Title: NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Accounting Policies: Basis of Accounting - The accompanying financial statements have been presented in accordance with accounting principles generally accepted in the United States of America. The accounts of the Organization are maintained on the accrual basis of accounting.
Classification of Net Assets - The Organization reports its net assets and changes therein in the following categories according to externally imposed restrictions:
Net Assets Without Donor Restrictions - Net assets without donor restrictions are not subject to donor-imposed restrictions and may be expended for any purposes related to the Organization.
Net Assets With Donor Restrictions - Net assets with donor restrictions are those whose use has been limited by donors to a specific purpose. The Organization’s net assets with donor restrictions are available generally for specific program services. As of December 31, 2023 the Organization had no net assets with donor restrictions.
Cash and Cash Equivalents - The Organization considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. The Organization maintains its cash and cash equivalents in bank deposit accounts at financial institutions which, at times, may exceed FDIC limits. The Organization has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk.
Grants and Pledges Receivable - The Organization accounts for unconditional contributions due in future periods as pledges receivable and with donor restrictions. Pledges receivable are recorded at their estimated net present value based upon the expected year of payment. No discount was necessary at December 31, 2023 since all pledges receivable were expected to be collected within the next year. Allowances for potential credit losses are determined based on historical experience and expected credit trends. A provision for credit losses in the amount of $55,650 was established by management at December 31, 2023. There was no provision for credit losses established for the year ended December 31, 2022.
Property and Equipment - Property and equipment are stated at cost. Depreciation is computed on the straight-line basis over the estimated useful lives of the respective assets (3 to 7 years). Maintenance and repairs are charged to operations as incurred; significant betterments are capitalized.
Revenue Recognition - The Organization follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”) which requires following a five-step process to recognize revenue: 1) identify the contract with the customer, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations and 5) recognize revenue when the performance obligations are satisfied.
In June 2018, The Financial Accounting Standards Board issued Accounting Standards Update No. 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (“ASU 2018-08”), which clarifies and improves the scope and the accounting guidance for contributions received and contributions made, distinguishing between contributions and exchange transactions. Grant revenues are recognized as income in accordance with the terms of the specific grants. Unconditional contributions are recognized as earned in accordance with the specific agreements between the Organization and the partner organizations. The Organization records contributions received as without donor restriction and with donor restriction support depending upon the existence or nature of any donor restrictions. All contributions are considered available for unrestricted use unless specifically restricted by the donor. When a restriction is fulfilled, net assets with donor restriction are reclassified to net assets without donor restriction and reported as released from restriction in the statements of activities and changes in net assets.
In-Kind Contributions - During the years ended December 31, 2023 and , the Organization recognized $481,998 and $336,8032, respectively, of in-kind contribution income representing certain donated services, facilities, and buildings. Such amounts were recorded at their estimated fair value at the time the services or use of the facilities and buildings took place. The Organization recognizes donated services as revenue if such services create or enhance nonfinancial assets or require specialized skills, are performed by people with those skills, or would otherwise be purchased by the Organization.
Allocation of Functional Expenses - Directly identifiable expenses are charged to specific programs or for specific purposes. Expenses related to more than one program (purpose) are allocated to the respective program (purpose) on the basis of time spent and/or expenses paid in the given area. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Organization.
Leases - In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), along with various amendments since. Collectively, “ASC 842.” This standard requires lessees to record leases on their balance sheets but recognize the expenses on their income statements in a manner similar to ASC 840. This lease guidance states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term.
The Organization adopted the new standard on January 1, 2022, as required for private companies, and applied the modified retrospective approach along with the package of transition practical expedients. The Organization also elected the short-term lease exemption and does not recognize leases with terms less than one year on the balance sheet. The modified retrospective application was applied to the prior year and there was no prior period impact at the date of adoption or as of December 31, 2022. As of December 31, 2023, the Organization recorded initial right-of-use assets and lease liabilities, that were previously unrecorded under prior GAAP, of $177,084. Refer to Note 7 for further detail on leases.
Income Taxes - The Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code, except on net income derived from unrelated business activities. The Organization believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements.
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 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
De Minimis Rate Used: N
Rate Explanation: The entity used its negotiated indirect rate
The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Organization and is presented on the modified accrual basis of accounting. 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). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements of the Organization.