accounting auditing

DISABLED CITIZENS FOUNDATION

Champaign, Illinois

Financial Statements

For the Year Ended

June 30, 2016

C O N T E N T S

Page INDEPENDENT AUDITOR’S REPORT ................................................................................... 1-2 FINANCIAL STATEMENTS Statement of Financial Position (Exhibit A) .................................................................................................................................3 Statement of Activities (Exhibit B) .................................................................................................................................4 Statement of Cash Flows (Exhibit C) .................................................................................................................................5 Notes to Financial Statements ................................................................................................... 6-9

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INDEPENDENT AUDITOR’S REPORT

Board of Directors and Management Disabled Citizens Foundation 1304 West Bradley Avenue Champaign, Illinois

We have audited the accompanying financial statements of Disabled Citizens Foundation (a nonprofit organization), which comprise the statement of financial position as of June 30, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these 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 preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the 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 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 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 financial statements.

2507 South Neil St. Champaign, Illinois 61820 Phone 217.351.2000 Fax 217.351.7726

CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS

www. mhfa.net

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Disabled Citizens Foundation as of June 30, 2016, and the changes in its net assets and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Champaign, Illinois September 8, 2016

Current Assets Cash 2,146,864$ Real Estate Taxes Receivable 2,433 Prepaid Expenses 10,939

Total Current Assets 2,160,236

Property and Equipment, Net Land 325,851 Equipment 156,015 Buildings 2,981,579 Building Improvements 2,414,730

Total Property and Equipment 5,878,175 Less: Accumulated Depreciation (2,948,554)

Property and Equipment, Net 2,929,621

Other Assets Unamortized Debt Issue Costs 706

Total Assets 5,090,563$

Current Liabilities Accounts Payable 2,579$ Accrued Interest Payable 863 Deferred Revenue 1,325 Mortgages Payable, Current Portion 32,713

Total Current Liabilities 37,480

Long-Term Liabilities Mortgages Payable, Net of Current Portion 219,967

Total Liabilities 257,447

Net Assets - Unrestricted 4,833,116

Total Liabilities and Net Assets 5,090,563$

June 30, 2016

ASSETS

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Exhibit A

DISABLED CITIZENS FOUNDATION Statement of Financial Position

See Accompanying Notes

LIABILITIES AND NET ASSETS

Support and Revenue Lease Revenue 419,948$

Interest Income 2,449 Total Support and Revenue 422,397

Expenses Program Expenses:

Donations to DSC and Other Organizations 52,566 Expenses Related to the Production of Income:

Depreciation 178,379 Interest 17,273 Insurance 11,884 Conference and Convention 2,800 Utilities 521 Repairs and Maintenance 337 Amortization of Debt Issue Costs 102 Other 3,019

Total Expenses Related to the Production of Income 214,315 Management and General:

Management Fees 25,704 Auditing and Legal Fees 8,965 Miscellaneous 2,183

Total Management and General 36,852

Total Expenses 303,733

Change in Net Assets 118,664

Net Assets, Beginning of Year 4,714,452

Net Assets, End of Year 4,833,116$

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Exhibit B

DISABLED CITIZENS FOUNDATION Statement of Activities

For the Year Ended June 30, 2016

See Accompanying Notes

Cash Flows from Operating Activities Change in Net Assets 118,664$ Adjustments to Reconcile Change in Net Assets

to Net Cash Provided by (Used In) Operating Activities: Depreciation 178,379 (Increase) Decrease in Assets:

Real Estate Taxes Receivable 4,663 Prepaid Expenses and Unamortized Debt Issue (6,993)

Increase (Decrease) in Liabilities: Accounts Payable (2,970) Accrued Interest Payable (680)

Total Adjustments 172,399 Net Cash Provided by (Used In) Operating Activities 291,063

Cash Flows from Investing Activities Purchases of Property and Equipment (103,292)

Cash Flows from Financing Activities Principal Payments on Mortgages Payable (245,577)

Net Increase (Decrease) in Cash (57,806)

Cash, Beginning of Year 2,204,670

Cash, End of Year 2,146,864$

Supplemental Disclosure of Cash Flow Information Cash Paid for Interest 17,953$

Exhibit C

DISABLED CITIZENS FOUNDATION Statement of Cash Flows

For the Year Ended June 30, 2016

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See Accompanying Notes

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DISABLED CITIZENS FOUNDATION Notes to Financial Statements

June 30, 2016

1. Purpose of Foundation

The primary purpose of the Disabled Citizens Foundation (the Foundation) is to encourage, support, and foster the work of the Developmental Services Center of Champaign County, Inc. (DSC) through its mission to enhance the lives of individuals with disabilities by providing services and supports, which enable them to live, work, learn, and participate in their communities. To support its mission, the Foundation acquires and maintains suitable property, both real and personal, by gift, devise, bequest, grant or purchase. DSC is related to the Foundation through an overlap of corporate management; and directors are elected by the Board of Directors of DSC. Currently, the Foundation receives 96 percent of its rental income from DSC.

2. Accounting Policies

Following is a summary of the significant accounting policies of the Foundation:

a. Property and equipment are recorded at cost. Additions and expenditures incurred during the acquisition or maintenance of property or that increase the useful life of the asset are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

b. Net assets of the Foundation and changes therein are classified and reported as follows:

Unrestricted Net Assets – Net assets that 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 Foundation and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

Permanently Restricted Net Assets – Net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on any related investments for general or specific purposes.

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c. Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Accordingly, actual results could differ from those estimates.

d. Lease revenue is classified as unrestricted and is recognized through the passage of time or as it is earned.

e. The costs of providing the various programs and other activities have been

summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

f. The Foundation is a tax-exempt foundation under Internal Revenue Code Section 501(c)(3).

g. The Foundation is not aware of any tax position for which a significant change is reasonably possible within the next year. As of June 30, 2016, the federal and Illinois tax filings that fall within the applicable statutes of limitation remain open for review by tax authorities.

h. The Foundation has evaluated subsequent events through September 8, 2016, the

date which the financial statements were available to be issued.

3. Collateralization of Cash

At June 30, 2016, the Foundation had deposits in financial institutions totaling $2,153,904, which reconciled to a book balance of $2,146,864. Of the outstanding balance, $392,711 was covered by federal deposit insurance. The uninsured and uncollateralized amount is the remaining $1,761,193, and $31,457 of this amount is subject to the Foundation’s right of offset against notes payable.

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4. Related Party Transactions

The Foundation is related to DSC as indicated in Note 1. The transactions between these two parties, for the year ended June 30, 2016, are summarized below:

The Foundation is the lessor of various properties under non-cancelable operating leases, accounting for 96 percent of total lease revenue. All property listed on the Statement of Financial Position is held for lease to related and other parties. The properties leased to DSC, a related party, are summarized below:

Total Expiration Monthly Revenue Date

Rent During Year June 30 Land and Buildings:

1302 and 1304 West Bradley Avenue, Champaign 13,095$ 157,140$ 2017

914 Lincolnshire Drive, Champaign 1,300 15,600 2017

1710 Georgetown Drive, Champaign 1,300 15,600 2017

3102 West Clark Road, Champaign 5,834 70,008 2020

913 Trailway Court, Champaign 2,639 31,668 2021

709 Chickory Street, Champaign 2,639 31,668 2021

309 East Neal Drive, Rantoul 3,355 40,260 2021

1910 Kathryn, Urbana 2,500 30,000 2027

504A Creve Coeur, Champaign 792 9,500 2028 401,444$

Property

The Foundation donated $48,141 to DSC to support DSC’s tax-exempt activities. The Foundation incurred $25,704 in management fees paid to DSC during the year ended June 30, 2016. At June 30, 2016, the Foundation had $0 of accounts payable to DSC.

The Foundation has provided a guarantee on a line of credit with First State Bank maturing January 15, 2017, which was established by DSC, a related party of the Foundation. This guarantee, on a credit line in the amount of $2,750,000, is collateralized

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by the property at 1304 West Bradley Avenue and 3102 West Clark Road. At June 30, 2016, the amount owed by DSC is $0. The Foundation believes that DSC will be able to fulfill its obligation with First State Bank.

5. Other Lease Transactions

The Foundation is the lessor of a tract of land on which a cellular tower has been constructed and is operated by the lessee. The lease term began upon construction commencement December 1, 2000 and initially ran for 10 years with renewal allowances at the lessee’s discretion for two additional five-year terms. The lessee may cancel at any time with six month’s written notice. Monthly rent related to this lease was $1,325 for the year ended June 30, 2016. Total revenue recorded for this lease in fiscal year 2016 was $17,504. The lease currently extends through November 30, 2020.

The Foundation is also the lessor of a tract of land on which a billboard has been constructed and is maintained by the lessee. The lease term began upon construction commencement in 2006 and will terminate in 20 years or earlier if the billboard is removed. Annual rent related to this lease is $1,000 per year. Total revenue recorded for this lease in fiscal year 2016 was $1,000. The lease currently extends through 2026.

6. Mortgages Payable

During the year ended June 30, 2016, the Foundation paid off the balance of one mortgage to Illinois Facilities Fund. As of June 30, 2016, the Foundation had one remaining mortgage payable to Farm Credit Services of Illinois as follows:

Balance Maturity Date Interest Rate Farm Credit Services of Illinois:

Rantoul, Illinois Day Training 252,680$ May 1, 2023 3.65%

Land and Building

Principal payments on the mortgage payable as of June 30, 2016, are as follows:

Fiscal Year Ending June 30 32,713$

2018 33,928 2019 35,187 2020 36,493 2021 37,847 Thereafter 76,512

252,680$

2017