2005 WAC Audit Report-V2.pub

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2006 Wisconsin Conference Journal WISCONSIN ANNUAL CONFERENCE THE UNITED METHODIST CHURCH Sun Prairie, Wisconsin FINANCIAL STATEMENTS and REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS For the Years Ended December 31, 2005 and 2004 TABLE OF CONTENTS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FINANCIAL STATEMENTS Statements of Financial Position Statements of Activities and Changes in Net Assets Statements of Cash Flows Notes to Financial Statements [Editor’s Note: The Audit Report was provided to the Conference Secretary as a Microsoft Word document and a Microsoft Excel spreadsheet. The report has been formatted to fit the size of the Journal page. In all other respects it is identical to the printed report provided by the Independent Auditors.] Audited Financial Statements186 2006 Wisconsin Conference Journal REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Wisconsin Annual Conference The United Methodist Church Sun Prairie, Wisconsin We have audited the accompanying statements of financial position of the Wis-consin Annual Conference of The United Methodist Church as of December 31, 2005 and 2004, and the related statements of activities and changes in net as-sets, and cash flows for the years then ended. These financial statements are the responsibility of the Conference's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted ...

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WISCONSIN ANNUAL CONFERENCE THE UNITED METHODIST CHURCH Sun Prairie, Wisconsin FINANCIAL STATEMENTS and REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS For the Years Ended December 31, 2005 and 2004

TABLE OF CONTENTS

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FINANCIAL STATEMENTS Statements of Financial Position Statements of Activities and Changes in Net Assets Statements of Cash Flows Notes to Financial Statements [Editors Note: The Audit Report was provided to the Conference Secretary as a Microsoft Word document and a Microsoft Excel spreadsheet. The report has been formatted to fit the size of the Journal page. In all other respects it is identical to the printed report provided by the Independent Auditors.]

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Wisconsin Annual Conference The United Methodist Church Sun Prairie, Wisconsin We have audited the accompanying statements of financial position of the Wis-consin Annual Conference of The United Methodist Church as of December 31, 2005 and 2004, and the related statements of activities and changes in net as-sets, and cash flows for the years then ended. These financial statements are the responsibility of the Conference's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally ac-cepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the finan-cial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reason-able basis for our opinion. For 2004, the Conference had not fully implemented the financial reporting re-quirements of the Statement of Financial Accounting Standards No. 117, "Financial Statements of Not --for --Profit Organizations." Accordingly, the Conference had not classified the difference between its assets and liabilities as unrestricted net assets, temporarily restricted net assets, and permanently re-stricted net assets based on the existence or absence of donor-imposed restric-tions on amounts in the designated fund. In addition, the Conference had not reported the changes in each of those classes of net assets in the statement of activities. Presentation of such information is required by generally accepted accounting principles. The effects on the financial statements of that departure from generally accepted accounting principles were not reasonably determin-able for 2004. In our opinion, except for the effect on the 2004 financial statements of the omission of the information discussed in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of the Wisconsin Annual Conference of The United Methodist Church as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles gener-ally accepted in the United States of America. Madison, Wisconsin April 28, 2006

SMITH & GESTELAND, LLP

NOTES TO FINANCIAL STATEMENTS NOTE 1: INFORMATION ABOUT THE ORGANIZATION AND SUM-MARY OF SIGNIFICANT ACCOUNTING POLICIES A. NATURE OF ACTIVITIES The Wisconsin Annual Conference of The United Methodist Church accepts apportionments from United Methodist churches in Wisconsin and distributes monies to General Conference agencies for national and international programs, Wisconsin Annual Conference agencies for local programs, and to other charita-ble organizations. To ensure observance of limitations and restrictions placed on the use of re-sources available to the Conference, its accounts are maintained in accordance with the principles of fund accounting. Resources of various purposes are clas-sified for accounting and reporting purposes into funds established according to their nature and purposes. Separate accounts are maintained for each fund. The Undesignated Fund represents amounts received primarily from apportion-ments and pass-through donations and is expended for purposes set forth in the annual budget adopted by the Conference or by the donor. The Designated Fund includes amounts to be used for specified purposes as de-termined by donors or conference agencies. The Group Health Benefit Plan makes available health benefits (pharmaceuticals, hospital, surgical and major medical) to all eligible active employees of the Wisconsin Annual Conference, participating local churches, agencies or institutions of the United Methodist Church, and to eligible retired individuals and surviving spouses of the participating groups. Prior to 2005, the United Methodist Church General Board of Pension and Health Benefits (General Board) directly billed and collected from local United Methodist Churches in Wisconsin their contributions to the Ministerial Pension Plan (MPP) and the Comprehensive Protection Plan (CPP), a death and disabil-ity plan for clergy. Therefore, these amounts were not reflected on the financial statements of the Conference. Beginning October 1, 2005, the Conference be-came responsible for billing and collecting these contributions and premiums and then paying the amounts due to the General Board. Therefore, in 2005, the Pension and Benefits Fund has been separated from the designated fund where it was previously reported to disclose the increased transactions relating to these two plans.

B. INTERFUND ACTIVITY For financial reporting purposes, interfund receivables and payables, as well as interfund revenues and expenses, have been eliminated. C. CASH AND CASH EQUIVALENTS For the statement of cash flows, the Conference considers cash accounts which are not subject to withdrawal restrictions or penalties and highly liquid debt in-struments purchased with an initial maturity of three months or less to be cash equivalents. D. DUE FROM LOCAL CHURCHES Apportionments received between year-end and a specified cut-off date in mid-January of the following year that are specifically designated by churches for the previous year are treated as prior year apportionments and as receivables at year end. -E. INVESTMENTS Securities are carried at fair market value. Gains or losses on the sale of debt and equity securities are computed using the specific identification method. F. PROPERTY AND EQUIPMENT Equipment is stated at cost. Real estate, except camps, is carried at cost if pur- chased, and at market value at date of receipt if donated. Conference camps are carried at appraised value as of February 26, 1976, the earliest date for which information is available, plus additions since that date at cost. Buildings and improvements are being depreciated over seven to fifty-year periods using the straight-line depreciation method. Equipment is being depreciated over its esti-mated useful life using the straight-line depreciation method. G. UNEARNED PREMIUMS Unearned premiums represent premiums collected prior to year end that relate to coverage periods subsequent to year end. Health insurance premiums are billed to participants one month in advance of the coverage month. Ministerial Pension Plan contributions and Comprehensive Protection Plan premiums are billed to participants during the month earned/covered.

H. CLASSIFICATIONS OF NET ASSETS Statement of Financial Accounting Standard No. 117 requires the Conference to report its net assets and changes therein in the following categories: Unrestricted Net Assets  Unrestricted net assets represent resources that are generally available for support of the Conferences activities. Amounts that have been earmarked for a specific purpose by one of the Conferences boards are reported as unrestricted-designated. Temporarily Restricted Net Assets  The Conference reports gifts of cash and other assets as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction. Permanently Restricted Net Assets  The Conference reports gifts of cash and other assets as permanently restricted support if they are received with donor stipulations that limit usage to earnings only. I. INCOME TAXES Wisconsin Annual Conference is exempt from federal and state income taxation under Internal Revenue Code Section 501(c)(3). J. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of con-tingent assets and liabilities at the date of the financial statements and the re-ported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. K. RECLASSIFICATIONS For comparability purposes, certain 2004 amounts have been reclassified to be consistent with 2005. NOTE 2: INVESTMENTS The Wisconsin United Methodist Foundation, Inc. and the Conference are affili-ated with The United Methodist Church. The Foundation maintains the invest-ments it manages for various United Methodist groups on a pooled basis similar to a mutual fund. Details of the investments underlying the units owned are not available.