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HomeMy WebLinkAboutFMC FinancialIOWA CITY FREE MEDICAL CLINIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 IOWA CITY FREE MEDICAL CLINIC TABLE OF CONTENTS YEAR ENDED JUNE 30, 2023 INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS STATEMENT OF ASSETS, LIABILITIES, AND NET ASSETS –MODIFIED CASH BASIS 4 STATEMENT OF REVENUE, EXPENSES, AND CHANGE IN NET ASSETS – MODIFIED CASH BASIS 5 STATEMENT OF FUNCTIONAL EXPENSES –MODIFIED CASH BASIS 6 NOTES TO FINANCIAL STATEMENTS 7 (1) INDEPENDENT AUDITORS' REPORT Board of Directors Iowa City Free Medical Clinic Iowa City, Iowa Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of Iowa City Free Medical Clinic (the Clinic) which comprise the statement of assets, liabilities, and net assets –modified cash basis as of June 30, 2023, and the related statements of revenue, expenses, and change in net assets –modified cash basis and functional expenses –modified cash basis for the year then ended, and the related notes to the financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities, and net assets of the Iowa City Free Medical Clinic as of June 30, 2023, and the results of its revenues and expenses and change in net assets for the year then ended in accordance with the modified cash basis of accounting as described in Note 1. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Iowa City Free Medical Clinic and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis of Accounting We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to that matter. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. CliftonLarsonAllen LLP CLAconnect.com Board of Directors Iowa City Free Medical Clinic (2) Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with the modified cash basis of accounting described in Note 1; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit 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 Iowa City Free Medical Clinic’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Iowa City Free Medical Clinic’s ability to continue as a going concern for a reasonable period of time. Board of Directors Iowa City Free Medical Clinic (3) We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Emphasis-of-Matter As discussed in Note 10 to the financial statements, in 2023 the Clinic adopted a policy of preparing its financial statements on the modified cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles. Accordingly, the accompanying financial statements are not intended to present the financial position and the changes in its net assets in accordance with the accounting principles generally accepted in the United States of America. CliftonLarsonAllen LLP Cedar Rapids, Iowa April 25, 2024 IOWA CITY FREE MEDICAL CLINIC STATEMENT OF ASSETS, LIABILITIES, AND NET ASSETS –MODIFIED CASH BASIS JUNE 30, 2023 See accompanying Notes to Financial Statements. (4) ASSETS CURRENT ASSETS Cash and Cash Equivalents 187,880$ Certificates of Deposit 54,212 Total Current Assets 242,092 LONG-TERM CERTIFICATES OF DEPOSIT 36,962 INVESTMENTS 526,799 PROPERTY AND EQUIPMENT Construction in Progress 14,150 Land 112,480 Building and Improvements 723,563 Furniture and Equipment 104,805 Total 954,998 Less: Accumulated Depreciation (355,236) Net Property and Equipment 599,762 Total Assets 1,405,615$ LIABILITIES AND NET ASSETS LIABILITIES CDBG Loans 325,467$ NET ASSETS Without Donor Restrictions 1,052,728 With Donor Restrictions 27,420 Total Net Assets 1,080,148 Total Liabilities and Net Assets 1,405,615$ IOWA CITY FREE MEDICAL CLINIC STATEMENT OF REVENUE, EXPENSES, AND CHANGE IN NET ASSETS –MODIFIED CASH BASIS YEAR ENDED JUNE 30, 2023 See accompanying Notes to Financial Statements. (5) Without Donor With Donor Restrictions Restrictions Total SUPPORT AND REVENUE Contributions 323,765$ -$323,765$ Grants 49,131 35,540 84,671 Local Funding Agreements 271,136 -271,136 Investment Income, Net 49,221 -49,221 Other Income 894 -894 Net Assets Released from Restrictions Satisfaction of Purpose and Time Restrictions 13,158 (13,158) - Total Revenue and Support 707,305 22,382 729,687 EXPENSES Program Services: Medical Clinic 530,870 -530,870 Dental Clinic 40,290 -40,290 Total Program Services 571,160 -571,160 Supporting Services: Management and General 184,958 -184,958 Fundraising 43,207 -43,207 Total Supporting Activities 228,165 -228,165 Total Expenses 799,325 -799,325 CHANGE IN NET ASSETS (92,020) 22,382 (69,638) Net Assets - Beginning of Year (As Previously Stated Under U.S. GAAP)1,109,472 5,038 1,114,510 Change in Accounting Basis - Beginning of Year 35,276 -35,276 NET ASSETS - END OF YEAR 1,052,728$ 27,420$ 1,080,148$ IOWA CITY FREE MEDICAL CLINIC STATEMENT OF FUNCTIONAL EXPENSES –MODIFIED CASH BASIS YEAR ENDED JUNE 30, 2023 See accompanying Notes to Financial Statements. (6) Total Total Medical Dental Program Management Supporting Clinic Clinic Services and General Fundraising Activities Total Salaries and W ages 338,914$ 15,175$ 354,089$ 126,461$ 25,292$ 151,753$ 505,842$ Employee Benefits 33,406 1,496 34,902 12,465 2,493 14,958 49,860 Payroll Taxes 25,160 1,127 26,287 9,388 1,877 11,265 37,552 Professional Services ---12,158 -12,158 12,158 Clinic Grant Expenses 22,904 -22,904 ---22,904 Client Assistance 17,594 -17,594 ---17,594 Clinic Supplies 20,014 19,074 39,088 ---39,088 Publicity ----682 682 682 Office Expenses 7,293 327 7,620 2,721 545 3,266 10,886 Information Technology 8,141 365 8,506 3,037 608 3,645 12,151 Occupancy 7,752 347 8,099 2,893 577 3,470 11,569 Insurance 19,648 1,034 20,682 1,843 -1,843 22,525 Staff and Volunteer Appreciation ---1,726 -1,726 1,726 Repairs and Maintenance 11,064 495 11,559 4,128 825 4,953 16,512 Depreciation 18,980 850 19,830 7,082 1,416 8,498 28,328 Celebration Events ----8,892 8,892 8,892 Charitable Contributions ---1,000 -1,000 1,000 Miscellaneous ---56 -56 56 Total Expenses 530,870$ 40,290$ 571,160$ 184,958$ 43,207$ 228,165$ 799,325$ Program Services Supporting Activities IOWA CITY FREE MEDICAL CLINIC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2023 (7) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Iowa City Free Medical Clinic (the Clinic)is a 501(c)(3) that was founded and incorporated on July 5, 1971 in Iowa City, Iowa for the purpose of providing free outpatient medical care to those persons unable to pay for such care. The Clinic is supported primarily through donor contributions, local funding agreements, and grants. The Clinic’s fiscal year-end is June 30. Significant accounting policies followed by the Clinic are presented below. Method of Accounting The Clinic’s policy is to prepare its financial statements on the modified cash basis of accounting, consequently, certain revenues are recognized when received rather than when earned, and certain expenses and purchases of assets are recognized when cash is disbursed rather than when the obligation is incurred. This method differs from accounting principles generally accepted in the United States of America primarily due to the effects of receivables, prepaid expenses, donated inventory, and liabilities of accounts payable and accrued expenses, and their related effects on net assets. Modifications to the cash basis of accounting include recording certificates of deposit, investments, capitalizing and depreciating property and equipment, including donated property and equipment, and related debt. Use of Estimates in Preparing Financial Statements The preparation of financial statements in conformity with the modified cash basis of accounting 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, expenses, gains, losses, donated goods and services, and other changes in net assets during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Clinic considers all liquid assets with a maturity of three months or less when purchased to be cash and cash equivalents. Certificates of Deposit The Clinic holds certificates of deposit at financial institutions with maturities of three months to two years. Certificates of deposit are carried at cost plus accrued interest. Investment income is recognized as revenue as interest is accrued. Investments Investments are recorded at fair market value, with gains and losses resulting form market fluctuations recognized in the period in which the fluctuations occur. Investment return consists of interest and dividend income, realized and unrealized gains and losses, less external investment expenses, and is reported in the financial statements as an increase of decrease in net assets without donor restrictions unless the use of assets is restricted by the donor. IOWA CITY FREE MEDICAL CLINIC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2023 (8) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property and Equipment Purchased property and equipment is recorded at cost. Property and equipment that is donated is recorded at fair market value on the date placed in service. Property and equipment are depreciated using the straight-line depreciation method over the estimated lives of the assets ranging from 5 to 39 years. Additions or betterments of $1,000 or more are capitalized, while maintenance and repairs that do not improve or extend the useful lives of the respective assets are charged to expense as incurred. Upon sale or retirement of property and equipment, the costs and related accumulated depreciation are eliminated from the accounts. Any resulting gains or losses are included in the determination of change in net assets. Impairment of Long-Lived Assets The Clinic reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Net Assets Net assets are based on the existence or absence of donor-imposed restrictions. The following is a description of each class: Net Assets Without Donor Restrictions –Net assets available for use in general operations and not subject to donor-imposed restrictions. The Clinic’s governing board may earmark portions of its net assets without donor restrictions as board-designated for various purposes. Net Assets with Donor Restrictions –Net assets subject to donor-imposed restrictions which will be satisfied by actions of the Clinic or passage of time. Functional Expenses The financial statements report certain categories of expenses that are attributed to more than one program or supporting function. Therefore, expenses require allocation on a more reasonable basis that is consistently applied. The expenses that are allocated are salaries and wages, employee benefits, payroll taxes, office expenses, information technology, occupancy, insurance, repairs and maintenance, and depreciation, which are allocated on the basis of estimates of time and effort. IOWA CITY FREE MEDICAL CLINIC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2023 (9) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes The Clinic is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and a similar section of the Iowa income tax law, which provides income tax exemption for corporations organized and operated exclusively for religious, charitable, or educational purposes. The IRS has not classified the Clinic as a private foundation. The Clinic files informational returns in the U.S. federal jurisdiction and follows the standard for evaluating uncertain tax positions. The Clinic has determined that it was not required to record a liability related to uncertain tax positions. NOTE 2 LIQUIDITY AND AVAILABILITY Financial assets available for general expenditure, that is, without donor or other restrictions limiting their use, within one year of the financial statement date,comprise the following: Cash and Cash Equivalents 187,880$ Certificates of Deposit 54,212 Investments 526,799 Total 768,891$ NOTE 3 INVESTMENTS The composition of investments is as follows at June 30, 2023: Cash and Cash Equivalents 17,586$ Mutual Funds: Fixed Income 177,962 Equities 331,251 Total Investments 526,799$ The composition of investment return is as follows for the year ended June 30, 2023: Interest and Dividends 18,409$ Investment Fees (2,468) Realized Gain (Loss)(6,950) Unrealized Gain 40,230 Total Investment Income, Net 49,221$ IOWA CITY FREE MEDICAL CLINIC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2023 (10) NOTE 4 FAIR VALUE MEASUREMENTS The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows: Level 1 –Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 –Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and market-corroborated inputs. Level 3 –Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset of liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs to minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value. Mutual Funds:Securities listed on a national market or exchange and valued at the last sales price or if there is no sale and the market is still considered active, at the last transaction price before year-end. The following table presents assets measured at fair value by classification within the fair value hierarchy as of June 30, 2023: Level 1 Level 2 Level 3 Total Mutual Funds: Fixed Income 177,962$ -$-$177,962$ Equities 331,251 --331,251 Total Investments 509,213$ -$-$509,213$ IOWA CITY FREE MEDICAL CLINIC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2023 (11) NOTE 5 NET ASSETS WITH DONOR RESTRICTIONS Net assets with donor restrictions are restricted for the following purposes as of June 30, 2023: Scholarship for Medical Student 2,500$ Purchase of Eyeglasses and Hearing Aids 24,920 Total 27,420$ NOTE 6 CDBG LOANS During the year ended June 30, 2009, the Clinic entered into a Community Block Development Grant (CDBG) conditional occupancy loan. Proceeds for this loan were to be used to acquire the building at 2440 Towncrest Drive. These funds were to be used by June 30, 2009 and were administered on a cost reimbursement basis in the amount of $90,772. If the Clinic doesn’t sell, assign, transfer any interest in the property, or rent the property prior to June 30, 2039, no payments will be required on the principal amount. If the terms are not met the principal is due immediately in full. During the year ended June 30, 2011, the Clinic entered into a CDBG conditional occupancy loan. Proceeds for this loan were to be used to replace the building’s HVAC system and complete exterior improvements. These funds were to be used by June 30, 2011 and were administered on a cost reimbursement basis in the amount of $43,000. If the Clinic doesn’t sell, assign, transfer any interest in the property, or rent the property prior to September 30, 2024, no payments will be required on the principal amount. If the terms are not met the principal is due immediately in full. During the year ended June 30, 2012, the Clinic entered into a CDBG conditional occupancy loan. Proceeds for this loan were to be used for exterior improvements including façade improvements, window and door replacements, lighting, insulation, and interior rehabilitation including lighting and flooring. These funds were to be used by June 30, 2012 and were administered on a cost reimbursement basis in the amount of $191,695. If the Clinic doesn’t sell, assign, transfer any interest in the property, or rent the property prior to December 31, 2028, no payments will be required on the principal amount. If the terms are not met the principal is due immediately in full. CDBG conditional occupancy loans will expire in the following years: Year Ending June 30, 2025 43,000$ 2029 191,695 2039 90,772 Total 325,467$ IOWA CITY FREE MEDICAL CLINIC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2023 (12) NOTE 7 EMPLOYEE BENEFIT PLAN The Clinic maintains a simplified employee retirement plan for the benefit of their employees. All paid employees of the Clinic are eligible to participate in the plan, provided they meet certain minimum levels of hours and years of service. Contributions to this plan, which are made monthly to a mutual fund, are based on the amounts of salaries paid to the plan participants. Contributions paid by the Clinic to this plan for the year ended June 30, 2023 totaled $14,872. NOTE 8 COMMITMENTS On September 20, 2022, the Clinic entered into a CDBG conditional occupancy loan. Proceeds for this loan are to be used to improve the entrance to the lower level of the clinic and expand access to healthcare for persons with low and moderate incomes for an amount not to exceed $75,000. These funds were to be used by June 30, 2023. The program is administered on a reimbursement basis; however reimbursement was not submitted or received until after June 30, 2023. If the Clinic doesn’t sell, assign, transfer any interest in the property, or rent the property prior to June 30, 2030, no payments will be required on the principal amount. If the terms are not met the principal is due immediately in full. On December 14, 2022, the Clinic entered an agreement for construction services related to the CDBG conditional occupancy loan project for an estimated $60,830. The project was completed in July 2023. On December 12, 2023, the Clinic entered into a grant agreement with the City of Iowa City for an amount not to exceed $1,000,000 for the facility renovation project at 2440 Towncrest Drive. The grant is administered on a cost reimbursement basis and all funds must be expended by December 31, 2026. The agreement shall be secured by a mortgage on the property and the Clinic must provide medical and dental services until December 31, 2038. On February 8, 2024, the Clinic entered into a grant agreement with Johnson County, Iowa for an amount not to exceed $300,000 for the facility renovation project at 2440 Towncrest Drive. The grant is administered on a cost reimbursement basis and all funds must be disbursed by January 31, 2026.On February 6, 2024, the Clinic entered into an agreement for design services related to the facility renovation project for an estimated fixed fee of $100,430.The Clinic will be soliciting construction bids for the remaining facility renovation project in the summer of 2024. On April 26, 2023, the Clinic entered into an agreement for the purchase and installation of a solar generation system. The full system value is $60,000 and $10,000 was paid as of June 30, 2023. IOWA CITY FREE MEDICAL CLINIC NOTES TO FINANCIAL STATEMENTS JUNE 30, 2023 (13) NOTE 9 CONCENTRATIONS The Clinic maintains deposit accounts at financial institutions where at times the account balances exceed the federally insured limits. The risk is managed by maintaining all deposits in high quality financial institutions. Management believes the credit risk related to the uninsured balance is minimal. The Clinic is primarily supported through contributions, grants, and local funding agreements. During the year ended June 30, 2023, the Clinic received 17% of total revenue from the United Way of Johnson and Washington Counties and 16% of total revenue from Johnson County, Iowa. NOTE 10 CHANGE IN ACCOUNTING BASIS Beginning July 1, 2022, the Clinic adopted a policy of preparing its financial statements on the modified cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles. Accordingly, the accompanying financial statements are not intended to present the financial position and the changes in its net assets and cash flows in accordance with accounting principles generally accepted in the United States of America. The financial statements as of and for the year ended June 30, 2023 are presented in accordance with the modified cash basis of accounting. A change in accounting basis adjustment in the amount of $35,276 has been made to beginning net assets on July 1, 2022 to accurately reflect the change in accounting basis. NOTE 11 SUBSEQUENT EVENTS Management evaluated subsequent events through April 25, 2024, the date the financial statements were available to be issued. Events or transactions occurring after June 30, 2023, but prior to April 25, 2024, that provided additional evidence about conditions that existed at June 30, 2023, have been recognized in the financial statements for the year ended June 30, 2023. Events or transactions that provided evidence about conditions that did not exist at June 30, 2023, but arose before the financial statements were available to be issued, have not been recognized in the financial statements for the year ended June 30, 2023.