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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. Page2 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 --- ( ------------ ----------I 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
Object Description
Description
Title | Financial statements... |
Other Title | Financial statements for the years ended...; North Carolina Board of Nursing |
Date | 2014 |
Description | Fiscal Year (July 1, 2013 - June 30, 2014) |
Digital Characteristics-A | 1.78 MB; 21 p. |
Digital Format |
application/pdf |
Pres File Name-M | pubs_serial_boardnursingfinancial20132014.pdf |
Full Text | 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. Page2 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 --- ( ------------ ----------I 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 |
OCLC number | 57243107 |