NORTH CAROLINA BOARD OF NURSING
FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2014 AND 2013
I ·JBERNARD
~ROBINSON
&Company, LLP.
Certified Public Accountants and Advisors Since 194?'
Greensboro, NC I Raleigh, NC I Winston-Salem, NC
Member of a Global Associatio· n, ~. D-K
of Independent Accounting '.:;;;JIJ:: r and Consultancy Firms .,JUf.Ot!C"UttU.\~t~ ••
NORTH CAROLINA BOARD OF NURSING
Table of Contents
Page No.
Management's Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 3
Independent Auditor's Report.................................................................. 4- 5
Financial Statements
Statements of Net Position ............................................................... . 6
Statements of Revenues, Expenses and Changes in Net Position ................... . 7
Statements of Cash Flows ................................................................ . 8
Notes to Financial Statements ........................................................... . 9- 16
Supplementary Information
Statements of Revenues, Expenses and Changes in Net Position-
Actual and Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 - 18
NORTH CAROLINA BOARD OF NURSING
Management's Discussion and Analysis
As management of the North Carolina Board of Nursing ("the Board") we offer this discussion and
analysis of the financial position for the fiscal years ended June 30, 2014 and 2013 with emphasis on
the current year. This discussion and analysis is designed to provide an overview of the Board's
activities that have a financial impact and to present the change in the Board's financial position. This
discussion should be read along with the financial statements and notes to the financial statements.
Financial Highlights
Assets of the Board totaled $17,801,389, an increase of $581,734 from the prior year. Liabilities
totaled $9,027,108, a decrease of $450,530 due primarily to reduction of mortgage debt.
Net position was $8,774,281, of which $5,686,865 reflects equity in capital assets. An additional
$2,335,624 is designated for risk management, i.e. loss due to litigation, disaster preparedness and
succession planning.
Operating revenues totaled $8,282,108, an increase of $286,215 or 3.6%, primarily due to an increase
in the number oflicensees renewing for a two-year cycle and increases in the number of newly licensed
nurses as a result of examination and nurses from other states applying for licensure in North Carolina.
Also, there was an increase in the number of advanced practice registered nurses seeking approval to
practice.
Operating expenses totaled $7,523,367, an increase of $94,981 or 1.3%.
Non-operating revenues totaled $273,523, an increase of $467,111, or 241.3% due to an increase in
value of the Board's investment portfolio.
Overview of the Basic Financial Statements
This discussion and analysis is an introduction to the Board's basic financial statements, which are
comprised of the following components: 1) Statements of Net Position, 2) Statements of Revenues,
Expenses and Changes in Net Position, 3) Statements of Cash Flows, and 4) Notes to Financial
Statements. Supplementary schedules are included which compare actual to budget for the current and
prior year. These financial statements are prepared in accordance with Governmental Accounting
Standards Board (GASB) principles.
Overall, the Statement of Net Position provides information relative to the Board's ability to meet its
current and long-term financial obligations.
Basic Financial Statements
The financial statements present information about the Board using accounting methods similar to
those used by private businesses. The major difference being that the focus of governmental reporting
is fiscal and operational accountability to assure that sufficient resources are available to cover cost of
providing services over the long term as opposed to the market-driven focus reported in the private
sector.
The Statements of Net Position present assets (current and noncurrent), liabilities (current and
noncurrent), and net position (total assets less total liabilities) and provide a comparative analysis for
the years ended June 30, 2014 and June 30, 2013.
Page 1
NORTH CAROLINA BOARD OF NURSING
Management's Discussion and Analysis
Basic Financial Statements (Continued)
The Statements of Revenues, Expenses and Changes in Net Position present the activities that show the
change in net position. Operating revenues are received from services provided, primarily initial and
renewal of nurse licensing fees, nurse aide II registry fees and advanced practice- RN revenue. Non­operating
revenue is derived from earnings on investments. Operating expenses are used to acquire
goods and services in return for the operating revenues in order to carry out the mission of the Board.
Statements of Cash Flows present information relative to the sources and uses of cash for operating
activities, capital activities and investing activities. The Statements of Cash Flows are useful in
analyzing the short-term viability of the Board; i.e., its ability to meet its fmancial obligations.
The following presents condensed financial information on the operations of the Board:
Years Ended June 30,
2014 2013 2012
Current assets $ 1,468,704 $ 1,394,148 $ 2,087,757
Noncurrent asset 9,075,838 8,287,459 7,433,859
Net capital assets 7,256,847 7,538,048 7,762,371
Total assets 17,801,389 17,219,655 17,283,987
Current liabilities 3,786,455 3,664,370 3,652,016
Noncurrent liabilities 5,240,653 5,813,268 6,263,873
Total liabilities 9,027,108 9,477,638 9,915,889
Net investment in capital assets 5,686,865 5,299,355 5,121,845
Unrestricted 3,087,416 2,442,662 2,246,253
Total net position $ 8,774,281 $ 7,742,017 $ 7,368,098
Operating revenues $ 8,282,108 $ 7,995,893 $ 7,805,033
Operating expenses 7,523,367 7,428,386 7,240,563
Operating income 758,741 567,507 564,470
Non -operating revenues (expenses) 273,523 (193,588) 154,140
Changes in net position $ 1,032,264 $ 373,919 $ 718,610
Factors Impacting Future Periods
The Board's fmancial position remains strong. The main factor having an economic impact on future
periods is the number of nurses that renew their biennial license. The primary revenue source consists
of renewal and reinstatement fees paid by licensed nurses which accounts for 75.2% of operating
revenue. The number of licensees has shown a steady increase and this trend is expected to continue
based on the number of newly licensed nurses by the Board per year.
Each year, subject to availability of funds, the Board will make a 13th mortgage payment of an amount
up to $500,000. This additional payment will greatly shorten the term of the loan and reduce the cost
ofthe loan.
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NORTH CAROLINA BOARD OF NURSING
Management's Discussion and Analysis
Contacting the Board's Management
This fmancial report is designed to provide a general overview of the Board's finances and to
demonstrate the Board's accountability for the funds it receives and expends. If you have any
questions about this report or need additional information, contact North Carolina Board of Nursing,
P.O. Box 2129, Raleigh, NC 27602 or 919-782-3211.
Page3
I _] BERNARD
~ROBINSON
&Company, LL.P.
Greensboro, NC I Raleigh, NC I Winston-Salem, NC
----------I
Certified Public Accountants and Advisors Since I 94 7
Independent Auditor's Report
Members of the Board
North Carolina Board of Nursing
Raleigh, North Carolina
Report on the Financial Statements
We have audited the accompanying fmancial statements of the North Carolina Board of Nursing (the
"Board"), an enterprise fund of the State ofNorth Carolina, which comprise the statements of net position as
of June 30, 2014 and 2013, and the related statements of revenues, expenses and changes in net position,
and cash flows for the years then ended, and the related notes to the fmancial statements, which collectively
comprise the Board's basic financial statements_
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these basic fmancial 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 basic fmancial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these basic fmancial 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 audits to obtain reasonable assurance about
whether the basic fmancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
basic fmancial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the basic fmancial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the Board's
preparation and fair presentation of the basic fmancial 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 Board'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 basic fmancial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the basic fmancial statements referred to above present fairly, in all material respects, the
fmancial position of the North Carolina Board of Nursing as of June 30, 2014 and 2013, and its changes in
fmancial position and cash flows for the years then ended in accordance with accounting principles
generally accepted in the United States of America.
Page4
Emphasis of Matter
As discussed in Note 1, these fmancial statements are presented only for the North Carolina Board of
Nursing and do not purport to and do not present fairly the fmancial position of the State of North Carolina
as of June 30, 2014 and 2013, nor the changes in its fmancia1 position and its cash flows thereof for the
years then ended in conformity with accounting principles generally accepted in the United States of
America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management's
Discussion and Analysis, on pages 1 - 3, be presented to supplement the basic fmancial statements. Such
information, although not a part of the basic fmancial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of fmancial reporting for placing the
basic fmancial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management about the
methods of preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit
of the basic fmancial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide
any assurance.
Report on Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the fmancial statements as a whole.
The accompanying supplementary schedules of budget and actual - revenues, expenses, and changes in net
position, on pages 1 7 - 18, is presented for purposes of additional analysis and is not a required part of the
fmancial statements. Such information was derived from and relates directly to the underlying accounting
and other records used to prepare the financial statements. That information has been subjected to the
auditing procedures applied in the audits of the fmancial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the fmancial statements or to the fmancial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, that information is fairly stated in all material respects in relation to the fmancial
statements as a whole.
Raleigh, North Carolina
October 21, 2014
PageS
------------I [ ,~--- -_--_---
NORTH CAROLINA BOARD OF NURSING
Statements of Net Position
June 30, 2014 and 2013
2014 2013
ASSETS:
Current assets:
Cash $ 1,161,582 $ 919,541
Accrued interest receivable 42,637 46,320
Accounts receivable 11,379 12,979
Prepaid expenses and other assets 73,109 63,295
Current portion of investments 179,997 352,013
Total current assets 1,468,704 1,394,148
Non-current assets:
Investments 9,017,709 8,250,894
Deferred compensation investments 58,129 36,565
Total noncurrent assets 9,075,838 8,287,459
Capital assets, net of depreciation 7,256,847 7,538,048
Total assets 17,801,389 17,219,655
LIABILITIES:
Current liabilities:
Accounts payable and accrued liabilities 228,171 169,931
Current portion of accrued vacation 11,507
Current portion of unearned revenues 3,370,697 3,318,305
Current portion of note payable 187,587 164,627
Total current liabilities 3,786,455 3,664,370
Noncurrent liabilities:
Deferred compensation liability 58,129 36,565
Accrued vacation 429,432 449,849
Unearned revenues 3,370,697 3,252,788
Note payable 1,382,395 2,074,066
Total noncurrent liabilities 5,240,653 5,813,268
Total liabilities 9,027,108 9,477,638
NET POSITION:
Invested in capital assets 5,686,865 5,299,355
Unrestricted net assets 3,087,416 2,442,662
Total net position $ 8,774,281 $ 7,742,017
See Notes to Financial Statements
Page 6
NORTH CAROLINA BOARD OF NURSING
Statements of Revenues, Expenses, and Changes in Net Position
Years Ended June 30, 2014 and 2013
2014 2013
Operating revenues:
License renewals $ 6,032,868 $ 5,900,183
Examination fees 528,444 471,262
Reinstatements 198,944 204,508
Endorsements - in-state 795,609 752,935
Verifications- out-of-state 3,160 2,705
Mailing labels 59,470 42,638
Hearing and settlement fees 4,800 5,100
Nurses aide registry fees 229,199 233,174
APRN revenue 346,819 300,445
Other operating income 82,795 82,943
Total operating revenues 8,282,108 7,995,893
Operating expenses:
Salaries and related benefits 5,597,882 5,433,817
Operations 1,697,865 1,763,598
Elections 4,700 4,900
Conferences and conventions 86,820 106,273
Board meetings 39,555 40,679
Hearings 21,201 20,237
Committee meetings 47,910 29,762
Contribution to Foundation 10,000 10,000
Other regulatory services 17,434 19,120
Total operating expenses 7,523,367 7,428,386
Operating income 758,741 567,507
Non-operating revenues (expenses):
Net investment income (loss) 342,412 (107,822)
Interest expense (68,889) (85,766)
Total non-operating revenues (expenses) 273,523 (193,588)
Changes in net position 1,032,264 373,919
Net position- beginning of year 7,742,017 7,368,098
Net position- end of year $ 8,774,281 $ 7,742,017
See Notes to Financial Statements
Page 7
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NORTH CAROLINA BOARD OF NURSING
Statements of Cash Flows
Years Ended June 30,2014 and 2013
2014 2013
Cash flows from operating activities:
Cash received from fees $ 8,454,009 $ 8,085,914
Cash payments to employees for services {5,629,806) (5,411,569)
Cash payments for operating expenses (1,585,820) (1,883,149)
Net cash provided by operating activities 1,238,383 791,196
Cash flows from capital and financing activities:
Principal payments on note (668,711) (401,834)
Interest payments on note (68,889) (85,766)
Acquisition of capital assets (10,038) (55,000)
Net cash used in capital and financing activities (747,638) (542,600)
Cash flows from investing activities:
Purchases of investments (2,861,302) ( 4,871 ,527)
Sales of investments 2,364,309 4,685,991
Net investment income 248,289 188,164
Net cash provided by (used in) investing activities (248,704) 2,628
Increase in cash 242,041 251,224
Cash - beginning of year 919,541 668,317
Cash- end of year $ 1,161,582 $ 919,541
Reconciliation of operating income to net cash
provided by operating activities:
Operating income $ 758,741 $ 567,507
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 291,239 279,325
Changes in assets and liabilities:
Accounts receivable 1,600 2,945
Prepaid expenses and other assets {9,814) (2,676)
Deferred compensation investments (21,564) (19,488)
Accounts payable and accrued liabilities 58,240 (165,229)
Deferred compensation liability 21,564 19,488
Accrued vacation (31,924) 22,248
Unearned revenues 170,301 87,076
Total adjustments 479,642 223,689
Net cash provided by operating activities $ 1,238,383 $ 791,196
See Notes to Financial Statements
Page 8
NORTH CAROLINA BOARD OF NURSING
Notes to Financial Statements
NOTE 1 -NATURE OF ACTIVITJES AND SIGNIFICANT ACCOUNTING POLICJES
Description of Organization
The North Carolina Board of Nursing (the "Board") is an independent State agency. It is an occupational
licensing board and is authorized by Chapter 90 of the North Carolina General Statutes. The Governor of
the State ofNorth Carolina appoints one ofthe 14 board members and the General Assembly appoints two
members. The remaining 11 members are elected by nurses holding active licenses to practice in the State
of North Carolina. All of the members are subject to the State Government Ethics Act.
The Board's function is to maintain minimum standards of nursing care through the examination and
licensure of all who engage in the practice of nursing and to monitor nursing education programs. The
Board's operations are funded through license renewal fees and various other fees.
Financial Reporting Entity
The concept underlying the definition of the financial reporting entity is that elected officials are
accountable to their constituents for their actions. As required by accounting principles generally accepted
in the United States of America (GAAP), the financial reporting entity includes both the primary
government and all of its component units. An organization other than a primary government serves as a
nucleus for a reporting entity when it issues separate financial statements. The accompanying financial
statements present all funds and activities for which the Board is responsible.
For financial reporting purposes, the Board is a nonmajor enterprise fund of the primary government of the
State of North Carolina and is reported as such in the State's Comprehensive Annual Financial Report
("CAFR"). These financial statements for the Board are separate and apart from those ofthe State of North
Carolina and do not present the financial position of the State nor changes in the State's financial position
and cash flows.
Basis of Presentation
The accompanying basic financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America as prescribed by Governmental Accounting Standards
Board ("GASB").
Proprietary funds are used to account for operations that are financed and operated in a manner similar to
private business enterprises where the intent of the governing body is that the cost of providing goods or
services to the general public on a continuing basis be financed or recovered primarily through user
charges.
The basic financial statements of the Board are prepared using the economic resource measurement focus
and the accrual basis of accounting. The economic measurement focus measures all assets that are
available to the entity, not only cash or soon to be cash assets. Both long-term assets and long-term
liabilities are measured, and depreciation is recorded as a cost of operations. Under the accrual basis of
accounting, revenues are recognized when earned, and expenses are recorded when a liability has been
incurred, regardless of the timing of the cash flows.
The Board classifies its revenues as operating or non-operating in the accompanying Statements of
Revenues, Expenses, and Changes in Net Position. Operating revenues and expenses generally result from
providing services that are necessary to the Board's principal ongoing operations. Operating revenues
include activities that have characteristics of exchange transactions and consist primarily of examination
and license fees. Operating expenses are all expense transactions incurred other than those related to
capital and noncapital financing or investing activities as defmed by GASB Statement No. 9, Reporting
Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities that Use
Proprietary Fund Accounting.
Page9
NORTH CAROLINA BOARD OF NURSING
Notes to Financial Statements
NOTE 1 -NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Accounting
Operating revenues and expenses consist of those revenues and expenses that result from the ongoing
principal operations of the Board. Other revenues and expenses are classified as non-operating in the
financial statements.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Board considers all highly liquid investments with an
original maturity of three months or less to be cash.
Investments
Investments consist of money market funds, government and corporate bonds, mutual funds, and
certificates of deposit held in a brokerage account. Money market funds are shown as current.
Investments are reported at fair value. The certificates of deposit are also reported at fair market value,
which is cost plus accrued interest to date.
Accounts Receivable
Accounts receivable is comprised of administrative hearing and settlement fees due from licensees.
Management uses the direct write off method for uncollectible amounts because it closely approximates
the expense under the allowance method.
Capital Assets
Capital assets are recorded at cost at the date of acquisition or fair market value at the date of donation in
the case of gifts. Capital assets that have a cost over $5,000 and are not considered software are
capitalized and are depreciated using the straight-line method over their useful lives. Capital assets that
are considered software and have a total installation cost over $500,000 are capitalized and are depreciated
using the straight-line method over their useful lives.
When an asset is disposed of, the cost of the asset and the related accumulated depreciation are removed
from the financial records. Any gain or loss on disposition is reflected in non-operating revenue or
expense for the period.
Long-Lived Assets
Long-lived assets to be held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the related carrying amount may not be recoverable. When required,
impairment losses on assets to be held and used are recognized based on the excess of the asset's carrying
amount over the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of
carrying amount or fair value less cost to sell.
Accrued Vacation Pay
The vacation policy of the Board provides for the accumulation of up to 40 days earned vacation leave
with such leave being fully vested when earned. Accumulated earned vacation at June 30, 2014 and 2013,
is $429,432 and $461,356, respectively.
Page 10
NORTH CAROLINA BOARD OF NURSING
Notes to Financial Statements
NOTE 1 -NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Unearned Revenues
Licenses are renewed for a period of two years on a birth month renewal system. License renewal fees
received are deferred and recognized as revenue over the two-year period to which they relate.
Examinations and endorsements are processed at any time during the year. The initial license period
includes the period from the examination or endorsement date to the birth month of the licensee which
occurs in the following thirteen to twenty-four month period. In addition, a portion of the examination or
endorsement fee representing estimated direct costs is recognized upon initial application with the
remaining fee being deferred and recognized as revenue over the license period.
Net Position
Investment in capital assets - This represents the Board's total investment in capital assets, net of
accumulated depreciation and debt.
Unrestricted net position - This represents assets with no external restriction as to use or purpose. They
can be employed for any purpose designated by the governing board, as distinguished from funds restricted
externally for specific purposes.
Designations of net assets represent management's estimates that are subject to change based on perceived
operating conditions and situations.
Budgetary Data
A budget for fiscal year ended June 30, 2014, was adopted by the Board and is prepared and reported on
the accrual basis of accounting. Although budgeted amounts lapse at year-end, the Board retains its
unexpended net assets to fund expenses ofthe succeeding year.
Use of 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 certain
reported amounts of assets and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Accordingly, actual results could differ from those
estimates, resulting in adjustments in future periods.
NOTE 2 - DEPOSITS AND INVESTMENTS
Investments are comprised of the following:
2014 2013
Fair Value Fair Value
Government bonds $ 4,805,277 $ 4,815,004
Certificates of deposit 1,728,084 2,362,030
Corporate bonds 853,424 1,073,860
Money market funds 179,997 352,013
Equities 1,630,924
Deferred compensation plan mutual funds 58,129 36,565
$ 9,255,835 $ 8,639,472
Page II
NORTH CAROLINA BOARD OF NURSING
Notes to Financial Statements
NOTE 2 -DEPOSITS AND INVESTMENTS (Continued)
Net investment income for the year ended June 30, 2014, is the amount of interest and dividends received
and accrued of $252,356, plus the net realized and unrealized gain on investments of $90,056, for the net
investment income of $342,412. Net investment loss for the year ended June 30, 2013, is the amount of
interest received and accrued of $257,064, plus the net realized and unrealized loss on investments of
$364,886, for a net investment loss of$107,822.
The Board has approved an investment strategy that seeks an investment portfolio comprised of 80%
invested in fixed income securities and 20% invested in equities.
The Board is subject to the following risks:
Custodial Credit Risk. Custodial credit risk is the risk that in the event of the failure of the counterparty,
the Board will not be able to recover the valuation of its investments or collateral securities that are in the
possession of an outside party.
The Securities Investor Protection Corporation (SIPC) is a nonprofit member corporation funded by its
member securities broker-dealers. The SIPC insures against the loss or theft of securities as well as the
failure or insolvency of the brokerage firm. At June 30, 2014, the Board owned investments that exceeded
the SIPC limit of$500,000 by $8,697,707.
The Board had cash deposits and multiple certificates of deposit investments insured by the Federal
Depository Insurance Corporation (FDIC). At June 30, 2014, all of these deposits were insured under the
FDIC limit of $250,000. The Board also has cash deposits that are insured under FDIC. At June 30, 2014,
the Board had $911,231 of deposits in excess of FDIC limit of$250,000.
Interest Rate Risk. Interest rate risk is the risk the Board may face should interest rate variances affect the
fair value of investments.
The maturities of the Board's fixed income investments as of June 30, 2014, were as follows:
0- 5 years
6- 10 years
11 +years
Investment
Amount
$ 576,669
3,999,301
2,810,815
$ 7,386,785
Credit risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. At June 30, 2014, the Board's money market funds and certificates of deposit were unrated,
and the Board's bond portfolio had the following credit ratings as rated by Moody's Investors Service:
Credit
Rating
AAA $ 4,805,278
AA3 79,775
A3 156,017
A2 231,173
A1 307,161
BAAl 79,297
Page 12
NORTH CAROLINA BOARD OF NURSING
Notes to Financial Statements
NOTE 3 -CAPITAL ASSETS
Capital assets are comprised of the following:
Cost Retirements/ Cost Accum. Net
6/30/13 Acquisitions Disposals 6/30/14 Depreciation Amount
Land $ 2,386,585 $ $ $ 2,386,585 $ $ 2,386,585
Buildings 4,838,297 4,838,297 (499,483) 4,338,814
Furniture/
equipment 1,567,632 10,038 5,975 1,571,695 (1 ,040,24 7) 531,448
$ 8,792,514 $ 10,038 $ 5,975 $ 8,796,577 $(1,539,730) $ 7,256,847
Cost Retirements/ Cost Accum. Net
6/30/2012 Acquisitions Disposals 6/30/2013 Depreciation Amount
Land $ 2,386,585 $ $ $ 2,386,585 $ $ 2,386,585
Buildings 4,838,297 4,838,297 (378,400) 4,459,897
Furniture/
equipment 1,512,632 55,000 1,567,632 (876,066) 691,566
$ 8,737,514 $ 55,000 $ $ 8,792,514 $(1 ,254,466) $ 7,538,048
NOTE 4- NOTE PAY ABLE
The Board converted a construction loan payable into a note payable in July 2010, upon completion of the
Board's operating facility. The original note payable balance was $3,400,000 and called for 162 monthly
payments of $19,800 including interest at 3.54%. The Board has made additional principal payments of
$500,000 and $250,000 during the fiscal years ended June 30, 2014 and 2013, respectively, and intends to
pay offthe note ahead of schedule. A final balloon payment is due January 15,2024. The note is secured
by the Board's land and building. Interest expense for the years ended June 30, 2014 and 2013, totaled
$68,889 and $85,766, respectively.
Principal and interest payments are due as follows:
Years Ending
June 30: Principal Interest Total
2015 $ 187,587 $ 50,013 $ 237,600
2016 191,755 45,845 237,600
2017 198,654 38,946 237,600
2018 205,802 31,798 237,600
2019 213,206 24,394 237,600
Thereafter 572,978 26,816 599,794
$ 1,569,982 $ 217,812 $ 1,787,794
Page 13
NORTH CAROLINA BOARD OF NURSING
Notes to Financial Statements
NOTE 5 - CHANGE IN LONG-TERM LIABILITIES
Change in long-term liabilities is as follows:
Deferred compensation
liability
Accrued vacation
Deferred revenues
Note payable
Long-term liabilities
Deferred compensation
liability
Accrued vacation
Deferred revenues
Note payable
Long-term liabilities
NOTE 6 - NET POSITION
Balance
6/30/13
$ 36,565
461,356
6,571,093
2,238,693
$ 9,307,707
Balance
6/30/12
$ 17,077
439,108
6,484,017
2,640,527
$ 9,580,729
Increase
$ 21,564
302,858
6,325,143
$ 6,649,565
Increase
$ 19,488
305,088
6,102,092
$ 6,426,668
Current
Balance Portion
Decreases 6/30/14 of balance
$ $ 58,129 $
334,782 429,432
6,154,843 6,741,393 3,370,697
668,711 1,569,982 187,587
$ 7,158,336 $ 8,798,936 $ 3,558,284
Current
Balance Portion
Decreases 6/30/13 of balance
$ $ 36,565 $
282,840 461,356 11,507
6,015,016 6,571,093 3,318,305
401,834 2,238,693 164,627
$ 6,699,690 $ 9,307,707 $ 3,494,439
The Board has reserved a portion of the unrestricted net assets to indicate their plans for how financial
resources will be used in a future period. Future uses are categorized as either pre-planned special projects
or unforeseen financial emergencies which may require a large, non-recurring outlay of funds.
Capital asset replacement of $6,000 is added each year per prior Board action. The Board's reserved
unrestricted net assets at June 30, 2014 and 2013, are summarized as follows:
Transfers Transfers
Balance and and Balance
6/30/13 Receipts Expenditures 6/30/14
Property acquisition and replacement $ 1,685 $ $ (1,685) $
Information systems operations 475,483 175,000 (17,534) 632,949
Fixed asset replacement 50,070 56,000 106,070
Office operations 234,852 25,000 (74,522) 185,330
Disaster recovery 250,000 250,000
Legal defense/risk management 1,200,000 (38,727) 1,161,273
$ 2,212,090 $ 256,000 $ (132,468) $ 2,335,622
Page 14
NORTH CAROLINA BOARD OF NURSING
Notes to Financial Statements
NOTE 6 -NET POSITION (Continued)
Property acquisition and replacement
Information systems operations
Fixed asset replacement
Office operations
Disaster recovery
Legal defense/risk management
NOTE7-RETIREMENTPLAN
Balance
6/30112
$ 1,685
494,016
17,070
187,246
250,000
800,000
$ 1,750,017
Transfers Transfers
and and Balance
-Receipts Expenditures 6/30/13
$ $ $ 1,685
100,000 (118,533) 475,483
33,000 50,070
87,000 (39,394) 234,852
250,000
400,000 1,200,000
$ 620,000 $ (157,927) $ 2,212,090
The Board contributes to the North Carolina Licensing Boards Retirement Savings Plan ("Plan"), a defined
contribution plan. The Plan was established to provide retirement benefits for employees of State boards
or agencies who did not elect by resolution to cause their employees to be eligible to become members of
the Teachers' and State Employees' Retirement System and for employees hired after July 1, 1983, by an
electing board or agency. The Plan is administered by a committee with authority to amend the Plan,
comprised of the executive directors of the participating boards and agencies.
Participating employees must contribute at least 6% of their gross compensation and the Board matches
those contributions 100%. The employees' contributions are immediately 100% vested; the Board's
matching contributions are 100% vested after 5 years of credited service. For vesting purposes, an
employee must complete 1,000 hours of service during the Plan year.
Each participant's account is credited with their individual contributions, the Board's matching
contributions, and Plan earnings and forfeitures of terminated participants' non-vested accounts.
Allocations are based on participant earnings and account balances as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the participant's account.
Total contributions to the Plan for the year ended June 30, 2014, were $627,417, which consisted of
$245,048 from the Board and $382,369 from employees. For the year ended June 30, 2013, total
contributions to the Plan were $604,493, which included $238,121 from the Board and $366,372 from
employees.
NOTE 8- OPERATING LEASES
The Board leases two copiers under five year operating leases, expiring in 2015. Total expense charged to
operations under the copier leases was $15,000 for the fiscal years ended June 30, 2014 and 2013. Future
minimum lease payments are expected to be $12,500 for the fiscal year ending June 30, 2015.
Page 15
NORTH CAROLINA BOARD OF NURSING
Notes to Financial Statements
NOTE 9- DEFERRED COMPENSATION PLAN
In September 2011, the Board approved and established a deferred compensation plan for the Executive
Director (ED) under Section 457 of the Internal Revenue Code. This plan allows the Board to fund the
plan with up to the maximum amount allowed by law on a fiscal year basis and for the ED to select the
investments that the funds are invested in. The balance in the deferred compensation account becomes
fully vested conditional on, among other things, the ED's continuous employment for five years following
the inception of the plan dated December 28, 2011. The investments are retained by the Board until the
time that the ED becomes fully vested. Upon vesting, the entire account balance, including the Board's
contributions and earnings, becomes the property of the ED. The Board contributed $15,500 and $17,500
to the plan for the years ended June 30, 2014 and 2013, respectively. The value of the deferred
compensation plan investments was $58,129 and $36,565 at June 30, 2014 and 2013, respectively. A
corresponding liability is recorded to reflect the balance due to the ED upon vesting.
NOTE 10 -RISK MANAGEMENT
The Board is exposed to various risks of loss related to torts; theft of, damage to, and the destruction of
assets; errors and omissions; injuries to employees; and natural disasters. Tort claims of Board members
are self-insured by the State under the authority of the State Tort Claims Act. Additional coverage is
provided to the Board under the State's public officers' and employees' liability insurance contract with a
private insurance company.
The Board also purchases general liability, workers' compensation, and dishonesty bond insurance through
independent insurance agents.
NOTE 11 - SUBSEQUENT EVENTS
Management of the Board evaluated subsequent events through October 21, 2014, which is the date the
financial statements were available to be issued. Management discovered no other subsequent events that
should be disclosed.
The audit was conducted in approximately 100 hours at a cost of $14,000.
Page 16
SUPPLEMENTARY INFORMATION
NORTH CAROLINA BOARD OF NURSING
Statements of Revenues, Expenses and Changes in Net Position- Actual and Budget
Year Ended June 30,2014
Actual Budget
Operating revenues:
License renewals $ 6,032,868 $ 5,803,385
Examination fees 528,444 493,924
Reinstatements 198,944 208,120
Endorsements- in-state 795,609 744,912
Verifications - out -of-state 3,160
Mailing labels 59,470 32,500
Hearing and settlement fees 4,800
Nurses aide registry fees 229,199 237,400
APRN revenue 346,819 266,038
Other operating income 82,795 81,910
Total operating revenues 8,282,108 7,868,189
Operating expenses:
Salaries and related benefits 5,597,882 6,014,084
Operations 1,697,865 1,784,723
Elections 4,700 8,800
Conferences and conventions 86,820 140,460
Board meetings 39,555 88,423
Hearings 21,201 26,102
Committee meetings 47,910
Contribution to Foundation 10,000 56,379
Other regulatory services 17,434 3,518
Total operating expenses 7,523,367 8,122,489
Operating income (loss) 758,741 (254,300)
Non-operating revenues (expenses):
Net investment income 342,412 254,300
Interest (68,889)
Total non-operating revenues (expenses) 273,523 254,300
Changes in net position 1,032,264 $
Net position- beginning of year 7,742,017
Net position -end of year $ 8,774,281
See Independent Auditor's Report
Page 17
Actual
Over/(Under)
Budget
$ 229,483
34,520
(9,176)
50,697
3,160
26,970
4,800
(8,201)
80,781
885
413,919
(416,202)
(86,858)
(4,100)
(53,640)
(48,868)
(4,901)
47,910
(46,379)
13,916
(599,122)
1,013,041
88,112
(68,889)
19,223
$ 1,032,264
NORTH CAROLINA BOARD OF NURSING
Statements of Revenues, Expenses and Changes in Net Position- Actual and Budget
Year Ended June 30,2013
Actual Budget
Operating revenues:
License renewals $ 5,900,183 $ 5,722,985
Examination fees 471,262 493,924
Reinstatements 204,508 190,520
Endorsements - in-state 752,935 642,051
Verifications - out -of-state 2,705
Mailing labels 42,638 32,500
Hearing and settlement fees ' 5,100
Nurses aide registry fees 233,174 229,000
APRN revenue 300,445 247,288
Other operating income 82,943 74,910
Total operating revenues 7,995,893 7,633,178
Operating expenses:
Salaries and related benefits 5,433,817 5,752,264
Operations 1,763,598 1,677,582
Elections 4,900 8,500
Conferences and conventions 106,273 135,915
Board meetings 40,679 38,010
Hearings 20,237 42,938
Committee meetings 29,762
Contribution to Foundation 10,000 44,415
Other regulatory services 19,120 28,490
Total operating expenses 7,428,386 7,728,114
Operating income (loss) 567,507 (94,936)
Non-operating revenues (expenses)
Net investment income (loss) (107,822) 214,936
Interest (85,766) (120,000)
Total non-operating revenues (expenses) (193,588) 94,936
Changes in net position 373,919 $
Net position- beginning of year 7,368,098
Net position -end of year $ 7,742,017
See Independent Auditor's Report
Page 18
Actual
Overi(Under)
Budget
$ 177,198
(22,662)
13,988
110,884
2,705
10,138
5,100
4,174
53,157
8,033
362,715
(318,447)
86,016
(3,600)
(29,642)
2,669
(22,701)
29,762
(34,415)
(9,370)
(299,728)
662,443
(322,758)
34,234
(288,524)
$ 373,919