PEARCE, BEVILL, LEESBURG, MOORE, P.C. - … BEVILL, LEESBURG, MOORE, P.C. CERTIFIED PUBLIC...

NATIONAL MULTIPLE SCLEROSISSOCIETY - ALABAMA CHAPTER

(D/B/A NATIONAL MULTIPLE SCLEROSISSOCIETY-ALABAMA-MISSISSIPPI CHAPTER)

FINANCIAL STATEMENTS

FOR THE YEARS ENDEDSEPTEMBER 30, 2013 AND 2012

PEARCE, BEVILL, LEESBURG, MOORE, P.C.CERTIFIED PUBLIC ACCOUNTANTS

CONTENTS

Page

Independent Auditors' Report

Financial Statements

3

Statements of Financial Position 5

Statements of Activities and Changes in Net Assets 6

Statements of Cash Flows 8

Statements of Functional Expenses 9

Notes to Financial Statements 11

Supplemental Information

Independent Auditors' Report on Supplemental Information 19

Statements ofIncome from Special Events and New Campaigns 20

Schedule of Amounts due National Multiple Sclerosis Society 21

Schedules of Memberships and Contributions 22


To the Board of TrusteesNational Multiple Sclerosis Society - Alabama Chapter(D/B/A National Multiple Sclerosis

Society - Alabama-Mississippi Chapter)Birmingham, Alabama

J. Wr.ty Pearce, CPAHamid L Bevin. CPA (1946.t99Z)Charll:.5 \v. leesburg, CPA. MBAStephen L. Moore, CPATommy B. Beam. CPAW. Glenn BridgC5. Jr.• CPA. MBAHal (8u::) Coons, W, CPAStephen B. Jones, JD. CPA. eVAJoseph M. lassiter, CPADavid T. Williams, CPAJeffrey R. Thornton, CPAW. Robert Cook, CPA/ABVMich;It:1 B. Hawkins, CPNABVC.lrlos G. McDonald, CPARobin A. Waldrup, CPA

~PEARCE. BEVILL.LEESBURG, MOORE, P.e.

M CERTIFIED rUAlIC ACCOUNTANTS

110 Office P:trk Drive. Suite 100

BinninJ;h;lm. Alabama 35223~2402

205~323~5440I (a.x 205·328.8523

www.pearcebcvill.com

INDEPENDENT AUDITORS' REPORT

Kelly Bartko. CPAJustin K. Berry. CPABrittany Binl;d, CPADaisy B. Buck. CPAHeather Melson, CPAChase Campbell, CPAPatrick L Dodd, CPAZadt Evans, CPAJames W. E=cU, Jr.• CPADelphine E. Fotd, CPAVaughan Holland. CPATyler E. Jenkins, CPA. CFEDonna Jortb.n. CPAJacob F. Julian, Iv. CPATaylor Martin. CPAOenni!; Mann\:o. CPAKaren A. Moore, CPAGlover Graham Pope, CPAS:lrah B. Propper, CPAMisri a R.umu5.\en. CPARob Shirl....,·, CPAEmily E. Stein, CPAJenna B. Stricklen, CPADoui:l:J.s K. Uhler. CPA, CVA, DABFAJennirer S. Wall:lce, CPACh3ndlu WriGht, CPAThont.:ls C. Zocbelcin, CPA. MBA

We have audited the accompanying financial statements ofNational Multiple Sclerosis SocietyAlabama Chapter, D/B/A National Multiple Sclerosis Society - Alabama-Mississippi Chapter (anonprofit organization), which comprise the statements of financial position as of September 30,2013 and 2012, and the related statements of activities and changes in net assets, cash flows andfunctional expenses for the years 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 ofthese financial statements inaccordance with accounting principles generally accepted in the United States of America; thisincludes the design, implementation, and maintenance ofinternal control relevant to the preparationand fair presentation offinancial statements that are free from material misstatement, whether due tofraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. Weconducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audits to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks ofmaterial misstatement ofthe financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity'spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal control. Accordingly, we express no such opinion.

Members:

• The American Institute of Certified Public Accountants

• The Alabama Society of Certified Public Accountants

• PCPS ~ The AICPA Alliance for CPA Finns• National CPA Health Care Advisors Association

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An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as evaluating theoverall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of National Multiple Sclerosis Society - Alabama Chapter, D/B/A NationalMultiple Sclerosis Society - Alabama-Mississippi Chapter as ofSeptember 30,2013 and 2012, andthe changes in its net assets and its cash flows for the years then ended in accordance withaccounting principles generally accepted in the United States of America.

December 26,2013

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NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY:

ALABAMA - MISSISSIPPI CHAPTER)STATEMENTS OF FINANCIAL POSITION

SEPTEMBER 30,2013 AND 2012

ASSETS2013 2012

CURRENT ASSETS:Cash and cash equivalents $ 534,070 $ 488,950Pledges receivable 114,771 121,645Contributions receivable from home office 18,882Prepaid assets 19,651 24,417

TOTAL CURRENT ASSETS 687,374 635,012

Property and equipment, at cost 77,682 134,868Less accumulated depreciation (50,369) (97,207)

Net property and equipment 27,313 37,661

Due from National Multiple Sclerosis Society 5,745 1,542

TOTAL ASSETS $ 720,432 $ 674,215

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES:Due to National Multiple Sclerosis Society:

Remittance due to home office $ 3,395 $ 73,884Due to other chapters 2,042

Accounts payable and accrued expenses 190,340 230,899Current portion of capital lease obligation 2,436Deferred income 83,907 52,976

TOTAL CURRENT LIABILITIES 279,684 360,195

TOTAL LIABILI,IES 279,684 360,195

NET ASSETS:

Unrestricted 427,238 290,679Temporarily Restricted 13,510 23,341

TOTAL NET ASSETS 440,748 314,020

TOTAL LIABILITIES AND NET ASSETS $ 720,432 $ 674,215

See independent auditors' report and accompanying notes to the financial statements.- 5 -

PEARCE, BEVILL, LEESBURG, MOORE, re.CERTIFIED PUBLIC ACCOUNTANTS


ALABAMA - MISSISSIPPI CHAPTER)STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

FOR THE YEAR ENDED SEPTEMBER 30,2013

TemporarilyUnrestricted Restricted Total

RevenuePublic supportSpecial events (includes in-kind donations of$65,912) $ 1,678,576 $ 403,267 $ 2,081,843

Less benefit to donors (219,763) (219,763)1,458,813 403,267 1,862,080

Membership contributions 197,826 47,401 245,227Legacies and bequests

Received at NationalTotal public support 1,656,639 450,668 2,107,307

Other revenueInvestment income 366 366Miscellaneous 4,000 4,000Service program fees 2,390 2,390

Total other revenue 4,366 2,390 6,756

Net Assets Released from Restrictions 462,889 (462,889)

Total revenue 2,123,894 (9,831 ) 2,114,063

ExpensesProgram Services

Research 329,769 329,769Public support to National 258,319 258,319Client programs 358,165 358,165Community programs 258,246 258,246Professional education and training 19,427 19,427Public education 281,888 281,888

Total program services 1,505,814 1,505,814

Supporting ServicesFundraising 390,007 390,007Management and general 91,514 91,514

Total supporting services 481,521 481,521

Total expenses 1,987,335 1,987,335

Change in net assets 136,559 (9,831 ) 126,728

Net assets- beginning of year 290,679 73,341 314,020Net assets- end of year $ 427,238 $ 13,510 $ 440,748

See independent auditors' report and accompanying notes to financial statements.- 6-

PEARCE, BEVILL, LEESBURG, MOORE, P.e.CERTIFIED PUBLIC ACCOUNTANTS


ALABAMA - MISSISSIPPI CHAPTER)STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

FOR THE YEAR ENDED SEPTEMBER 30, 2012

Temporarily• Jnrestrjctcd Restricted Total

RevenuePublic support

Special events (includes in-kind donations of$35,784) $ 1,567,090 $ 253,085 $ 1,820,175Less benefit to donors (188,915) (188,915)

1,378,175 253,085 1,631,260

Membership contributions 172,114 28,884 200,998Legacies and bequests 59,998 6,254 66,252Received at National 37,695 1,578 39,273

Total public support 1,647,982 289,801 1,937,783

Other revenueInvestment income 551 551Miscellaneous 875 875Service program fees 3,161 3,161

Total other revenue 1,426 3,161 4,587

Net Assets Released from Restrictions 292,534 (292,534)

Total revenue 1,941,942 428 1,942,370

ExpensesProgram Services

Research 279,518 279,518Public support to National 219,621 219,621Client programs 362,925 362,925Community programs 250,127 250,127Professional education and training 12,396 12,396Public education 276,747 276,747

Total program services 1,401,334 1,401,334

Supporting ServicesFundraising 307,601 307,601Management and general 106,764 106,764

Total supporting services 414,365 414,365

Total expenses 1,815,699 1,815,699

Change in net assets 126,243 428 126,671

Net assets- beginning of year 164,436 22,913 187,349

- Net assets- end of year $ 290,679 $ 23,341 $ 314,020

See independent auditors' report and accompanying notes to financial statements.- 7 -

PEARCE, BEVILL, LEESBURG, MOORE, Pc.CERTIFIED PUBLIC ACCOUNTANTS

NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/B/A NATlONAL MULTIPLE SCLEROSIS SOCIETY:

ALABAMA - MISSISSIPPI CHAPTER)STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012

2013 2012CASH FLOWS FROM OPERATING ACTIVITIES

Change in nct assets $ 126,728 $ 126,671Adjustments to reconcile changes in nct assets to net cash

provided by operating aclivities:

Depreciation expense 13,104 14,012Changes in assets and liabilities:

Pledges receivable 6.874 10.706Contributions receivable from home office (18.882)Prepaid assets 4,766 (4,252)Due from National Multiple Sclerosis Society (4,203) (313)Due to National Multiple Sclerosis Socicly- remittance

due to home office (70,489) 10,829Due to National Multiple Sclerosis Society· due to

other chapters 2,042Accounts payable and accrued expenses (40,559) (41,518)Deferred income 30,931 (26,132)

CASH PROVIDED BY OPERATING ACTIVITIES 50,312 90,003

CASH FLOWS FROM INVESTING ACTIVITIESCash paid for purchases of property and equipment (2,756) (26,723)

CASH USED FOR INVESTING ACTIVITIES (2.756) (26,723)

CASH FLOWS FROM FINANCING ACTIVITIESPrincipal payments on capital lease obligation (2,436) (6,089)

CASH USED FOR FINANCING ACTIVITIES (2,436) (6,089)

NET INCREASE IN CASH 45,120 57,191

CASH AT BEGINNING OF YEAR 488,950 431,759

CASH AT END OF YEAR $ 534,070 $ 488,950

SUPPLEMENTAL CASH FLOW INFORMATIONCash paid during the year for interest $ 1,224 $ 211

See independent auditors' report and accompanying notcs to thc financial statcments.

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NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY: ALABAI\1A- MISSISSIPPI CIIAi'TER)

STATEMENT OF FUNCTIONAL EXPENSESSEPTEMBER 30, 2013

Prugrom Sen'ice, SuPport Sen'icuProfl'S!iollOI MOllll~emenl Totol Benefil!

Nlltionol aienl Community Educntion nnd Public ,," Progrnm! 10 Donor GrnndRe! ..nrch Acti,·;ti .., Program! Proernm, Trnining Educlilion Totol FundraiJine Geoeral TOlol lind Support COJt! ~

Salon..s S S S 151,9J4 S 163,171 S 12,251 S 159,790 S 487,746 S 107,640 S 59,636 S 167,276 S 655,022 S S 655,022Employe.. b..n..fits 17,238 18,581 1,390 18,130 55,339 12,213 6,766 l8,979 74,318 74,318Payrolllnx..S 11,981 l2,914 966 12.600 38.461 8,488 4.703 13.191 51.652 5l.652

TOlal salaries and related eKpcnses 181,153 195,266 14,607 190,520 581,546 128,341 7l,105 199,446 780,992 780,992

Printing, pllblicntions and artwork 11,830 2,097 '55 28,459 42.541 116,511 792 117,303 159,844 159,844POSlage and shipplllg 3,905 2,317 173 11,483 17,938 9,099 834 9.')33 27,871 27,871

Telephone 666 6)0 47 614 1,917 524 229 753 2,730 2,730

Supplies 2,63·1 2,873 164 2,396 8,067 5,085 967 6,052 l4,119 32,147 46,266

Du..s and memberships 841 997 66 885 2,701 671 330 1,001 3,702 3,702

Professional and other conlmCI s..n'ic ..

fees 18,187 4,775 757 5,662 29,381 5,592 1,739 7,33 I 36,712 36,712

Donated public sen'ice announcementsand udvertising 33,000 33,000 33,000 33,000

Travd ll,354 10,472 279 3,873 25,978 62,554 1.801 64.355 90.333 123,500 213,833M....tings 19,087 359 399 1,758 21,60] ],60] 184 ],787 25,]90 5,137 30,527

Occupancy 20,532 22,131 1,656 2l.S93 65,9\2 14,546 8,059 22.605 88,517 8,475 96,992Furniture and eqUIpment 5,497 5,925 443 5.181 17,646 3,894 2,158 6.052 2],698 2],6911

Direct financial asSlstanee 7l,866 71,866 71,866 71,1166Pnzes and promollonal items 2,165 2.165 397 397 2,562 44,950 47,512l\lisceJlaneolls expense 5,]88 7,158 434 5,667 18,647 4.0]7 2.123 6,160 24.807 5.554 30,]61

Depreelahon und amortiz.1lion 3,Q.l0 ],276 245 ],197 9,7511 2,153 l,l9] 3,346 13,104 13,104Restricted contnbutions to Society

Research Inv..stm..nt 1.000 1,000 1,000 1.000FuncllOnalized National program

expense 328,769 328,769 ]28.769 __.B!!)69Total expenses before public

suppon to Nalional 319,769 177,0l:! 61,980 4.1110 91,3611 665,949 261,666 20,409 282,075 948,024 219,76] 1,167,787

Public support to Notional 258.3 19 258.3 19 258.3 19 158,3\9

Total expenses 329,769 258,3l9 358,165 258,246 19,427 28\ ,888 l,505,814 390,007 91,514 481,52l 1,9B7,]]5 219,76] 2,207,098

Less bcnefilto donor dtr.... t COslS {2 I9.763) (2l9,76])

Total expenses as reported on thestatement of activities S 329,769 S 258.319 S ]58.165 S 258,246 S 19,427 S 281,888 S 1.505,814 S 390,007 S 91,514 S 481.521 S \,987,3]5 S S 1,987,3]5

See independent audilors' repon antlaccompanying notes to the financml stal ..m..nts

-" -PEARCE, BEVILL, LEESBURG, MOORE, P.e.

CERTIFIED PUBLIC ACCOUNTANTS

NATIONAL l\IULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY: ALABAMA- MISSISSIPI'I CHAPTER)

STATEl\IENT OF FUNCTIONAL EXI'EJliSESSEPTEl\IBER )0, 2012

Program Sen'ices SuPport Sen'icesProressiunul Manngemellt Toilli Dendits

Nnlionnl Clieol Comnmnily Euuention nnd Publie ", Programs to Donor GrandResearch Activities PrlleralllS Programs Training Educatian Tolnl Fundraising General Total nnd SUpplIrt Cosls Tolnl

Salaries , S , 115,304 , 145,688 , 5,4D , 150,400 , 416,815 , 99,190 , 63,951 , 163,141 , 589,956 , , 589,956

Employee benefits 14,676 17,064 6J' 17,615 49,990 11,618 7,490 19,108 69,098 69,098Payroll ta:o;es 10,607 12,33] 459 12.731 ]6.130 8,396 5,414 13,810 49,940 49.9,10

T01al salaries and related e:o;penses 150,587 175,085 6.517 180,746 512,935 119,204 76,855 196,059 708,99.t 708.994

Pdntmg, publicatIOns and artwork 14,527 2,177 2,944 24,779 44,417 76,701 ""' 77,584 122,011 122,011

Postage and shipping 1,421 2,162 113 5,728 10,414 9,217 944 10,161 20,585 20,585

Telephone 4,]80 4.579 170 4,n8 1],857 3,]98 1,012 5,410 19,167 19,267

Supphes ·1.198 2.441 77 1,815 9,541 5,063 9<37 5,970 15,511 14,976 30,487

Dues and memberships 860 1,000 J7 1,032 2,929 976 439 1,415 4,344 4,]44

Professional and other contract service

fees 70,229 15,158 1,064 15,648 102,099 13,581 6.655 20,D6 111.]]5 121,335

Travel 4,924 7,607 100 1,981 15,612 45,732 1,353 47,085 62.697 99,063 161,760

Meetings 15,457 3,641 23 830 19,951 8,598 790 9,388 29,339 4,696 34,0]5

Occupancy 15,796 18,366 684 18,960 53,806 12,504 8,059 20.563 74,369 4,888 79,157

Furniture and equipment 5,061 5,885 219 6,075 17,240 4,007 2,583 6,590 23,830 23,830

Insurance 1,302 1,677 100 1,763 7,842 1,822 1,115 2,997 10,839 10,8]9

Awards and grants to other MS relatedorgamZlltmns 2,878 2,878 2.,878 2,878

Direct financial ilSSlstance 60,964 60,964 60,964 60,964PnteS and promotIOnal items 432. 432 432 64,449 64,881MisccllanL'Qus expense 5,365 5,889 219 6,080 17,553 4,010 2,590 6,600 :!4,15] 843 14,996DeprL'C1ll1l0n and amortizallon 2,976 3,460 129 3.5n 10.137 1,356 1,519 ],875 14,011 14,011Functionahzed National program

expense 279.518 279,5 18 279,518 279,518Total expenses before pubhe

support to National 279,518 212,]]8 75,042 5,879 96,001 668,778 188,]97 29,909 2.18,306 887,084 Il1S.915 1,075,9~

Pubhc support to National 219,621 219.621 219,621 2.19,62.1

Total expenses 279,518 219,621 ]62,925 250,127 11,396 276,747 1,401,3]4 307,601 106.764 414,365 1,815,699 188.915 2.,004,614

Less benefit to donor direct costs (lSB,915) (188.915)

Total expenses as reported on thestatement of activities S 279.518 S 219,611 S ]62.925 , 150,127 S 12,396 , 276,747 , 1.401.334 S ]07.601 , 106,764 , 414.]65 , 1.815,699 S S 1,815,699

See mdependenl audaors' report and nccompanymg notes to the finan~lill statements

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PEARCE, BEVILL, LEESBURG, MOORE, PC.

CERTIFIED PUBLIC ACCOUNTANTS

NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA-MISSISSIPPICHAPTER)

Notes to Financial Statements for the years ending September 30,2013 and 2012

NOTE I: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature ofOrganization

National Multiple Sclerosis Society- Alabama Chapter, D/B/A National Multiple Sclerosis Society- Alabama-Mississippi Chapter (Chapter) is a not-for-profit voluntary health agency which raisesfunds in Alabama and Mississippi to provide services to people with multiple sclerosis, supportmultiple sclerosis research through its national organization and educate the public about the impactof multiple sclerosis. Services include supporting medical care centers, counseling, crisis services,education, transportation, recreation, and physical therapy for individuals who have multiplesclerosis. Services include, but are not necessarily limited to, supporting education, centers providingmedical, recreational and other therapy and care for those living with multiple sclerosis, counselingand support, advocacy for local and national change, and information and resources through inperson and online programs.

Basis ofAccounting

The accompanying financial statements have been prepared on the accrual basis in accordance withstandards adopted by the National Health Council and the National Assembly for Society Policy andDevelopment.

Financial Statement Presentation and Net Asset Classifications

The Chapter has adopted Financial Accounting Standards Board (FASB) Accounting StandardsCodification (ASC) 958-205, Presentation ofFinancial Statements, for not-for-profit organizations.Under FASB ASC 958-205, the Chapter is required to report information regarding its financialposition and activities according to three classes of net assets: unrestricted net assets, temporarilyrestricted net assets, and permanently restricted net assets.

Resources for various purposes are classified for accounting and financial reporting purposes into netasset categories established according to their nature and purpose as follows:

• Unrestricted Net Assets - Unrestricted net assets represent funds, which are fully available, at thediscretion of management and the Board of Trustees, for the Chapter to utilize in any of itsprogram or supporting service.

• Temporarily Restricted Net Assets - Temporarily restricted net assets are comprised of funds,which are restricted by donors for specific purposes. The restrictions are satisfied either by thepassage of time or by actions of the Chapter.

• Permanently Restricted Net Assets - Permanently restricted net assets include resources withpermanent donor-imposed restrictions, which require the assets to be maintained in perpetuity butpermit the Chapter to expend all or part of the income derived from the donated assets.

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NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(DIB/A NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA-MISSISSIPPICHAPTER)

Notes to Financial Statements for the years ending September 30, 2013 and 2012

NOTE 1: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTINGPOLICIES - CONTINUED

The Chapter does not hold any permanently restricted net assets. As permitted, the Chapter does notuse fund accounting.

Revenue Recognition and Deferred Revenue

Contributions are recorded as revenue when received or promised (pledged) unconditionally, at theirfair value. The fair value of long-term contributions receivable is measured based on the presentvalue offuture cash flows, with consideration ofexpectation about possible variations in the amountand/or timing of the cash flows and other specific factors that would be considered by marketparticipants. The fair value measurements also consider donors' credit risk. Gifts received withdonor stipulations that limit the use of the donated assets are reported as temporarily restrictedsupport. The Chapter recognizes income from legacies and bequests when an unassailable right tothe gift has been established by the court and the proceeds are measurable in amount. Contributionsrestricted by the donor are reported as an increase in unrestricted net assets if the restriction expiresin the same period in which the support is recognized. All other donor restricted support is reportedas an increase in temporarily restricted net assets. Conditional contributions are recognized asrevenue when the conditions on which they depend have been substantially met.

During the years ended September 30, 2013 and 2012, the Chapter received contributions of$403,267 and $253,085, respectively, which were restricted by the donors to be used solely for localchapter services and sponsorship for special events. The Chapter also received in-kind contributionsof$65,912 and $35,784, respectively, to be used solely as a sponsorship for special events.

During the yearS ended September 30, 2013 and 2012, the Chapter received contributions of$16,276and $3,000, respectively, which were restricted by the donors to be used solely for research. Thesecontributions were remitted to the national organization and released from restriction.

All revenue received in advance for special events that are held subsequent to the year-end aredeferred.

Expense Allocations

Functional expenses, which are not specifically attributable to program services or supportingservices, are allocated by management based on various allocation factors.

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Concentration ofRisk

The Chapter maintains a portion of its cash in deposit and fund accounts that at times may exceedfederally insured limits. The Chapter has not experienced any losses in such accounts. The Chapterbelieves it is not exposed to any significant credit risk on its cash.

Cash and Cash Equivalents

The Chapter considers all highly liquid investments with maturities of three months or less whenpurchased to be cash equivalents. As of September 30, 2013 and 2012, there were no cashequivalents.

Pledges Receivable

All pledges receivable or unconditional promises to give consist of accruals of public supportreceived after year-end that pertained to fundraising events held during fiscal year 2013. TheChapter believes that the pledges receivable are fully collectible.

As of September 30, 2013, all pledges receivable are due in less than one year.

Property and Equipment

Property and equipment are stated at cost or, if donated, fair market value on the date received.Depreciation is computed using the straight-line method and is provided over the estimated usefullives as follows:

•

Furniture and fixturesLeasehold improvementsOffice equipment

5 to 8 years5 years3 to 7 years

Included in office equipment, as of September 30, 2012, was an asset held under a capital leaseobligation with a net book value of $4,940.

For the years ended September 30, 2013 and 2012, depreciation expense totaled $13,104 and$14,012, respectively, which includes $7,228 in 2012 related to the asset under the capital leaseobligation mentioned above.

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All acquisitions of furniture and equipment in excess of $500 and all expenditures for repairs,maintenance renewals, and betterments that materially prolong the useful lives of assets arecapitalized.

In accordance with FASB ASC 360-10, Impairment or Disposal ofLong-LivedAssets, the Chapterrecords impairment losses on long-lived assets used in operations when events and circumstancesindicate that assets might be impaired and the undiscounted cash flows estimated to be generated bythose assets are less than the carrying amounts of those assets. If impairment exists, the amount ofsuch impairment is calculated based on the estimated fair value ofthe asset. The Chapter continuallyevaluates its investment in long-lived assets used in operations for impairment. Based on thisevaluation, management does not believe that impairment indicators are present.

Donated Goods and Services

Donated goods and services, including public service announcements, used by the Chapter inprograms, special events, and supporting services are reflected as in-kind contributions and expensedin the accompanying financial statements at their estimated fair value at the date of receipt.

Donated public service announcements received in fiscal year 2013 totaled approximately $33,000,and are reflected above as donated goods and as fundraising expense in the accompanying statementof activities.

In addition, a number of volunteers have donated significant amounts oftheir time to the Chapter'sprogram services and supporting services. No amounts have been reflected in the accompanyingfinancial statements for those donated services, because they do not meet the criteria for revenuerecognition established by FASB ASC 958-605, Contributed Services.

Use ofEstimates

The preparation offinancial statements in conformity with accounting principles generally acceptedin the United States ofAmerica (GAAP) requires management to make estimates and assumptionsthat affect the reported amount of assets and liabilities and disclosure of contingent assets and

_ liabilities at the date of the financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimates.

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Research and National Activities Expense

The National Multiple Sclerosis Society (the Society) calculates the National Program Expense foreach Chapter in advance ofthe fiscal year after a complete review by the Budget Review Committeeand national Board. The Chapter's National Programs Expense will be calculated using the averageof the previous two year's audited results as the revenue base. The remittance percentage is subject toadjustment each year to ensure that the Society meets its programmatic goals and that all donorrestrictions are honored. In fiscal year 2013, the Chapter's National Program Expense under the newpolicy was calculated to be $587,088. By setting the Chapter's National Programs Expense inadvance, the Chapters and the national organization are in a better position to control resourcesthrough their respective budgeting and planning processes.

The Chapter participates in Home Office's direct marketing program. In fiscal year 2012,unrestricted public support received under the program by the home office that was attributable toChapter sources was credited to and recorded by the Chapter at 50% of the net revenue from theprogram. These amounts were recorded as contributions received from Home Office in fiscal year2012 in the accompanying statement of activities. In order to drive Society initiatives, the DirectMarketing Program revenue distribution has been revised for fiscal year 20 13. The Chapter no longerrecords the net revenue from the program as contributions received from home office, but ratherreceived credit towards its National Programs Expense for 50% ofthe actual FY 2011 audited DirectMarketing revenue.

Included in the National Program Expense for fiscal year 2013 is a contribution in the anlount of$9,000, which was earmarked for research. This amount is reflected in the Public Support forNational Activities in the accompanying statement of activities.

Advertising Costs

The Chapter expenses advertising costs as incurred. Advertising expense for the years endedSeptember 30,2013 and 2012 was $1,760 and $1,041, respectively.

-15 -


NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA-MISSISSIPPICHAPTER)


NOTE 2: INCOME TAXES

The Chapter qualifies as a charitable organization as defined by Internal Revenue Code 501 (c) (3),and accordingly, it is exempt from federal income taxes under Internal Revenue Code Section501(a). Additionally, since the Chapter is publicly supported, contributions made to the ChapterqualifY for the maximum charitable contributions deduction under the Internal Revenue Code.

The Chapter has adopted FASB ASC 740-10, Income Taxes. The Chapter files a tax return in theUnited States (U.S.) federal jurisdiction. The Board ofTrustees (Board) evaluated the Chapter's taxposition and concluded that the Chapter has not entered into any events or transactions that woulddisqualifY its tax-exempt status or has not taken any uncertain tax positions that would cause theChapter to incur income taxes or penalties at the entity level. With few exceptions, the Chapter is nolonger subject to U.S. federal tax examinations by tax authorities for years before 2010.

NOTE 3: ALLOCATION OF JOINT COSTS

In the years ended September 30,2013 and 2012, the Chapter incurred joint costs of$7,109 and$4,448, respectively, for information materials and activities that included fundraising appeals. Suchcosts were allocated in accordance with the requirements of FASB ASC 958-720 (formerly theAmerican Institute of Certified Public Accountants Statement of Position 98-2), Accounting forCosts ofActivities ofNotfor-Profit Organizations and State and Local Government Entities thatInclude Fund-raising. Of these costs, $6,330 and $4,143 were allocated to fund-raising, and $779and $305 to public education in 2013 and 2012, respectively.

NOTE 4: PROPERTY AND EQUIPMENT

At September 30, furniture and equipment consist of the following:

Furniture and fixtureOffice equipmentLeasehold improvements

Less accumulated depreciation

-16 -

2013

$ 24,37142,80610.50577,682

(50.369)

$,~~27h>.3"",1=,3

2012

$ 23,773100,590

10.505134,868(97.207)

$ 37.661


NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/BIA NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA-MISSISSIPPICHAPTER)


NOTE 5: EMPLOYEE BENEFIT PLAN

The Chapter participates in the Society's noncontributory Defined Contribution Retirement Plan,which covers substantially all of the Chapter's employees, based on defined eligibility for coveredemployees. Temporary employees and independent contractors are not eligible. Employees becomeeligible on the first day of the first month after beginning employment and all covered employeesreceive a contribution on September 30 each year. Employees are fully vested at the end of fiveyears. The contribution rate for the year ended September 30, 2013, as determined by the Society'sPresident and ChiefExecutive Officer, was 3% ofgross annual salary. The pension expense incurredby the Chapter related to this plan for the years ended September 30, 2013 and 2012 were $14,631and $14,876, respectively.

NOTE 6: OPERATING LEASES

Rental expense of Chapter office space and equipment for the year ended September 30, 2013 and2012 was $86,259 and $59,982, respectively. This obligation represents future commitments and isincluded in the minimum annual rentals that follow:

Year ending September 30,

20142015201620172018

NOTE 7: TEMPORARILY RESTRICTED NET ASSETS

$ 88,95090,73098,898

100,74692.322

$ 471.646

As of September 30, 2013 and 2012, temporarily restricted net assets in the amount of$13,510 and_ $23,341, respectively, were restricted due to donor-imposed purpose restrictions for programs.

- 17 -


NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY -ALABAMA-MISSISSIPPICHAPTER)

Notes to Financial Statements for the years ending September 30,2013 and 2012

NOTE 8: CONTRIBUTIONS RESTRICTED FOR LOCAL USE

During the fiscal year ended September 30,2013 and 2012, the Chapter received contributions of$403,267 and $253,085, respectively, which were restricted by the donors to be used solely for localchapter services and sponsorship for special events. These restricted contributions were tested aspart ofour independent audit procedures and were in compliance with the restricted gift policy of theSociety.

NOTE 9: GIFT ANNUITY

The Chapter is the beneficiary of a split-interest agreement with a donor, whereby home officecontrols and invests the donated assets and shares with the donor or the donor's designee incomegenerated from these assets until such time as stated in the agreement (usually upon the death of thedonor or the donor's designee).

Effective fiscal year 2012, the Chapter Relations Committee (CRC) of the Board ofDirectors oftheSociety adopted a new policy which allocates 100% of the residual assets to the Chapter in a splitinterest agreement where a Chapter is designated as a beneficiary by the donor. The CRC alsoapplied the policy to all such agreements entered into as of September 30, 20 I I, resulting in thereallocation, during fiscal year 2012, to the Chapters of the portion of contributions previouslycredited to home office as of that date. Home office continues to hold, manage, invest and control thedonated assets.

The year-end values of the Chapter split-interest agreement for 2013 and 2012 was $5,745 and$1,542, respectively. Income derived from changes in value of the agreements for 2013 and 20 I2was $3 I3 and $4,203, respectively.

NOTE 10: SUBSEQUENT EVENTS

The Chapter has evaluated subsequent events through December 26,2013, which is the date thefinancial statements were available to be issued and concluded no events or transactions occurredduring that period requiring recognition or disclosure.

- 18-


J. Wmy Pe.J.ree, CPAH.J.mld L Bevill, CPA (1946.t99Z)Ch.J.dc..5 W Leesburg, CPA, MBAStephen L. Moore, CPATommy B. Beam, CPAw. Glenn Bridg~, Jr.• CPA, MBAHal (Bu.::) Coons, m, CPAStepllen B. Jones, JO, CPA. eVAJQ:§cph M. 1..J.s5iter, CPAIhvid T. Williams, CPAJeffrey R. Thornton, CPAW. Robert Cook, CPNABVMich;lel B. Hawkins, CPNABVC.1r1os G. McDoruld, CPARabin A. Waldrup, CPA

rrI1JPEARCE, BEVILL,LEESBURG, MOORE, Pc.

M CERTIFIEr> PUBLIC ACCOUNTANTS

110 Office Park Drive, Suite 100

Birmingham, Alabama J52!3.Z402

205·323·5440 I fa.'t 205·328·8523

www.pcarccbcYiII.com

INDEPENDENT AUDITORS' REPORTON SUPPLEMENTAL INFORMATION

Kelly Bartko, CPAJustin l<. Derry, CPABrin:my Bingel, CPADaisy B. Buck, CPAHeath~r Melson, CPAChase C..mpbell, CPAPatrick L Dodd, CPAhch Evans, CPAJames W. E:cU, Jr., CPADelphine E Ford, CPAv..ugh:m Holland, CPATyler E. Jenkins, CPA, CFEDonna Jordan, CPAJacob F. Julian, Iv. CPATaylor Marrin, CPADl:nnis Ma:inl:o, CPAKaren A. Moon:, CPAGlover Graham Pope. CPASa~h B. Propper, CPAMisti B. R:umusscn, CPARob Shirley, CPAEmily E. Sicin, CPAJcnn.J. B. Stricklen, CPADoul;l:.s K. Uhler, CPA, CVA. OABFAJennifer S. Wallace, CPAChandli:r Wriglu, CPAThomas C. Zoebclcin. CPA, MBA

To the Board of TrusteesNational Multiple Sclerosis Society - Alabama Chapter(DIB/A National Multiple Sclerosis

Society - Alabama-Mississippi Chapter)Birmingham, Alabama

We have audited the financial statements ofNational Multiple Sclerosis Society - Alabama Chapter,D/B/A National Multiple Sclerosis Society - Alabama-Mississippi Chapter as of and for the yearsended September 30, 2013 and 2012, and our report thereon dated December 26,2013, whichcontained an unmodified opinion on those financial statements, appears on page 3. Our audits wereconducted for the purpose of forming an opinion on the financial statements as a whole. Thesupplementary information is presented for purposes ofadditional analysis and is not a required partof the financial statements. Such information is the responsibility of management and was derivedfrom and relates directly to the underlying accounting and other records used to prepare the financialstatements. The information has been subjected to the auditing procedures applied in the audits offinancial statements and certain additional procedures, including comparing and reconciling suchinformation directly to the underlying accounting and other records used to prepare the financialstatements or to the financial statements themselves, and other additional procedures in accordancewith auditing standards generally accepted in the United States of America. In our opinion, theinformation is fairly stated in all material respects in relation to the financial statements as a whole.

December 26,2013

- 19 -Members:

• The American Institute of Certified Public Accountants• The Alabama Society of Certified Public Accountants• PCPS· The AICPA Alliance for CPA Finns• National CPA Health Care Advisors Association

NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY: ALABAMA- MISSISSIPPI CHAPTER)STATEMENT OF INCOME FROM SPECIAL EVENTS AND NEW CAMPAIGNSFOR THE YEAR ENDED SEPTEMBER 30, 2013

TotalOther Sponsorship and Benefit to Other

Sponsorship Restricted Other Restricted Campaign Donor Event TotalName of event Cash in-kind Income [ncorne Income Total Costs Costs Costs

MS Walk $ 71,905 $ 24,177 $ 3,022 $ 99,104 $ 644,311 $ 743,415 $ 68,243 $ 53,361 $ 121,604Challenge Walk 333 333 12,169 12,502 3,881 1,055 4,936Bike MS 71.850 30,138 2,351 104,339 334,792 439,131 46,705 66,990 113,695One Day Bike 12,571 3.196 15.767Dinner of Champions 34,731 34,73 I 103,422 138,153 29,857 4,873 34,730

178,819 54.315 5,373 238,507 1,094,694 1,333,201 161,257 129,475 290,732Other Leadership Events

Legacy of leadership events 79,775 79,775 236.674 316,449 2,422 79,812 82,234Class 23,103 100 23.203 136,346 159,549 17,703 5,400 23,103

Total other leadership events 102,878 100 102,978 373,020 475,998 20,125 85,212 105,337

Other Special EventsWine auction 25,500 20,081 45,581 183,625 229,206 25.157 3,933 29.090Pig Out for MS 4,619 11,600 30 30 22,679 22.709 13,224 2,996 16,220Stand against MS 60 16,279 4,450 20,729 28 28

Total other special events 30,119 11.600 20,171 61,890 210,754 272.644 38.381 6,957 45,338-Total $ 311,816 $ 65,915 $ 25,644 $ 403,375 $ 1,678,468 $ 2,081,843 $219,763 $ 221,644 $ 441,407

See independent auditors' report on supplemental infonnation.

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NATIONAL MULTIPLE SCLEROSIS SOCIETY - ALABAMA CHAPTER(D/B/A NATIONAL MULTIPLE SCLEROSIS SOCIETY: ALABAMA

MISSISSIPPI CHAPTER)SCHEDULE OF AMOUNTS DUE NATIONAL MULTIPLE SCLEROSIS SOCIETY

FOR THE YEAR ENDED SEPTEMBER 30, 2013

Remittance:Total Fiscal Year 2013 National Program Expense per Remittance Invoice

Research honor roll contributed from chapter reserves

Chapter Payments:October 2012 through September 2013Less payments for Fiscal Year 2012

Total paid for Fiscal Year 2013

Balance due National Chapter for Fiscal Year 2013

Balance Due National Chapter as of September 30,2013Less payments for fiscal year 2012 in current year

Adjusted balance due National Chapter for prior years

Total remittance balance due National Chapter at September 30, 2013

Other Payablcs Due to National Multiple Sclerosis SocietyInfoffilation and Referral CenterHealth InsuranceCampaign SuppliesUsage fees

Due to NatiQIlal Multiple Sclerosis Society- Other

Amounts Payable tolFrom Other ChaptersPayable to Greater Carolinas Chapter

See independent auditors' report on supplemental infonnation.- 21 -


$

$

$

$

$

587,088

1,000

659,80372,715

587,088

1,000

72,715(72,715)

1,000

978883418116

2,395

2,042

NATIONAL MULTIPLE SCLEROSIS SOCIETY- ALABAMA CHAPTER(Dffl/A NATIONAL MULTIPLE SCLEROSIS SOCIETY:

ALABAMA- MISSISSIPPI CHAPTER)SCHEDULES OF MEMBERSHIPS AND CONTRIBUTIONSFOR THE YEAR ENDED SEPTEMBER 30, 2013

TemporarilyUnrestricted Restricted Total

Individual ContributionsGeneral gifts $ 27,369 $ 25,429 $ 52,798Tributes and memorials 32,241 32,241Workplace giving! United Way 41,170 41,170

100,780 25,429 126,209

Corporate Contributions 17,507 1,000 18,507

Foundation Gifts and Grants 6,250 20,972 27,222

Other Campaign IncomeCommunity (third party)

event income 11,518 11,518Other 61,771 61,771

$ 197,826 $ 47,401 $ 245,227

See independent auditors' report on supplemental information.- 22-


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