TRANSACTIONS OF THE AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION, VOL. 130, 2019
ACCOUNTANTS' COMPILATION REPORT
THE BOARD OF TRUSTEES
AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION
Management is responsible for the accompanying financial statements of the American Clinical and Climatological Association (a nonprofit organization), which comprise the statement of financial position as of December 31, 2017, the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements, in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements.
The supplementary information on pages 13 and 14 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management. The supplementary information was subject to our compilation engagement. We have not audited or reviewed the supplementary information and do not express an opinion, a conclusion, nor provide any assurance on such information.
AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION BATON ROUGE, LOUISIANA STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2017 (SEE ACCOUNTANTS' COMPILATION REPORT)
| ASSETS | |
|---|---|
| CURRENT ASSETS | |
| Cash and cash equivalents | $ 29,154 |
| Receivable for overpayment from hotel | 21,051 |
| Total current assets | 50,205 |
| INVESTMENTS | 632,031 |
| OTHER ASSETS | |
| Deposits | 17,500 |
| Total assets | $699,736 |
| LIABILITIES AND NET ASSETS | |
| LIABILITIES | |
| Accounts payable | $ 1,878 |
| NET ASSETS | |
| Unrestricted net assets: | |
| Designated by the Board of Trustees: | |
| Endowment Fund | 216,043 |
| Metzger Fund | 56,260 |
| Woodward Fund | 87,950 |
| Undesignated | 134,712 |
| Total unrestricted net assets | 494,965 |
| Temporarily restricted net assets | 117,506 |
| Permanently restricted net assets | 85,387 |
| Total net assets | 697,858 |
| Total liabilities and net assets | $699,736 |
The accompanying notes are an integral part of this financial statement.
AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION BATON ROUGE, LOUISIANA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2017 (SEE ACCOUNTANTS' COMPILATION REPORT)
| Unrestricted | Temporarily Restricted | Permanently Restricted | Total | |
|---|---|---|---|---|
| REVENUES AND SUPPORT | ||||
| Dues and other support | $ 70,212 | $ - | $ - | $ 70,212 |
| Registration and conference fees | 129,000 | - | - | 129,000 |
| Net investment return | 68,781 | 26,191 | 1,781 | 96,753 |
| 267,993 | 26,191 | 1,781 | 295,965 | |
| Net assets released from purpose restrictions | 7,179 | (7,179) | - | - |
| Total revenues and support | 275,172 | 19,012 | 1,781 | 295,965 |
| EXPENSES | ||||
| Program services: | ||||
| Meeting expenses | 205,029 | - | - | 205,029 |
| Total program services | 205,029 | - | - | 205,029 |
| Support services: | ||||
| Administrative support | 12,520 | - | - | 12,520 |
| Office supplies and postage | 1,735 | - | - | 1,735 |
| Archive expense | 1,697 | - | - | 1,697 |
| Professional fees | 7,000 | - | - | 7,000 |
| Total support services | 22,952 | - | - | 22,952 |
| Total expenses | 227,981 | - | - | 227,981 |
| CHANGE IN NET ASSETS | 47,191 | 19,012 | 1,781 | 67,984 |
| Net assets - beginning of period | 447,774 | 98,494 | 83,606 | 629,874 |
| Net assets - end of period | $494,965 | $117,506 | $85,387 | $697,858 |
The accompanying notes are an integral part of this financial statement.
AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION BATON ROUGE, LOUISIANA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2017 (SEE ACCOUNTANTS' COMPILATION REPORT)
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| Change in net assets | $ 67,984 |
| Adjustments to reconcile change in net assets to net cash provided by operating activities: | |
| Realized gains on investments - net | (12,017) |
| Unrealized gains on investments - net | (53,944) |
| Decrease in receivables | 36,611 |
| Increase in payable | 876 |
| Increase in deposits | (7,500) |
| Net cash provided by operating activities | 32,010 |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| Proceeds from sales of investments | 42,760 |
| Purchases of investments | (30,642) |
| Net cash provided by investing activities | 12,118 |
| CASH FLOWS FROM FINANCING ACTIVITIES | |
| Change in disbursements in excess of cash balances | (14,974) |
| Net cash used in financing activities | (14,974) |
| Net change in cash and cash equivalents | 29,154 |
| Cash and cash equivalents - beginning of year | - |
| Cash and cash equivalents - end of year | $ 29,154 |
The accompanying notes are an integral part of this financial statement.
AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION
BATON ROUGE, LOUISIANA NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Organization and Nature of Activities
The American Clinical and Climatological Association (the Association) is a non-profit organization which provides an annual forum for the exchange of scientific information between involved professionals from many sectors of the medical community, including representatives from the practicing sector, academic medicine, medical research, national physicians' organizations, national educational organizations and various medically-involved governmental agencies. Presentations of these annual proceedings are published worldwide.
Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the Unites States of America (GAAP), which is contained in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC).
Financial Statement Presentation
The Association is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets.
Temporarily restricted net assets are those whose use by the Association has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained by the Association in perpetuity.
Cash and Cash Equivalents
Cash equivalents consist of short-term, highly liquid investments which are readily convertible into cash within ninety (90) days or less from the date of purchase and consist of demand deposits and money market accounts. The Association, at times, may have deposits in excess of FDIC insured limits. Management, however, believes the credit risk associated with these deposits is minimal.
Support and Revenue
The Association receives its support primarily from active member dues and returns on investments. Additional revenue is received from emeritus dues, outside book sales or other contributions. Dues are unrestricted and are recognized over the calendar year to which they relate.
Investments
Investments in marketable equity securities with readily determinable values are stated at fair value. Investment returns are allocated based on the average balances of the individual funds. Allocated investment returns include interest income, dividends, realized gains and losses and unrealized gains and losses. Purchases and sales of investments are recorded on a trade-date basis; security transactions awaiting settlement are recorded as receivable (sales) or payable (purchases). Interest is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Investment income and gains restricted by donors are reported as increases in unrestricted net assets if the restrictions are met (either a stipulated time period ends or a purpose restriction is accomplished) in the reporting period in which the income and gains are recognized.
Donated investments are recorded at their fair value at the date of receipt, which is then treated as cost. Realized gains and losses on dispositions are based on the net proceeds and the adjusted cost basis of the securities sold, using the specific identification method. Unrealized gains and losses are recognized in the Association's statement of activities.
Contributions
Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence or nature of any donor restrictions. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. 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.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Income Taxes
The Association was organized exclusively for education and scientific purposes and is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and, therefore, has made no provision for federal income taxes in the accompanying financial statements.
The Association adopted the accounting guidance related to accounting for uncertainty in income taxes which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions. Management does not believe the Company has any uncertain tax positions. The statute of limitations for the examination of the Association's tax returns is generally three years from the due date of the tax return, including extensions.
Designated Funds
If the Board of Trustees (the Board) specifies a purpose where none has been stated by the original donor, such funds are classified as designated funds. Since these funds resulted from an internal designation and are not donor-restricted, they are classified and reported as unrestricted net assets. Also, see Note 4. The Board has designated funds for the following purposes:
Endowment Fund - established to account for undesignated contributions received by the Association. Use of the resources is determined annually by the Board.
Metzger Fund - established in 1960 to be used for purposes considered worthwhile by the Board, generally for expenses incurred by lecturers.
Woodward Fund - established in 1993 by a gift from Theodore Woodward. The unrestricted funds will be used to pay for an annual award to the lecturer with the best presentation of clinical skills.
Accounting Pronouncements Issued But Not Yet Adopted
The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, to update its revenue recognition standard to clarify the principles of recognizing revenue and eliminate industry-specific guidance as well as help financial statement users better understand the nature, amount, timing, and uncertainty of revenue that is recognized. This standard will be effective for periods beginning after December 15, 2018.
On August 18, 2016, FASB issued ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. Under the ASU, the number of net asset classes is decreased from three to two; enhanced disclosure of underwater endowments are required; reporting of expenses by function and nature, as well as an analysis of expenses by both function and nature is required; and qualitative information in the notes to the financial statements on how it manages its liquid available resources and liquidity risk is required. This ASU will be effective for the Association for year ending December 31, 2018. Early application of the standard is permitted.
In June 2018, the FASB issued ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, to clarify and improve current guidance about whether a transfer of assets (or the reduction, settlement, or cancellation of liabilities) is a contribution or exchange transaction. This ASU will be effective for the Association for year ending December 31, 2018.
The Association is currently evaluating the impact of these standards.
2. Investments
The asset allocation of the Association's portfolio involves exposure to a diverse set of markets which involve various risks such as interest rate risk, market risk, and credit risk. The Association believes that the value of its investments may, from time to time, fluctuate substantially as a result of these risks. Investments at December 31, 2017, are summarized as follows:
| Cost Basis | Unrealized Appreciation | Estimated Fair Value | ||
|---|---|---|---|---|
| Mutual funds: | ||||
| Bond Fund of America | $ 50,919 | $ 319 | $ 51,238 | |
| New Perspective Fund | 23,601 | 10,086 | 33,687 | |
| Small Cap World | 61,755 | 22,131 | 83,886 | |
| Capital Income Builder | 70,432 | 10,915 | 81,347 | |
| Cap World Bond Fund | 32,982 | 1,120 | 34,102 | |
| Fundamental Investors | 28,318 | 11,575 | 39,893 | |
| Growth Fund of America | 39,098 | 13,738 | 52,836 | |
| Income Fund of America | 77,017 | 14,335 | 91,352 | |
| American Balanced Fund | 95,906 | 67,784 | 163,690 | |
| Total investments | $480,028 | $152,003 | $632,031 |
The following schedule summarizes the net investment return and its classification in the statement of activities for the year ended December 31, 2017:
| Unrestricted | Temporarily Restricted | Permanently Restricted | Total | |
|---|---|---|---|---|
| Interest and dividends | $21,890 | $ 8,336 | $ 567 | $ 30,793 |
| Realized gains on investments - net | 8,543 | 3,253 | 221 | 12,017 |
| Unrealized gains - net | 38,348 | 14,602 | 993 | 53,943 |
| Net investment return | $68,781 | $26,191 | $1,781 | $ 96,753 |
3. Fair Value Measurements
The Association uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer of a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date. Fair value is best determined based upon quoted market prices. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. GAAP also establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. These levels are as follows:
Level 1 — Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include investment securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2 — Valuation is based on inputs other than quoted prices included within level l that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 — Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.
The Association's investments consist of mutual funds, which are measured at fair value on a recurring basis according to quoted market prices available from actively traded exchanges and, therefore, meet Level 1 criteria.
| Level 1 | Level 2 | Level 3 | |
|---|---|---|---|
| Mutual funds | $632,031 | $ - | $ - |
4. Endowed Net Assets
The Association's endowed net assets consist of individual funds established for a variety of purposes. Endowed net assets include both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments (See Note 1). As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions.
The Wilson Fund was established in 1936 to be used for the expenses for the Gordon Wilson Lectureship. Expenses include honorarium and travel expenses of the lecturer. Temporarily restricted funds received are for specific purposes and are released from restriction when that particular need or program occurs.
In January 2009, the Association received donor-restricted funds in the amount of $75,000, establishing the Bert and Peggy DuPont Lecture Endowment Fund (the DuPont Fund), to remain in perpetuity. The annual spending allocation, which is restricted to 5 percent of the inflation-adjusted corpus, can be used in support of an annual lecture or for support of the Association's expenses.
The DuPont Fund's spending policy dictates that no portion of the inflation-adjusted corpus calculated on an annual basis, as defined by the donors, is to be allocated for spending. The amounts in excess of the inflation-adjusted corpus which are allocated to the DuPont Fund are classified as temporarily restricted net assets and may be subject to the annual spending allocation.
The Association has established investment and spending policies with the objective of maintaining the purchasing power of its assets and to provide a stable level of support. The Association has a diversified investment allocation that places emphasis on equity-based investments to achieve its long-term return objectives, through both capital appreciation (realized and unrealized) and current yield (interest and dividends). To achieve these objectives, the Association's investment allocation strategy is reviewed periodically and adjusted to target a total return that covers inflation, administrative expenses, and spending allocations, while minimizing volatility.
Changes in endowed net assets for the year ended December 31, 2017 were as follows:
| Unrestricted (Endowment, Metzger, Woodward) | Temporarily Restricted (Wilson, DuPont) | Permanently Restricted (DuPont) | Total | |
|---|---|---|---|---|
| Endowment net assets, beginning of year | $ 326,395 | $ 98,494 | $ 83,606 | $ 508,495 |
| Investment returns: | ||||
| Investment income | 22,216 | 11,589 | 788 | 34,593 |
| Net appreciation | 27,994 | 14,602 | 993 | 43,589 |
| Other revenues and support | 145,425 | - | - | 145,425 |
| Appropriation of endowment assets for expenditure | (161,777) | (7,179) | - | (168,956) |
| Endowment net assets, end of year | $ 360,253 | $ 117,506 | $ 85,387 | $ 563,146 |
| Donor-restricted endowment | $ - | $ 117,506 | $ 85,387 | $ 202,893 |
| Board-designated endowment | 360,253 | - | - | 360,253 |
| Total | $ 360,253 | $ 117,506 | $ 85,387 | $ 563,146 |
5. Temporarily Restricted Net Assets
Temporarily restricted net assets at December 31, 2017, and net assets released from donor restrictions by satisfaction of the restricted purposes specified by the donors during the year ended December 31, 2017, were as follows:
| Temporarily Restricted Net Assets | Released from Donor Restrictions | |
|---|---|---|
| DuPont Fund | $ 37,823 | $2,500 |
| Wilson Fund | 79,683 | 4,679 |
| Total | $117,506 | $7,179 |
6. Subsequent Events
The Association has evaluated subsequent events through the date that the financial statements were available to be issued, November 6, 2018, and determined that no events occurred that required additional disclosure. No events occurring after this date have been evaluated for inclusion in these financial statements.
AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION BATON ROUGE, LOUISIANA SUPPLEMENTARY INFORMATION SCHEDULE OF INVESTMENTS DECEMBER 31, 2017 (SEE ACCOUNTANTS' COMPILATION REPORT)
| Operating Fund | Endowment Fund | Metzger Fund | Woodward Fund | Wilson Fund | DuPont Fund | Total All Funds | ||
|---|---|---|---|---|---|---|---|---|
| INVESTMENTS (AT ESTIMATED FAIR VALUE) | ||||||||
| Shares | ||||||||
| Bond Fund of America | 3,974.994 | $ 5,584 | $ 17,514 | $ 4,561 | $ 7,130 | $ 6,460 | $ 9,988 | $ 51,237 |
| New Perspective Fund | 780.519 | 3,672 | 11,515 | 2,999 | 4,688 | 4,247 | 6,567 | 33,688 |
| Small Cap World | 1,503.327 | 9,143 | 28,674 | 7,467 | 11,673 | 10,576 | 16,353 | 83,886 |
| Capital Income Builder | 1,294.926 | 8,866 | 27,806 | 7,241 | 11,320 | 10,256 | 15,858 | 81,347 |
| Cap World Bond Fund | 1,707.671 | 3,717 | 11,657 | 3,036 | 4,745 | 4,299 | 6,648 | 34,102 |
| Fundamental Investors | 641.266 | 4,348 | 13,636 | 3,551 | 5,551 | 5,029 | 7,777 | 39,892 |
| Growth Fund of America | 1,066.523 | 5,759 | 18,061 | 4,703 | 7,352 | 6,661 | 10,300 | 52,836 |
| Income Fund of America | 3,908.952 | 9,956 | 31,226 | 8,132 | 12,712 | 11,517 | 17,808 | 91,351 |
| American Balanced Fund | 6,029.112 | 17,840 | 55,954 | 14,570 | 22,779 | 20,638 | 31,911 | 163,692 |
| Total | $ 68,885 | $ 216,043 | $ 56,260 | $ 87,950 | $ 79,683 | $ 123,210 | $ 632,031 | |
AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION BATON ROUGE, LOUISIANA SUPPLEMENTARY INFORMATION SCHEDULE OF MEETING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2017 (SEE ACCOUNTANTS' COMPILATION REPORT)
| Banquet charges | $132,479 |
| Band and music | 8,695 |
| Audio visual | 9,609 |
| Meeting and travel expenses | 24,001 |
| Publishing | 28,603 |
| Awards | 1,642 |
| $205,029 |
