,567$


SCHEDULE OF EXPENDITURES OF STATE AWARDS


See notes to schedules of expenditures of federal and state awards and Independent Auditors’ Report.

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NOTES TO SCHEDULES OF EXPENDITURES OF FEDERAL AND STATE AWARDS 1 - GENERAL INFORMATION

The accompanying Schedules of Expenditures of Federal and State Awards presents the activities for all of the federal and state award programs of Atlantic City Rescue Mission, Inc. and Affiliate. All financial awards received directly from federal and state agencies, as well as financial awards passed through other governmental agencies or not-for-profit organizations, are included on the schedules.

2 - BASIS OF ACCOUNTING

The accompanying Schedules of Expenditures of Federal and State Awards are presented using the accrual basis of accounting. The amounts reported on the schedules as expenditures may differ from certain financial reports submitted to federal and state funding agencies due to those reports being submitted on either a cash or modified accrual basis of accounting.

3 - RELATIONSHIP TO BASIC FINANCIAL STATEMENTS

Federal and state award expenditures are reported on the Schedule of Functional Expenditures as program services and supporting services. In certain programs, the expenditures reported in the basic financial statements may differ from the expenditures reported in the Schedules of Expenditures of Federal and State Awards due to program expenditures exceeding grant or contract budget limitations, matching, in-kind contributions, or capitalization policies required under accounting principles generally accepted in the United States of America.

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SUMMARY OF AUDITORS’ RESULTS AND FINDINGS Section I - Summary of Auditors’ Results Financial Statements Type of auditors’ report issued: Unqualified Internal control over financial reporting: 1) Material weakness(es) identified? yes X no 2) Significant deficiency(ies) identified? yes X none reported Noncompliance material to general-purpose financial statements noted? yes X no Section II - Financial Statement Findings {This section identifies the significant deficiencies, material weaknesses, and instances of noncompliance related to the financial statements that are required to be reported in accordance with paragraphs 5.18 through 5.20 of Government Auditing Standards.} None noted.

OTHER SUPPLEMENTARY INFORMATION - COMBINING

COMBINING STATEMENT OF FINANCIAL POSITION

Atlantic City Mid-AtlanticRescue ResourcesMission for the Poor Eliminations Total

ASSETSCurrent assets

Cash and cash equivalents 693,441$ 3,278$ -$ 696,719$ Accounts receivable 194,566 - - 194,566 Accounts receivable - related party 11,500 - - 11,500 Prepaid expenses and deposits 62,853 - - 62,853 Advance to Mid-Atlantic Resources for the Poor 100,179 - (100,179) -

Total current assets 1,062,539 3,278 (100,179) 965,638

Noncurrent assetsProperty and equipment - at cost, less accumulated depreciation 4,101,160 5,178 - 4,106,338 Construction in progress 149,391 - - 149,391 Investments 223,403 - - 223,403

Total noncurrent assets 4,473,954 5,178 - 4,479,132 Total assets 5,536,493$ 8,456$ (100,179)$ 5,444,770$

Current liabilitiesAccounts payable and other liabilities 124,038$ 27$ -$ 124,065$ Accrued expenses 89,565 - - 89,565 Advance from Atlantic City Rescue Mission - 100,179 (100,179) - Deferred revenue 84,541 - - 84,541 Line of credit 250,000 - - 250,000

Total current liabilities 548,144 100,206 (100,179) 548,171 Noncurrent liabilities

Gift annuities payable 65,911 - - 65,911 Total liabilities 614,055 100,206 (100,179) 614,082

Commitments

Net assetsUnrestricted

Net investments in land, buildings and equipment 4,101,160 5,178 - 4,106,338 Designated for long-term investment 223,403 - - 223,403 Undesignated 456,172 (96,928) - 359,244

Total unrestricted 4,780,735 (91,750) - 4,688,985Temporarily restricted 137,408 - - 137,408Permanently restricted 4,295 - - 4,295

Total net assets 4,922,438 (91,750) - 4,830,688 Total liabilities and net assets 5,536,493$ 8,456$ (100,179)$ 5,444,770$

LIABILITIES AND NET ASSETS


DECEMBER 31, 2012

See Independent Auditors’ Report.

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Mid-AtlanticAtlantic City Resources

Rescue Mission for the Poor Eliminations TotalRevenues and other support

Contributions 1,803,146$ 2,880$ -$ 1,806,026$ Legacies 170,827 - - 170,827 Donated food, clothing and supplies 895,451 - - 895,451 Donated services 6,715 - - 6,715 Special events 15,488 - - 15,488 Shelter/welfare income 1,030,506 - - 1,030,506 Client fees 66,186 8,626 - 74,812 Contract income 549,964 - - 549,964 Investment income 26,525 19 - 26,544 Adjustment of actuarial liability 8,477 - - 8,477 Miscellaneous 17,323 - - 17,323 Net assets released from restrictions

for use in programs 277,064 - - 277,064 Total revenues and other support 4,867,672 11,525 - 4,879,197

Expenditures and lossProgram services

Men’s Ministry 1,061,206 - - 1,061,206 Family Life Center 452,012 - - 452,012 Single Women’s Ministry 436,324 - - 436,324 Barnabas House 159,155 - - 159,155 Community Service 339,631 - - 339,631 Kitchen 1,144,395 - - 1,144,395 Street Outreach 209,870 - - 209,870 Mid-Atlantic Resources for the Poor - 19,219 - 19,219

Total program services 3,802,593 19,219 - 3,821,812 Supporting services

Management and general 509,132 - - 509,132 Development 831,426 - - 831,426

Total supporting services 1,340,558 - - 1,340,558 Total expenditures before loss 5,143,151 19,219 - 5,162,370

Loss on disposal of equipment 1,168 - - 1,168

Total expenditures and loss 5,144,319 19,219 - 5,163,538

Change in net assets (276,647) (7,694) - (284,341)

Net assets, beginning of year 5,057,382 (84,056) - 4,973,326 Net assets, end of year 4,780,735$ (91,750)$ -0-$ 4,688,985$


COMBINING STATEMENT OF ACTIVITIES AND CHANGES IN UNRESTRICTED NET ASSETS


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COMBINING SCHEDULE OF PROGRAM SERVICES


Family Single Mid-Atlantic TotalMen's Life Women's Barnabas Community Street Resources Program

Ministry Center Ministry House Service Kitchen Outreach for the Poor Services

Salaries and wages 548,761$ 229,725$ 235,234$ 56,547$ 101,468$ 95,715$ 109,487$ -$ 1,376,937$ Employee benefits 136,091 67,789 39,846 21,534 17,328 20,939 22,140 - 325,667 Payroll taxes 43,223 17,974 17,990 4,431 7,903 7,156 8,588 - 107,265 Total 728,075 315,488 293,070 82,512 126,699 123,810 140,215 - 1,809,869 Books and literature 293 - 112 - - - - - 405 Community relations 41 17 17 4 7 7 8 - 101 Continuing education 224 53 51 13 23 22 25 - 411 Depreciation 68,022 28,344 29,276 7,008 12,575 11,866 13,573 - 170,664 Dues/subscriptions 1,620 609 628 297 262 383 353 - 4,152 Food service - GIK - - - - - 863,731 - - 863,731 Food service - Other 4,251 1,771 1,830 988 786 39,838 848 - 50,312 Emergency assistance and HPRP - - - - 151,708 - - - 151,708 Health and program services - GIK 17,173 7,156 7,391 - - - - - 31,720 Health and program services - Other 16,742 4,394 7,445 610 1,798 1,034 1,593 50 33,666 Insurance 25,515 10,632 10,982 17,330 4,717 4,451 5,092 - 78,719 Interest expense and bank fees - - - - - - - 246 246 Office supplies 1,517 1,125 1,079 1,130 949 899 1,103 - 7,802 Mailings and postage 366 242 241 172 190 194 194 - 1,599 Professional fees 15,758 6,567 6,783 1,624 3,734 49,671 3,145 49 87,331 Donated services 2,060 858 886 212 381 359 411 - 5,167 Property and equipment maintenance 35,132 14,616 14,567 12,083 6,344 11,821 7,001 5,540 107,104 Utilities 76,872 32,031 33,083 26,445 14,212 13,409 15,339 - 211,391 Refuse removal 9,954 4,148 4,284 1,026 1,840 1,736 1,986 - 24,974 Rentals 35,236 14,682 15,165 3,630 6,514 16,886 7,031 13,334 112,478 Telephone 8,178 3,830 3,863 589 3,321 2,016 4,037 - 25,834 Travel 12,483 4,741 4,766 3,159 3,257 1,965 7,577 - 37,948 Software and services 1,358 566 584 140 251 237 271 - 3,407 Miscellaneous 336 142 221 183 63 60 68 - 1,073

1,061,206$ 452,012$ 436,324$ 159,155$ 339,631$ 1,144,395$ 209,870$ 19,219$ 3,821,812$


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COMBINING STATEMENT OF CASH FLOWS


Mid-AtlanticAtlantic City Resources

Rescue Mission for the Poor TotalCash flows from operating activities

Change in net assets (210,699)$ (7,694)$ (218,393)$ Adjustments to reconcile change in net assets

to net cash provided by (used in) operating activitiesRealized gain on investments (7,692) - (7,692) Unrealized gain on investments (17,892) - (17,892) Loss on disposal of equipment 1,168 - 1,168 Depreciation 221,786 - 221,786 Changes in assets and liabilities

Accounts receivable 952 - 952 Prepaid expenses and deposits (3,476) 4,000 524 Accounts payable and other liabilities (96,214) (5,773) (101,987) Accrued expenses 32,571 - 32,571 Advances to Mid-Atlantic Resources for the Poor (1,464) - (1,464) Advances from Atlantic City Rescue Mission - 1,464 1,464 Deferred revenue 84,541 - 84,541

Net cash provided by (used in) operating activities 3,581 (8,003) (4,422)

Cash flows from investing activitiesPurchase of property and equipment (2,700) - (2,700) Investment in construction in progress (63,488) - (63,488) Proceeds from sale of investments 282,936 - 282,936 Gift annuities payable (4,044) - (4,044)

Net cash provided by investing activities 212,704 - 212,704

Cash flows from financing activitiesProceeds from short-term borrowings (line of credit) 250,000 - 250,000

Net increase (decrease) in cash and cash equivalents 466,285 (8,003) 458,282

Cash and cash equivalents, beginning of year 227,156 11,281 238,437

Cash and cash equivalents, end of year 693,441$ 3,278$ 696,719$

Supplemental cash flow disclosuresInterest paid 6,448$ -$ 6,448$

Noncash investing activitiesUtilization of deposit on property and equipment acquisition 15,432 - 15,432


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ACRM Audited Financial Statements 2012

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Transcript of ACRM Audited Financial Statements 2012