West Virginia Bar Foundation, Inc.
Independent Auditors’ Report
and
Financial Statements
June 30, 2010
West Virginia Bar Foundation, Inc.
Table of Contents
Page
Independent Auditors’ Report ........................................................................................................ 1
Financial Statements
Statement of Assets, Liabilities and Net Assets – Modified Cash Basis ....................................... 2
Statement of Support, Revenue and Expenses – Modified Cash Basis ......................................... 3
Statement of Cash Flows – Modified Cash Basis .......................................................................... 4
Notes to Financial Statements .................................................................................................... 5-8
Independent Auditors’ Report
To the Board of Directors
West Virginia Bar Foundation, Inc.
We have audited the accompanying statement of assets, liabilities, and net assets – modified cash basis of West
Virginia Bar Foundation, Inc. (a nonprofit organization) as of June 30, 2010, and the related statements of support,
revenue, and expenses– modified cash basis and cash flows – modified cash basis for the year then ended. These
financial statements are the responsibility of the Organization’s management. Our responsibility is to express an
opinion on these financial statements based on our audit. The prior year summarized comparative information has
been derived from West Virginia Bar Foundation, Inc.’s 2009 financial statements and, in our report dated
November 23, 2009, we expressed an unqualified opinion on those financial statements.
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 includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
As described in Note A, these financial statements were prepared on the cash basis of accounting, except that the
statements include a provision for depreciation of buildings, reports unrealized gains and losses on investments, and
records liabilities for accrued payroll taxes and withholdings. This basis is a comprehensive basis of accounting other
than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities,
and net assets of West Virginia Bar Foundation, Inc. as of June 30, 2010, and its support, revenue, and expenses for
the year then ended, on the basis of accounting described in Note A.
Charleston, WV
October 27, 2010
1
West Virginia Bar Foundation, Inc.
Statement of Assets, Liabilities, and Net Assets – Modified Cash Basis
June 30, 2010, with Comparative Totals
as of June 30, 2009
Assets
Cash and cash equivalents
Investments
Land and buildings
Total Assets
Liabilities and Net Assets
Accrued payroll and other liabilities
Notes payable
Total Liabilities
Net Assets
Unrestricted
Temporarily restricted
Total Net Assets
Total Liabilities and Net Assets
See independent auditors’ report and notes to financial statements.
2
2010
2009
$339,997
-0620,335
$960,332
$333,563
3,854
639,363
$976,780
$
2,010
303,724
305,734
$ 1,968
323,790
325,758
561,634
92,964
654,598
534,438
116,584
651,022
$960,332
$976,780
West Virginia Bar Foundation, Inc.
Statement of Support, Revenue and Expenses – Modified Cash Basis
For the Year Ended June 30, 2010, with Comparative Totals
for the Year Ended June 30, 2009
2010
Unrestricted
Revenues Collected
Membership fees
Contributions
Fellows dinner and program
Interest and dividends
Unrealized gain (loss) on investments
Rental income
Net assets released from restrictions
Satisfaction of program requirements
$
5,750
15,875
39,694
8,384
632
114,063
Temporarily
Restricted
$
-0-0-0449,370
-0-0-
Total
2009
Total
$ 5,750
15,875
39,694
457,754
632
114,063
$ 12,800
29,988
37,724
427,120
(1,616)
114,063
472,990
(472,990)
Total Revenues Collected
657,388
(23,620)
633,768
620,079
Expenses and Losses
Grants awarded
Salaries and payroll taxes
Deferred compensation
Office supplies and expense
Depreciation
Interest
Fellows dinner and program
Professional services
Insurance
Travel and meetings
Dues and fees
Miscellaneous
456,300
80,833
10,000
9,632
19,028
20,263
16,640
8,661
1,555
6,266
977
37
-0-0-0-0-0-0-0-0-0-0-0-0-
456,300
80,833
10,000
9,632
19,028
20,263
16,640
8,661
1,555
6,266
977
37
470,892
80,649
10,000
9,666
19,028
32,017
10,891
8,334
1,520
6,293
961
-0-
Total Expenses and Losses
630,192
-0-
630,192
650,251
27,196
(23,620)
3,576
(30,172)
534,438
116,584
651,022
681,194
$561,634
$ 92,964
$654,598
$651,022
Change in Net Assets
Net Assets, Beginning of Year
Net Assets, End of Year
See independent auditors’ report and notes to financial statements.
3
-0-
-0-
West Virginia Bar Foundation, Inc.
Statement of Cash Flows – Modified Cash Basis
For the Year Ended June 30, 2010, with Comparative Totals
for the Year Ended June 30, 2009
2010
Cash Flows from Operating Activities
Change in Net Assets
$ 3,576
Adjustments to Reconcile Change in Net Assets To
Net Cash Provided By (Used In) Operating Activities:
Depreciation
Unrealized (gain) loss on investments
(Decrease) increase in accrued payroll and other liabilities
Net Cash Provided By (Used In) Operating Activities
Cash Flows From Investing Activities
Sale of investments
Net Cash Provided By Investing Activities
19,028
(632)
42
22,014
4,486
4,486
Cash Flows From Financing Activities
Principal payments on long-term debt
Net Cash Used in Financing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
2009
$ (30,172)
19,028
1,616
(754)
(10,282)
-0-0-
(20,066)
(20,066)
(157,666)
(157,666)
6,434
(167,948)
333,563
501,511
Cash and Cash Equivalents, End of Year
$339,997
$ 333,563
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest
$ 20,263
$ 32,017
See independent auditors’ report and notes to financial statements.
4
West Virginia Bar Foundation, Inc.
Notes to Financial Statements
June 30, 2010, with Comparative Totals
as of June 30, 2009
Note A – Summary of Significant Accounting Policies
Organization - The West Virginia Bar Foundation, Inc. was formed in 1988 to promote the administration
of justice, the continuing education of the practicing lawyer, and the introduction of the law school
graduate to the practice of law. Additionally, it supports organizations established to provide legal services
through staff attorneys or unpaid volunteers to persons who find it difficult to obtain such services through
normal channels. The Organization’s primary revenue sources are through contributions, memberships, and
interest earned on the lawyers’ trust accounts.
Basis of Accounting - The financial statements of the Organization have been prepared on the modified
cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted
accounting principles. Modifications to the cash basis of accounting include the recording of depreciation
and the recognition of unrealized gains and losses on investments held.
Revenue Recognition – All contributions and grants are considered available for the Organization’s general
programs unless specifically restricted by the donor. Amounts received that are designated for future
periods or restricted by the donor or grantor are reported as temporarily or permanently restricted support
and increase the respective class of net assets. Contributions received with temporary restrictions that are
met in the same reporting as unrestricted support and increase unrestricted net assets. Investment income
that is limited to specific uses by donor restrictions is reported as increases in unrestricted net assets if the
restrictions are met in the same reporting period as the income is recognized.
Cash and cash equivalents - For purposes of the Statement of Cash Flows, the Organization considers all
highly liquid investments with an initial maturity of three months or less to be cash equivalents.
Estimates - Management uses estimates and assumptions in preparing financial statements. Those estimates
and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.
Income Tax Status - The Organization is exempt from federal income tax under Section 501(c)(3) of the
Internal Revenue Code. In addition, the Organization qualifies for the charitable contribution deduction
under Section 170(b)(1)(A) and has been classified as an organization other than a private foundation under
Section 509(a)(2).
Investments - Investments in marketable equity securities with readily determinable fair values are stated at
fair market value. Unrealized gains and losses are included in the change in net assets in the accompanying
Statement of Support, Revenue and Expenses.
5
West Virginia Bar Foundation, Inc.
Notes to Financial Statements
June 30, 2010, with Comparative Totals
as of June 30, 2009
Note A – Summary of Significant Accounting Policies (Continued)
Comparative Totals – The financial statements include certain prior year summarized comparative
information in total but not by net asset class. Such information does not include sufficient detail to
constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such
information should be read in conjunction with the Organization’s financial statements for the year ended
June 30, 2009, from which the summarized information was derived.
Land and Buildings - Land and buildings are recorded at cost. The Organization capitalizes expenditures
for property and equipment based upon the cost and life expectancy of the asset. Depreciation is calculated
utilizing the straight-line method over the estimated useful life of the asset. The land and equipment value
at June 30, 2010 and 2009 is as follows:
Buildings
Less: accumulated depreciation
Land
2010
2009
$761,088
242,253
518,835
101,500
$620,335
$761,088
223,225
537,863
101,500
$639,363
Classification of Support – The Organization reports contributions and other revenues as restricted support
if they are received with donor stipulations that limit the use of the donated assets. When a donor or
earnings restriction expires, that is, when a stipulated time restriction ends or purpose restriction is
accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported on the
Statement of Support, Revenue and Expense as net assets released from restrictions.
Note B – Net Assets Released From Restrictions
Net assets were released from donor and earnings restrictions by incurring expenses satisfying the restricted
purposes or by occurrence of other events specified by donors for the years ended June 30, 2010 and 2009
as follows:
2010
2009
IOLTA program disbursements and fund transfers
We the People Program
6
$469,264
3,726
$472,990
$483,771
-0$483,771
West Virginia Bar Foundation, Inc.
Notes to Financial Statements
June 30, 2010, with Comparative Totals
as of June 30, 2009
Note C – Certificates of Deposit
Certificates of deposit totaling $108,722 and $101,630 at June 30, 2010 and 2009, respectively are included
in cash and cash equivalents in the accompanying financial statements. The certificate bears interest at
3.68% at June 30, 2010. The certificate of deposit matures on December 16, 2010, with penalties for early
withdrawal. Any penalties for early withdrawal would not have a material effect on the financial
statements.
Note D – Concentration of Credit Risk
The Organization receives a significant portion of its revenues from interest earned on lawyers’ trust
accounts and rental income. A material reduction in the level of earned interest or rents received would
have a significant impact on the Organization’s activities, and its ability to continue as a going concern.
Note E – Restrictions of Net Assets
Temporarily restricted net assets are available for the following purposes at June 30, 2010 and 2009:
2010
Grants - We the People Program
IOLTA Program
$
-092,964
$92,964
2009
$
3,726
112,858
$116,584
Note F – Notes Payable
Notes payable at June 30, 2010 and 2009 are as follows:
Note payable to a bank, bearing interest at 6.35% and payable
in monthly installments of $3,361 through October, 2020.
Secured by the related land and building.
2010
2009
$303,724
$323,790
Following is a summary of the schedule of maturities of long-term debt for the next five years:
Years Ended
June 30,
2011
2012
2013
2014
2015
Thereafter
Amount
$ 18,606
20,050
21,607
23,284
25,092
195,085
$303,724
7
West Virginia Bar Foundation, Inc.
Notes to Financial Statements
June 30, 2010, with Comparative Totals
as of June 30, 2009
Note G – Investments
The Organization’s investments at June 30, 2009 consist of common stocks and options held with an
investment company. The cost basis of these investments was $6,144 and the market value was $3,854.
The market value is reported on the basis of quoted market prices and are unrestricted net assets at year
end. During the year ended June 30, 2010 all stocks and options were sold and converted into cash.
Note H – Leases
The Organization leases a portion of its buildings owned to the WV State Bar. During each of the years
ended June 30, 2010 and 2009, the Organization recognized rental income of $114,063 for the leasing of
these facilities. As of October 1, 2010 the WV Bar Foundation and the WV State Bar have agreed to an
option for the WV State Bar to purchase these buildings. Future rental income is dependent upon whether
the option is exercised. While the option is being negotiated, the lease has been extended on a month to
month basis at a reduced rent as agreed upon by both parties.
Note I – IOLTA Program
The Organization, as mandated by the Supreme Court of Appeals, is required to remit all earnings received
from lawyers’ trust accounts to various organizations based upon a prescribed formula. Grants were
awarded in the amounts of $429,874 and $440,653 under this formula during the years ended June 30, 2010
and 2009, respectively.
Additionally, the Organization is permitted to retain an amount not to exceed $50,000 for administration of
the fund. During the year ended June 30, 2010, this amount was retained by the Organization and
transferred into its unrestricted cash account to cover these costs.
Note J – Subsequent Events
By an order of the West Virginia Supreme Court of Appeals on June 22, 2010, the West Virginia State Bar
was empowered to be the administrative agency of the interest earned on the IOLTA trust accounts,
effective July 1, 2010. The Organization is currently working with the banks holding the IOLTA funds
about the changes, etc. prior to the transfer of all funds to the WV State Bar. The net effect of the transfer
will decrease the net assets of the Organization by $92,964.
8