LELANDVOLUNTEER

FIRE/RESCUEDEPARTMENT,INC.

AuditedFinancialStatements
forthefiscalyearended

June30,2016

TableofContents

IndependentAuditorsReport............................................................................................3

FinancialStatements

StatementofFinancialPosition.............................................................................4

StatementofActivities...........................................................................................5

StatementofFunctionalExpenses.........................................................................6

StatementofCashFlows........................................................................................7

NotestotheFinancialStatements................................................................................814

INDEPENDENTAUDITORSREPORT
To the Board of Directors
Leland Volunteer Fire/Rescue Department, Inc.
Leland, North Carolina
We have audited the accompanying financial statements of Leland Volunteer Fire/Rescue Department, Inc., a
nonprofit organization, which comprise the statement of financial position as of June 30, 2016, and the related
statements of activities, functional expenses, and cash flows, for the year then ended, and the related notes to the
financial statements.
ManagementsResponsibilityfortheFinancialStatements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
AuditorsResponsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors judgment, including the assessment of the
risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Leland Volunteer Fire/Rescue Department, Inc. as of June 30, 2016, and the changes in its net assets
and its cash flows for the year then ended in accordance with accounting principles generally accepted in the
United States of America.

Wilmington, North Carolina

September 28, 2016

2030EastwoodRoad,Suite10A
Wilmington,NC28403

(910)5080630
nbearman@bearmancpa.com

Leland Volunteer Fire/Rescue Department, Inc.

Statement of Financial Position
as of June 30, 2016

6/30/16
Assets
Cash and Cash Equivalents (Note 3c)

149,458

Cash Held for Asset Purchase (Note 3c and Note 7)

219,445

Restricted Cash (Note 3c)

109,621

Accounts Receivable (Note 4)

132,216

Prepaid Expenses

131,741

Property & Equipment, net (Note 5)

2,607,549

Total Assets

3,350,030

Liabilities & Net Assets

Accounts Payable & Accrued Liabilities (Note 6)

148,509

Notes Payable (Note 7)

1,079,001

Total Liabilities

1,227,510

Net Assets
Unrestricted (Note 3b)

2,012,899

Temporarily Restricted (Note 3b and Note 8)

109,621

Permanently Restricted (Note 3b)

Total Net Assets

2,122,520

Total Liabilities & Net Assets

3,350,030

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

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Leland Volunteer Fire/Rescue Department, Inc.

Statement of Activities
for the year ended June 30, 2016

Unrestricted

Temporarily
Restricted

Total
FY 2015/16

Revenue
-

$ 1,880,414

Other Earned Revenue (Note 4)

Fire District Fees (Note 4)

516,810

516,810

Grants & Contributions (Note 4)

37,360

37,360

117,840

117,840

Volunteer Services (Note 3d and Note 4)

Firefighters Relief Fund (Note 8)
Interest & Other Income
Net Assets Released from Restriction (Note 3b)

1,880,414

10,945

10,945

33,883

33,883

119

Total Revenue

(119)

2,586,426

10,826

2,597,252

Expense
Program (Note 3e)
Management & General (Note 3e)
Fundraising (Note 3e)
Total Expense

2,613,370

2,613,370

201,996

201,996

7,420

7,420

2,822,786

Change in Net Assets

(236,360)

Net Assets Beginning of Year

2,249,259

Net Assets End of Year

$ 2,012,899

10,826

2,822,786
(225,534)

98,795

2,348,054

109,621

$ 2,122,520

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

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Leland Volunteer Fire/Rescue Department, Inc.

Statement of Functional Expenses
for the year ended June 30, 2016

Expense Type
Wages, Taxes & Benefits
Contracted Services
Volunteer Services (Note 3d)

Program
$

1,465,799

Management
& General
$

34,178

84,115

Fundraising
$

40,576

Total
FY 2015/16

$ 1,549,914

74,754
117,840

117,840

35,256

17,345

7,420

Vehicle Maintenance, Equipment & Supplies

265,563

7,292

272,855

Occupancy

114,307

3,319

117,626

General Operations

Training
Insurance
Interest (Note 7)
Depreciation (Note 5)
Total Expense

60,021

48,292

48,292

114,593

6,935

121,528

26,028

26,028

391,514

42,414

433,928

$ 2,613,370

201,996

7,420

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

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$ 2,822,786

Leland Volunteer Fire/Rescue Department, Inc.

Statement of Cash Flows
for the year ended June 30, 2016
FY 2015/16
Cash Flows from Operating Activity
Change in Net Assets

(225,534)

Adjustments to reconcile the change in net assets

to net cash used in operating activities:
Changes in certain assets and liabilities:
Restricted Cash

(10,826)

Accounts Receivable

(55,590)

Prepaid Expenses

(10,999)

Accounts Payable & Accrued Expenses

7,908

Depreciation

433,928

Net Cash Provided by Operating Activities

138,887

Cash Flows from Investing Activities

Equipment Purchases

(93,964)

Cash Held for Asset Purchase

(219,445)

Net Cash Used in Investing Activities

(313,409)

Cash Flows from Financing Activities

Proceeds from Debt Financing

308,519

Principal Repayments of Notes Payable

(210,286)

Net Cash Used in Financing Activities

98,233

Net Decrease in Cash and Cash Equivalents

(76,289)

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

225,747
$

149,458

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

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Leland Volunteer Fire/Rescue Department, Inc.

Notes to the Audited Financial Statements
for the year ended June 30, 2016

1. Organization
Leland Volunteer Fire/Rescue Department, Inc. (the Department) is a North Carolina nonprofit
corporation organized in October 1998. The affairs of the corporation are governed by voting
members of the board of directors elected by its membership. The general membership consists of
individuals of at least 18 years of age who possess the required certifications to perform fire/rescue
department-related duties.
The organization is exempt from income taxes under the Internal Revenue Service Code Section
501(c)(3). As such, contributions to the organization are generally tax deductible.
2. Mission
The Departments mission is to respond to public safety needs through education, prevention, and
mitigation. It provides comprehensive emergency services as a combination career-volunteer
department. It offers emergency medical services (EMS) response at the paramedic level, is heavyrescue certified, and provides fire protection to the citizens of the Leland area of Brunswick
County, North Carolina.
The Department responded to 1,833 fire and 2,562 EMS calls during calendar year 2015. Its staff
of 8 firefighters, 8 EMS personnel, 4 administrative staff and 82 volunteers serves a district with a
population of approximately 26,000 people.
3. Summary of Significant Accounting Policies
The Department prepares its financial statements in accordance with generally accepted accounting
principles promulgated in the United States of America (U.S. GAAP) for not-for-profit
organizations using the accrual basis of accounting. As such, revenues are recorded when earned
and expenses are recorded when incurred. The significant accounting and reporting policies used
by the organization are described below to enhance the usefulness and understandability of the
financial statements.
3a. Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions
that affect the reported amounts of revenues and expenses during the reporting period and the
reported amounts of assets and liabilities at the date of the financial statements. On an ongoing
basis, the organizations management evaluates the estimates and assumptions based upon
historical experience and various other factors and circumstances. The organizations
management believes that the estimates and assumptions are reasonable in the circumstances;
however, the actual results could differ from those estimates.

See the Independent Auditors Report

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Leland Volunteer Fire/Rescue Department, Inc.

Notes to the Audited Financial Statements
for the year ended June 30, 2016

3b. Net Asset Classes

The Financial Accounting Standards Board Accounting Standards Codification (FASB ASC)
topic 958, Not-for-Profit Entities, requires the reporting of the organizations activities by net
asset class. The financial statements report net assets and changes in net assets in three classes
that are based upon the existence or absence of restrictions on use that are placed by its
donors, as follows:
Unrestricted net assets are resources available to support operations. The only limits on the
use of unrestricted net assets are the broad limits resulting from the nature of the organization,
the environment in which it operates, the purposes specified in its corporate documents and its
application for tax-exempt status, and any limits resulting from contractual agreements with
creditors and others that are entered into in the course of its operations.
Temporarily restricted net assets are resources that are restricted by a donor for use for a
particular purpose or in a particular future period. The organizations unspent contributions are
classified in this class if the donor limited their use. When a donors restriction is satisfied,
either by using the resources in the manner specified by the donor or by the passage of time,
the expiration of the restriction is reported in the financial statements by reclassifying the net
assets from temporarily restricted to unrestricted net assets. Also see Note 8.
Permanently restricted net assets result from contributions to the organization that must be
maintained permanently. Typically, the future investment returns on such assets may be used
in full or in part for the operations of the organization. As of June 30, 2016, the Department
held no permanently restricted net assets.
3c. Cash and Cash Equivalents
The organization considers short-term, interest bearing, highly liquid investments with original
maturities of three months or less to be cash equivalents for purposes of financial statement
presentation. As of June 30, 2016, the Department held $478,524 of cash and cash equivalents.
Of this amount, $109,621 was held in a restricted cash account for the Fire Fighters Relief Fund
(See Note 8). Additionally, another $219,445 of loan proceeds were designated for an ambulance
purchase that was completed after June 30, 2016 (see Note 7).
3d. Contributions
Contributions, including unconditional promises to give, are recognized when received. All
contributions are reported as increases in unrestricted net assets unless the use of the contributed
assets is specifically restricted by the donor (see Note 3b, previously). Also see Note 8,
Restrictions on Net Assets.

See the Independent Auditors Report

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Leland Volunteer Fire/Rescue Department, Inc.

Notes to the Audited Financial Statements
for the year ended June 30, 2016

Contributed services are only recorded if they meet FASB requirements for recognition (such as
if they require specialized skills and would otherwise have been purchased by the organization).
These requirements are outlined in FASB ASC 958-605-25-16, Contributed Services.
The Department has a volunteer force of approximately 80 firefighters and EMS personnel who
are either fully trained or in-training to become credentialed emergency respondents.
Management estimates that volunteers contributed over 26,000 hours of their time to help the
Department during the fiscal year which at a paid rate of $15 per hour would have a value of
over $393,000.
However, due to the FASB requirements noted above, only the donated time of credentialed
volunteers meets the criteria for recognition in the financial statements. During Fiscal Year (FY)
2015/16, 18 credentialed volunteers donated 7,856 hours to the Department. The Department
has valued this time at a rate of $15 per hour. As such, management has estimated $117,840 as
the value of donated services and this appears as the revenue line item Volunteer Services on
the Statement of Activities. This amount is offset by an equal amount of expense on the
Statement of Functional Expenses as the line item Volunteer Services expense.
3e. Functional Allocation of Expenses
The Statement of Activities presents expenses by functional classification (program,
management and general, and fundraising). Expenses that can be identified with a specific
program or support service are charged directly to that program or support service. Costs
common to multiple functions have been allocated among the various functions benefited using
an objective basis (such as staff members time). The Statement of Functional Expenses presents
these same expenses by natural classification (e.g. wages, contracted services).
Management and General activities include the functions necessary to provide support for the
organizations program. These include those that provide governance (Board of Directors),
oversight, business management, financial recordkeeping, budgeting, legal services, human
resource management, and similar activities that ensure an adequate working environment and
an equitable employment program.
Fundraising activities include publicizing and conducting fundraising campaigns; maintaining
donor lists; conducting special fundraising events; and other activities involved with soliciting
contributions from corporations, foundations, individuals, and others.
3f. Property & Equipment
The Department capitalizes property and equipment costing more than $5,000 with a useful life
of more than one year. Lesser amounts are expensed. Purchased property and equipment is
capitalized at cost. Donations of property and equipment are recorded as contributions at fair
See the Independent Auditors Report
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Leland Volunteer Fire/Rescue Department, Inc.

Notes to the Audited Financial Statements
for the year ended June 30, 2016

value on the date of donation. Such donations are reported as unrestricted contributions unless
the donor specifically restricts the assets use. Also see Note 5, Property & Equipment.
4. Program Service Revenue
The Departments operations are funded from two primary sources as shown in the table below. If
a significant reduction in funding from these primary sources, particularly Brunswick County, were
ever to occur, it could have an adverse impact on the Departments activities.
FundingSource
BrunswickCountyFireDistrictFees
EmergencyMedicalServicesPatientRevenue
DonatedServices(seeNote3d)
LocalMunicipalities
AllOther
TotalGovernmentSources

Amount
$1,880,414
446,410
117,840
70,400
71,243
$2,586,307

%ofTotal
73%
17%
4%
3%
3%
100%

Fire District Fees

Fire fees are assessed and collected by the Brunswick County Tax Office based upon the authority
of House Bill 651 first enacted by the North Carolina Legislature in 1999. The Department receives
fees from those residents living within a 5-mile radius of its responding fire stations. The fees are
used to fund the general operations of the Department and may also be used for capital
improvements upon approval of the Brunswick County Fire Protection Oversight Committee.
Accounts Receivable
The accounts receivable balance of $132,216 is primarily comprised of revenue billed to EMS
patients and their health insurance providers before June 30, 2016, for which the organization has
yet to receive payment. The amount is stated net of an allowance for uncollectible amounts based
upon a trend analysis that compares cash collections to net charges over the course of the prior 12
months. Management estimates that 55% of net charges will ultimately be collected.
5. Property and Equipment
Property and equipment of $2,607,549 is stated at depreciated cost and consists of the following:

Original
Cost

Accumulated
Depreciation

Net
BookValue

$122,000
1,642,607
1,991,257
2,145,975

$0
755,626
1,697,706
840,958

$122,000
886,981
293,551
1,305,017

$5,901,839

$3,294,290

$2,607,549

Land
Buildings&Improvements
Vehicles
OtherFire/Rescue&EMSEquipment

Total

See the Independent Auditors Report

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Leland Volunteer Fire/Rescue Department, Inc.

Notes to the Audited Financial Statements
for the year ended June 30, 2016

Depreciation is computed on a straight-line basis and expensed over the useful lives of the
associated assets (5 to 15 years for vehicles and equipment; 40 years for buildings and
improvements). Depreciation expense totaled $433,928 and appears as a line item on the Statement
of Functional Expenses.
6. Accounts Payable and Accrued Liabilities
The accounts payable and accrued liabilities balance of $148,509 consists of $10,052 of operational
accounts payable, $16,755 of accrued interest (see Note 7) and $121,702 of payroll and associated
liabilities.
7. Notes Payable
The Departments long-term debt of $1,079,001 consists of two notes payable to BB&T
Governmental Finance with principal balances totaling $770,482 and one note payable to the Local
Government Federal Credit Union (LGFCU) with a principal balance of $308,519. The terms of
the loans are as follows.
BB&T Governmental Finance ($770,482)
Repayments on the two notes are due in annual installments of $113,493 and $23,875, including
interest at fixed rates of 2.37% and 2.09% per annum, respectively. The notes are secured by the
equipment and real property of the Department. Future scheduled maturities of the long-term debt
are as follows:
FY2016/17
FY2017/18
FY2018/19
FY2019/20
FY2020/21
Thereafter
Total

$119,237
121,998
100,949
103,342
105,791
219,165
$770,482

LGFCU ($308,519)
The LGFCU loaned the Department $308,519 in April 2016 in order to purchase an ambulance
and other EMS equipment. Repayments are due in annual installments of $81,518, including
interest at a fixed rate of 2.25%. The Department had not taken delivery of the ambulance as of
June 30, 2016 and the $219,445 advanced for that purchase by LGFCU was held as cash-on-hand
at June 30, 2016. It appears as the asset, Cash Held for Asset Purchase on the Statement of
Financial Position. The note is secured by the ambulance.

See the Independent Auditors Report

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Leland Volunteer Fire/Rescue Department, Inc.

Notes to the Audited Financial Statements
for the year ended June 30, 2016

Future scheduled maturities of the long-term debt are as follows:

FY2016/17
FY2017/18
FY2018/19
FY2019/20
Total

$74,576
76,254
77,970
79,719
$308,519

Interest expense for the year totaled $26,028 and appears as a line item on the Statement of
Functional Expenses.

8. Restrictions on Net Assets

The Department receives an annual distribution from the North Carolina Commissioner of
Insurance to fund its local Firefighters Relief Fund. The North Carolina Legislature established
the Firefighters Relief Fund in 1907 to financially assist firefighters that may have been injured
while performing their duties. The local fund is required to be administered by a five-member
board and may only be used for certain restricted purposes such as financial assistance to
firefighters in active service for sickness or injury contracted in the line of duty. During the fiscal
year, the annual distribution plus interest received increased the fund by $10,945 and expenses
paid out totaled $119. The fund balance at June 30, 2016 totaled $109,621 and is displayed as both
restricted cash and temporarily restricted net assets on the Statement of Financial Position.
9. Income Taxes
The Department is exempt from federal income taxation under Section 501(c)(3) of the Internal
Revenue Code. Additionally, it does not generate business income unrelated to its exempt purpose
and therefore has made no provision for income taxes or uncertain tax positions in the financial
statements. There are no federal or state tax audits of the organization in progress and the
Department believes it is not subject to tax examinations for fiscal years prior to FY 2012/13.
10. Retirement Plan
The Department provides its full-time employees with a self-elected 401K retirement plan. The
Department matches employee contributions to the plan up to 6% of each participants qualified
wages for the fiscal year. Retirement contribution expense for the fiscal year totaled $31,678 and
appears within the Wages, Taxes & Benefits line item on the Statement of Functional Expenses.
11. Related Parties
The Department is governed by a board of directors appointed by its membership. The board
consists of seven voting members and four non-voting members. The officers of the corporation
See the Independent Auditors Report
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Leland Volunteer Fire/Rescue Department, Inc.

Notes to the Audited Financial Statements
for the year ended June 30, 2016

consist of the president, administrative officer and chief operating officer. The administrative
officer performs the duties of Secretary, Treasurer and Vice-President of the board. The chief
operating officer, a non-voting member of the board, is the Fire Chief. He is charged with
controlling the day-to-day affairs of the fire/rescue/EMS department.
The administrative officer and the chief operating officer are related to each other by marriage.
The administrative officer recuses herself from any votes related to the compensation,
performance, or duties of her husband. The Departments conflict of interest policy is reviewed
on an annual basis and directors are required to report potential conflicts as soon as they become
known.
12. Subsequent Events
The Department has evaluated events that have occurred subsequent to the statement of financial
position date (June 30, 2016) and through the date that the Independent Auditors Report was
available to be issued (September 28, 2016). No events have occurred during that period that
would require adjustments to the audited financial statements or disclosures in these notes.

See the Independent Auditors Report

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