christian reformed church in north america and christian ... · management is responsible for the...
TRANSCRIPT
The report accompanying these financial statements was issued by BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of BDO International Limited, a UK company limited by guarantee.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada) Combined Financial Statements and Supplementary Information Years Ended June 30, 2013 and 2012
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combined Financial Statements and Supplementary Information Years Ended June 30, 2013 and 2012
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Contents
2
Independent Accountant’s Review Report 3
Combined Financial Statements Statements of Financial Position as of June 30, 2013 and 2012 5 Statements of Activities for the Years Ended June 30, 2013 and 2012 6-7 Statements of Functional Expenses for the Years Ended June 30, 2013 and 2012 8-9 Statements of Changes in Net Assets for the Years Ended June 30, 2013 and 2012 10 Statements of Cash Flows for the Years Ended June 30, 2013 and 2012 11 Notes to Financial Statements 12-19
Supplementary Information Independent Accountant’s Review Report on Supplementary Information 21 Combining Summary of Financial Position Information - United States and Canada in United States Dollars, and Canada in Canadian Dollars 22-23 Combining Summary of Activities Information - United States and Canada in United States Dollars, and Canada in Canadian Dollars 24-25
����� ���������� ��� �����������������������
������� � ��������� !�"�#�������$% ���& '#�(!�)*�+,����
3
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.
Independent Accountant’s Review Report Boards of Trustees Christian Reformed Church in North America and Christian Reformed Church in North America (Canada) Grand Rapids, Michigan We have reviewed the accompanying combined statements of financial position of Christian Reformed Church in North America, a Michigan corporation, and Christian Reformed Church in North America (Canada), a Canadian corporation (collectively, the Organization) as of June 30, 2013 and 2012, and the related combined statements of activities, functional expenses, changes in net assets, and cash flows for the years then ended. A review primarily includes applying analytical procedures to management’s financial data and making inquiries of management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management is responsible for the preparation and fair presentation of the combined financial statements in accordance with accounting principles generally accepted in the United States, and for designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the combined financial statements. Our responsibility is to conduct the reviews in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the combined financial statements. We believe that the results of our procedures provide a reasonable basis for our report. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying combined financial statements in order for them to be in conformity with accounting principles generally accepted in the United States.
October 17, 2013
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combined Statements of Financial Position
5
June 30, 2013 2012
Assets
Cash and cash equivalents 5,139,058$ 5,082,154$
Investments 22,214,543 22,616,445
Accrued interest receivable 82,061 119,337
Due from other denominational corporations 1,938,378 1,313,516
Accounts receivable 164,939 146,268
Note receivable 29,160 -
Inventory 192,518 234,568
Prepaid expenses 72,427 36,742
Property, plant and equipment 18,281,934 18,180,973
Less: accumulated depreciation (9,769,862) (8,810,971)
Total Assets 38,345,156$ 38,919,032$
Liabilities and Net Assets
Liabilities
Accounts payable 840,281$ 892,899$
Accrued liabilities 703,999 639,813
Due to other denominational corporations 4,304,459 4,545,213
Notes payable 23,025,867 22,569,374
Total Liabilities 28,874,606 28,647,299
Net Assets
Unrestricted:
Operating 8,134,719 9,613,072
Foreign currency translation adjustment 347,976 470,019
Total unrestricted net assets 8,482,695 10,083,091
Temporarily restricted net assets 987,855 188,642
Total Net Assets 9,470,550 10,271,733
Total Liabilities and Net Assets 38,345,156$ 38,919,032$
See accompanying independent accountant’s review report and notes to combined financial statements.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combined Statements of Activities
6
Temporarily
Year ended June 30, 2013 Unrestricted Restricted Total
Revenues and Other Support
Proservice sales 3,508,609$ -$ 3,508,609$
Denominational ministry shares 6,740,769 - 6,740,769
Coordinated equipment usage, materials
and service revenue 4,498,829 - 4,498,829
Investment income 406,468 - 406,468
Contributions from churches, agencies and individuals 579,303 100,000 679,303
Sea to Sea - 1,501,417 1,501,417
Youth Ministries - 217,228 217,228
Other 29,955 - 29,955
Net assets released from restrictions 1,019,432 (1,019,432) -
Total Revenues and Other Support 16,783,365 799,213 17,582,578
Expenses
Program services:
Proservices 3,212,424 - 3,212,424
Coordinated support services 4,886,854 - 4,886,854
Synod assembly, trustee, deputies and committee
expense, assistance and grants 2,541,700 - 2,541,700
Sustaining pastoral excellence 70,057 - 70,057
Sustaining congregational excellence 410,550 - 410,550
Specialized ministries 2,325,007 - 2,325,007
Sea to Sea 561,152 - 561,152
Ministries in Canada 1,169,835 - 1,169,835
Total program services 15,177,579 - 15,177,579
Support services:
Management and general 3,059,046 - 3,059,046
Fundraising 25,093 - 25,093
Total support services 3,084,139 - 3,084,139
Total Expenses 18,261,718 - 18,261,718
Changes in Net Assets (1,478,353)$ 799,213$ (679,140)$
See accompanying independent accountant’s review report and notes to combined financial statements.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combined Statements of Activities
7
Temporarily
Year ended June 30, 2012 Unrestricted Restricted Total
Revenues and Other Support
Proservice sales 3,430,250$ -$ 3,430,250$
Denominational ministry shares 6,951,405 - 6,951,405
Coordinated equipment usage, materials
and service revenue 4,565,740 - 4,565,740
Investment income 946,382 - 946,382
Contributions from churches, agencies and individuals 659,966 76,525 736,491
Youth ministries - 237,030 237,030
Other 312,912 - 312,912
Net assets released from restrictions 794,816 (794,816) -
Total Revenues and Other Support 17,661,471 (481,261) 17,180,210
Expenses
Program services:
Proservices 3,151,700 - 3,151,700
Coordinated support services 4,529,020 - 4,529,020
Synod assembly, trustee, deputies and committee
expense, assistance and grants 2,720,775 - 2,720,775
Sustaining pastoral excellence 119,549 - 119,549
Sustaining congregational excellence 616,260 - 616,260
Specialized ministries 2,536,231 - 2,536,231
Sea to Sea 58,340 - 58,340
Ministries in Canada 1,201,311 - 1,201,311
Total program services 14,933,186 - 14,933,186
Support services:
Management and general 3,135,371 - 3,135,371
Fundraising 222,355 - 222,355
Total support services 3,357,726 - 3,357,726
Total Expenses 18,290,912 - 18,290,912
Changes in Net Assets (629,441)$ (481,261)$ (1,110,702)$
See accompanying independent accountant’s review report and notes to combined financial statements.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combined Statements of Functional Expenses
8
Year ended June 30, 2013 Proservices
Coordinated Support Services
Sustaining Pastoral
Excellence
Sustaining Congregational
ExcellenceSpecialized
Ministries Sea to Sea
Ministries in Canada
Management and General Fundraising Total
Expenses
Materials purchased 1,975,283$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 1,975,283$
Salaries and wages 742,777 2,976,826 317,980 6,648 91,119 1,269,103 203,059 334,117 604,293 7,013 6,552,935
Fringe benefits 273,050 935,721 62,753 4,274 19,073 270,557 42,829 78,462 94,056 3,335 1,784,110
Printed materials (6,956) 10,423 83,945 2,308 2,380 82,075 87,270 25,398 6,393 3,980 297,216
Mailings - 49,555 18,376 - 899 26,651 33,187 2,339 10,335 420 141,762
Other communications - 750 14,627 8,379 138,728 182,128 - 157,641 11,914 - 514,167
Broadcasting - 70,414 3,715 - 828 33,576 - 766 2,877 939 113,115
Travel 3,319 55,108 482,925 5,085 6,502 179,922 134,684 33,943 44,037 - 945,525
Dues and subscriptions 630 22,560 81,716 - 572 9,292 - 40,793 1,412 - 156,975
Insurance 8,356 26,251 - - - 7,036 - - 24,995 - 66,638
Interest expense - 61,341 - - - - - - 635,225 - 696,566
Legal and professional 9,506 410,941 158,505 14,588 10,946 18,012 350 86,542 76,422 8,648 794,460
Supplies 63,079 65,047 1,322 - 1,609 6,889 26,937 10,978 5,492 - 181,353
Telephone and fax - 207,671 - - - 1,869 1,958 2,171 5,210 - 218,879
Copier costs 13,492 8,009 32,502 - 16 6,402 3 11 4,093 - 64,528
Other office costs 1,531 58,131 35,648 4,102 8,224 25,984 30,875 (25,581) (9,065) 758 130,607
Repairs and maintenance 113,083 90,053 - - - - - - - - 203,136
Rent - 103,710 15,215 - - - - 7,130 - - 126,055
Utilities - 182,608 - - - - - - - - 182,608
Depreciation 11,199 1,024,184 1,674 - - 10,852 - - 355 - 1,048,264
Other facilities - 22,954 - - - - - - - - 22,954
Training and conferences 4,075 42,564 8,058 24,673 1,449 79,655 - 914 3,035 - 164,423
Grants - - 1,222,739 - 128,205 115,004 - 414,211 - - 1,880,159
Total 3,212,424 6,424,821 2,541,700 70,057 410,550 2,325,007 561,152 1,169,835 1,521,079 25,093 18,261,718
Allocation to support services -
management and general - (1,537,967) - - - - - - 1,537,967 - -
Total Expenses 3,212,424$ 4,886,854$ 2,541,700$ 70,057$ 410,550$ 2,325,007$ 561,152$ 1,169,835$ 3,059,046$ 25,093$ 18,261,718$
Program Services Support Services
Synod Assembly,Trustee, Deputies and
Committee Expense,Assistance and Grants
See accompanying independent accountant’s review report and notes to combined financial statements.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combined Statements of Functional Expenses
9
Year ended June 30, 2012 Proservices
Coordinated Support Services
Sustaining Pastoral
Excellence
Sustaining Congregational
ExcellenceSpecialized
Ministries Sea to SeaMinistries in
CanadaManagement and General Fundraising Total
Expenses
Materials purchased 1,942,659$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 1,942,659$
Salaries and wages 730,017 2,801,897 368,866 14,014 104,395 1,352,421 41,126 329,178 520,813 55,658 6,318,385
Fringe benefits 281,932 881,389 72,050 5,783 15,955 314,959 7,522 74,947 81,377 13,191 1,749,105
Printed materials - 10,328 69,926 1,179 4,908 67,728 4,468 28,254 8,111 66,817 261,719
Mailings - 52,350 24,873 - 1,679 27,567 515 1,587 13,716 420 122,707
Other communications - 453 9,574 897 122,096 146,511 - 172,754 1,750 - 454,035
Broadcasting - 39,224 2,701 - 55 33,735 - 1,253 1,268 72 78,308
Travel 4,916 51,556 461,395 3,417 18,085 182,167 4,467 25,768 53,968 545 806,284
Dues and subscriptions 28 34,583 85,905 - 658 11,059 - 40,698 1,540 - 174,471
Insurance 8,266 38,501 - - - 5,265 - - 15,254 - 67,286
Interest expense - 63,002 - - - - - - 665,230 - 728,232
Legal and professional 9,589 343,000 35,745 - 35,441 67,957 - 65,619 195,155 84,763 837,269
Supplies 42,591 99,930 10,765 - 403 6,329 3 9,184 4,253 - 173,458
Telephone and fax - 234,306 5 - - 5,668 - 2,493 3,976 - 246,448
Copier costs 20,860 3,039 23,556 - 66 9,063 2 1 2,849 - 59,436
Other office costs 1,913 41,814 1,105 14,995 7,472 10,977 237 - 2,242 889 81,644
Repairs and maintenance 98,104 107,506 - - - - - - - - 205,610
Rent - 108,147 - - - - - 7,156 - - 115,303
Utilities - 186,730 - - - - - - - - 186,730
Depreciation 10,110 940,702 2,988 - - 21,369 - - 356 - 975,525
Other facilities - 23,330 - - - - - - - - 23,330
Training and conferences 715 30,057 11,240 79,264 91 61,558 - 1,666 689 - 185,280
Grants - - 1,540,081 - 304,956 211,898 - 440,753 - - 2,497,688
Total 3,151,700 6,091,844 2,720,775 119,549 616,260 2,536,231 58,340 1,201,311 1,572,547 222,355 18,290,912
Allocation to support services -
management and general - (1,562,824) - - - - - - 1,562,824 - -
Total Expenses 3,151,700$ 4,529,020$ 2,720,775$ 119,549$ 616,260$ 2,536,231$ 58,340$ 1,201,311$ 3,135,371$ 222,355$ 18,290,912$
Program Services Support Services
Synod Assembly,Trustee, Deputies and
Committee Expense,Assistance and Grants
See accompanying independent accountant’s review report and notes to combined financial statements.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combined Statements of Changes in Net Assets
10
Temporarily
Unrestricted Restricted Total
Balance, July 1, 2011 10,976,827$ 669,903$ 11,646,730$
Changes in net assets (629,441) (481,261) (1,110,702)
Foreign currency translation adjustment (264,295) - (264,295)
Balance, June 30, 2012 10,083,091 188,642 10,271,733
Changes in net assets (1,478,353) 799,213 (679,140)
Foreign currency translation adjustment (122,043) - (122,043)
Balance, June 30, 2013 8,482,695$ 987,855$ 9,470,550$
See accompanying independent accountant’s review report and notes to combined financial statements.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combined Statements of Cash Flows
11
Year ended June 30, 2013 2012
Cash Flows From (for) Operating Activities
Changes in net assets (679,140)$ (1,110,702)$
Adjustments to reconcile changes in net assets
to net cash for operating activities:
Depreciation 1,048,264 975,525
Loss (gain) on investments 302,462 (199,562)
Loss on sale and disposition of equipment 9,731 14,058
Changes in assets and liabilities:
Accrued interest receivable 37,276 37,913
Due from other denominational corporations (624,862) 93,016
Accounts receivable (18,671) (901)
Inventory 42,050 (30,828)
Prepaid expenses (35,685) 42,422
Accounts payable (52,618) 123,195
Accrued liabilities 64,186 35,090
Due to other denominational corporations (240,754) (218,199)
Net Cash for Operating Activities (147,761) (238,973)
Cash Flows From (for) Investing Activities
Purchases of investments (20,873,526) (34,234,600)
Proceeds from the sale of investments 20,249,939 33,592,473
Issuance of note receivable (29,160) -
Proceeds from the allocation of depreciation to health benefit plan 33,140 39,145
Purchases of property, plant and equipment (251,657) (429,754)
Net Cash for Investing Activities (871,264) (1,032,736)
Cash Flows From Financing Activity
Borrowings on notes payable 1,152,438 1,940,907
Effect of Exchange Rates on Cash (76,509) (162,925)
Net Increase in Cash and Cash Equivalents 56,904 506,273
Cash and Cash Equivalents, beginning of year 5,082,154 4,575,881
Cash and Cash Equivalents, end of year 5,139,058$ 5,082,154$
Supplemental Disclosure of Cash Flow InformationInterest paid 356,300$ 367,822$
See accompanying independent accountant’s review report and notes to combined financial statements.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Notes to Combined Financial Statements
See accompanying independent accountant’s review report.
12
1. Organization The Christian Reformed Church in North America (Denomination) operates under the direction of the Synod of the Christian Reformed Church. The overall activities of the Denomination include several not-for-profit corporations, which have been established to carry out the various ministries and educational mandates of the Synod. The Christian Reformed Church in North America, a Michigan corporation (CRCNA-Mich), conducts various activities in the United States for the other corporations in the Denomination, individual churches which are part of the Denomination and ministries which affect individuals. These activities include the following programs:
Proservices – design, printing and other services
Coordination support services – administrative support services provided to various corporations which are part of the Denomination
Synod Assembly and related committees
Sustaining Pastoral Excellence program
Sustaining Congregational Excellence and CRC Network programs
Specialized ministries, which include operation of the following programs:
Chaplaincy
Safe Church Ministries
Race Relations
Pastor and Church Relations
Disability Concerns
Sea to Sea
Ministries in Canada The Christian Reformed Church in North America (Canada), a Canada corporation (CRCNA-Can), conducts substantially the same activities in Canada as CRCNA-Mich does in the United States. In addition, CRCNA-Can carries out activities in Canada for Faith Alive Christian Resources, which is separately incorporated in the United States. The combined financial statements reflect the combined activities of CRCNA-Mich and CRCNA-Can (Organization), except the activities carried out by CRCNA-Can for CRC Faith Alive Christian Resources have been excluded. Other corporations (referred to as denominational corporations) which have been established to carry out various ministries and educational mandates of the Synod and which also have been excluded from these combined financial statements are:
Back to God Ministries International and Back to God Ministries International (Ontario)
Christian Reformed World Missions of the United States of America and Christian Reformed World Missions of Canada
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Notes to Combined Financial Statements
See accompanying independent accountant’s review report.
13
Christian Reformed Church Loan Fund, Inc. – U.S.
Faith Alive Christian Resources
World Renew and World Renew Canada
CRCNA Funds, LLC
Christian Reformed Church in North America Foundation
Christian Reformed Church in North America Canada – Foundation
Calvin College
Calvin Theological Seminary 2. Summary of Significant Accounting Policies Combined Financial Statements The combined financial statements are expressed in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States of America. All significant balances, accounts and transactions between the two corporations have been eliminated. Net assets and changes therein are classified and reported as follows:
Unrestricted net assets – Net assets which are not subject to donor-imposed stipulations.
Temporarily restricted net assets – Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Organization and/or the passage of time. Net assets are temporarily restricted for certain projects or programs.
Revenues and contributions are reported as follows:
Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increase or decrease in unrestricted net assets unless their use is restricted by explicit donor stipulations. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets.
Proservice sales include earned revenue from CRC agencies for the design and production of written materials, office supply order fulfillment and inventory, cleaning and reception services. Revenue is considered earned as products and services are delivered according to agency order specifications.
Coordinated equipment usage, materials and service revenue includes allocated cost recovery for CRCNA central service departments providing support for CRC agency information, communication and data systems, financial management, advancement and buildings services.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Notes to Combined Financial Statements
See accompanying independent accountant’s review report.
14
Contributions, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Denominations ministry shares are recommended gifts from churches based on active professing members age 18 and over.
Functional Currency The functional currency for foreign activities is the applicable local currency. The translation from the applicable foreign currency to United States dollars is performed in accounts in the combined statements of financial position using current exchange rates in effect at the combined statements of financial position date, and for revenue and expense accounts using the average exchange rate during the period. Gains or losses resulting from foreign currency translations are included as a separate component of net assets. Gains or losses from foreign currency transactions are not material and are reflected in management and general expenses. Use of Estimates The preparation of the combined financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid debt instruments with original maturities of less than three months when purchased. Investments Investments are carried at fair value as determined by quoted market prices. See Notes 3 and 4 for additional disclosures on investments. Inventory Inventory consists principally of supplies and is stated at the lower of weighted-average cost or market. Property, Plant and Equipment Property, plant and equipment are recorded at cost, except for donated equipment, which is stated at its estimated fair market value at the date of donation. Property, plant and equipment of $1,000 or more are capitalized and depreciated.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Notes to Combined Financial Statements
See accompanying independent accountant’s review report.
15
Depreciation Depreciation is computed using the straight-line method at rates designed to amortize the cost of such assets over their estimated useful lives, which range from two to 40 years. Depreciation amounted to $1,048,264 and $975,525 in 2013 and 2012, respectively. Income Taxes The Organization is organized as a nonprofit religious entity and is, therefore, exempt from federal and state income taxes in the U.S. under Section 501(c)(3) of the Internal Revenue Code and in Canada under the Income Tax Act, and contributions to each corporation are deductible for federal tax purposes. Subsequent Events Management has evaluated subsequent events through October 17, 2013, the date the financial statements were available to be issued. Based on evaluation, there were no matters identified that had a significant impact on the financial statements as presented. 3. Managed Investment Account CRCNA-Can manages an investment account for its benefit, the benefit of Canadian denominations corporations and certain Canadian Christian Reformed Churches (collectively referred to as Members). The Members’ aggregate cash balances at a financial institution are used as the basis for CRCNA-Can to obtain loans from the financial institution. The loans are used by CRCNA-Can to finance its investment portfolio (see Note 4) and are secured by the investment portfolio. CRCNA-Can pays interest on the bank loans only to the extent that they exceed the aggregate balance in the Members’ cash accounts. CRCNA-Can receives interest if the cash account balance exceeds the loan balance. Investment income received from the investment portfolio is distributed to the Members at an agreed-upon rate. Any excess of investment income over the amount paid to Members is retained by CRCNA-Can for its own purposes. 4. Investments Investment Risks CRCNA-Can invests in various securities including government securities, corporate bonds and other debt instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect the amounts reported in the combined statements of financial position.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Notes to Combined Financial Statements
See accompanying independent accountant’s review report.
16
Investments at fair value are summarized as follows: June 30, 2013 2012 Treasury bills $ 2,560,326 $ 2,449,116 Municipal-backed bonds 708,408 748,271 Government bonds 11,882,823 11,209,637 Corporate bonds 6,339,637 6,309,858 Mortgage bonds 705,421 1,867,274 Money market funds 17,928 32,289 Total $ 22,214,543 $ 22,616,445 Total investment income of approximately $406,000 for the year ended June 30, 2013 represents investment earnings of $733,000, realized loss of $393,000, unrealized gain of $41,000 and other income of $25,000. Total investment income of approximately $946,000 for the year ended June 30, 2012 represents investment earnings of $758,000, realized loss of $155,000 and unrealized gain of $343,000. Investment income consists of realized and unrealized gains, losses, interest and dividends. Fair Value Measurements In accordance with the Financial Accounting Standards Board (FASB) standard relating to fair value measurements, the Organization classifies its investments into Level 1, which refers to securities valued using quoted market prices from active markets for identical assets; Level 2, which refers to securities not traded on an active market but for which observable market inputs are readily available; and Level 3, which refers to securities valued based on significant unobservable inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Organization’s investments have directly observable inputs and, as such, are categorized as Level 1 investments for the purposes of the fair value measurement standard. 5. Property, Plant and Equipment Property, plant and equipment consist of the following: June 30, 2013 2012 Land $ 1,186,163 $ 1,199,236 Buildings and improvements 13,685,020 13,767,904 Equipment, furniture and fixtures 1,690,026 1,424,961 Software 1,630,610 1,641,966 Vehicles 90,115 146,906 Total $ 18,281,934 $ 18,180,973
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Notes to Combined Financial Statements
See accompanying independent accountant’s review report.
17
6. Notes Payable Notes payable is summarized as follows: June 30, 2013 2012
Note payable to bank - revolving demand credit, interest payable quarterly at the bank’s standard overdraft rate of 3.0% at June 30, 2013 and 2012. Interest is payable only to the extent that the loan balance exceeds the accumulated balance in the cash concentration account. The note is secured by the investment accounts summarized in Note 4. $ 22,223,903 $ 21,769,374
Note payable to bank - line of credit, interest payable
monthly at the bank’s adjusted LIBOR rate of 2.94% at June 30, 2013. 801,964 800,000
$ 23,025,867 $ 22,569,374 CRCNA-Mich has a credit agreement with a bank which permits it to borrow up to $1.6 million. CRCNA-Mich and certain other denominational corporations participate in a consolidated cash management system with a single bank (see Note 8) and have collateralized available cash in the accounts for amounts borrowed under the agreement. The note is also collateralized by property. Borrowings were $801,964 and $800,000 as of June 30, 2013 and 2012, respectively. 7. Employee Retirement Plans Retirement plan contributions for employees of CRCNA-Mich are made to the Christian Reformed Church in North America Employees’ Savings Plan (Plan), a defined contribution multi-employer retirement plan for the benefit of covered non-ordained employees, and to the Retirement Plan for Ministers of the Christian Reformed Church in the United States of America (U.S. Ordained Plan), a defined benefit retirement plan for ordained employees. Contributions of CRCNA-Can are made to the Christian Reformed Church in North America Group Retirement Savings Plan (Savings Plan), a defined contribution multi-employer retirement plan for the benefit of covered non-ordained employees, and to the Retirement Fund for Ministers of the Christian Reformed Church in Canada (Canada Ordained Plan), a defined benefit multi-employer retirement plan for CRCNA-Can ordained employees. The obligation of the Organization is limited to a matching contribution of up to 4% of eligible wages of qualified employees to either the Plan or the Savings Plan non-ordained plan, with employer discretionary contributions of up to 6% of eligible wages of qualified employees. A fixed amount is contributed to the U.S. and Canada Ordained Plans. As a result, there are no past service costs of unfunded vested benefits for the Plans. Retirement plan expense for the Organization for the years ended June 30, 2013 and 2012 amounted to $515,827 and $512,202, respectively.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Notes to Combined Financial Statements
See accompanying independent accountant’s review report.
18
Information with respect to the plan assets and accumulated plan benefits for the defined benefit plans is as follows:
Regarding the U.S. Ordained Plan, the estimated actuarial present value of accumulated plan benefits and plan assets, assuming an 8% interest rate, as of the most recent valuation was $113,424,294. Net assets available for benefits for the U.S. Ordained Plan were $93,907,630 and $87,687,033 as of December 31, 2012 and 2011, respectively.
Regarding the Canadian Ordained Plan, the estimated actuarial present value of accumulated plan benefits and plan assets, assuming a 6.5% interest rate, as of the most recent valuation was US$38,178,000. Net assets available for benefits for the Canadian Ordained Plan were US$35,312,000 and US$32,642,000 as of January 1, 2013 and January 1, 2012, respectively.
The increase in net assets available for benefits is due primarily to appreciation in the fair value of assets invested during the year. The Organization anticipates that the difference between estimated actuarial present value of accumulated plan benefits and net assets available for benefits at the most recent valuation date will be met through future pension investment gains and possible higher contributions to the Plan.
8. Transactions With Other Denominational Corporations During the years ended June 30, 2013 and 2012, the Organization sold printed material of approximately $3,344,000 and $3,264,000, respectively, to other denominational corporations, and also provided services of approximately $2,506,890 and $2,343,000, respectively, for administrative support, printing and other services. During 2013 and 2012, the Organization also provided financial services support of approximately $1,744,000 and $1,616,000, respectively, to other denominational corporations, and also charged approximately $703,000 and $692,000, respectively, of allocated building occupancy expenses. Due from other denominational corporations includes the following: June 30, 2013 2012
Faith Alive Christian Resources $ 1,076,464 $ 375,111 World Renew and World Renew Canada 199,927 220,771 The Christian Reformed Board of Home Missions and
Christian Reformed Board of Home Missions of Canada 104,284 96,337 Back to God Ministries International and Back to God
Ministries International (Ontario) 120,928 205,000 Christian Reformed World Missions of the United States of
America and Christian Reformed World Missions of Canada 259,957 162,199 Christian Reformed Church in North America Foundation 24,630 1,447 Denominational Health and Welfare Benefit Plans 39,365 131,286 Christian Reformed Church Loan Fund, Inc. – U.S. 19,972 17,361 Miscellaneous 92,851 104,004
Total $ 1,938,378 $ 1,313,516
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Notes to Combined Financial Statements
See accompanying independent accountant’s review report.
19
CRCNA-Mich manages a consolidated cash management system with a single bank, which includes certain other denominational corporations. As part of this process, CRCNA-Mich may borrow funds of participating entities. As of June 30, 2013 and 2012, CRCNA-Mich has borrowed $4,287,000 and $4,492,264, respectively, included in due to other denominational corporations, as shown below. Due to other denominational corporations includes the following: June 30, 2013 2012 Faith Alive Christian Resources $ 6,353 $ 80,302 World Renew and World Renew Canada 2,157,331 2,188,000 The Christian Reformed Board of Home Missions and
Christian Reformed Board of Home Missions of Canada 68,800 150,356 Back to God Ministries International and Back to God
Ministries International (Ontario) 33,800 63,000 Christian Reformed World Missions of the United States of
America and Christian Reformed World Missions of Canada 35,700 50,292 Christian Reformed Church Loan Fund, Inc. – U.S. 2,000,000 2,013,263 Miscellaneous 2,475 - Total $ 4,304,459 $ 4,545,213
����� ���������� ��� �����������������������
������� � ��������� !�"�#�������$% ���& '#�(!�)*�+,����
21
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.
Independent Accountant’s Review Report on Supplementary Information Our reviews of the combined financial statements included in the preceding section of this report were made for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with accounting principles generally accepted in the United States. The supplementary information presented in the following section of this report is presented only for purposes of additional analysis and is not a required part of the combined financial statements. Such information has been subjected to the inquiry and analytical procedures applied in the reviews of the combined financial statements. Based on our reviews, we did not become aware of any material modifications that should be made to the supplementary information.
October 17, 2013
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combining Summary of Financial Position Information – United States and Canada in United States Dollars, and Canada in Canadian Dollars
22
Canadian $
United
June 30, 2013 Combined States Canada Canada
Assets
Cash and cash equivalents 5,139,058$ 2,042,148$ 3,096,910$ 3,257,164$
Investments 22,214,543 - 22,214,543 23,364,054
Accrued interest receivable 82,061 - 82,061 86,307
Due from other denominational corporations 1,938,378 1,697,019 241,359 253,848
Accounts receivable 164,939 63,527 101,412 106,660
Note receivable 29,160 29,160 - -
Inventory 192,518 192,518 - -
Prepaid expenses 72,427 53,129 19,298 20,297
Property, plant and equipment 18,281,934 16,570,611 1,711,323 1,799,877
Less: accumulated depreciation (9,769,862) (8,670,770) (1,099,092) (1,155,965)
Total Assets 38,345,156$ 11,977,342$ 26,367,814$ 27,732,242$
Liabilities and Net Assets
Liabilities
Accounts payable 840,281$ 648,117$ 192,164$ 202,108$
Accrued liabilities 703,999 540,604 163,395 171,850
Due to other denominational corporations 4,304,459 4,304,087 372 391
Notes payable 23,025,867 801,964 22,223,903 23,373,899
Total Liabilities 28,874,606 6,294,772 22,579,834 23,748,248
Net Assets 9,470,550 5,682,570 3,787,980 3,983,994
Total Liabilities and Net Assets 38,345,156$ 11,977,342$ 26,367,814$ 27,732,242$
United States $
See accompanying independent accountant’s review report on supplementary information.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combining Summary of Financial Position Information – United States and Canada in United States Dollars, and Canada in Canadian Dollars
23
Canadian $
United
June 30, 2012 Combined States Canada Canada
Assets
Cash and cash equivalents 5,082,154$ 1,505,645$ 3,576,509$ 3,641,325$
Investments 22,616,445 - 22,616,445 23,026,313
Accrued interest receivable 119,337 - 119,337 121,500
Due from other denominational corporations 1,313,516 1,132,226 181,290 184,576
Accounts receivable 146,268 25,163 121,105 123,300
Inventory 234,568 234,568 - -
Prepaid expenses 36,742 18,408 18,334 18,667
Property, plant and equipment 18,180,973 16,420,869 1,760,104 1,792,001
Less: accumulated depreciation and amortization (8,810,971) (7,783,033) (1,027,938) (1,046,568)
Total Assets 38,919,032$ 11,553,846$ 27,365,186$ 27,861,114$
Liabilities and Net Assets
Liabilities
Accounts payable 892,899$ 376,307$ 516,592$ 525,953$
Accrued liabilities 639,813 475,813 164,000 166,972
Due to other denominational corporations 4,545,213 3,913,616 631,597 643,044
Notes payable 22,569,374 800,000 21,769,374 22,163,892
Total Liabilities 28,647,299 5,565,736 23,081,563 23,499,861
Net Assets 10,271,733 5,988,110 4,283,623 4,361,253
Total Liabilities and Net Assets 38,919,032$ 11,553,846$ 27,365,186$ 27,861,114$
United States $
See accompanying independent accountant’s review report on supplementary information.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combining Summary of Activities Information – United States and Canada in United States Dollars, and Canada in Canadian Dollars
24
Canadian $
United
Year ended June 30, 2013 Combined States Canada Canada
Revenues and Other Support
Proservice sales 3,508,609$ 3,508,609$ -$ -$
Denominational ministry shares 6,740,769 4,470,659 2,270,110 2,292,346
Coordinated equipment usage, materials
and service revenue 4,498,829 3,451,957 1,046,872 1,057,126
Investment income (loss) 406,468 (9,722) 416,190 420,267
Contributions from churches, agencies
and individuals 679,303 231,051 448,252 452,643
Sea to Sea 1,501,417 871,735 629,682 635,850
Youth Ministries 217,228 - 217,228 219,356
Other 29,955 29,955 - -
Total Revenues and Other Support 17,582,578 12,554,244 5,028,334 5,077,588
Expenses
Program services:
Proservices 3,212,424 3,212,424 - -
Coordinated support services 4,886,854 3,751,198 1,135,656 1,146,780
Synod assembly, trustee, deputies and
committee expense, assistance and grants 2,541,700 1,039,164 1,502,536 1,517,253
Sustaining pastoral excellence 70,057 70,083 (26) (26)
Sustaining congregational excellence 410,550 161,235 249,315 251,757
Specialized ministries 2,325,007 1,430,617 894,390 903,151
Sea to Sea 561,152 558,333 2,819 2,847
Ministries in Canada 1,169,835 689,587 480,248 484,952
Total program services 15,177,579 10,912,641 4,264,938 4,306,714
Support services:
Management and general 3,059,046 1,941,047 1,117,999 1,128,950
Fundraising 25,093 6,093 19,000 19,186
Total support services 3,084,139 1,947,140 1,136,999 1,148,136
Total Expenses 18,261,718 12,859,781 5,401,937 5,454,850
Changes in Net Assets (679,140)$ (305,537)$ (373,603)$ (377,262)$
United States $
See accompanying independent accountant’s review report on supplementary information.
Christian Reformed Church in North America and Christian Reformed Church in North America (Canada)
Combining Summary of Activities Information – United States and Canada in United States Dollars, and Canada in Canadian Dollars
25
Canadian $
United
Year ended June 30, 2012 Combined States Canada Canada
Revenues and Other Support
Proservice sales 3,430,250$ 3,430,250$ -$ -$
Denominational ministry shares 6,951,405 4,681,169 2,270,236 2,284,169
Coordinated equipment usage, materials
and service revenue 4,565,740 3,350,580 1,215,160 1,222,618
Investment income 946,382 - 946,382 952,190
Contributions from churches, agencies
and individuals 736,491 340,036 396,455 398,888
Youth ministries 237,030 - 237,030 238,485
Other 312,912 282,133 30,779 30,968
Total Revenues and Other Support 17,180,210 12,084,168 5,096,042 5,127,318
Expenses
Program services:
Proservices 3,151,700 3,151,700 - -
Coordinated support services 4,529,020 3,493,739 1,035,281 1,041,635
Synod assembly, trustee, deputies and
committee expense, assistance and grants 2,720,775 972,464 1,748,311 1,759,041
Sustaining pastoral excellence 119,549 119,549 - -
Sustaining congregational excellence 616,260 389,115 227,145 228,539
Specialized ministries 2,536,231 1,590,691 945,540 951,343
Sea to Sea 58,340 58,160 180 181
Ministries in Canada 1,201,311 710,348 490,963 493,976
Total program services 14,933,186 10,485,766 4,447,420 4,474,715
Support services:
Management and general 3,135,371 1,959,109 1,176,262 1,183,481
Fundraising 222,355 143,702 78,653 79,136
Total support services 3,357,726 2,102,811 1,254,915 1,262,617
Total Expenses 18,290,912 12,588,577 5,702,335 5,737,332
Changes in Net Assets (1,110,702)$ (504,409)$ (606,293)$ (610,014)$
United States $
See accompanying independent accountant’s review report on supplementary information.