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NEBRASKA STATE BAR ASSOCIATION
AND
NEBRASKA LAWYERS FOUNDATION
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS Consolidated Statements of Financial Position Consolidated Statements of Activities Consolidated Statements of Functional Expenses Consolidated Statements of Cash Flows
NOTES TO CONSOLI DATED Fl NANCIAL STATEMENTS
SUPPLEMENTAL INFORMATION Consolidating Schedules of Financial Position Consolidating Schedules of Activities
Page
1-2
3
4-5 6-7
8 -9
10-22
23-24
25-28
DANA F .. COLE & COMPANYLLP CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
To the Executive Council Nebraska State Bar Association
and the Nebraska Lawyers Foundation Lincoln, Nebraska
We .have audited the accompanying consolidated financial statements of Nebraska State Bar Association and Nebraska Lawyers Foundation (nonprofit organizations), which comprise the consolidated statements of financial position as of December 31, 2019 and 2018, and the related consolidated statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the consolidated financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated 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 prepara- . tion and fair presentation of consolidated 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 consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the U'nited States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nebraska State Bar Association and Nebraska Lawyers Foundation as of December 31, 2019 and 2018, and the changes in their net assets and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Other Information
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating schedules of financial position and activities on pages 23 - 28 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole.
Lincoln, Nebraska June 8, 2020
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NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2019 AND 2018
ASSETS
CURRENT ASSETS Cash and cash equivalents Accounts receivable Promises to give Grants receivable Prepaid expenses Certificates of deposit
Total current assets
LONG-TERM INVESTMENTS, mutual funds
PROPERTY AND EQUIPMENT, net
TOTAL ASSETS
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES Accounts payable Accrued liabilities Deferred revenue
Total current liabilities
NET ASSETS Net assets without donor restrictions
Board-designated - House of Delegates Reserve
Undesignated Net assets with donor restrictions
Time and purpose restrictions Client Assistance Fund Other time and purpose restrictions
Total net assets
TOTAL LIABILITIES AND NET ASSETS
See accompanying notes to consolidated financial statements.
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2019
1,338,803 180,078
90,208 175,835
30,783 407,099
2 ,222,806
984,905
154,433
3,362,144
181,595 195,864 946,764
1,324,223
824,861 103,785
371,828 737,447
2,037,921
3,362, 144
2018
1,300,519 102,536
86, 194 222,000
56,367 530,646
2,298,262
741,653
162,385
3,202,300
61,243 193,932 861,877
1,117,052
756,836 53,440
502,152 772,820
2,085,248
3,202,300
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION CONSOLIDATED STATEMENTS OF ACTIVITIES
DECEMBER 31, 2019 AND 2018
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS Revenues and support
Membership dues Contributions Special events revenue Direct benefits to donors
Net special events revenue
Program income Publications and label sales Registration fees Advertising Recovery of costs Grants Investment income Royalties and rebates Other income
Net assets released from restrictions
Total revenues and support
Expenses Program services
Administration of Justice Professional and practice development Grants
Supporting activities General and administrative Fund raising
Total expenses
Change in net assets without donor restrictions
CHANGES IN NET ASSETS WITH DONOR RESTRICTIONS Revenues and support
Registration fees Section dues Client Assistance Fund investment income Promises to give
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2019 2018
1,084,011 1,094,941 12,722 7,237
2 28,154 175,573 (64,251) (66,768)
163,903 108,805
75,705 76,895 113,934 164,509 632, 168 650,399
59,936 61,389 119,091 112,000
10,550 11,550 66,697 26,633 89,605 35,464
598 128
2 ,428,920 2,349,950 552,344 327,361
2 ,981,264 2,677,311
571,359 420,187 1,252,885 1,225,498
19,755 10,690
978,047 932, 249 40,848 44,841
2 ,862,894 2,633,465
118,370 43,846
12,503 22,196 71,870 72,200 28,418 9,162
6,282 3,883
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION CONSOLIDATED STATEMENTS OF ACTIVITIES
DECEMBER 31, 2019 AND 2018
CHANGES IN NET ASSETS WITH DONOR RESTRICTIONS (Continued}
VLP Fund contributions LSAT Scholarship Fund contributions SOLACE contributions Grants
Total revenues and support Net assets released from restrictions
Change in net assets with donor restrictions
CHANGE IN NET ASSETS
NET ASSETS, beginning of year
NET ASSETS, end of year
See accompanying notes to consolidated financial statements.
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2019 2018
750 1,755 529
125 265,819 244,096
386,647 352,941 (552,344} (327,361)
(165,697} 25,580
(47,327} 69,426
2,085,248 2,015,822
2,037,92 1 2,085,248
NEBRASKA STATE BAR ASSOCIATION
AND
NEBRASKA LAWYERS FOUNDATION
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED DECEMBER 31, 2019
Program Services Supporting Activities
Professional
Administration and Practice General and
of Justice Development Grants Total Administrative Fundraising Total
Salaries 228,797 400,339 629,136 444,855 16,923 1,090,914
Benefits 27,815 48,098 75,913 74,053 2,107 152,073
Payroll taxes 17,402 24,004 41,406 39,618 1,946 82,970
Insurance 6,379 6,510 12,889 9,398 315 22,602
Retirement benefits 5,978 28,213 34,191 4,374 2,049 40,614
Travel and related costs 6,421 37,668 44,089 52,853 1,647 98,589
Professional fees 81,938 52,381 134,319 19,628 3,350 157,297 O'>
Financial services expenses 15,952 15,952 25,884 2,735 44,571
Telephone 4,997 5,687 10,684 10,977 1,614 23,275
Supplies 2,066 14,857 16,923 11,905 160 28,988
Postage 1,083 47,256 48,339 12,739 435 61,513
Printing duplication 541 85,316 85,857 2,831 1,879 90,567
Office rent 11,680 24,372 36,052 142,418 1,277 179,747
Dues and subscriptions 1,164 464 1,628 4,461 150 6,239
Donations 26,598 26,598 100 26,698
Client Assistance Fund 149,927 149,927 149,927
Meetings 5,518 233,167 238,685 31,146 731 270,562
Depreciation 2,725 4,312 7,037 4,319 209 11,565
Miscellaneous expenses 19 31,346 31,365 8,458 2,682 42,505
MCLE fees 26,596 26,596
Scholarships 19,755 19,755 19,755
Tools and technology 16,909 166,345 183,254 51,434 639 235,327
Total expenses 571,359 1,252,885 19,755 1,843,999 978,047 40,848 2,862,894
See accompanying notes to consolidated financial statements.
NEBRASKA STATE BAR ASSOCIATION
AND
NEBRASKA LAWYERS FOUNDATION
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED DECEMBER 31, 2018
Program Services Supporting Activities
Professional
Administration and Practice General and
of Justice Development Grants Total Administrative Fundraising Total
Salaries 189,660 372,661 562,321 381,423 17,369 961,113 Benefits 30,023 39,481 69,504 55,454 1,937 126,895 Payroll taxes 14,980 21,478 36,458 33,394 1,972 71,824
Insurance 2,926 1,021 3,947 18,428 93 22,468 Retirement benefits 9,157 23,989 33,146 38,117 1,910 73,173
Travel and related costs 8,775 32,538 41,313 56,034 4,625 101,972
Professional fees 96,511 62,819 159,330 25,352 5,463 190,145 --..J Financial services expenses 18,799 18,799 24,847 1,978 45,624
Telephone 5,517 3,530 9,047 10,098 642 19,787
Supplies 2,285 14,973 17,258 11,004 73 28,335
Postage 1,149 46,279 47,428 12,889 1,002 61,319
Printing duplication 69 77,101 77,170 2,904 3,099 83,173
Office rent 11,940 22,868 34,808 143,723 1,234 179,765
Dues and subscriptions 2,008 1,074 3,082 4,591 680 8,353
Donations 23,429 23,429 200 23,629
Client Assistance Fund 30,767 30,767 30,767
Meetings 2,427 213,845 216,272 35,592 196 252,060
Section activities 27,905 27,905 27,905 Depreciation 63 7,415 7,478 4,398 213 12,089 Miscellaneous expenses 5 929 934 6,964 216 8,114 MCLE fees 12 27,618 27,630 27,630 Scholarships 10,690 10,690 10,690 Tools and technology 11,913 185,746 197,659 66,837 2,139 266,635
Total expenses 420,187 1,225,498 10,690 1,656,375 932,249 44,841 2,633,465
See accompanying notes to consolidated financial statements.
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018
CASH FLOWS FROM OPERATING ACTIVITIES 2019
Cash received from revenue and support 2,769,948 Cash paid to employees and suppliers (2, 703,461) Interest received 18,960
Net cash provided by (used in) operating activities 85,447
CASH FLOWS FROM INVESTING ACTIVITIES Sale of investments Purchase of investments (174,000) Purchase of certificates of deposit (300,000) Redemption of certificates of deposit 430,451 Purchase of property and equipment (3,614)
Net cash used in investing activities (47,163)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 38,284
CASH AND CASH EQUIVALENTS, beginning of year 1,300,519
CASH AND CASH EQUIVALENTS, end of year 1,338,803
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2018
2,601,099 (2,636,587)
18,301
( 17,187)
116,118 (269,700) (427,666) 484,503 ( 12,772)
(109,517)
(126,704)
1,427,223
1,300,519
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2019 AND 2018
Reconciliation of Change in Net Assets to Net Cash Provided by (Used in) Operating Activities
Change in net assets
Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation Realized gain on investments Unrealized (gain) loss on investments Reinvested interest and dividends (Increase) decrease in assets:
Accounts receivable Accounts receivable from related organizations Grants receivable Contributions receivable Prepaid expenses
Increase (decrease) in liabilities: Accounts payable Accounts payable to related organizations Accrued liabilities Deferred revenue
Total adjustments
Net cash provided by (used in) operating activities
See accompanying notes to consolidated financial statements.
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2019 2018
(47,327) 69,426
11,565 12,089 (1,442)
(48,025) 10,571 (28,130) (26,623)
(77,542) (35,857)
46,165 8,304 (4,014) (3,383)
25,584 510
120,352 (37,884)
1,932 22,163 84,887 (35,061)
132,774 (86,613)
85,447 (17,187)
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Activities
The Nebraska State Bar Association was created to aid in maintaining high standards of conduct, integrity, confidence, and public service of persons engaged in the practice of law and to promote the professional interest of its members. By Supreme Court rule, all persons admitted to the practice of law in the state of Nebraska are members of the Association, however, only dues paying members receive full benefits of membership. The Association is primarily funded by voluntary membership dues.
The Nebraska Lawyers Foundation was created to provide support for programs dedicated to ensuring access to justice for all Nebraskans and strengthening the legal profession through programs like:
• The Volunteer Lawyers Project • The Rural Practice Initiative • Nebraska Lawyers Assistance Program • SOLACE • Scholarships for LSAT prep and Leadership Academy
Method of Accounting
The consolidated financial statements of the Organization have been prepared on the accrual basis of accounting which conforms with generally accepted accounting principles.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Nebraska State Bar Association and Nebraska Lawyers Foundation (collectively referred to as the Organization). All significant intercompany accounts and transactions have been eliminated in consolidation.
New Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The provisions of ASU No. 2014-09 apply to exchange transactions with customers that are bound by contracts or similar arrangements and establish a performance obligation approach to revenue recognition. The new standard also requires expanded disclosures regarding the qualitative and quantitative information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard is effective for annual reporting periods beginning after December 15, 2018, and permits the use of either a full retrospective or a modified retrospective approach.
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NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
New Accounting Pronouncements (Continued)
The Organization adopted the new standard on January 1, 2019, using the modified retrospective method. Based on the Organization's evaluation process and review of its contracts with customers, the timing and amount of revenue recognized previously is consistent with how revenue is recognized under the new standard. The adoption of the ASU No. 2014-09 did not have an impact on the Organization's financial statements. Therefore, no cumulative adjustment was recognized in net assets upon adoption.
In 2019, the Organization adopted ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. This accounting standard is meant to help not-for-profit entities evaluate whether transactions should be accounted for as contributions or as exchange transactions and, if the transaction is identified as a contribution, whether it is conditional or unconditional. ASU 2018-08 clarifies how an organization determines whether a resource provider is receiving commensurate value in return for a grant. If the resource provider does receive commensurate value from the grant recipient, the transaction is an exchange transaction and would follow the guidance under ASU 2014-09 (ASC Topic 606 - Revenue Recognition). If no commensurate value is received by the grant maker, the transfer is a contribution. ASU 2018-08 stresses that the value received by the general public as a result of the grant is not considered to be commensurate value received by the provider of the grant. ASU 2018-08 was implemented on a modified prospective basis. Therefore, in 2019, the new standard was applied to agreements that were either not completed as of January 1, 2019, or entered into after January 1, 2019. The 2018 financial statements were not restated and continue to be reported under the accounting standards in effect in that period. There was no material impact to the financial statements as a result of adoption. Accordingly, no adjustment to opening net assets was recorded.
Financial Statement Presentation
The consolidated financial statements report amounts by class of net assets.
Net Assets Without Donor Restrictions
Net assets without donor restrictions are resources available to support operations and not subject to donor restrictions.
Net Assets With Donor Restrictions
Net assets with donor restrictions are resources that are subject to donor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donorimposed restrictions are perpetual in nature, where the donor stipulates that resources
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NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial Statement Presentation (Continued)
Net Assets With Donor Restrictions (Continued)
be maintained in perpetuity. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both, and are reported in the statements of activities as net assets released from restrictions.
Contributions
The Organization utilizes FASB ASC 958-605, Not-for-Profit Entities Revenue Recognition. This standard requires that unconditional promises to give be recorded as receivables and revenues and requires the Organization to distinguish between contributions received for each net asset category in accordance with donor-imposed restrictions. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional.
Contributed Materials and Services
Contributed personal services are to be recognized at fair value if the services received (a) create or enhance long-lived assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Contributions of tangible assets are recognized at fair value when received. Any amounts reflected in the accompanying financial statements as in-kind contributions are offset by like amounts included in expenses or additions to property and equipment.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Organization considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents.
Accounts and Grants Receivable
Accounts receivable are reported at the amount management expects to collect on balances outstanding at year end. Based on management's assessment of the credit history with customers having outstanding balances and current relationships with them, it has concluded that realization losses on balances outstanding at year end will be immaterial.
Receivables due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Receivables are stated at the amount billed to the customer. The Organization does not charge interest on overdue customer account balances. Payments of receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices.
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NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Prom is es to give
Contributions are recognized when the donor makes a promise to give that is, in substance, unconditional. Unconditional promises to give that are expected to be collected or paid in more than one year are recognized at the present value of estimated future cash flows if the discount is material to the financial statements. Based on prior years' experience and management's analysis of specific promises made, management has concluded that realization losses on balances outstanding at year end will be immaterial.
Investments
The Organization has adopted FASB ASC 958-320, Not-for-Profit Entities, Investments -Debt and Equity Securities, which establishes principles of reporting at fair value certain investments, debt and equity securities, held by not-for-profit organizations.
Therefore, investments in equity securities that have a readily determinable fair value and all investments in debt securities are stated at fair value, with gains and losses included in the statements of activities. Fair value is determined by quoted market values.
Eauipment
Property and equipment are stated at cost, if purchased or fair value, if donated. Costs over $500 for property and those which substantially increase useful lives of assets are capitalized. Maintenance, repairs, and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and resulting gains or losses are included in income.
Depreciation
The Organization depreciates property and equipment using the straight-line method over their estimated useful lives which range from 3 to 39 years.
Revenue Recognition
Membership dues are for a calendar year period and are recognized as income in the year in which the dues revenue is earned. Any dues revenue received prior to the calendar year in which it is earned is recorded as deferred revenue. Event sponsorships received in advance of the event are recognized as revenue in the year earned.
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NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Compensated Absences
Employees of the Organization earn a vested right to compensation for unused vacation time. Accordingly, the Organization has made an accrual for vacation and compensation that employees have earned.
Advertising
Advertising costs are expensed as incurred. Publicity expense for the years ended December 31, 2019 and 2018, was $884 and $2,549, respectively.
Functional Expense Allocation
The costs of providing various program services and supporting activities have been summarized on a functional basis in the consolidated statements of activities and the consolidated statements of functional expenses. Accordingly, certain costs have been allocated among the program services and supporting activities benefitted. Such methods include time estimates and square footage estimates based on program usage.
Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Income Taxes
The Nebraska State Bar Association and Nebraska Lawyers Foundation are exempt from federal income taxes under Section 501(c)(6) and Section 501(c)(3) , respectively, of the Internal Revenue Code. As such, income earned in the performance of their exempt purpose is not subject to income tax. Any income earned through activities not directly related to their exempt purpose is subject to taxation at normal corporate rates. The Organization has advertising income, which is subject to tax on unrelated business income. For the years ended December 31, 2019 and 2018, the Organization's tax liability on unrelated business activity was $- 0 -.
The Organization utilizes the provisions of FASB ASC 7 40-10, Accounting for Uncertain Tax Positions. The Organization continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law, and new authoritative rulings. The Organization believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that would be material to the financial statements.
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NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassification
In certain instances, figures for the prior year have been reclassified to place them on a basis comparable with the current year.
NOTE 2. CONCENTRATIONS
The Organization holds deposits in several financial institutions. Accounts at each institution are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). As of December 31, 2019 and 2018, the bank accounts exceeded federally insured limits by $86,548 and $153,084, respectively. The Organization utilizes an Insured Cash Sweep® Deposit Placement Agreement. The balances that exceeded the FDIC limit were created by the excess of deposits over next-business-day placement of funds in the Destination Institutions' FDIC-insured accounts. High year end dues and continuing education registration receipts caused these overages. The Organization has not experienced any losses on such accounts.
Financial instruments which potentially subject the Organization to concentrations of credit risk consist primarily of trade receivables with a variety of customers. The Organization generally does not require collateral from its customers. Such credit risk is considered by management to be limited due to the Organization's broad customer base and its customers' financial resources.
The Organization was awarded grant income of $216,000 and $240,000 during the years ended December 31, 2019 and 2018, respectively, from the Nebraska Commission on Public Advocacy. Absent these grants, the Organization's programs would be greatly diminished.
NOTE 3. PROMISES TO GIVE
Promises to give are due to be collected as follows:
Gross amount due in: One year or less One to five years
Total promises to give
2019 2018
6,459 86,194 83,749
90,208 86,194
No allowance for doubtful accounts is considered necessary on the promises to give. The Discount to present value is considered immaterial and is not recorded.
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NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. INVESTMENTS
The Organization has adopted FASB ASC 820-10, Fair Value Measurements, which provides a framework for measuring fair value under accounting principles generally accepted in the United States of America. FASB ASC 820-10 applies to all financial instruments that are being measured and reported on a fair value basis.
As defined in FASB ASC 820-10, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Organization uses various methods including market, income, and cost approaches. Based on these approaches, the Organization often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Organization utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Organization is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1- Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2 - Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities.
Level 3 - Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
For the years ended December 31, 2019 and 2018, the application of valuation techniques applied to similar assets has been consistent. The following is a description of the valuation methodologies used for instruments measured at fair value:
Marketable Debt and Equity Securities
The fair value of marketable debt and equity securities is the market value based on quoted market prices.
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NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. INVESTMENTS (Continued)
Fair Value on a Recurring Basis
The table below presents the balances of assets measured at December 31, 2019 and 2018, at fair value on a recurring basis.
2019
Total Level 1 Level 2 Level 3
Mutual Funds Balanced mixed equity/bond 214,388 214,388
Bonds 770,517 770,517
Total 984,905 984,905
2018
Total Level 1 Level 2 Level 3
Mutual Funds Balanced mixed equity/bond 139,936 139,936 Bonds 601,717 601,717
Total 741,653 741,653
The carrying amounts, market value, unrealized gains, and unrealized losses of the investments at December 31, 2019 and 2018, are as follows:
Mutual Funds Balanced mixed equity/bond Bonds
Mutual Funds Balanced mixed equity/bond Bonds
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Total Cost
171,699 768,642
940,341
Total Cost
138,371 606,743
745,114
2019
Unrealized Gains
(Losses)
42,689 1,875
44,564
2018
Unrealized Gains
(Losses)
1,565 (5,026)
(3,461)
Estimated Fair
Value
214,388 770,517
984,905
Estimated Fair
Value
139,936 601,717
741,653
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE4. INVESTMENTS (Continued)
NOTE 5.
Management evaluates securities for other than temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial conditions and near-term prospects of the issuer, and (3) the intent and ability of the Organization to retain its investments in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. As management has the ability to hold securities for the foreseeable future, no declines are deemed to be other than temporary.
Investment income consists of: 2019 2018
Interest and dividend income 47,090 44,924 Unrealized gains (losses) on investments 48,025 (10,571) Realized gains on investments 1,442
95,115 35,795
PROPERTY AND EQUIPMENT
Property and equipment consists of:
2019 2018
Furniture and equipment 212,709 209,096 Leasehold improvements 231,823 231,823
444,532 440,919 Less accumulated depreciation (290,099) (278,534)
154,433 162,385
The financial statements include depreciation expense of $11,565 and $12,089 for the years ended December 31, 2019 and 2018, respectively.
NOTE 6. NET ASSETS WITHOUT DONOR RESTRICTIONS - BOARD DESIGNATED
Board-designated net assets at December 31, 2019 and 2018, consist of a fund designated by the Organization's House of Delegates as a reserve unavailable for operating expenses, unless otherwise determined by the Board.
18
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. NET ASSETS WITH DONOR RESTRICTIONS
Net assets with donor restrictions include a Client Assistance Fund which was established by the Organization to reimburse, within limits set by members of the fund committee, clients of the Organization members who have suffered financial loss due to dishonesty of an attorney.
In March 2020 the Organization signed a memorandum of understanding with the Nebraska Supreme Court in which the Court will make a one-time transfer in the amount of $100,000 to the Organization for use in compensating victims of dishonest acts by attorneys.
Client Assistance Fund activities are summarized as follows:
2019 2018 Revenue and support
Investment income 28,418 9,162
Expenses Administrative expenses 9,015 8,598 Fidelity bond 810 810 Claims paid 148,917 29,757
Total expenses 158,742 39,165
Decrease in net assets with donor restrictions (130,324) (30,003)
Net assets, beginning of year 502,152 532,155
Net assets, ending of year 371,828 502, 152
Other net assets with donor restrictions are available for the following purposes:
Section dues unexpended Legislative checkoff dues unexpended Grants unexpended Promises to give Volunteer Lawyer's Project New Initiatives Fund SOLACE Schoenike Memorial Fund
19
2019 2018
411,053 14,074 30,000 88,983
175,835 2 ,561 2,940
12,001
400,850 14,074 30,000 85,944
222,000 2,561 5 ,390
12,001
737,447 772,820
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. COMMITMENTS
Leases
The Organization has an agreement with the Nebraska State Bar Foundation for a noncancelable operating lease for office space. The lease is for a 15-year period ending June 2020. In October 2019, the Organization signed a new lease commencing on July 1, 2020 and ending June 30, 2030. In addition to minimum annual payments, the Organization also must pay its prorated share of operating costs incurred by the lessor in connection with common areas of the building, the land, and the underground parking area. The consolidated financial statements include office rent expense of $179, 7 4 7 and $179, 765 for the years ended December 31, 2019 and 2018, respectively.
The Organization is also obligated under non-cancelable equipment lease agreements expiring in December 2021.
Future minimum payments under the agreements are as follows:
2020 202 1 2022 2023 2024
Thereafter
Electronic Library Development
117,048 90,180 91,758 93,364 94,998
552,769
1,040,117
The Organization is obligated under a contract for electronic library development for a period of five years beginning October 2018 at $7 ,858 per month. The contract is renewable for a period of five years.
The financial statements include electronic library development expense of $98,654 and $ 122,807 for the years ended December 31, 2019 and 2018, respectively.
Child Support Calculator
The Organization is obligated under a contract extension for the license to Advanced Legal Software, LLC, for Nebraska Child Support Calculator for a period of two years beginning in October of 2019. The contract is for annual licensing fees of $25,000. As of December 31, 2019, the Organization is current with the payments.
The financial statements include Child Support Calculator expense of $26,583 and $27,000 for the years ended December 31, 2019 and 2018, respectively.
20
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. COMMITMENTS (Continued)
Legislative Services
The Organization has entered into a contract for professional services related to representation of legislative interests. The contract term covers the period January 2019 through December 2020. The amount due for 2020 includes a fixed fee of $90,000 to be paid in equal installments over 12 months. The contract may be renegotiated or terminated by the Organization if the services cannot be supported by the Organization's voluntary dues revenue.
NOTE 9. RETIREMENT PLAN
The Organization has a defined contribution pension plan for all eligible employees who have completed one year of service and are 21 years of age. The annual contribution is 10 percent of the compensation paid during a year. Participants may make voluntary contributions to the plan and are limited to 100 percent of the participant's compensation, subject to IRS annual contribution limitations. Participants are immediately vested in their voluntary contributions plus interest earned on the voluntary contributions.
The participant's interest in the Organization's contributions and the earnings thereon vest at the rate of 25 percent per year, beginning with completion of two years of service and are 100 percent vested after five years of service. Pension expense was $40,614 for 2019 and $73,173 for 2018.
NOTE 10. LIQUIDITY AND AVAILABILITY OF RESOURCES
The Organization's financial assets available to meet cash needs for general expenditures within one year of the balance date are as follows:
2019 2018
Current assets 2,222,806 2,298,262 Subtract: nonfinancial assets (30,783) (56,367) Subtract: cash restricted by donor for Client
Assistance Fund (30,065) (189,030) Subtract: cash restricted by donor for other
time and purpose restrictions (453,491) (567,554)
Financial assets available to meet cash needs for general expenditures within one year 1,708,467 1,485,311
As part of the Organization's liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, the Organization invests cash in excess of daily requirements in short-term investments. The Organization places cash in excess of short-term needs in mutual funds.
21
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. SUBSEQUENT EVENTS
The Coronavirus (COVID-19) outbreak has prompted a global health concern. Consequently, the Organization may experience a loss in revenue sources due to the economic impacts of the virus, or may experience an increase in costs to provide services. An estimate of the effect of the COVID-19 pandemic cannot be made at this time.
In preparing the financial statements, the Organization has evaluated events and transactions for potential recognition or disclosure through June 8, 2020, the date the financial statements were available to be issued.
22
SUPPLEMENTAL INFORMATION
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION CONSOLIDATING SCHEDULE OF FINANCIAL POSITION
DECEMBER 31, 2019
ASSETS
Nebraska Nebraska State Bar Lawyers Eli mi-
Association Foundation nations CURRENT ASSETS
Cash and cash equivalents 1,212,261 126,542 Accounts receivable 179,128 950 Accounts receivable from related
organizations 946 5,818 ( 6,764) Promises to give 90,208 Grants receivable 175,835 Prepaid expenses 29,531 1,252 Certificates of deposit 407,099
Total current assets 1,828,965 400,605 ( 6,764)
LONG-TERM INVESTMENTS, mutual funds 984,905
PROPERTY AND EQUIPMENT, net 154,433
TOTAL ASSETS 2,968,303 400,605 (6,764)
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES Accounts payable 181,585 10 Accounts payable to related organizations 5,818 946 (6,764) Accrued liabilities 195,270 594 Deferred revenue 933,814 12,950
Total current liabilities 1,316,487 14,500 (6,764)
NET ASSETS Net assets without donor restrictions
Board-designated - House of Delegates Reserve 824,861
Undesignated 103,785 Net assets with donor restrictions
Time and purpose restrictions Client Assistance Fund 371,828 Other time and purpose restrictions 455,127 282,320
Total net assets 1,651,816 386,105
TOTAL LIABILITIES AND NET ASSETS 2,968,303 400,605 (6,764)
See accompanying notes to consolidated financial statements.
23
Consolidated
1,338,803 180,078
90,208 175,835
30,783 407,099
2 ,222,806
984,905
154,433
3 ,362,144
181,595
195,864 946,764
1,324,223
824,861 103,785
371,828 737,447
2,037,921
3,362,144
NEBRASKA STATE BAR ASSOCIATION
AND
NEBRASKA LAWYERS FOUNDATION
CONSOLIDATING SCHEDULE OF FINANCIAL POSITION
DECEMBER 31, 2018
ASSETS
Nebraska Nebraska
State Bar Lawyers Eli mi-
Association Foundation nations Consolidated
CURRENT ASSETS
Cash and cash equivalents 1,212,898 87,621 1,300,519 Accounts receivable 98,811 3,725 102,536 Accounts receivable from related
organizations 135 575 (710) Promises to give 86,194 86,194 Grants receivable 222,000 222,000 Prepaid expenses 55,094 1,273 56,367 Certificates of deposit 530,646 530,646
Total current assets 1,897,584 401,388 (710) 2,298,262
LONG-TERM INVESTMENTS, mutual funds 741,653 741,653
PROPERTY AND EQUIPMENT, net 162,385 162,385
TOTAL ASSETS 2,801,622 401,388 (710) 3,202,300
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable 61,243 61,243 Accounts payable to related organizations 575 135 (710) Accrued liabilities 192,265 1,667 193,932 Deferred revenue 843,627 18,250 861,877
Total current liabilities 1,097,710 20,052 (710) 1,117,052
NET ASSETS
Net assets without donor restrictions
Board-designated - House of Delegates
Reserve 756,836 756,836 U ndesignated 53,440 53,440
Net assets with donor restrictions
Time and purpose restrictions
Client Assistance Fund 502,152 502,152 Other time and purpose restrictions 444,924 327,896 772,820
Total net assets 1,703,912 381,336 2,085,248
TOTAL LIABILITIES AND NET ASSETS 2,801,622 401,388 (710) 3,202,300
See accompanying notes to consolidated financial statements.
24
NEBRASKA STATE BAR ASSOCIATION AND
NEBRASKA LAWYERS FOUNDATION CONSOLIDATING SCHEDULE OF ACTIVITIES
DECEMBER 31, 2019
Nebraska Nebraska
State Bar Lawyers
Association Foundation
CHANGES IN NET ASSETS WITHOUT DONOR RESTRICTIONS Revenues and support
Membership d ues 1,084,011 Contributions 12,722 Special events revenue $228,154, net of
direct benefits to donors of $64,251 163,903 Program income 75,705 Publications and label sales 113,934 Registration fees 632,168 Advertising 59,936 Recovery of costs 119,091 Grants 319,064 Investment income 59,550 7,147 Royalties and rebates 89,605 Other income 598
2 ,553,662 183,772 Net assets released from restrictions 341,561 210,783
Total revenues and support 2 ,895,223 394,555
Expenses
Program services
Ad ministration of j ustice 571,359 Professional and practice
development 1,252,885 Grants 328,269
Supporting activities
Management and general 973,030 5,017 Fundraising 29,924 10,924
Total expenses 2,827,198 344,210
Change in net assets without donor
restrictions 68,025 50,345
25
Eli m i-
nations Consolidated
1,084,011 12,722
163,903 75,705
113,934 632,168
59,936 119,091
(308,5 14) 10,550 66,697 89,605
598
(308,514) 2,428,920 552,344
(308,514) 2,981,264
571,359
1,252,885 (308,514) 19,755
978,047 40,848
(308,514) 2,862,894
118,370
NEBRASKA STATE BAR ASSOCIATION
AND
NEBRASKA LAWYERS FOUNDATION
CONSOLIDATING SCHEDULE OF ACTIVITIES
DECEMBER 31, 2019
Nebraska Nebraska
State Bar Lawyers
Association Foundation
CHANGES IN NET ASSETS WITH DONOR
RESTRICTIONS
Revenues and support
Registration fees 12,503 Section d ues 71,870 Client Assistance Fund investment income 28,418
Promises to give 6,282 LSAT Scholarship Fund contributions 1,755 Grants 108,649 157,170
Total revenues and support 221,440 165,207 Net assets released from restrictions (341,561) (210,783)
Change in net assets with donor
restrictions (120,121) (45,576)
CHANGE IN NET ASSETS (52,096) 4,769
NET ASSETS, beginning of year 1,703,912 381,336
NET ASSETS, end of year 1,651,816 386,105
See accompanying notes to consolidated financial statements.
26
Eli mi-
nations Consolidated
12,503 71,870 28,418
6,282 1,755
265,819
386,647 (552,344)
(165,697)
(47,327)
2,085,248
2,037,921
NEBRASKA STATE BAR ASSOCIATION
AND
NEBRASKA LAWYERS FOUNDATION
CONSOLIDATING SCHEDULE OF ACTIVITIES
DECEMBER 31, 2018
Nebraska Nebraska
State Bar Lawyers
Association Foundation
CHANGES IN NET ASSETS WITHOUT DONOR
RESTRICTIONS
Revenues and support
Membership dues 1,094,941 Contributions 7,237 Special events revenue $175,573, net of
d i rect benefits to donors of $66, 768 108,805
Program income 76,895 Publications and label sales 164,509
Registration fees 650,399 Advertising 61,389 Recovery of costs 112,000 G rants 349,151 750
Investment income 22,221 4,412
Royalties and rebates 35,464 Other i ncome 50 78
2 ,567,019 121,282 Net assets released from restrictions 102,682 224,679
Total revenues and support 2,669,701 345,961
Expenses
Program services
Adm inistration of justice 420,187 Professional and practice
development 1,225,498
G rants 349,041 Supporting activities
Management and general 925,849 6,400 Fund raising 32,692 12, 149
Total expenses 2,604,226 367,590
Change in net assets without donor
restrictions 65,475 (21,629)
27
Eli m i-
nations Consolidated
1,094,941 7,237
108,805 76,895
164,509 650,399
61,389 112,000
(338,351) 11,550 26,633 35,464
128
(338,351) 2 ,349,950 327,361
(338,351) 2 ,677,311
420,187
1,225,498 (338,35 1) 10,690
932,249 44,841
(338,35 1) 2 ,633,465
43,846
N EBRASKA STATE BAR ASSOCIATION
AND
N EBRASKA LAWYERS FOUNDATION
CONSOLIDATING SCHEDULE OF ACTIVITIES
DECEMBER 3 1, 2018
Nebraska Nebraska
State Bar Lawyers
Association Fou ndation
CHANGES IN N ET ASSETS WITH DONOR
RESTRICTIONS
Reven ues and support
Registration fees 22,196
Section dues 72,200
Client Assistance Fund investment income 9,162
Promises to give 3,883
VLP Fu nd 750
LSAT Scholarship Fund contributions 529
SOLACE contributions 125
Grants 30,000 2 14,096
Total reven ues and support 133,558 219,383 Net assets released from restrictions (102,682) (224,679)
Change in net assets with donor
restrictions 30,876 (5,296)
CHANGE IN N ET ASSETS 96,351 (26,925)
N ET ASSETS, beginning of year 1,607,561 408,261
NET ASSETS, end of year 1,703,912 381,336
See accompanying notes to consolidated financial statements.
28
Eli m i-
nation s Consolidated
22,196 72,200
9,162 3,883
750 529 125
244,096
352,941 (327,361)
25,580
69,426
2,015,822
2,085,248