Return to flip book view

2020 Financial Review

Page 1

Harvest Point Fellowship Church (A Not-for-Profit Organization) Independent Accountant’s Review Report And Financial Statements As of December 31, 2020

Page 2

Harvest Point Fellowship Church (A Not-for-Profit Organization) Table of Contents Independent Auditor's Review Report ........................................................................................ 1-2 Statement of Financial Position ..................................................................................................... 3 Statement of Activities and Changes in Net Assets ....................................................................... 4 Statement of Cash Flows ............................................................................................................... 5 Schedule of Functional Expenses .................................................................................................................. 6 Notes to the Financial Statements ........................................................................................... 7-11

Page 3

11200 Broadway St., Ste.2743 Pearland,TX77584 Phone(832)375-0222 awilliams@cpawilliamsonline.com Independent Accountant’s Review Report To The Board of Directors Harvest Point Fellowship Church: I have reviewed the accompanying statement of financial position of the Harvest Point Fellowship Church (a not- for-profit entity) as of December 31, 2020, and the related statements of activities and changes in net assets, and cash flows for the year then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management's financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, I do not express such an opinion. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement whether due to fraud or error. Accountant's Responsibility My responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants. Those standards require me to perform procedures to obtain limited assurance as a basis for reporting whether I am aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. I believe that the results of my procedures provide a reasonable basis for my report. Accountant's Conclusion Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America. 1

Page 4

Supplementary Information My review was conducted for the purpose of determining if any material modifications should be made to the accompanying financial statements as a whole, in order for them to be in accordance with accounting principles generally accepted in the United States of America. The schedule of functional expenses on page 6 is presented for the purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to procedures applied in the review of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants. Ann E. Williams CPA, PC Pearland, Texas June 7, 2021 2

Page 5

TemporarilyUnrestricted Restricted TotalASSETSCash 321,109$ -$ 321,109$ Building Improvement 377,422$ -$ 377,422$ Signage 4,325$ -$ 4,325$ Furniture and Equipment 76,991$ -$ 76,991$ Land 526,198$ -$ 526,198$ Building Deposit 16,270$ -$ 16,270$ Accumulated Depreciation (35,310)$ -$ (35,310)$ Other Assets -$ -$ Total Assets 1,287,005$ -$ 1,287,005$ LIABILITIESAccounts payable 20,371$ -$ 20,371$ Other Current Liability 173,659$ -$ 173,659$ Notes Payable 337,143$ -$ 337,143$ -$ Total Liabilities 531,174$ -$ 531,174$ NET ASSETSUnrestricted 755,831$ -$ 755,831$ Temporarily Restricted -$ -$ Total Net Assets 755,831$ -$ 755,831 Total Liabilities and Net Assets 1,287,005$ -$ 1,287,005$ Harvest Point Fellowship Church(A Texas Not-for-Profit Corporation)Statement of Financial PositionDecember 31, 2020The accompanying notes are an integral part of these financial statements3

Page 6

TemporarilyUnrestricted Restricted TotalREVENUE AND SUPPORT CONTRIBUTIONSGeneral Donations732,655$ 401,272$ 1,133,927$ Other Income 1,211$ -$ 1,211$ Grant Income 5,000$ -$ 5,000$ Organizations -$ -$ -$ Churches -$ -$ -$ Individuals -$ -$ -$ -$ -$ -$ TOTAL CONTRIBUTIONS 738,866$ 401,272$ 1,140,138$ -$ -$ -$ OTHERInterest and other miscellaneous income 20$ -$ 20$ Net Assets released from restrictions -$ -$ -$ 738,886$ 401,272$ 1,140,158$ EXPENSESMinistry Services 336,795$ -$ 336,795$ General and Administrative 294,409$ 250,509$ 544,918$ TOTAL EXPENSE 631,204$ 250,509$ 881,713$ CHANGES IN NET ASSETS 107,682$ 150,763$ 258,445$ RELEASE OF TEMPORARILY RESTRICTED ASSETS 150,763$ (150,763)$ -$ NET ASSETS BEGINNING OF YEAR 497,386$ -$ 497,386$ NET ASSETS END OF YEAR 755,831$ -$ 755,831$ The accompanying notes are an integral part of these financial statements.Harvest Point Fellowship Church(A Texas Not-for-Profit Corporation)Statement of Activities and Changes in Net AssetsFor the Year Ended December 31, 20204

Page 7

CASH FLOWS FROM OPERATING ACTIVITIESIncrease (Decrease) in net asssets 258,445$ Adjustments to reconcile increase / (decrease) in net assets to net cash provided by operating activities: Depreciation - Prior period adjustment - cash (Increase) decrease in assets (122,798) (Increase) decrease in inventory Increase (decrease) in liabilities 166,952 - NET CASH PROVIDED (USED) BY 302,599$ OPERATING ACTIVITIESCASH FLOWS FROM INVESTING ACTIVITIESNET CASH PROVIDED (USED) BYINVESTING ACTIVITIES (Increase) decrease in Fixed Assets (1,451.35)$ CASH FLOWS FROM FINANCING ACTIVITIESNET CASH PROVIDED (USED) BYFINANCING ACTIVITIES (Increase) decrease in Long Term Liabiliites(10,871.79)$ INCREASE (DECREASE) IN CASH 290,276$ CASH BALANCE - BEGINNING OF YEAR 30,833 CASH BALANCE - END OF YEAR 321,109$ The accompanying notes are an integral part of these financial statements.Harvest Point Fellowship ChurchStatement of Cash FlowsFor the Year Ended December 31, 20205

Page 8

Ministry Supportive TemporarilyServices Services Restricted TotalAdult Ministries 27,973$ 27,973$ Pastoral Care 17,112$ 17,112$ Connect Ministry 5,069$ 5,069$ Student Ministry 7,088$ 7,088$ Children's Ministry 22,237$ 22,237$ Worship & Creative Arts Ministr54,696$ 54,696$ Media Ministry 41,815$ 41,815$ Pastoral Administration 4,308$ 4,308$ General Ministry 1,659$ 1,659$ Rent & Facilities Expenses 238,143$ 238,143$ Operations Expenses114$ 13,717$ 13,831$ Payroll expense103,537$ 173,150$ 276,687$ Depreciation 7,864$ 7,864$ Utilities 12,771$ 12,771$ Equipment Rental and Storage 6,555$ 6,555$ Insurance 1,016$ 18,604$ 19,620$ Professional fees 12,366$ 12,366$ Supplies 1,177$ 1,177$ Outreach & Missions 50,171$ 50,171$ Technology Expenses 26,591$ 26,591$ Finance Expenses 33,980$ 33,980$ 336,795$ 294,409$ 250,509$ 881,713$ The accompanying notes are an integral part of these financial statements.Harvest Point Fellowship Church(A Texas Not-for-Profit Corporation)Statement of Functional ExpensesDecember 31, 20206

Page 9

Harvest Point Fellowship Church (A Not-for-Profit Organization) Notes to Financial Statements For the Year Ended December 31, 2020 Note A - Organization Harvest Point Fellowship Church (the "Organization”) was established in the fall of 2013 after years of prayer, preparation, and consultation. Lawrence and Shannon met with 7 families in their home and presented the vision God had given them regarding a future church to be called Harvest Point Fellowship Church Fellowship Church. They were reminded of what Jesus spoke in Matthew 9:37-38 when He said, “The harvest is plentiful but the workers are few. Ask the Lord of the harvest, therefore, to send out workers into his harvest field.” With this in mind, they envisioned a church that would equip workers for the harvest. A place where lives are changed and spiritual growth is commonplace. With the vision in front of them, this core team began to pray day and night about this move of God. As they continued to pray and seek a place to hold worship services, an interest meeting was held at their home church (Bethel’s Family) for anyone who wanted to be a part of this local church plant. That day more families were added to their core team. In celebration of this move of God, this team was commissioned in January 2014 by Pastor Walter August and The Church at Bethel’s Family to go plant Harvest Point Fellowship Church Fellowship Church in January of 2014. Note B - Summary of Significant Accounting Policies Basis of Accounting and Use of Estimates The Organization's financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Management must make estimates and assumptions to prepare financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, the amounts reported as revenue and expenses and the allocation of expenses among various functions. Actual results could vary from the estimates that were used. Cash Cash is comprised of available cash balances. The Organization maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Organization has not experienced losses in such accounts. Management believes that the Organization is not exposed to any significant credit risk on cash. Contributions The Organization maintains its accounts in accordance with the principles and practices of fund accounting. Fund accounting is the procedure by which resources for various purposes are classified for accounting purposes in accordance with activities or objectives specified by donors. These financial statements have been prepared to focus on the Organization as a whole and to present balances and transactions classified according to the existence or absence of donor -imposed restrictions. This has been accomplished by classification of fund balances into three 7

Page 10

Harvest Point Fellowship Church (A Not-for-Profit Organization) Notes to Financial Statements For the Year Ended December 31, 2020 classes of net assets-permanently restricted, temporarily restricted or unrestricted. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or are restricted by the donor for specific purposes, are reported as temporarily restricted. Amounts required to be in perpetuity by the donor are reported as permanently restricted assets. Contributions, including unconditional promises to give, are recognized in the period received. Conditional promises to give are not recognized until the conditions upon which they depend are substantially met. A donor restriction expires when a stipulated time restriction ends or when the purpose for which it was intended is obtained. Temporarily restricted net assets are reclassified to unrestricted net assets upon expiration of donor restrictions and are reported in the statement of activities as net assets released from restrictions. Restrictions expiring on contributions received in the same year result in a reclassification from temporarily restricted to unrestricted. Operating and Other Activities The Organization's measure of operations includes all revenue and expenses that are an integral part of its programs and supporting activities, net assets released from donor restrictions to support operating expenditures, and transfers from Board-designated and other non-operating funds to support current operating activities. The measure of operations excludes support for non-operating and restricted operating activities, donated services and space and debt service. Donated Materials and Services Donated materials are recorded at fair market value at the date of the donation. Donated services that create or enhance nonfinancial assets or require specialized skills are recognized as revenues and corresponding expenses. Donated services that do not meet the above conditions are not recognized. Advertising Costs are expensed as incurred. Allocation of Functional Expenses Expenses are allocated to various programs and supporting services based on the ultimate use of the product or services and on estimated time and effort invested in the activity. Certain costs may be allocated among the program and supporting services benefited. Property and Equipment Purchased property and equipment is recorded at cost. Donated property and equipment is recorded at the estimated fair value at the date of the gift. The Organization reports gifts of land, buildings, and equipment as unrestricted support, unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as temporarily restricted support. Absent explicit donor stipulations about how long these long-lived assets must be maintained, the Organization reports expirations of donor restrictions 8

Page 11

Harvest Point Fellowship Church (A Not-for-Profit Organization) Notes to Financial Statements For the Year Ended December 31, 2020 When the donated or acquired long-lived assets are placed in service; if insignificant, gifts of long- lived assets are expensed when received. Depreciation is computed using the straight-line method over the estimated useful life. Furniture and fixtures are depreciated over 5years; machinery and equipment are depreciated over 5years; and vehicles are depreciated over 5 years. The Organization capitalizes purchased property and equipment having a cost greater than $750.00 with estimated useful life greater than one year. Expenditures for repair and maintenance are charged to operating expenses as incurred. Statement of Cash Flows The statement of cash flows is presented using the indirect method. Memorandum Totals Total columns on the financial statements are captioned "memo only" to indicate that they are presented only to facilitate analysis. Amounts in these columns do not present financial position or results of operations in conformity with accounting principles generally accepted in the United States of America. These amounts are not comparable to a consolidation. Note C–Building Campaign – Project Next The vision is to be a church of multiplication and discipleship. Harvest Point embarked on a building project to grow with the vision God has given to Harvest Point and beyond. We do not want a bigger building simply for the sake of being bigger church, but for the sake of the mission and vision of our church, to the glory of God. The church looks forward to expanding the children and student ministries as it will give more opportunities to utilize various teaching methods and settings; from small groups lessons, creative space and age-based worship opportunities. The church also seeks to have additional space for adult small groups, fellowship opportunities, and a worship space that will not only assist in creating an atmosphere of intimacy but can accommodate our growing church. To build a facility that will assist in discipling 500 families, including a worship center that seats approximately 500-550 people, ample space to lead 400 children and students, and intentional space designed to encourage fellowship with opportunities to deepen relationships within our local congregation. It is a three-year project that is divided into two phases. Phase I: includes raising capital, identifying/purchasing land and eventually paying off the mortgage of the land within that period. Phase I will last approximately 18 months, ending in March 2018. Phase II: will consist of planning and raising capital for the construction of the church. Phase II will last approximately 18 months, ending in August 2019. Construction is slated to begin the Summer of 2021. Total funds raised in 2020 were $401,271.49. The church does not record commitments to give as a receivable. 9

Page 12

Harvest Point Fellowship Church (A Not-for-Profit Organization) Notes to Financial Statements For the Year Ended December 31, 2020 Note D - Property and Equipment Property and equipment consist of the following: Depreciation expense totaled $7,863.97. for the year ended December 31, 2020. Note E - Income Taxes The Organization has received a letter of determination exempting the Organization from federal income tax under Section501(c)(3) of the Internal Revenue Code. The Organization is classified as other than a private foundation. Accordingly, no provision for income taxes is included in the financial statements. Note F - Compensable Absences The Organization has not accrued for compensable absences because the amount cannot be reasonably estimated at December 31, 2020. However, the Organization's management does not believe the amount to be material. Note G - Contingencies Amounts received may be temporarily or permanently restricted. Failure by the Organization to comply with donor specifications may result in the donor requesting that the contribution be returned. As of December 31, 2020, the Organization has met all donor specifications on all Temporarily and permanently restricted contributions, and accordingly, no provision has been made for any liabilities that might arise from noncompliance. Note H- Current Vulnerability Due to Certain Concentrations The Organization operates in a heavily regulated environment. The operations of the Organization are subject to the administrative directives, rules and regulations of federal, state and local regulatory agencies. Such administrative directives, rules and regulations are subject to change by an act of Congress, or an administrative change made by these agencies. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change. Land $526,198 Signage $4,325 Musical Instruments $7,222 Sound, Audio Visual Equipment $34,880 Computer Equipment $1,433 Furniture & Fixtures $33,455 TOTAL $ 607,513 10

Page 13

Harvest Point Fellowship Church (A Not-for-Profit Organization) Notes to Financial Statements For the Year Ended December 31, 2020 Note I -Schedule of Functional Expenses The Organization reports its operating expenses into primarily two functional classifications: • Ministry services - activities that provide goods and services to the beneficiaries, customersand members of the Organization that fulfill its purpose or mission for which the Organization exists. • Support services - activities not directly related to the purpose or mission for which theOrganization exists, but which are necessary for the Organization to operate. Supporting services generally include management and general, fundraising and membership- development activities. • Temporarily Restricted – activities for which restricted funds have been used to acquireassets or pay expenses as denoted by the donor. Note J- Lease Commitments Total lease expense (Office Rent) incurred under operating leases totaled $238,143/$21,594.81 for 12 months and total copier lease expense incurred totaled $4,917.96/$409.83. Year Ending December 31, Future Lease and Rental Commitments 2020 $264,655.68 2021 $264,055.68 2021 and thereafter $264,055.68 Note K – Notes Payable Notes Payable consist of a 20 year note payable to Vasudev Properties LLC executed on February 3, 2017 in the amount of $375,000 bearing interest of 7% annum. The loan is secured by the land located at 2450 Garden Road in Pearland, Texas. Total principal and interest payments were $10,828.74 and $24,079.70 respectively in 2020. SBA Payroll Protection Loan (“PPP”) dated April 12, 2020 in the amount of $23,759, with terms of 24 months (6 months deferment) @ 1% interest SBA Economic Injury Disaster Loan dated June 2, 2020 in the amount $150,000 with annum of 2.75% with payments in the amount of $641/mo. to begin 12 months from the date of the note until paid in full or Thirty Years from the date of the Note. Year Ending December 31, Future Loan Payments 2020 $ 0 2021 $ 7,692 2021 and thereafter $223,068 11

Page 14

Harvest Point Fellowship Church (A Not-for-Profit Organization) Notes to Financial Statements For the Year Ended December 31, 2020 Note L-Subsequent Events FASB 165, which is codified in ASC Topic 855-10, requires the disclosure of the date through which the Organization has evaluated subsequent events and the reason for selecting that date. The Organization evaluated subsequent events through June 7, 2020, the date the financial statements were available to be issued. As a result of this evaluation, we noted the $23,759 PPP Loan dated April 12, 2020, was forgiven on January 14, 2021 and the loan proceeds will be reclassed to income in 2021. 12