Note 1 - Summary of Significant Accounting Policies
Independent Auditors’ Report and Financial Statements
Years Ended March 31, 2015 and 2014
Notes to Combined Financial Statements
The Society of Professional Engineering Employees in Aerospace, IFPTE Local 2001 (the Society or SPEEA), is a labor union
and a 501(c)( 5) organization (a tax-exempt entity) representing employees of The Boeing Company in Washington, Kansas,
Oregon, California, Utah, and Florida, Triumph Composite Systems, Inc. in Spokane, Washington, and Spirit AeroSystems in
SPEEA Properties, an affiliate of the Society, is a 501(c)( 2) organization (a tax-exempt entity) formed in 1978 to own and
operate the Society's headquarters in Seattle, Washington.
The Society initially invested $140,000 to purchase property
on which the building was constructed. A further surcharge
to SPEEA members and a sale of a portion of the property financed the construction of the building. During the year ended
March 31, 2008, SPEEA’s Everett office was transferred to SPEEA
Properties at a net book value of $1,352,804.
b. Basis of Accounting:
The combined financial statements are prepared on the accrual
basis of accounting in accordance with accounting principles
generally accepted in the United States of America.
c. Basis of Presentation:
The accompanying financial statements have been prepared in
conformity with the disclosure and display requirements of the
FASB Accounting Standards Codification Topic 958,
Not-for-Profits. This Topic establishes standards for external financial reporting by not-for-profit organizations and requires that resources be
classified for accounting and reporting purposes into net asset
classes according to donor-imposed restrictions. Accordingly, the
net assets of the Society have been reported as follows:
•;Unrestricted net assets are those currently available at
the discretion of the board for use in the activities of the
•;Temporarily restricted net assets are those stipulated by
donors for specific operating purposes.
•;Permanently restricted net assets are in the form of endowment or sustaining funds in which only the income
from such funds may be expended.
Net assets of the temporarily and permanently restricted class
are created only by donor-imposed restrictions on the use of
funds. All other net assets, including board-designated or appropriated amounts, are reported as part of the unrestricted
class. The Society had no temporarily or permanently restricted
net assets at March 31, 2015 and 2014.
d. Fund Accounting:
To ensure observance of limitations and restrictions placed on
the use of resources available to the Society, the accounts of
the Society are maintained in accordance with the principles
of fund accounting. This is the method by which resources for
various purposes are classified for accounting and reporting
purposes into funds established according to their nature and
purposes. Separate accounts are maintained for each fund and,
accordingly, all financial transactions have been recorded and
reported by fund.
The assets, liabilities, and net asset balances of the Society are
reported in two fund groups as follows:
1) The General Fund, which includes undesignated resources that represent the portion of funds that are
available for support of operations.
2) Board designated funds represent funds designated
by the Executive Board for the Holiday Outreach Fund,
the Negotiation Fund to be used to fund negotiations
of contracts for the Society's members, the Building
Fund for replacement of the Society's building and
equipment, and the Organizing Fund to be used for
organizing new members into the Society. Funds can
be moved from these accounts only by board actions.
Contributions to the Holiday Outreach Fund come from
various sources other than dues income.
e. Principles of Combination:
The assets, liabilities, and net asset balances of SPEEA Properties are owned by the Society as a separate entity. SPEEA
Properties has not issued capital stock and is owned by the
members in good standing of the Society.
All transactions between the Society and SPEEA Properties are
eliminated upon combination. When combining the financial
information of the Society and its subsidiary, SPEEA Properties,
there are items which appear in both entities. An entry was
made to eliminate the amount of investment in SPEEA Properties. The $140,000 initial investment made by the Society in
its subsidiary and the additional investment of $1,352,804 as a
result of the transfer of the building in Everett were eliminated.
During the years ended March 31, 2011 and 2010, an additional
$30,000 and $470,000, respectively, in funds were transferred
to SPEEA Properties. Rent of $150,000 for both the years ended
March 31, 2015 and 2014 was paid by the Society to SPEEA
Properties and eliminated within occupancy expenses.
f. Cash and Cash Equivalents:
For purposes of the financial statements, cash equivalents include time deposits, certificates of deposit, and all highly liquid
instruments with original maturities of three months or less.
Investments in equity and debt securities are reported at fair
value. Realized gains and losses, unrealized gains and losses,
and investment returns are recognized in the combined statement of activities and changes in net assets.
h. Accounts Receivable and Allowance for Doubtful Accounts:
Accounts receivable represent Ed Wells expense reimbursements which were due to the Society and collected after the
close of the fiscal year. All balances due were less than 90 days
past due for the years ended March 31, 2015 and 2014.
The Society uses the direct write-off method to account for bad
debts. No allowance for doubtful accounts has been included
as of March 31, 2015 and 2014 because management considers
all recorded receivables to be fully collectible.
i. Prepaid Expenses:
Prepaid expenses represent advance payments for products
and services and consisted primarily of postage, prepaid payroll
taxes, and insurance, which will be used in operations during
the next 12 months.
j. Land, Buildings, Vehicles, Equipment, and Furniture:
Land, buildings, vehicles, equipment, and furniture are stated
at cost less accumulated depreciation. The Society and SPEEA
Properties generally follow the practice of capitalizing all ex-
penditures for property and equipment in excess of $500 and
a useful life greater than one year. Routine repairs and main-
tenance are expensed as incurred. Depreciation is computed
using the straight-line method of depreciation using the fol-
lowing estimated useful lives:
Buildings and building 15 - 40
Furniture, vehicles, 3 - 10
and office equipment
Depreciation expense on the Seattle and Everett buildings
owned by SPEEA Properties was $35,940 for both the years
ended March 31, 2015 and 2014. Depreciation expense on ve-
hicles, furniture, and equipment was $133,149 and $123,578
for the years ended March 31, 2015 and 2014, respectively.
At March 31, 2015 and 2014, the land and buildings held by
SPEEA Properties had an assessed market value of $2,269,200
and $2,140,200, respectively, by the King and Snohomish
County Departments of Assessments for property tax purposes.
k. Impairment of Long-Lived Assets:
At each reporting date, long-lived assets are reviewed to determine whether there is any indication that those assets have
suffered an impairment loss. If there is indication of possible
impairment, the recoverable amount of any affected asset (or
group of related assets) is estimated and compared with its
carrying amount. If estimated recoverable amount is lower,
the carrying amount is reduced to its estimated recoverable
amount, and an impairment loss is recognized immediately.
l. Accounts Payable:
Accounts payable represent costs and expenses that are obligations
of the Society at the fiscal year-end, which are billed by the vendor
after the close of the fiscal year. In the normal course of operations,
the Society receives, approves, and pays these obligations after the
close of the fiscal year. The balances consisted primarily of billings
for payroll taxes, utilities, leave with pay, and other operating expenses of the Society.
m. Provision for Severance Pay and Compensatory Time Off:
The Society accrues its contractual obligation for severance pay, vacation pay, sick leave, and compensatory time off as a liability, and
represents the Society’s obligation at each employee’s current salary
level. The actual amounts paid to satisfy this liability will depend
upon the employee’s salary level at the time of the payment.
n. Dues Income:
Dues income represents funds received from members either
through a payroll deduction by The Boeing Company, Triumph
Composite Systems, Inc., Spirit AeroSystems, or a direct pay-