AMARA PARENTING AND ADOPTION SERVICES … parenting and adoption services independent auditors’ report and financial statements december 31, 2013 and 2012

AMARA PARENTING AND ADOPTION SERVICES

INDEPENDENT AUDITORS’ REPORT

AND FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012


Years Ended December 31, 2013 and 2012

TABLE OF CONTENTS

Page

Independent Auditors’ Report ....................................................................................................... 1 Financial Statements: Statements of Financial Position ............................................................................................. 2 Statements of Activities ..................................................................................................... 3 - 4 Statements of Functional Expenses .................................................................................. 5 - 6 Statements of Cash Flows ....................................................................................................... 7 Notes to the Financial Statements ........................................................................................... 8 - 13

9757 Greenwood Avenue North • Seattle, WA 98103 • (206) 298-9811 • FAX: 298-9772

FINNEY, NEILL & COMPANY, P.S.

C E R T I F I E D P U B L I C A C C O U N T A N T S

1

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors Amara Parenting and Adoption Services

We have audited the accompanying financial statements of Amara Parenting and Adoption Services, which comprise the statements of financial position as of December 31, 2013 and 2012, and the related statements of activities, functional expenses, and cash flows 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 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.

Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 from 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 the entity’s 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.

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

OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amara Parenting and Adoption Services as of December 31, 2013 and 2012, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Seattle, Washington May 8, 2014

The accompanying notes are an integral part of these financial statements. 2

AMARA PARENTING AND ADOPTION SERVICES Statements of Financial Position

December 31, 2013 and 2012

2013 2012ASSETS

Current assets:Cash and cash equivalents 509,592$ 583,312 Short-term investments 151,476 - Accounts receivable 86,719 90,601Pledges receivable, net - current 133,862 66,567Prepaid and other assets 32,015 36,649

Total current assets 913,664 777,129

Pledges receivable - long-term 25,000 250Long-term investments - 150,344Insurance trust deposit 27,260 27,683Fixed assets, net 42,934 52,125

Total assets 1,008,858$ 1,007,531

LIABILITIES AND NET ASSETS

Current liabilities:Accounts payable 17,009$ 25,608 Accrued payroll and related 98,687 86,278Deferred rent 27,799 42,637Other 13,723 9,340

Total current liabilities 157,218 163,863

Net assets:Unrestricted 691,697 775,769 Temporarily restricted 159,943 67,899

Total net assets 851,640 843,668

Total liabilities and net assets 1,008,858$ 1,007,531


AMARA PARENTING AND ADOPTION SERVICES Statement of Activities

Year ended December 31, 2013

Temporarily

Unrestricted Restricted TotalSupport and revenue:

Contributions 579,883$ 157,644 737,527 Foundation grants 203,000 - 203,000 In-kind contributions 14,023 - 14,023 United Way 101,030 - 101,030 Contracts 427,137 - 427,137 Client service fees 413,787 - 413,787 Sublease revenue, net of associated lease expense

of $43,074 2,359 - 2,359 Investment income 4,438 - 4,438 Other 1,135 - 1,135

1,746,792 157,644 1,904,436 Net assets released from restriction for future periods 65,600 (65,600) -

Total support and revenue 1,812,392 92,044 1,904,436

Expenses:Program services:

Adoption and Foster Care 1,233,211 - 1,233,211 The Voice for Permanence 110,919 - 110,919 Pregnancy and Parenting 187,404 - 187,404

Total program services 1,531,534 - 1,531,534 Supporting services:

Management and general 77,573 - 77,573 Fundraising 287,357 - 287,357

Total supporting services 364,930 - 364,930 Total expenses 1,896,464 - 1,896,464

Change in net assets (84,072) 92,044 7,972

Net assets at beginning of year 775,769 67,899 843,668

Net assets at end of year 691,697$ 159,943 851,640


AMARA PARENTING AND ADOPTION SERVICES Statement of Activities

Year ended December 31, 2012

Temporarily

Unrestricted Restricted TotalSupport and revenue:

Contributions 550,351$ 56,850 607,201 Foundation grants 301,000 - 301,000 In-kind contributions 15,503 - 15,503 United Way 73,928 - 73,928 Contracts 368,805 - 368,805 Client service fees 427,020 - 427,020 Sublease revenue, net of associated lease expense

of $46,084 2,975 - 2,975 Investment income 3,979 - 3,979 Other - - -

1,743,561 56,850 1,800,411 Net assets released from restriction for future periods 89,225 (89,225) -

Total support and revenue 1,832,786 (32,375) 1,800,411

Expenses:Program services:

Adoption and Foster Care 1,065,400 - 1,065,400 The Voice for Permanence 78,976 - 78,976 Pregnancy and Parenting 274,095 - 274,095

Total program services 1,418,471 - 1,418,471 Supporting services:

Management and general 83,737 - 83,737 Fundraising 250,431 - 250,431

Total supporting services 334,168 - 334,168 Total expenses 1,752,639 - 1,752,639

Change in net assets 80,147 (32,375) 47,772

Net assets at beginning of year 695,622 100,274 795,896

Net assets at end of year 775,769$ 67,899 843,668


AMARA PARENTING AND ADOPTION SERVICES Statement of Functional Expenses Year ended December 31, 2013

Program Services Supporting Services Adoption & The Voice Pregnancy ManagementFoster Care for Permanence & Parenting Total & General Fundraising Total Total

Salaries and related benefits 991,185$ 81,047 148,455 1,220,687 39,449 152,550 191,999 1,412,686 Contract labor 16,414 458 - 16,872 - 840 840 17,712 Program costs 4,097 - 1,033 5,130 - - - 5,130 Professional fees - - 4,054 4,054 13,104 - 13,104 17,158 Client assistance - - 393 393 - - - 393 Supplies 9,847 5,551 1,085 16,483 4,929 60,012 64,941 81,424 Marketing and public relations - 13,529 - 13,529 - 29,244 29,244 42,773 Telephone and technology 19,424 1,589 2,437 23,450 7,270 6,390 13,660 37,110 Printing - - - - 4,119 - 4,119 4,119 Postage and shipping 2,052 145 339 2,536 57 626 683 3,219 Travel 25,532 176 5,541 31,249 247 6,674 6,921 38,170 Dues and subscriptions 11,187 1,396 49 12,632 833 6,427 7,260 19,892 Taxes and licenses 8,553 - - 8,553 215 - 215 8,768 Occupancy 89,164 5,169 14,215 108,548 2,584 18,091 20,675 129,223 Insurance 21,483 206 2,558 24,247 103 719 822 25,069 Rental and maintenance 12,145 692 4,603 17,440 4,183 2,422 6,605 24,045 Depreciation and amortization 22,128 961 2,642 25,731 480 3,362 3,842 29,573

Totals 1,233,211$ 110,919 187,404 1,531,534 77,573 287,357 364,930 1,896,464


AMARA PARENTING AND ADOPTION SERVICES Statement of Functional Expenses Year ended December 31, 2012

Program Services Supporting Services Adoption & The Voice Pregnancy ManagementFoster Care for Permanence & Parenting Total & General Fundraising Total Total

Salaries and related benefits 837,206$ 54,974 211,793 1,103,973 36,274 136,717 172,991 1,276,964 Contract labor 24,385 - - 24,385 1,291 4,031 5,322 29,707 Program costs 4,238 - 1,888 6,126 - - - 6,126 Professional fees - - 14,617 14,617 12,586 - 12,586 27,203 Client assistance 52 - 1,061 1,113 - - - 1,113 Supplies 6,416 275 1,375 8,066 9,320 58,139 67,459 75,525 Marketing and public relations - 16,311 - 16,311 - 17,456 17,456 33,767 Telephone and technology 15,024 1,409 2,741 19,174 12,034 5,508 17,542 36,716 Printing - - - - 4,391 - 4,391 4,391 Postage and shipping 2,426 403 590 3,419 69 490 559 3,978 Travel 24,287 200 10,200 34,687 131 6,917 7,048 41,735 Dues and subscriptions 5,636 350 38 6,024 567 957 1,524 7,548 Taxes and licenses 9,909 - - 9,909 765 - 765 10,674 Occupancy 84,727 3,738 18,690 107,155 2,492 14,952 17,444 124,599 Insurance 19,543 152 2,548 22,243 101 607 708 22,951 Rental and maintenance 12,237 540 5,433 18,210 3,300 2,160 5,460 23,670 Depreciation and amortization 19,314 624 3,121 23,059 416 2,497 2,913 25,972

Totals 1,065,400$ 78,976 274,095 1,418,471 83,737 250,431 334,168 1,752,639

The accompanying notes are an integral part of these financial statements.

7


Statements of Cash Flows Increase (Decrease) in Cash and Cash Equivalents

Years ended December 31, 2013 and 2012

2013 2012

Cash flows from operating activities:Change in net assets 7,972$ 47,772 Adjustments to reconcile change in net assets

to cash provided by (used in) operating activities:Depreciation and amortization 29,573 25,972 (Increase) decrease in assets:

Accounts receivable 3,882 54,400 Pledges receivable (92,045) 31,850 Insurance trust deposit 423 (1,927) Prepaid and other assets 4,634 (8,880)

Increase (decrease) in liabilities:Accounts payable (8,599) (1,210) Accrued payroll and related 12,409 12,195 Deferred rent (14,838) (11,742) Other 4,382 2,113

Total adjustments (60,179) 102,771

Net cash provided by operating activities (52,207) 150,543

Cash flows from investing activities:Purchase of equipment (20,381) - (Purchase) sale of investments in CDs (1,132) (44,336)

Net cash provided by (used in) investing activities (21,513) (44,336) Net increase in cash and cash equivalents (73,720) 106,207

Cash and cash equivalents at beginning of year 583,312 477,105

Cash and cash equivalents at end of year 509,592$ 583,312

AMARA PARENTING AND ADOPTION SERVICES Notes To Financial Statements

Years ended December 31, 2013 and 2012

These notes are an integral part of the financial statements. 8

1. DESCRIPTION OF ACTIVITIES & SUMMARY OF ACCOUNTING POLICIES

Nature of Activities Following the vision of A Home for Every Child, Amara Parenting and Adoption Services (the Organization) has been serving children and families in the Puget Sound Region since 1921. With a focus on the child first; with highly trained staff and low caseloads; with a commitment to inclusiveness that embraces families of all types; and with its provision of high quality, individualized services through adoption finalization and beyond, the Organization has remained a leader in providing child welfare services to the community. The Organization is supported primarily from program service fees and contributions from the community.

At Amara, we partner with foster, adoptive, and birth parents to create and support stable, loving homes for children who need them. Since our founding in 1921 as Medina Baby Home, a traditional orphanage, Amara has served vulnerable children and families. While our services have evolved over the past 93 years to meet emerging and urgent needs, our focus on finding permanent homes for vulnerable children has never wavered. We proudly provide our services to everyone, regardless of marital status, religious beliefs, income level, education or sexual orientation. We create enduring families defined only by their propensity to love, care and support.

We serve children and families through the following programs:

Foster-Adoption: Amara finds loving adoptive homes for children in foster care and for infants who have been relinquished to Amara’s care. We educate, guide, and support adoptive parents so that they may sustain healthy and well-bonded families, capable of meeting the needs of vulnerable children.

Temporary Foster Care: Oftentimes, children in foster care need a safe, temporary home until they can return to their birth parents or until an adoptive home is found for them. Amara licenses and supports foster parents who can provide the compassion that these children need during a particularly vulnerable time in their lives.

Pregnancy and Parenting Counseling: Amara also offers free, non-judgmental pregnancy counseling to women facing an unplanned pregnancy. Amara's caring, experienced counselors offer emotional support, accurate and unbiased information about all options, referrals to other community resources, and encouragement toward stability and healing, no matter what path our clients decide to take.

Amara served 634 families and 193 children in 2013, and 596 families and 169 children in 2012.

In addition, Amara’s Voice for Permanence has played a strong role in developing a community-wide effort to improve outcomes for children in foster care, and to increase support for children in care and their caregivers. Amara is committed to being an active voice for permanence for children in foster care, and directs its communication efforts there.

Basis of Accounting The financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

AMARA PARENTING AND ADOPTION SERVICES Notes To Financial Statements, continued Years ended December 31, 2013 and 2012


1. DESCRIPTION OF ACTIVITIES & SUMMARY OF ACCOUNTING POLICIES, continued

Basis of Presentation The accompanying financial statements have been prepared in conformity with the disclosure and display requirements of the Presentation of Financial Statements for Not-for-Profit Entities Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification. This Topic establishes standards for external financial reporting by not-for-profit organizations and requires that resources be classified for accounting and reporting purposes into net asset classes according to donor imposed restrictions.

Accordingly, the net assets of the Organization have been reported as follows:

Unrestricted net assets are those currently available at the discretion of the board for use in the activities of the Organization.

Temporarily restricted net assets are those stipulated by donors for specific operating purposes.

Permanently restricted net assets are in the form of endowment or sustaining funds in which only the income from such funds may be expended. The Organization had no permanently restricted net assets at December 31, 2013 and 2012.

Net assets of the temporarily and permanently restricted class are created only by donor-imposed restrictions on the use of funds. All other net assets, including board-designated or appropriated amounts and are reported as part of the unrestricted class.

Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents For purposes of the statement of cash flows, the Organization considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents.

Investments Investments are comprised of certificates of deposit and are carried at fair value. Certificates of deposit held for investment that are not debt securities are reported as “short-term investments” if they have a remaining maturity of less than one year. Certificates of deposit with remaining maturities greater than one year are classified as “long-term investments”.

Receivables The Organization recognizes revenue as earned as services are provided. Accounts receivable are unsecured and are stated at the amount management expects to collect from outstanding balances. Pledges receivable are unconditional promises to give that are recognized as revenues or gains in the period received and as assets, decrease of liabilities, or expenses depending on the form of benefits received. Based on management’s assessment of the nature of the accounts and pledges receivable, the Organization has concluded that realization losses on balances outstanding at year end will be minimal, and has established their allowance for doubtful accounts at December 31, 2013 and 2012 accordingly.



1. DESCRIPTION OF ACTIVITIES & SUMMARY OF ACCOUNTING POLICIES, continued Fixed Assets Fixed assets are recorded at cost. Depreciation is computed using the straight-line method over estimated useful lives of ten years. Depreciation begins when the assets are placed in service. Repairs and maintenance of property and equipment are expensed as incurred. The Organization generally follows the practice of capitalizing expenditures for property and equipment in excess of $1,500. Depreciation and amortization expense for the years ended December 31, 2013 and 2012 was $29,573 and $25,972, respectively.

Donated Assets and Services Donations of property and equipment are recorded at their estimated fair market values at the date of receipt. The Organization recognizes donated services that create or enhance nonfinancial assets or that require specialized skills, which are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. For the years ended December 31, 2013 and 2012, $14,023 and $15,503 of donated services were included in the statement of activities, respectively.

Restricted and Unrestricted Support and Revenue Recognition Contributed support is recorded when cash is received or when ownership of donated assets is transferred. The Organization has adopted the Revenue Recognition section of the FASB Accounting Standards Codification Topic No. 958, Not-for-Profit Entities. In accordance with this Topic, contributions received are recorded as unrestricted, temporarily restricted or permanently restricted depending on the existence and/or nature of any donor restrictions.

Contributions received with donor stipulations that limit the use of the donated assets are reported as temporarily restricted. When a donor 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 in the statement of activities as net assets released from restrictions. Restricted resources, whose restrictions are met in the reporting period received, are recorded as unrestricted. Temporarily restricted net assets are restricted for future periods.

Functional Allocation of Expenses The costs of providing the various program services and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program and supporting services on the basis of benefits received.

Income Tax Status Pursuant to a letter of determination from the Internal Revenue Service, the Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and is classified as an organization other than a private foundation under Section 509(a)(1). Accordingly, no provision has been made for federal income tax in the accompanying financial statements. The Organization qualifies for the charitable contribution deduction under Section 170(b)(1)(A).

The Organization accounts for tax positions in accordance with the FASB Accounting Standards Codification Topic No. 740, Income Taxes. With few exceptions, the Organization is subject to federal and state income tax examinations by tax authorities for the prior three years. Management has reviewed the Organization’s tax positions and determined there were no uncertain tax positions as of December 31, 2013 and 2012.



1. DESCRIPTION OF ACTIVITIES & SUMMARY OF ACCOUNTING POLICIES, continued The Organization recognizes income tax related interest in interest expense and penalties in operating expenses. During the years ended December 31, 2013 and 2012, the Organization recognized no income tax related interest or penalties.

Date of Management’s Review Subsequent events have been evaluated through May 8, 2014, which is the date the financial statements were available to be issued.

2. CONCENTRATIONS

Financial instruments that potentially subject the Organization to concentrations of credit risk consist principally of deposits in excess of federally insured limits and receivables. The Organization periodically has cash deposits and certificates of deposit which are in excess of federally insured limits. The Organization has not experienced any losses in such accounts, and management believes it is not exposed to any significant credit risk on these accounts.

The Organization believes its acceptance policies minimize potential credit risk on its receivables.

In 2013 and 2012, respectively, 22 percent and 19 percent of the Organization’s revenues and support were provided by one government contract and were related to foster care services provided by the Organization.

3. PLEDGES RECEIVABLE

Pledges receivable of $158,862 and $66,817 at December 31, 2013 and 2012, primarily consisted of amounts due in the following year in support of the various programs of the Organization. Pledges receivable are reported net of a present value discount of $0. The Organization has provided an allowance for doubtful pledges of $1,082 and $1,083 as of December 31, 2013 and 2012, respectively.

Pledges receivable at December 31 are due as follows: 2013 2012

Due in less than one year $ 134,944 67,650 Due in one to five years 25,000 250 159,944 67,900 Less allowance for doubtful amounts (1,082) (1,083) Total pledges receivable, net $ 158,862 66,817



4. FIXED ASSETS Fixed assets consisted of the following at December 31, 2013 and 2012:

2013 2012

Tenant improvements 203,529$ 187,836 Furniture, equipment and software 26,253 21,565Less accumulated depreciation and amortization (186,848) (157,276)

42,934$ 52,125

5. CONTINGENCIES

Expenses incurred under certain grant programs are subject to audit by the granting agencies. If, as a result of such an audit, certain expenses incurred are determined to be non-reimbursable, the Organization may be liable for repayment of disallowed expenses previously claimed or received. Amounts disallowed, if any, would be recorded as a liability and expense at the time such amounts can first be reasonably determined, normally upon notification of the examination results of the granting agency.

6. LEASE COMMITMENT

The Organization is committed to lease space under an operating lease agreement that expires on June 30, 2015. The lease requires the Organization to pay all executory costs such as taxes, maintenance, and insurance. Total occupancy expense, net of sublease related expenses, under the lease was $129,223 and $124,599 for the years ended December 31, 2013 and 2012, respectively.

Future minimum lease payments for the years ending December 31 are as follows, exclusive of sublease rental income commitments:

SubleaseYear Ending Gross Revenue Net

2014 161,179$ (25,545) 135,634 2015 81,388 (375) 81,013

323,955$ (25,920) 298,035

7. RETIREMENT PLAN During 2010, the Organization established a 401(k) type pension plan for all eligible employees. Employees are eligible to participate in the plan if they have completed 1,000 hours of service during a calendar year. Generally, employees can defer up to 15% of their gross earnings, not to exceed federal limitations. The Plan allows a discretionary match and the Organization paid $21,232 and $13,537 into the plan during 2013 and 2012, respectively, for matching contributions.



8. SUBSEQUENT EVENT

Subsequent to December 31, 2013, the Organization entered into an agreement to purchase a real property parcel located in Seattle, Washington. The Organization’s existing lease expires on June 30, 2015. The Organization’s management believes the long term fiscal health of the Organization is best served by purchasing a building and land suitable for the current and potential needs of Amara. The Organization paid an initial refundable deposit of $50,000 as earnest money. Completion of the purchase transaction is contingent upon various conditions, an environmental review, Board of Director approval, and subject to terms as specified in the purchase and sale agreement. If the sale occurs, it will happen in the 2014 calendar year.

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AMARA PARENTING AND ADOPTION SERVICES … parenting and adoption services independent auditors’ report and financial statements december 31, 2013 and 2012