DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER DELTA SIGMA THETA SORORI… · Performed in...

DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER FINANCIAL STATEMENTS

AND UNIFORM GUIDANCE REPORT JUNE 30, 2017

TABLE OF CONTENTS

Independent Auditor’s Report........................................................................................................................1 Statement of Financial Position.....................................................................................................................3 Statement of Activities and Changes in Net Assets.......................................................................................4 Statement of Cash Flows................................................................................................................................5 Notes to Financial Statements........................................................................................................................6 Supplemental Schedule of Functional Expenses.........................................................................................15 Supplemental Schedules of Budget vs Actual Expenses.............................................................................16 Independent Auditor’s 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............................................................19 Independent Auditor’s Report on Compliance for Each Major Federal Program and Report On Internal Control Over Compliance Required by Uniform Guidance...................................................21 Schedule of Expenditures of Federal Awards..............................................................................................23 Notes to Schedule of Expenditure of Federal Awards.................................................................................24 Schedule of Findings and Questioned Costs - Summary of Auditors’ Result.............................................25 Schedule of Findings and Questioned Costs - Financial Statement Findings..............................................26 Schedule of Findings and Questioned Costs - Federal Award Findings and Questioned Costs..................27

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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER STATEMENT OF FINANCIAL POSITION

JUNE 30, 2017 (With Comparative Totals for 2016)

2017

2016

ASSETS Current Assets Cash and Cash Equivalents

$ 9,879,258

$ 6,132,299 Investments 15,742,232 15,092,896 Prepaid Expenses and Other Assets

1,686,702

1,733,433

Grants Receivable

208,469

83,554 Other Receivable

163,945

178,969

Inventory

264,489

351,425 Total Current Assets

27,945,095

23,572,576

Noncurrent Assets

Fixed Assets, Net 6,355,516 6,688,205

Total Assets $ 34,300,611 $ 30,260,781 LIABILITIES AND NET ASSETS

Current Liabilities Accounts Payable

$ 409,032

$ 979,972 Affiliate Payable

5,710

1,997

Accrued Liabilities

464,397

484,721 Deferred Dues and Fees

5,474,914

5,001,123

Deferred Event Revenue

6,916,361

2,829,934 Loans Payable 145,872 145,872

Total Current Liabilities

13,416,286

9,443,619

Noncurrent Liabilities Pension Payable 2,445,970 1,731,180 Loans Payable 1,799,008 1,944,880 Total Noncurrent Liabilities 4,244,978 3,676,060 Total Liabilities 17,661,264 13,119,679 Net Assets

Unrestricted

15,654,762

16,004,142 Unrestricted-Board Designated

798,605

814,314

Temporarily Restricted

185,980

322,646 Total Net Assets

16,639,347

17,141,102

Total Liabilities and Net Assets

$ 34,300,611

$ 30,260,781

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

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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

FOR THE YEAR ENDED JUNE 30, 2017 (With Comparative Totals for 2016)

Unrestricted

Temporarily Restricted

2017

2016

Revenue and Support Conference and Events Revenue

$ 3,496,581

$ -

$ 3,496,581

$ 9,566,519 Membership Dues

6,155,802

$ -

6,155,802

6,205,830

Membership Intake

537,290

$ -

537,290

462,410 Chapter Fees

451,363

$ -

451,363

448,381

Government Grant

-

958,081

958,081

922,954 Donated Facilities

-

32,544

32,544

32,544

Contributions

-

11,339

11,339

142,290 Membership Doctrine

247,800

$ -

247,800

227,270

Certification of Vendors

352,250

$ -

352,250

118,000 Capital Improvement Funds

854,815

$ -

854,815

760,485

Net Investment and Interest Income

1,284,680

$ -

1,284,680

121,113 Boutique Sales

379,428

$ -

379,428

501,377

Other Income

265,318

$ -

265,318

208,363 Net Assets Released from Restrictions

Satisfaction of Purpose Restrictions

1,138,630

(1,138,630)

-

$ - Total Revenue and Support

15,163,957

(136,666)

15,027,291

19,717,536

Expenses

Program Services Chapter and Member Services

3,144,783

$ -

3,144,783

3,539,429 Conferences

3,033,430

$ -

3,033,430

1,219,992

National Convention $ - $ - $ - 9,049,267 Hazing Summit 148,032 $ - 148,032 $ - Leadership Delta 109,449 $ - 109,449 $ - Total Program Services

6,435,694

$ -

6,435,694

13,808,688

Support Services

Headquarters

8,742,600

$ -

8,742,600

8,356,562 Total Support Services

8,742,600

$ -

8,742,600

8,356,562

Total Expenses

15,178,294

$ -

15,178,294

22,165,250

Change in Net Assets Before Pension-Related Changes

(14,337)

(136,666)

(151,003)

(2,447,714)

Pension-Related Changes Other Than Periodic Pension Cost

(350,752) $ -

(350,752)

(604,844)

Change in Net Assets

(365,089)

(136,666)

(501,755)

(3,052,558)

Net Assets, Beginning of Year

16,818,456

322,646

17,141,102

20,193,660

Net Assets, End of Year

$ 16,453,367

$ 185,980

$ 16,639,347

$ 17,141,102


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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER STATEMENT OF CASH FLOWS


2017

2016

Cash Flows from Operating Activities Change in Net Assets

$ (501,755)

$ (3,052,558) Adjustments to Reconcile Change in Net Assets to Net Cash Provided

by (Used in) Operating Activities: Depreciation Expense

418,129

478,438 Net Unrealized Loss

159,715

795,831

(Increase)Decrease in Current Assets: Receivables

(109,891)

(87,939)

Inventory

86,936

42,949 Prepaid Expenses and Other assets

46,731

1,282,552

Increase (Decrease)in Current Liabilities: Accounts Payable

(567,227)

602,977

Accrued Liabilities

(20,324)

78,542 Retirement Payable 714,790 867,930 Deferred Revenue

4,560,218

(4,574,570)

Net Cash Provided by (Used in) Operating Activities

4,787,322

(3,565,848)

Cash Flows From Investing Activities Purchase of Investments

(2,844,395)

(1,593,188) Sale of Investments

2,035,344

4,188,517

Purchase of Fixed Assets

(85,440)

(2,665,317) Net Cash Used in Investing Activities

(894,491)

(69,988)

Cash Flows From Financing Activities Payments on Capital Lease Obligations

-

(2,229) Proceeds from Loans Payable - 2,188,000 Payments on Loans Payable (145,872) (97,248)

Net Cash (Used in) Provided by Financing Activities

(145,872)

2,088,523

Net Increase (Decrease) in Cash and Cash Equivalents

3,746,959

(1,547,313) Cash and Cash Equivalents, Beginning of Year

6,132,299

7,679,612

Cash and Cash Equivalents, End of Year

$ 9,879,258

$ 6,132,299 Supplemental Disclosure

Cash Paid for Interest

$ 37,542

$ 22,023


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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2017

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES • Organization: Delta Sigma Theta Sorority, Inc. - Grand Chapter (the Grand Chapter), founded in

1913, was organized as a public service sorority whose purpose is to provide cultural educational and public services and programs to promote welfare. The major programs of the sorority are based upon the Grand Chapter’s Five Point Programmatic Trust: – Economic Development – Educational

Development

– International Awareness and Involvement

– Physical and Mental Health

– Political Awareness and Involvement

The financial statements of the Grand Chapter do not include the operations of the local chapters, which maintain their own separate accounts. The Grand Chapter receives funding from membership dues and fees, contributions, grants, product sales, and vendor fees. The funds are expended for scholarships, membership services, assistance to other nonprofit organizations, and community-based activities.

• Basis of Accounting: The accompanying financial statements have been prepared on the accrual basis

of accounting in accordance with accounting principles generally accepted in the United States of America.

• Basis of Presentation: The Grand Chapter’s financial statements follows accounting standards for

financial statements of not for profit organizations in accordance with Accounting Standards Codification (ASC) Topic 958. Under these standards, the Grand Chapter is required to report information regarding its financial position and activities to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. … Unrestricted Net Assets - unrestricted resources available to support operations and also

includes temporarily restricted resources which become available for use by the Grand Chapter in accordance with intentions of donors.

… Temporarily Restricted Net Assets - net assets subject to donor-imposed stipulations that will be

met either by actions of the Grand Chapter and/or the passage of time.

… Permanently Restricted Net Assets - net assets subject to donor-imposed stipulations that are to be maintained permanently by the Grand Chapter. Generally, the donors of these permit the Grand Chapter to use all or part of the income earned on related investments for general or specific purposes. There were no permanently restricted net assets at June 30, 2017.

• Use of 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. These estimates also affect disclosures of contingent assets and liabilities at the date of the financial statements.

• Membership Dues and Initiation Fees: Annual membership dues and initiation fees are recognized as revenue over the applicable membership period. Dues and fees received in advance are recorded as deferred dues and fees.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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• Event Revenues and Expenses: Revenue and expenses from events are recognized when the event occurs. Revenue received in advance is recorded as deferred event revenue. Expenses paid in advance are recorded as prepaid expenses.

• Contributions: The Grand Chapter 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.

• Donated Facilities: The Grand Chapter occupies, without charge, certain facilities in government owned buildings. The facilities are used to operate the Maryland Educational Opportunity Center. The estimated fair rental value of the facilities is $32,544 which is reflected as support and expense in the statement of activities.

• Investments: Investments in marketable securities with readily determinable fair values and investments in debt securities are valued at their fair values in the statement of financial position. Investment income, including realized and unrealized gains and losses, as well as interest and dividends, are recognized as revenue and reported in the statement of activities and changes in net assets as increases or decreases in the unrestricted net assets, unless their use is temporarily or permanently restricted by the donor.

• Inventories: Inventories are valued at the lower of cost (first in and first out) or market. The Grand Chapter’s major classes of inventory are sorority pins, publications, audios, and other accessories.

• Fixed Assets: The Grand Chapter capitalizes all fixed assets valued over $200. Fixed assets are

recorded at cost and are depreciated on the straight-line basis over the estimated service lives of the assets. Leased property under capital leases are depreciated over the straight-line basis over the respective term of the lease.

The estimated useful lives used in computing depreciation are as follows:

Building and Improvements 25 years Computer Equipment 5 years Furniture and Equipment 10 years

• Cash and Cash Equivalents: Cash and cash equivalents includes all monies in the bank and on hand

and highly liquid investments with original maturities of three months or less. The carrying value of cash and cash equivalents approximates fair value because of the short maturities of those financial instruments.

• Tax Exempt Status: The Grand Chapter is exempt from Federal income taxes under Internal Revenue

Code Section 501(c)(7) and, therefore, has made no provision for federal income taxes. Financial Accounting Standards Board (FASB), Accounting Standards Codification 740, Income Taxes (ASC 740). ASC 740 requires that a tax position be recognized or derecognized based on a “more-likely- than-not” threshold. This applies to positions taken or expected to be taken in a tax return. As of June 30, 2017, management has assessed its various tax positions and it believes it has no uncertain position and there are no liabilities for uncertain tax positions. The Grand Chapter’s tax returns are subject to examination by the Internal Revenue Service, generally three years after they are filed.

• Functional Expenses Allocation: The cost of providing the various programs and supporting services

are summarized on a functional basis in the statement of activities and changes in net assets. Certain costs are allocated among program and supporting services benefited.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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• Comparative Information: The financial statements include certain prior-year summarized comparative information in total but not by net asset class. The 2016 fiscal year financial statements are not intended to present all information necessary for fair presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Grand Chapter’s financial statements for the year ended June 30, 2016, from which the summarized information was derived.

• Accounting Amendment to Be Adopted: FASB ASU 2015-07, “Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” The amendment removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. It also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical. The amendment is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendment is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Earlier application is permitted. The Grand Chapter has not adopted the amendment.

• FASB 958, ASU 2016-14, “Presentation of Financial Statements of Not-for-Profit Entities” This standard enhances disclosures and amends the requirements for financial statements and notes for non-profit organizations to require the presentation of the financial statements in two classes of net assets rather than for the currently required three classes. In addition, the amendment no longer requires the presentation or disclosure of the indirect method (reconciliation) if using the direct method. The amendments in this update are effective for annual financial statements issued for fiscal years beginning after December 15, 2017. Early application is permitted. The Grand Chapter has not adopted the amendment. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This standard states that entities which are not public business entities are not required to apply the fair value of financial instruments disclosure guidance in the General Subsection of Section 825-10-50. The standard is effective for fiscal years beginning after December 15, 2017 for mainly public entities. All other entities, including not-for-profits, should apply guidance to annual reporting periods beginning after December 15, 2018. The Grand Chapter is evaluating the impact this standard will have on the financial statements beginning in fiscal year 2020.

NOTE 2 CONCENTRATION OF CREDIT RISK The Grand Chapter maintains its cash and cash equivalents at two financial institutions. Accounts at each financial institution are insured by the Federal Deposit Insurance Corporation up to $250,000. At June 30, 2017, the uninsured cash balance totaled $6,680,476. However, any amounts in excess of the insured amount are fully collateralized. NOTE 3 FAIR VALUE MEASUREMENTS In accordance with ASC 820, Fair Value Measurements and Disclosures, the Grand Chapter applies the provisions for fair value measurements of investments that are recognized and disclosed at fair value in the financial statements on a recurring basis. Fair value is the price that would be received to sell an asset or transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC No. 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy consists of three broad levels.

NOTE 3 – FAIR VALUE MEASUREMENTS (CONTINUED)

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Level 1: Inputs that reflect unadjusted quoted market prices in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability,

either directly or indirectly, including inputs in markets that are not considered to be active.

Level 3: Inputs that are unobservable for the asset or liability and that include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimates.

The fair value of the Grand Chapter’s assets measured on a recurring basis at June 30, 2017 is as follows:

Level 1 Level 2 Total Short-term Investments Cash Equivalents $ - $ 3,095,198 $ 3,095,198

Long-term Investments Equities

Large Cap $ 3,866,479 $ - $ 3,866,479 Mid Cap 1,738,398 - 1,738,398 Small Cap 1,207,987 - 1,207,987 International 1,138,377 - 1,138,377 Emerging Markets Equities 833,631 - 833,631

Total Equities 8,784,872 - 8,784,872

Fixed Income Corporate Bonds $ - 2,839,603 2,839,603 United States Treasury Notes $ - 1,922,660 1,922,660

Total Fixed Income $ - 4,762,263 4,762,263

Certificate of Deposits $ - 1,048,791 1,048,791 Hedge Funds $ - 878,884 878,884 Commodities $ - 267,422 267,422

Total Long-term Investments $ 8,784,872 $ 6,957,360 $ 15,742,232 NOTE 4 INVESTMENTS Investments are stated at fair value at June 30, 2017. Approximately 94% of the Grand Chapter’s investments are with one financial institution. The investments consist of the following:

Equities $ 8,784,872 Fixed Income 4,762,263 Certificate of Deposits 1,048,791 Hedge Funds 878,884 Commodities 267,422 Total $15,742,232

In 2017, the Grand Chapter recognized net investment income from its investments of $1,284,401. This amount excludes the interest of $279 on cash and cash equivalents. The investment income is net of investment expenses of $56,111.

Interest and Dividends $ 266,148 Net Realized Gain 1,177,968 Net Unrealized Loss (159,715) Total $1,284,401

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NOTE 5 FIXED ASSETS Fixed assets consist of the following at June 30, 2017:

Nondepreciable Land $ 1,005,985 Building and Improvements 1,817,880 Depreciable Building and Improvements 10,923,630 Furniture and Equipment 2,523,148 Capital Lease Equipment 86,547

Total 16,357,190 Accumulated Depreciation and Amortization (10,001,674)

Net Fixed Assets $ 6,355,516 Depreciation and amortization expense totaled $418,129 at June 30, 2017. NOTE 6 NOTES PAYABLE The Grand Chapter obtained a $2,188,000 loan in October 2015 for the purchase of the building at 1711 New Hampshire Avenue. The loan is due October 1, 2020 and has a LIBOR daily floating interest rate plus 1.15 percentage points. The loan is secured by the building. Interest paid during the fiscal year was $37,542. At June 30, 2017, the total amount payable on the note was $1,944,880. The future minimum principal payments are as follows:

2018 $ 145,872 2019 145,872 2020 145,872 2021 1,507,264 Total $1,944,880

NOTE 7 DISTINGUISHED PROFESSOR ENDOWED TRUST In 1980, the Grand Chapter established the Distinguished Professor Endowed Trust. The irrevocable trust is an endowment which provides support for Black colleges and universities through a grant for a professor of distinction for a two-year period. The endowment includes both donor restricted endowment funds and funds designated by the Board of Directors. Net Asset Classification ASC 958-205, Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management Institutional Funds Act and Enhanced Disclosures for all Endowment funds provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA). ASC-958-205 also improves disclosures about an organization’s endowment funds (both donor restricted endowment funds and board designated endowment funds) whether or not the organization is subject to UPMIFA.

NOTE 7 – DISTINGUISHED PROFESSOR ENDOWED TRUST (CONTINUED)

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Law Interpretation The Grand Chapter has interpreted UPMIFA as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. The Grand Chapter does not have a permanent endowment. Consequently, the donor restricted endowment funds are classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Grand Chapter in a manner consistent with the standard prudence prescribed by UPMIFA. In accordance with UPMIFA, the Grand Chapter considers the purpose of the endowment fund in making a determination to appropriate or accumulate donor-restricted endowment funds. Investment Policies The Grand Chapter has adopted investment policies for the endowment assets that attempt to provide a predictable stream of funding for the program supported by the endowment while seeking to maintain the purchasing power of the endowment assets. • Endowment Net Asset Composition by Type of Fund as of June 30, 2017:

Unrestricted Temporarily

Restricted Total Donor Restricted $ - $ 41,174 $ 41,174 Board-designated 798,605 - 798,605 Total Funds $ 798,605 $ 41,174 $ 839,779

• Changes in Endowment Net Assets for the Fiscal Year Ended June 30, 2017:

Unrestricted Temporarily

Restricted Total Endowment Net Assets, Beginning of the Year $ 814,314 $ 40,026 $ 854,340 Contributions - 1,148 1,148 Investment Return: Investment Income 14,374 - 14,374 Net Appreciation (realized and unrealized) 69,917 - 69,917 Total Investment Return 84,291 - 84,291 Appropriation of Endowment Assets for

Expenditures (100,000) - (100,000) Endowment Net Assets, End of the Year $ 798,605 $ 41,174 $ 839,779

NOTE 8 TEMPORARILY RESTRICTED NET ASSETS The Grand Chapter’s temporarily restricted net assets consisted of the following at June 30, 2017:

Distinguished Professional Endowed Chair $ 41,174 Haiti Refugee 150 Tsunami Relief 600 Hurricane Relief 14,240 Water Well Project 34,576 Haiti Relief 3,893 Christmas Fund 1,515 Thika Project 89,832 Total $185,980

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NOTE 9 CAPITAL CAMPAIGN The Grand Chapter collected fees from members to fund its building operations and maintenance. The Grand Chapter received $854,815 from members in 2017. NOTE 10 PENSION PLAN The Grand Chapter has a defined benefit retirement plan (the Plan) that covers all employees with one year or more in service. Benefits paid to retirees are based on age at retirement, years of credited service, and average compensation. The Grand Chapter’s funding policy is to contribute the amount necessary to meet the funding requirements. Employees do not make contributions to the Plan. The Grand Chapter made its required contribution to the Plan. Benefit disbursements from the Plan totaled $1,021,906. ASC 715-30-25 requires that the Plan’s funding status be recognized in the statement of financial position and the measurement date to be as of the statement of financial position date. The funding status is the difference between the Plan’s projected future benefit obligation and the fair value of the Plan’s assets. Projected benefit obligation is the expected benefit payment payout to eligible employees beginning in 2017 through 2026. The fair value of the Plan’s assets is the anticipated value of the Plan’s invested funds during that same period. All of the Plan’s assets are invested 100% in annuity contracts of the Plan Administrator’s General Account. The Grand Chapter had an actuarial valuation performed to determine the Plan’s funding status. The valuation, which is based on various actuary assumptions, had a measurement date as of June 30, 2017. Based on the valuation, the fair value of the Plan’s assets did not exceed the projected benefit obligation resulting in an unfunded status of $2,445,970, which is reflected in the statement of financial position.

Projected Benefit Obligation $6,545,701 Fair Value of Plan Assets at June 30, 2017 4,099,731 Unfunded Status at End of Year $2,445,970

Component of Net Period Pension Cost and Other Amounts Recognized in Change in Unrestricted Net Assets:

Service Cost $ 217,426 Interest Cost 213,235 Expected Return on Plan Assets (195,827) Recognized Settlement Loss 415,527 Recognized Actuarial Loss 104,571

Net Periodic Pension Cost $ 754,932 The portion of the unrecognized actuary losses expected to be included in future net periodic pension expense is $2,661,609.

NOTE 10 – PENSION PLAN (CONTINUED)

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Other Changes in Plan Assets and Benefit Obligations Recognized in Unrestricted Net Assets:

Net Loss $ 155,521 Pension Benefit Obligation Loss 715,329

Net Loss 870,850 Recognized Settlement Loss (415,527) Amortization of Actuarial loss (104,571)

Total recognized in unrestricted net assets during the fiscal year other than through net periodic cost $ 350,752

Total recognized in net periodic pension cost and unrestricted net assets during the fiscal year $ 364,038

Actuary Assumptions The post-retirement interest rate assumption used to determine benefit obligations at June 30, 2017 was 5.25%. The expected long-term rate of return on plan assets was 4.0% compounded annually. The rate was selected using the “building block” approach described by the Actuarial Standards Board in Actuarial Standards of Practice No. 27-Selection Economic Assumptions for Measuring Pension Obligations. A best estimate range was determined for both the real estate (net of inflation) and for inflation based on the Grand Chapter’s historical 30 year period rolling averages. An average inflation rate within the range equal to 4.00% was selected and added to the real rate of return range to arrive at a best estimate range. The assumed rate of compensation increase for the future was projected at 4.0% per year. The assumed Social Security Wage base increase was 4.25%. The investment objective for the Plan is to ensure that the assets are reasonably sufficient to meet future obligations. Future Contribution The Grand Chapter expects to contribute about $225,000 to its pension plan in Fiscal Year 2018. Expected Return of Plan Assets No Plan assets were returned to the Grand Chapter in Fiscal Year 2017. Expected Benefit Payments The expected benefits payments are as follows:

2017 $ 2,432,000 2018 36,000 2019 4,000 2020 856,000 2021 848,000 2022-2026 1,542,000 Total $ 5,718,000

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NOTE 11 RELATED PARTIES The Grand Chapter has over 900 local chapters that remit membership dues, fees and other assessments to the organization. The Grand Chapter maintains the funds of the local chapters that have been suspended, retired, or do not have any officers. At June 30, 2017, the amount of local chapter funds held was $173,036, which is reflected in accrued liabilities in the statement of financial position. The Delta Research and Educational Foundation (the Foundation), a tax exempt organization under Section 501(c)(3) of the Internal Revenue Code, acts as the program sponsoring and funding arm of the Grand Chapter. The Grand Chapter provides funding to the Foundation by assessing a $20 fee to each new initiate which is in addition to the annual contribution of $300,000. New initiate fees for fiscal year 2017 were $80,000. The Grand Chapter also provides free space to the organization and acts as a conduit for contributions received from members for the Foundation. At June 30, 2017, the total amount due to the Foundation was $5,710. NOTE 12 FEDERAL FINANCIAL ASSISTANCE The Grand Chapter received a federal grant from the Department of Education for its Maryland Educational Opportunity Center. The grant enables the Grand Chapter to provide counseling and other information on college admissions to qualified adults who want to enter or continue a program of postsecondary education. The Grand Chapter recognized revenue from the grant totaling $958,081 in 2017. NOTE 13 CONTINGENCIES The Grand Chapter, in its normal operations, is a defendant in various legal actions. In the opinion of legal counsel, the potential loss on any claims should be covered by the Grand Chapter’s liability insurance coverage. Management asserts that there have been no other material claims, suits or complaints filed, nor pending, against the Grand Chapter. In the opinion, of management, all other matters which are asserted or unasserted would not have a significant effect on the financial position or changes in net assets, if they were disposed of unfavorably. NOTE 14 SUBSEQUENT EVENTS The Grand Chapter plans to freeze it defined benefit plan on December 31, 2017. There will be no new participants to the existing plan and the accrual of benefits will cease. Funding and admin expenses will continue until the existing plan is terminated. The timeline for termination has not been determined. The assets from the defined benefit plan are schedule to be transferred from Mutual of America to Principal Financial Group on or about December 1, 2017. On January 1, 2018, the Grand Chapter plans to offer a Safe Harbor 401k plan to its employees The Grand Chapter has evaluated subsequent events through November 29, 2017 which is the date the financial statements were available to be issued. This review and evaluation revealed no additional material events that would require disclosure or have an effect on the accompanying financial statements.

SUPPLEMENTAL SCHEDULES

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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER SUPPLEMENTAL SCHEDULE OF FUNCTIONAL EXPENSES


Support Services Chapter and Member Services Conferences Conventions

Headquarters

National President

Executive Committee

National Board Regions Committees MEOC

Total Services

Regional Conferences

Hazing Summit

Leadership Delta 2017 2016

Salaries and Benefits $ 4,938,584 $ - $ - $ - $ - $ - $804,222 $ 804,222 $ - $ - $ - $ 5,742,806 $ 4,801,955 Travel 7,651 26,195 19,984 217,667 34,989 194,290 9,564 502,689 376,537 20,006 96,519 1,003,402 1,117,830 Supplies and Materials 56,255 204 $ - $ - 2,828 6,878 13,932 23,842 139,237 1,979 265 221,578 386,444 Postage and Mailings 218,761 35 118 26 1,491 20 $ - 1,690 647 97 $ - 221,195 403,455 Communications 126,165 868 2,556 $ - 18,254 1,057 21,095 43,830 28,016 697 $ - 198,708 230,815 Conferences, Convention,

& Meetings 7,405 5,689 10,325 33,440 35,854 345,683 3,524 434,515 2,074,490 112,614 8,000 2,637,024 9,126,362 Printing and Publications 97,241 $ - $ - $ - 28,561 11,580 15,213 55,354 28,268 2,700 3,984 187,547 305,823 Contractual Services 80,657 $ - $ - 6,400 210 $ - $ - 6,610 22,255 $ - $ - 109,522 175,201 Audit and Legal Fees 53,000 $ - $ - 929,331 $ - $ - $ - 929,331 $ - $ - $ - 982,331 1,234,448 Other Professional Fees 342,020 $ - $ - 20,144 $ - $ - $ - 20,144 30,911 874 $ - 393,949 786,455 Management Training - $ - $ - $ - $ - $ - $ - - $ - $ - $ - - 160 Organizational

Affiliations and Dues 19,279 $ - $ - $ - $ - $ - 690 690 $ - $ - $ - 19,969 19,764 Insurances 585,069 $ - $ - 21,155 $ - $ - $ - 21,155 $ - $ - $ - 606,224 562,594 Depreciation 418,129 $ - $ - $ - $ - $ - $ - - $ - $ - $ - 418,129 478,438 Interest 37,542 $ - $ - $ - $ - $ - $ - - $ - $ - $ - 37,542 22,023 Cost of Boutique Sales 227,305 $ - $ - $ - $ - $ - $ - - $ - $ - $ - 227,305 226,909 Operations and Property 543,699 $ - $ - 4,908 $ - 2,680 122,386 129,974 209,911 1,153 $ - 884,737 741,721 Contributions 354,500 $ - $ - 7,500 867 65,500 $ - 73,867 $ - $ - $ - 428,367 646,965 Taxes 196,124 $ - $ - $ - $ - $ - $ - - $ - $ - $ - 196,124 212,591 Other 433,214 6,463 535 42,302 12,764 34,806 $ - 96,870 123,158 7,912 681 661,835 685,297 Total $ 8,742,600 $ 39,454 $ 33,518 $1,282,873 $135,818 $ 662,494 $990,626 $3,144,783 $ 3,033,430 $148,032 $ 109,449 $ 15,178,294 $ 22,165,250

- 16 -

DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER SUPPLEMENTAL SCHEDULE OF BUDGET VS ACTUAL EXPENSES

FOR THE YEAR ENDED JUNE 30, 2017

Headquarters

National President

Executive Committee

Budget

Actual

Variance

Budget

Actual

Variance

Budget

Actual

Variance

Salaries and Benefits

$4,160,981

$4,938,584

$(777,603)

$ -

$ -

$ -

$ -

$ -

$ - Travel

5,000

7,651

(2,651)

26,000

26,195

(195)

31,900

19,984

11,916

Supplies and Materials

60,000

56,255

3,745

2,000

204

1,796

1,800

$ -

1,800 Postage and Mailings

250,000

218,761

31,239

2,000

35

1,965

1,400

118

1,282

Communications

150,000

126,165

23,835

3,000

868

2,132

1,400

2,556

(1,156) Conferences, Convention, and Meetings

12,000

7,405

4,595

1,000

5,689

(4,689)

2,200

10,325

(8,125)

Printing and Publications

86,500

97,241

(10,741)

4,000

$ -

4,000

800

$ -

800 Contractual Services

116,480

80,657

35,823

2,000

$ -

2,000

$ -

$ -

$ -

Audit and Legal Fees

60,000

53,000

7,000

$ -

$ -

$ -

$ -

$ -

$ - Other Professional Fees

192,500

342,020

(149,520)

5,000

$ -

5,000

$ -

$ -

$ -

Management Training

5,000

-

5,000

$ -

$ -

$ -

$ -

$ -

$ - Organizational Affiliations and Dues

5,000

19,279

(14,279)

$ -

$ -

$ -

$ -

$ -

$ -

Insurance

500,000

585,069

(85,069)

$ -

$ -

$ -

$ -

$ -

$ - Depreciation

-

418,129

(418,129)

$ -

$ -

$ -

$ -

$ -

$ -

Interest - 37,542 (37,542) $ - $ - $ - $ - $ - $ - Cost of Boutique Sales

-

227,305

(227,305)

$ -

$ -

$ -

$ -

$ -

$ -

Operations and Property

1,295,470

543,699

751,771

$ -

$ -

$ -

$ -

$ -

$ - Contributions

301,700

354,500

(52,800)

$ -

$ -

$ -

$ -

$ -

$ -

Taxes

190,000

196,124

(6,124)

$ -

$ -

$ -

$ -

$ -

$ - Other

532,228

433,214

99,014

$ -

6,463

(6,463)

$ -

535

(535)

$7,922,859

$8,742,600

$(819,741)

$ 45,000

$39,454

$ 5,546

$39,500

$33,518

$ 5,982

- 17 -

DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER SUPPLEMENTAL SCHEDULE OF BUDGET VS ACTUAL EXPENSES (Continued)


National Board

Regions

Committees

Budget

Actual

Variance

Budget

Actual

Variance

Budget

Actual

Variance


$ -

$ -

$ -

$ -

$ -

$ -

$ -

$ -

$ - Travel

160,000

217,667

(57,667)

64,150

34,989

29,161

328,625

194,290

134,335


$ -

$ -

$ -

6,250

2,828

3,422

2,000

6,878

(4,878) Postage and Mailings

$ -

$ 26

(26)

14,900

1,491

13,409

3,400

20

3,380

Communications

$ -

$ -

$ -

28,700

18,254

10,446

8,050

1,057

6,993 Conferences, Convention, and Meetings

73,400

33,440

39,960

23,788

35,854

(12,067)

302,200

345,683

(43,483)


$ -

$ -

$ -

17,913

28,561

(10,648)

16,550

11,580

4,970 Contractual Services

$ -

6,400

(6,400)

-

210

210

700

$ -

700


500,000

929,331

(429,331)

-

$ -

$ -

-

$ -

$ - Other Professional Fees

15,000

20,144

(5,144)

-

$ -

$ -

-

$ -

$ -

Organizational Affiliations and Dues

3,000

$ -

3,000

-

$ -

$ -

-

$ -

$ - Insurance

25,000

21,155

3,845

-

$ -

$ -

-

$ -

$ -


5,500

4,908

592

-

$ -

$ -

-

2,680

(2,680) Contributions

125,000

7,500

117,500

-

$ 867

(867)

-

65,500

(65,500)

Other

14,000

42,302

(28,302)

6,984

12,764

(5,780)

71,900

34,806

37,094

Total

$ 920,900

$1,282,873

$ (361,973)

$162,685

$135,818

$ 26,867

$ 733,425

$ 662,494

$ 70,931

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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER SUPPLEMENTAL SCHEDULE OF BUDGET VS ACTUAL EXPENSES (Continued)


MEOC

Regional Conferences

Hazing Summit Leadership Delta

Budget Actual Variance

Budget Actual Variance

Budget Actual Variance Budget Actual Variance


$814,203 $804,222 $ 9,981

$ - $ - $ -

$ - $ - $ - $ - $ - $ -

Travel

14,400 9,564 4,836

263,817 376,537 (112,720)

22,902 20,006 2,896 82,410 96,519 (14,109)


9,000 13,932 (4,932)

109,556 139,237 (29,681)

$ - 1,979 (1,979) 2,900 265 2,635

Postage and Mailings

- - -

47,693 647 47,046

$ - 97 (97) 300 $ - 300

Communications

14,000 21,095 (7,095)

19,375 28,016 (8,641)

1,500 697 803 $ - $ - $ -

Conferences, Convention, and Meetings

76,175 3,524 72,651

1,171,133 2,074,490 (903,357)

140,046 112,614 27,432 46,390 8,000 38,390


11,000 15,213 (4,213)

13,248 28,268 (15,020)

750 2,700 (1,950) 2,000 3,984 (1,984)

Contractual Services

- - -

14,663 22,255 (7,592)

$ - $ - $ - 1,000 $ - 1,000


- - -

- $ - -

$ - $ - $ - $ - $ - $ -

Other Professional Fees

- - -

55,150 30,911 24,239

$ - 874 (874) $ - $ - $ -

Organizational Affiliations and Dues

- 690 (690)

- $ - -

$ - $ - $ - $ - $ - $ -

Insurance

- - -

- $ - -

$ - $ - $ - $ - $ - $ -

Depreciation and Amortization

- - -

- $ - -

$ - $ - $ - $ - $ - $ -

Cost of Boutique Sales

- - -

520,393 $ - 520,393

$ - $ - $ - $ - $ - $ -


15,723 122,386 (106,663)

494,389 209,911 284,478

$ - 1,153 (1,153) $ - $ - $ -

Contributions

- - -

- $ - -

$ - $ - $ - $ - $ - $ -

Taxes

- - -

- $ - -

$ - $ - $ - $ - $ - $ -

Other

- - -

91,528 123,158 (31,630)

$ - 7,912 (7,912) $ - 681 (681)

Total

$954,501 $990,626 $ (36,125)

$2,800,945 $3,033,430 $(232,485)

$ 165,198 $ 148,032 $ 17,166 $ 135,000 $ 109,449 $ 25,551

UNIFORM GUIDANCE

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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Program Name CFDA# Expenditures U.S. Department of Education Educational Opportunity Centers 84.066 $ 958,081

Total U.S. Department of Education 958,081

Total Expenditures of Federal Awards $ 958,081

The accompanying notes are an integral part of this schedule.

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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


NOTE 1 BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of the Grand Chapter under programs of the federal government for the year ended June 30, 2017. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Grand Chapter, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Grand Chapter. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. NOTE 3 INDIRECT COST RATE The Grand Chapter elected not to use the option of the 10% de-minis indirect cost rate.

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DELTA SIGMA THETA SORORITY, INC. - GRAND CHAPTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS


Section I - Summary of Auditors’ Results

Financial Statements Type of auditor’s report issued: Unmodified Internal Control over financial reporting

• Material weaknesses identified? No

• Significant Deficiency(ies) identified that are not considered to material weakness(es) None reported

Noncompliance material to financial statements noted? No Federal Awards

Internal Controls over major programs:

• Material weaknesses identified? No • Significant Deficiency(ies) identified that are not considered to be

material weakness(es) None reported

Type of auditor’s report issued on compliance Unmodified

Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133. No Identification of Major Program CFDA# Program Name 84.066 Educational Opportunity Centers Dollar threshold used to distinguish between Type A and Type B Programs $750,000 Auditee qualified as a low risk auditee? No

- 26 -



Section II - Financial Statement Findings

No matters were reported.

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Section III - Federal Award Findings

No matters were reported.

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