SWVAFB Annual Report FY 2008-2009

THE SOUTHWESTERN VIRGINIA
SECOND HARVEST FOOD BANK, INC.

and SUBSIDIARY
Salem, Virginia
FINANCIAL STATEMENTS
For the Years Ended June 30, 2009 and 2008
ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS

THE SOUTHWESTERN VIRGINIA SECOND HARVEST FOOD BANK, INC.
and SUBSIDIARY
Salem, Virginia
- INDEX -
Independent Auditors' Report Page 1
Statements of Financial Position as of

June 30, 2009 and 2008 Exhibit A
Statements of Activities, For the Years

Ended June 30, 2009 and 2008 Exhibit B
Statements of Cash Flows, For the Years

Ended June 30, 2009 and 2008 Exhibit C
Statements of Functional Expenses, For the Years

Ended June 30, 2009 and 2008 Exhibit D
Notes to Financial Statements,

June 30, 2009 and 2008 Exhibit E
Schedule of Expenditures of Federal Awards,

For the Year Ended June 30, 2009 Schedule 1
Schedule of Findings and Questioned Costs,

For the Year Ended June 30, 2009 Schedule 2
Report on Internal Control Over Financial Reporting

and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance
with Government Auditing Standards Exhibit F
Report on Compliance with Requirements Applicable

to Each Major Program and on Internal Control
Over Compliance in Accordance with OMB
Circular A-133 Exhibit F-1

Independent Auditors' Report
To the Board of Directors

The Southwestern Virginia Second Harvest
Food Bank, Inc. and Subsidiary
Salem, Virginia
We have audited the accompanying statements of financial position of The

Southwestern Virginia Second Harvest Food Bank, Inc. (a nonprofit organization) and its
wholly-owned subsidiary, SWVAFB Property Corporation, as of June 30, 2009 and 2008
and the related statements of activities, cash flows and functional expenses for the years
then ended. These financial statements are the responsibility of the Food Bank'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

accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the
United States. 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 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 the significant estimates made by management as well as
evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in

all material respects, the financial position of The Southwestern Virginia Second Harvest
Food Bank, Inc. and Subsidiary as of June 30, 2009 and 2008 and the changes in its net
assets and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
-2-
In accordance with Government Auditing Standards, we have also issued our

report dated September 28, 2009 on our consideration of The Southwestern Virginia
Second Harvest Food Bank, Inc. and Subsidiary's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements and other matters. The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards and should be considered in assessing
the results of our audit.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements of The Southwestern Virginia Second Harvest Food Bank, Inc. and
Subsidiary taken as a whole. The accompanying schedule of expenditures of federal
awards is presented for purposes of additional analysis as required by U. S. Office of
Management and Budget Circular A-133, "Audits of States, Local Governments and
Non-Profit Organizations," and is not a required part of the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
Roanoke, Virginia
September 28, 2009

and SUBSIDIARY
Statements of Financial Position
As of June 30, 2009 and 2008
ASSETS 2009 2008
Current Assets:
Cash and cash equivalents $ 334,865 $ 238,800
Accounts receivable (net of allowance of $5,000
and $4,369 as of June 30, 2009
and 2008, respectively) 47,983 59,021
Employee receivable - 450
Unconditional promises to give 76,531 73,302
Deposits and prepaid expenses 13,860 11,727
Food inventory 1,234,257 1,062,923
Total current assets $ 1,707,496 $ 1,446,223
Long-Term Unconditional Promises to Give $ 31,631 $ 58,426
Fixed Assets:
Land $ 1,120,000 $ 975,000
Buildings and other equipment 2,786,085 1,636,089
Vehicles 408,300 330,307
Total $ 4,314,385 $ 2,941,396
Less accumulated depreciation 620,080 580,283
Total fixed assets $ 3,694,305 $ 2,361,113
Intangible Assets:
Loan costs $ 28,978 $ 28,978
Less accumulated amortization 9,314 5,175
Total intangible assets $ 19,664 $ 23,803
Total assets $ 5,453,096 $ 3,889,565

Exhibit A
LIABILITIES and NET ASSETS 2009 2008
Current Liabilities:
Accounts payable $ 112,224 $ 55,935
Accounts receivable credit balances 25,902 4,565
Grant funds due agencies 37,573 37,586
Note payable - line of credit 133,255 43,594
Bridge loan - 171,274
Current portion of long-term note payable 36,000 36,000
Accrued payroll and related taxes 10,823 48,474
Accrued annual leave 8,292 8,292
Unearned rent 5,750 10,750
Accrued interest 14,965 5,709
Total current liabilities $ 384,784 $ 422,179
Long-Term Liabilities:
Note payable - other $ 75,000 $ 75,000
Note payable – Salem facility 1,692,000 1,728,000
Note payable – Abingdon facility 1,049,824 -
Interest rate swap agreement 208,182 -
Total long-term liabilities $ 3,025,006 $ 1,803,000
Total liabilities $ 3,409,790 $ 2,225,179
Net Assets:
Unrestricted $ 1,623,616 $ 1,246,670
Temporarily restricted 419,690 417,716
Total net assets $ 2,043,306 $ 1,664,386
Total liabilities and net assets $ 5,453,096 $ 3,889,565
The accompanying notes are an integral part of these financial

statements and should be read in connection therewith.
Exhibit B
Sheet 1

and SUBSIDIARY
Statements of Activities
2009 2008
Unrestricted Net Assets:

Support:
Grants $ 251,458 $ 160,812
Local municipal government grants 95,992 103,517
Contributions 824,604 1,154,605
In-kind contributions 821,059 287,448
Donated food 18,366,016 14,564,915
Total support $ 20,359,129 $ 16,271,297
Revenue:
USDA shared maintenance fees $ 401,200 $ 390,355
Other shared maintenance fees 836,611 740,580
Sale of purchased food 251,899 186,408
Miscellaneous - 12,518
Total revenue $ 1,489,710 $ 1,329,861
Net assets released from restrictions $ 318,004 $ 278,636
Total support and revenue $ 22,166,843 $ 17,879,794

Expenses:
Program expenses $ 1,952,293 $ 1,678,804
Management and general 725,533 670,161
Fundraising 479,719 434,642
Food distributions 18,424,170 15,211,961
Total expenses $ 21,581,715 $ 17,995,568
Change in Unrestricted Net Assets Before Unrealized

Loss on Interest Rate Swap Agreement $ 585,128 $ (115,774)
Unrealized Loss on Interest Rate Swap Agreement (208,182) -
Change in Unrestricted Net Assets $ 376,946 $ (115,774)

Exhibit B
Sheet 2

and SUBSIDIARY
2009 2008
Temporarily Restricted Net Assets:

Support:
Contributions $ 318,478 $ 86,044
Grants 1,500 215,690
Net assets released from restrictions (318,004) (278,636)
Change in Temporarily Restricted Net Assets $ 1,974 $ 23,098
Change in Net Assets $ 378,920 $ (92,676)
Net Assets, Beginning of Year 1,664,386 1,757,062
Net Assets, End of Year $ 2,043,306 $ 1,664,386


Exhibit C
Sheet 1

and SUBSIDIARY
Statements of Cash Flows
2009 2008
Cash Flows from Operating Activities:

Change in net assets $ 378,920 $ (92,676)
Adjustments to reconcile change in net assets
to net cash provided by operating activities:
Contributions received in kind (other than donated food) $ (408,331) $ (3,624)
Depreciation 157,765 147,916
Unrealized loss on interest rate swap agreement 208,182 -
Loss on sale of fixed assets 3,081 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 11,038 (9,044)
(Increase) decrease in unconditional promises to give 23,566 (22,130)
(Increase) decrease in employee receivable 450 (450)
(Increase) decrease in prepaid expenses (2,133) (9,700)
(Increase) decrease in food inventory (171,334) 460,057
Increase (decrease) in accounts payable 56,289 (126,462)
Increase (decrease) in accounts receivable credit balance 21,337 (30,836)
Increase (decrease) in grants due agencies (13) 16,325
Increase (decrease) in accrued payroll and related taxes (37,651) 48,474
Increase (decrease) in unearned rent (5,000) (30,000)
Increase (decrease) in accrued interest 9,256 1,299
Total adjustments $ (133,498) $ 441,825
Net cash provided by operating activities $ 245,422 $ 349,149
Cash Flows from Investing Activities:

Capital expenditures $ (37,344) $ (13,094)
Proceeds from sale of transportation equipment 5,600 -
Net cash used in investing activities $ (31,744) $ (13,094)
Cash Flows from Financing Activities:

Proceeds from note payable $ - $ 75,000
Net borrowing (payments) on line of credit 89,661 (127,556)
Principal payments on notes payable (207,274) (284,726)
Net cash used in financing activities $ (117,613) $ (337,282)

Exhibit C
Sheet 2

and SUBSIDIARY
2009 2008
Net Increase (Decrease) in Cash and Cash Equivalents $ 96,065 $ (1,227)
Cash and Cash Equivalents, Beginning of Year 238,800 240,027
Cash and Cash Equivalents, End of Year $ 334,865 $ 238,800
Supplemental Disclosures of Cash Flow Information:

Cash paid during the year for:
Interest $ 91,515 $ 117,029
Supplemental Schedule of Noncash Investing and Financing Activities:

In-kind contributions received were comprised of the
following assets:
Vehicles $ 149,831 $ -
Equipment and office furniture 8,500 3,624
Abingdon facility (20% interest) 250,000 -
$ 408,331 $ 3,624
For the year ended June 30, 2009, the Food Bank drew
down $1,049,824 of its loan to finance the
acquisition of its Abingdon facility.


Exhibit D
Sheet 1

and SUBSIDIARY
Statement of Functional Expenses
For the Year Ended June 30, 2009
Program Management
Services and General Fundraising Total
Personnel Expenses:
Salaries $ 644,529 $ 285,080 $ 309,870 $1,239,479
Payroll taxes 53,804 23,798 25,868 103,470
Fringe benefits 70,970 31,391 34,120 136,481
Total personnel expenses $ 769,303 $ 340,269 $ 369,858 $1,479,430
Other Expenses:
Consultants and contract services 45,510 95,725 1,996 143,231
Travel 4,877 7,191 770 12,838
Space costs 633,341 26,230 13,116 672,687
Materials and supplies 15,255 10,488 2,247 27,990
Postage and printing 6,359 9,241 72,442 88,042
Equipment expense 96,674 18,316 5,887 120,877
Depreciation 146,721 9,466 1,578 157,765
Telephone 28,407 1,833 305 30,545
General insurance 29,657 38,837 2,118 70,612
Dues and subscriptions 958 28,074 2,182 31,214
Trucking expenses 169,292 - - 169,292
Interest expense - 100,771 - 100,771
Other costs 5,939 39,092 7,220 52,251
Total expenses $1,952,293 $ 725,533 $ 479,719 $3,157,545


Exhibit D
Sheet 2

and SUBSIDIARY
Statement of Functional Expenses
Program Management
Services and General Fundraising Total
Personnel Expenses:
Salaries $ 613,422 $ 267,675 $ 234,216 $1,115,313
Payroll taxes 52,148 22,756 19,911 94,815
Fringe benefits 63,628 27,765 24,294 115,687
Total personnel expenses $ 729,198 $ 318,196 $ 278,421 $1,325,815
Other Expenses:
Consultants and contract services 44,373 77,405 58,946 180,724
Travel 6,833 6,561 1,034 14,428
Space costs 496,598 20,355 10,179 527,132
Materials and supplies 14,979 9,949 4,386 29,314
Postage 6,360 9,011 72,141 87,512
Equipment expense 51,495 8,810 2,832 63,137
Depreciation 137,562 8,875 1,479 147,916
Telephone 24,922 1,608 268 26,798
General insurance 29,328 38,405 2,095 69,828
Dues and subscriptions 932 25,985 2,038 28,955
Trucking expenses 132,720 - - 132,720
Interest expense - 118,328 - 118,328
Other costs 3,504 26,673 823 31,000
Total expenses $1,678,804 $ 670,161 $ 434,642 $2,783,607


Exhibit E
Sheet 1

and SUBSIDIARY
Notes to Financial Statements
June 30, 2009 and 2008
Notes:
1. Nature of Activities:
The Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary (the Food
Bank) is a non-profit organization incorporated under the laws of the Commonwealth of Virginia
on December 29, 1998. The Food Bank has applied for and received tax exempt status from the
Internal Revenue Service as an organization described in Section 501(c)(3) of the Internal Revenue
Code. The Corporation was created to take over and operate the food bank program previously run
by Total Action Against Poverty in the Roanoke Valley, Inc. The mission of the Food Bank is to
feed the hungry by soliciting food and judiciously distributing that food through a network of non-
profit member agencies. On November 1, 2004, the Food Bank moved to a new office and
warehouse facility in Salem, Virginia. The Food Bank has, in addition to its headquarters in
Salem, branches in Abingdon and Covington. Funding comes from area United Way agencies,
local governments, contributions from the general public and businesses in the area and through an
agreement with the Virginia Department of Agriculture and Consumer Services. This agreement
provides for donated foods as they are made available by the United States Department of
Agriculture. Numerous other commercial organizations donate food through the Feeding America
network of which the Food Bank is an affiliate. On February 5, 2007, the Food Bank formed
SWVAFB Property Corporation, a Virginia corporation, for the purpose of acquiring land and
building occupied by the Food Bank in Salem and to provide warehouse services to the Food
Bank. The Food Bank is the sole stockholder of the corporation. Purchase of an 80% undivided
interest in the land and building was completed on March 30, 2007 by the new corporation under
the terms of an option agreement between the Food Bank and New Century Development
Company LLC. SWVAFB Property Corporation leases the facility to the Food Bank and provides
warehouse services under various leasing agreements.
2. Corporate Structure:
The affairs of the Food Bank are managed by a Board of Directors. Day-to-day operations
are managed by a chief executive officer hired by the Board of Directors.

Exhibit E
Sheet 2

and SUBSIDIARY
June 30, 2009 and 2008
Notes: (Continued)
3. Summary of Significant Accounting Policies:
(a) Principles of Consolidation:
The consolidated financial statements include the accounts of the Food Bank and its
wholly-owned subsidiary, SWVAFB Property Corporation. All material intercompany
transactions have been eliminated in consolidation.
(b) Basis of Accounting:
The financial statements have been prepared on the accrual basis of accounting in
accordance with generally accepted accounting principles. Under generally accepted
accounting principles, the Food Bank is required to report information regarding its
financial position and activities according to three classes of net assets: unrestricted,
temporarily restricted and permanently restricted. Currently, the Food Bank has no assets
that are permanently restricted.
(c) Support and Revenue:
The Food Bank receives grants from area United Way Agencies and from local
governments which are recognized as support in the period(s) for which the grant was
made. One-time grants from charitable foundations and contributions from businesses or
individuals are recorded, in most cases, when received. Significant amounts pledged but
not received by year-end are recorded as receivable. Contributions received with donor-
imposed restrictions are recorded as temporarily or permanently restricted depending on
the nature of the restrictions. Support that is restricted by the donor is reported as an
increase in unrestricted net assets if the restriction expires in the reporting period in
which the support is recognized.
(d) Unconditional Promises to Give:
The Food Bank recognizes promises to give as income in the period when the promise is
received. Oral promises are not recorded until a signed commitment is received.
Promises to give are recorded at net receivable value. Management bases collectability
on past experience and uses a discount rate commensurate with the risk involved.

Exhibit E
Sheet 3

and SUBSIDIARY
June 30, 2009 and 2008
Notes: (Continued)
3. (Continued)
(e) Food Valuation:
Foods for distribution in the Food Bank's program are obtained from three types of
sources and are valued as follows:
Purchased food Valued at cost

USDA commodities Value assigned by USDA
Donated foods Valued at $1.58 and $1.49 per pound,
as of June 30, 2009 and 2008, respectively*
*The average value per pound is based on an independent study done for Feeding
America. These values are used in measuring the amount of donated food received and
food distributions shown on Exhibit B and the food inventory on Exhibit A.
Food distributions for the years ended June 30, 2009 and 2008 were approximately 13.6
million and 11.3 million pounds, respectively, with an approximate value of 18 million
and 15 million dollars, respectively.
(f) Fixed Assets:
The Food Bank follows the practice of capitalizing all expenditures for property,
furniture and equipment in excess of $500. Acquisitions are recorded at cost if purchased
and at fair market value if donated to the Food Bank in-kind. Depreciation of all such
items is computed on a straight-line basis over the estimated useful lives of the assets
generally as follows:
Buildings 39 years
Refrigerated trucks 5 years
Cooler, freezers, forklift 7 years
Other equipment, including computers 5 years
Computer software 3 years
Office furniture 7 years

Exhibit E
Sheet 4

and SUBSIDIARY
June 30, 2009 and 2008
Notes: (Continued)
3. (Continued)
(g) Income Taxes:
The Food Bank is exempt from Federal income taxes under Section 501(c)(3) of the
Internal Revenue Code and did not conduct unrelated business activities. The
subsidiary, a Virginia corporation, is subject to income taxes. However, as the
subsidiary has no taxable income for the year ended June 30, 2009, the Food Bank has
made no provision for income taxes in the accompanying financial statements. In
addition, the Food Bank has been determined by the Internal Revenue Service not to be
a "private foundation" within the meaning of Section 509(a) of the Internal Revenue
Code.
(h) 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 contingent assets
and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could vary from the
estimates that were used.
(i) Functional Allocation of Expenses:
The costs of providing the various programs and other activities have been summarized
on a functional basis in the statement of activities. Accordingly, certain costs have
been allocated among the programs and supporting services benefited.
(j) Cash and Cash Equivalents:
Cash equivalents consist of highly liquid investments with an initial maturity of three
months or less. Fair value approximates carrying amounts.

Exhibit E
Sheet 5

and SUBSIDIARY
June 30, 2009 and 2008
Notes: (Continued)
3. (Continued)
(k) Allowance for Doubtful Accounts:
The Food Bank provides for estimated losses on accounts receivable based on prior bad
debt experience and a review of existing receivables. Based on these factors, there is an
allowance for doubtful accounts of $5,000 and $4,369 as of June 30, 2009 and 2008,
respectively.
(l) In-Kind Contributions:
In-kind contributions are recorded at fair market value and recognized as support in the
year they are received.
(m) Donated Services
Donated services are recognized as contributions if the services (a) create or enhance non-
financial assets or (b) require specialized skills, are performed by people with those skills,
and would otherwise be purchased by the Food Bank. The Food Bank recognized
$119,314 in donated services for specialized mold remediation and restoration of freezer
units during the year ended June 30, 2009. Volunteers provided various services to the
Food Bank throughout the year that are not recognized as contributions in the financial
statements since the recognition criteria are not met. The Food Bank received over 18,000
volunteer hours from over 2,000 volunteers during the year ended June 30, 2009.
(n) Accrued Annual Leave:
Vacation pay is recognized as expense in the period when it is earned.
(o) Derivatives:
The Food Bank uses an interest-rate swap agreement to fix the interest rate on one long-
term note. The swap agreement is recorded at fair market value and changes in fair
market value are recorded as changes in net assets as described in Note 4.

Exhibit E
Sheet 6

and SUBSIDIARY
June 30, 2009 and 2008
Notes: (Continued)
4. Notes Payable:
The Food Bank has a line of credit in the amount of $325,000 with SunTrust Bank. Interest
is payable at the bank's prime rate and is due and payable on demand. The line is secured by a first
credit line deed of trust and a blanket lien on all assets of the Food Bank. The balances outstanding
at June 30, 2009 and 2008 were $133,255 and $43,594, respectively.
During the year ended June 30, 2009 the Food Bank obtained a forty-year mortgage
loan from the Rural Housing Service, an agency of the United States Department of Agriculture, in
the amount of $1,879,400 for the purchase and renovation of land and building in Abingdon,
Virginia to replace the existing leased facility in Abingdon. Payments for years one and two are
interest only calculated on the drawdown amount of the loan at the rate of 4.5% annually payable
on the anniversary date of the loan. A drawdown will be permitted for the amount of the interest
from the original principal amount provided that prior drawdowns have not exceeded the principal
amount. The principal amount of the loan (drawdowns) was $1,049,824 as of June 30, 2009.
During the year ended June 30, 2009 the Food Bank obtained a second loan from the Rural
Housing Service in the amount of $104,000 for equipment for the new Abingdon facility.
Payments for the first year will be interest only calculated on the drawdown amount of the loan at
the rate of 4.5% annually on the anniversary date of the loan. A drawdown will be permitted for
the amount of the interest due from the original principal amount provided that prior drawdowns
have not exceeded the principal amount. The principal amount of the loan (drawdowns) was $-0-
as of June 30, 2009. Both loans are secured by a Deed of Trust having first priority, a financing
statement on all accounts and general intangibles of the Food Bank and all equipment and fixtures
financed with these loan funds.
The Food Bank has a seven-year commercial mortgage from SunTrust Bank and was
required to make sinking fund deposits of $400,000 by December 31, 2008 and an additional
deposit of $100,000 by December 31, 2009. However, SunTrust Bank modified the requirement
on December 1, 2008 to require a $200,000 deposit by December 31, 2009, $200,000 by
December 31, 2010 and $100,000 by December 31, 2011.

Exhibit E
Sheet 7

and SUBSIDIARY
June 30, 2009 and 2008
Notes: (Continued)
4. (Continued)
The long-term debt at June 30, 2009 and 2008 is as follows:
Interest
Rate Due 2009 2008 Security
SunTrust Bank 4.13% Annual interest

only. Principal 2007 Chevrolet
due 12-20-12 $ 75,000 $ 75,000 truck
SunTrust Bank LIBOR, Monthly interest

less 1% payments of
(swap approximately
agree- $6,380. Annual
ment principal payment
below) of $36,000 due
December 31. Real property
Balance of principal and blanket
due 3-30-2014 1,728,000 1,764,000 lien
Rural Housing 4.5% Annual interest only

Service for first two years; Real property,
principal over equipment and
forty years 1,049,824 - fixtures
$2,852,824 $1,839,000
Less Current Portion 36,000 36,000
Non-Current Portion $2,816,824 $1,803,000
The Food Bank entered into an interest rate swap agreement with SunTrust Bank to fix the
interest rate on the seven year commercial loan at 4.43% in order to protect the Food Bank against
rising interest rates and to provide for stable cash flows during the term of the loan in order to
provide a stable capital campaign budget. The interest rate swap agreement notional amounts and
maturity matches the principal amounts and maturity of the loan. At June 30, 2009, the
outstanding notional principal amount of the agreement was $1,728,000. The fair value of the
interest rate swap agreement at June 30, 2009 was a derivative liability of $208,182. This amount
has been recorded as a long-term liability as the Food Bank does not plan to terminate the

Exhibit E
Sheet 8

and SUBSIDIARY
June 30, 2009 and 2008
Notes: (Continued)
4. (Continued)
agreement prior to the maturity of the loan. The change in the fair value of the swap agreement
has been recorded as an unrealized loss on interest rate swap agreement in the statement of
activities. The fair value was not recorded in previous years as it was not considered material to
the financial statements.
The future maturities of long-term debt are as follows:
Year Ended June 30, Amount
2010 $ 36,000
2011 39,130
2012 130,282
2013 56,168
2014 1,615,095
5. Pension Plan:
The Food Bank participates in a retirement and 401(k) plan for the benefit of its employees.
The plan is administered by SunTrust Bank and Transamerica Retirement Services. Employees
become eligible to participate in the plan and make elective deferrals after 30 days of employment.
After two years of service, participants are eligible to have employer contributions credited to their
account. The plan provides for benefits at the employee’s normal retirement age of 65. Benefits
may be paid in a lump sum or in installments over a fixed period of time. The amount of benefits
is based on the participant’s account balance at time of retirement.
Participants may defer from 1% to 100% of their salary and up to 100% of any cash paid
employer bonus subject to the annual dollar limit and overall plan limit on elective deferrals. The
Food Bank may make matching, non-elective, and discretionary contributions to the plan. During
the years ended June 30, 2009 and 2008, the Food Bank contributed $59,755 and $39,519,
respectively, to the plan which is included in fringe benefits in the financial statements.

Exhibit E
Sheet 9

and SUBSIDIARY
June 30, 2009 and 2008
Notes: (Continued)
6. Leases:
The Food Bank leases a 20% undivided interest in its Salem facility of approximately 98,090
square feet for an annual rental of $172,966. Under the terms of the lease, the Food Bank is to pay
rent monthly in the amount of $14,414. However, the Food Bank is not required to pay the rent as
the landlord treats the amount of foregone rent as a donation to the Food Bank. The Food Bank
recognizes the amount of rental payments as an in-kind contribution.
The Food Bank subleases unused warehouse and parking space on a short-term basis. Rental
expense for the years ended June 30, 2009 and 2008, not including contributed rent, was
$224,788 and $174,378 net of sublease rental income of $53,445 and $104,816, respectively.
The branch facility in Abingdon is leased under an agreement which provides approximately
1,200 square feet of office space for $1,200 per month. Approximately 9,500 square feet of
additional warehouse and office space is leased at zero monthly rent. The fair market rental value
of $86,500 is recognized as an in-kind contribution. The lease expired March 31, 2006, and the
Food Bank is renting the facility on a month-to-month basis. On April 15, 2009, the Food Bank
purchased an 18,000 square-foot building and four acres of land in Washington County to replace
the Abingdon facility. An additional 2,700 square feet of freezer and cooler space is under
construction with plans to move to the new facility by late October, 2009.
The branch facility in Covington was leased under an agreement that requires the Food Bank
to pay 63% of all utilities for the facility. There was no monthly rental. The amount paid for
utilities under this agreement was $4,377 for the year ended June 30, 2009 and $5,328 for 2008.
The lease agreement was terminated at the end of April, 2009. Covington agencies presently place
orders by phone or fax and Food Bank personnel deliver orders to the TAP parking lot in
Covington once a week for transfer to agencies.

Exhibit E
Sheet 10

and SUBSIDIARY
June 30, 2009 and 2008
7. Temporarily Restricted Net Assets:
Temporarily restricted net assets consisted of the following at June 30, 2009 and
2008, respectively:
2009 2008
Kids Café $ 28,894 $ 74,344

Grants and donations for specific
agencies or purposes 282,532 211,543
Unconditional promises to give 108,162 131,728
Sinking Fund 102 101
$ 419,690 $ 417,716
8. Related Party Transactions:
The Food Bank exercised an option, granted in 2004, to purchase an 80% undivided interest
in the Salem facility from New Century Development Company, LLC. The Food Bank leases the
remaining 20% undivided interest from New Century. A managing member of New Century, was
elected to the board of the Food Bank in 2006. The total amount of rent paid to New Century for
each of the years ended June 30, 2009 and 2008 was $172,966 all of which was recognized as an in-
kind contribution.
During the years ended June 30, 2009 and 2008, the Food Bank paid legal fees to its law firm
in the amount of $12,775 and $3,866, respectively. Fees for 2009 included $12,600 paid in
connection with the purchase of the Abingdon facility. A partner in the law firm is also a director of
the Food Bank.
The Food Bank entered into a contract with Access, an advertising and public relations
agency, to provide planning and assistance with the Food Bank's capital campaign. The owner of
Access is a distant relative of the Chairman of the Board of the Food Bank. The Chairman has no
financial interest in or other connection with Access and did not participate in the selection process
or vote to engage Access to provide services to the Food Bank. The total amount paid to Access by
the Food Bank for the year ended June 30, 2009 was $5,184.

Schedule 1

and SUBSIDIARY
Schedule of Expenditures of Federal Awards
Federal
CFDA # Revenue Expenditures
Pass Through Virginia Department of Agriculture

and Consumer Services (VDACS Agency
Number 67-500):
USDA - Emergency Food Assistance
Program (food commodities) 10.569 $2,574,287 $ 2,440,597
USDA - Emergency Food Assistance
Program (administrative costs) 10.568 247,784 247,784
ARRA - USDA - Emergency Food Assistance
Program (Administrative costs) 10.568 153,416 153,416
Virginia Child and Adult Care Food Program
(operating costs) 10.558 175,591 175,591
Summer Feeding Program Foods 10.559 3,184 3,184
USDA - Community Facilities Loans & Grants 10.766 1,049,824 1,049,824
Total Federal assistance $4,204,086 $ 4,070,396
NOTES TO SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE

FOR THE YEAR ENDED JUNE 30, 2009
Note A Basis of Presentation
The accompanying schedule of revenue and expenditures of Federal awards includes the Federal
grant activity of The Southwestern Virginia Second Harvest Food Bank, Inc. and is presented on
the accrual basis of accounting. The information in this schedule is presented in accordance with
the requirements of OMB Circular A-133, "Audits of States, Local Governments, and Non-Profit
Organizations."
Note B Food Distribution
Non-monetary assistance is reported in the schedule at the fair market value of the commodities
received and distributed. At June 30, 2009 and 2008, the Food Bank had food commodities
totaling $290,886 and $157,196, respectively in inventory.

Schedule 2

and SUBSIDIARY
Schedule of Findings and Questioned Costs
Part A: Summary of Audit Results:
1. The auditors' report expresses an unqualified opinion on the financial statements of the
Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary.
2. No significant deficiencies in internal control were disclosed by the audit of the financial
statements.
3. The audit disclosed no instances of noncompliance which are material to the financial
statements of The Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary.
4. No significant deficiencies in internal controls over major programs were disclosed by the
audit of major Federal programs.
5. The auditors' report expresses an unqualified opinion on compliance for major programs of
The Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary.
6. The audit disclosed no audit findings relative to the major programs for The Southwestern
Virginia Second Harvest Food Bank, Inc. and Subsidiary which are required to be reported
under OMB Circular A-133.
7. The programs tested as major programs included:
CFDA #
USDA - Emergency Food Assistance Program (food commodities) 10.569

USDA - Emergency Food Assistance Program (administrative costs) 10.568
USDA - Community Facilities Loans and Grants 10.766
8. The threshold for distinguishing Types A and B programs was $300,000.
9. The Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary was determined
to be a low risk auditee.

Exhibit F
Sheet 1
Report on Internal Control Over Financial

Reporting and on Compliance and Other Matters Based on
An Audit of Financial Statements Performed
In Accordance with Government Auditing Standards
Board of Directors
Salem, Virginia
We have audited the financial statements of The Southwestern Virginia Second

Harvest Food Bank, Inc. and its wholly-owned subsidiary SWVAFB Property Corporation
as of and for the year ended June 30, 2009 and have issued our report thereon dated
September 28, 2009. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered The Southwestern Virginia

Second Harvest Food Bank, Inc. and Subsidiary's internal control over financial reporting
as a basis for designing our auditing procedures for the purpose of expressing our opinion
on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of The Southwestern Virginia Second Harvest Food Bank, Inc. and
Subsidiary's internal control over financial reporting. Accordingly, we do not express an
opinion on the effectiveness of the Food Bank's internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect misstatements on a timely basis. A significant deficiency is a control
deficiency, or combination of control deficiencies, that adversely affects the Food Bank's
ability to initiate, authorize, record, process, or report financial data reliably in accordance
Exhibit F
Sheet 2
with generally accepted accounting principles, such that there is more than a remote
likelihood that a misstatement of the Food Bank's financial statements that is more than
inconsequential will not be prevented or detected by the Food Bank's internal control.
A material weakness is a significant deficiency, or combination of significant

deficiencies, that results in more than a remote likelihood that a material misstatement of
the financial statements will not be prevented or detected by the Food Bank's internal
control.
Our consideration of internal control over financial reporting was for the limited
purpose described in the first paragraph of this section and would not necessarily identify
all deficiencies in internal control that might be significant deficiencies or material
weaknesses. We did not identify any deficiencies in internal control over financial
reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether The Southwestern Virginia

Second Harvest Food Bank, Inc. and Subsidiary's financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our
audit, and accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported
under Government Auditing Standards.
We noted certain matters that we reported to management of The Southwestern

Virginia Second Harvest Food Bank, Inc. and Subsidiary in a separate letter dated
September 28, 2009.
This report is intended solely for the information and use of management, the audit
committee, Board of Directors and Federal awarding agencies and pass-through entities
and is not intended to be and should not be used by anyone other than these specified
parties.
Roanoke, Virginia
September 28, 2009

Exhibit F-1
Sheet 1
Report on Compliance with Requirements

Applicable to Each Major Program and on Internal Control
Over Compliance in Accordance with OMB Circular A-133
Board of Directors
Salem, Virginia
Compliance
We have audited the compliance of The Southwestern Virginia Second Harvest

Food Bank, Inc. and Subsidiary with the types of compliance requirements described in the
U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement
that are applicable to each of its major Federal programs for the year ended June 30, 2009.
The Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary's major
Federal programs are identified in the summary of auditor's results section of the
accompanying schedule of findings and questioned costs. Compliance with the
requirements of laws, regulations, contracts, and grants applicable to each of its major
Federal programs is the responsibility of The Southwestern Virginia Second Harvest Food
Bank, Inc. and Subsidiary's management. Our responsibility is to express an opinion on
The Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary's compliance
based on our audit.
We conducted our audit of compliance in accordance with auditing standards

generally accepted in the United States of America; the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States; and OMB Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan
and perform the audit to obtain reasonable assurance about whether noncompliance with
the types of compliance requirements referred to above that could have a direct and
material effect on a major Federal program occurred. An audit includes examining, on a
test basis, evidence about The Southwestern Virginia Second Harvest Food Bank, Inc. and
Exhibit F-1
Sheet 2
Subsidiary's compliance with those requirements and performing such other procedures as
we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion. Our audit does not provide a legal determination of The
Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary's compliance with
those requirements.
In our opinion, The Southwestern Virginia Second Harvest Food Bank, Inc. and
Subsidiary complied, in all material respects, with the requirements referred to above that
are applicable to each of its major Federal programs for the year ended June 30, 2009.
Internal Control Over Compliance
The management of The Southwestern Virginia Second Harvest Food Bank, Inc.
and Subsidiary is responsible for establishing and maintaining effective internal control
over compliance with the requirements of laws, regulations, contracts, and grants
applicable to Federal programs. In planning and performing our audit, we considered The
Southwestern Virginia Second Harvest Food Bank, Inc. and Subsidiary's internal control
over compliance with requirements that could have a direct and material effect on a major
Federal program in order to determine our auditing procedures for the purpose of
expressing our opinion on compliance, but not for the purpose of expressing an opinion on
the effectiveness of internal control over compliance. Accordingly, we do not express an
opinion on the effectiveness of The Southwestern Virginia Second Harvest Food Bank, Inc.
and Subsidiary's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the
design or operation of a control does not allow management or employees, in the normal
course of performing their assigned functions, to prevent or detect noncompliance with a
type of compliance requirement of a Federal program on a timely basis. A significant
deficiency is a control deficiency, or combination of control deficiencies, that adversely
affects the entity's ability to administer a Federal program such that there is more than a
remote likelihood that noncompliance with a type of compliance requirement of a Federal
program that is more than inconsequential will not be prevented or detected by the entity's
internal control.
A material weakness is a significant deficiency, or combination of significant

deficiencies, that results in more than a remote likelihood that material noncompliance with
a type of compliance requirement of a Federal program will not be prevented or detected
by the entity's internal control.
ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS125

Exhibit F-1
Sheet 3
Our consideration of internal control over compliance was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all
deficiencies in internal control that might be significant deficiencies or material
weaknesses. We did not identify any deficiencies in internal control over compliance that
we consider to be material weaknesses as defined above.
This report is intended solely for the information and use of the audit committee,
management, Board of Directors, and Federal awarding agencies and pass-through entities
and is not intended to be and should not be used by anyone other than these specified
parties.
Roanoke, Virginia
September 28, 2009
ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS125

SWVAFB Annual Report FY 2008-2009

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

SWVAFB Annual Report FY 2008-2009

Hochgeladen von

Copyright:

Verfügbare Formate

THE SOUTHWESTERN VIRGINIA

SECOND HARVEST FOOD BANK, INC.

For the Years Ended June 30, 2009 and 2008

ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditors' Report Page 1

Statements of Financial Position as of

Statements of Activities, For the Years

Statements of Cash Flows, For the Years

Statements of Functional Expenses, For the Years

Notes to Financial Statements,

Schedule of Expenditures of Federal Awards,

Schedule of Findings and Questioned Costs,

Report on Internal Control Over Financial Reporting

Report on Compliance with Requirements Applicable

ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors

We have audited the accompanying statements of financial position of The

We conducted our audits in accordance with auditing standards generally

In our opinion, the financial statements referred to above present fairly, in

In accordance with Government Auditing Standards, we have also issued our

ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS

Statements of Financial Position

As of June 30, 2009 and 2008

ASSETS 2009 2008

Total current assets $ 1,707,496 $ 1,446,223

Long-Term Unconditional Promises to Give $ 31,631 $ 58,426

Total fixed assets $ 3,694,305 $ 2,361,113

Total intangible assets $ 19,664 $ 23,803

Total assets $ 5,453,096 $ 3,889,565

ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS

LIABILITIES and NET ASSETS 2009 2008

Total current liabilities $ 384,784 $ 422,179

Total long-term liabilities $ 3,025,006 $ 1,803,000

Total liabilities $ 3,409,790 $ 2,225,179

Total net assets $ 2,043,306 $ 1,664,386

Total liabilities and net assets $ 5,453,096 $ 3,889,565

The accompanying notes are an integral part of these financial

THE SOUTHWESTERN VIRGINIA SECOND HARVEST FOOD BANK, INC.

For the Years Ended June 30, 2009 and 2008

Unrestricted Net Assets:

Net assets released from restrictions $ 318,004 $ 278,636

Total support and revenue $ 22,166,843 $ 17,879,794

Total expenses $ 21,581,715 $ 17,995,568

Change in Unrestricted Net Assets Before Unrealized

Unrealized Loss on Interest Rate Swap Agreement (208,182) -

Change in Unrestricted Net Assets $ 376,946 $ (115,774)

ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS

THE SOUTHWESTERN VIRGINIA SECOND HARVEST FOOD BANK, INC.

Temporarily Restricted Net Assets:

Change in Temporarily Restricted Net Assets $ 1,974 $ 23,098

Change in Net Assets $ 378,920 $ (92,676)

Net Assets, Beginning of Year 1,664,386 1,757,062

Net Assets, End of Year $ 2,043,306 $ 1,664,386

The accompanying notes are an integral part of these financial

ANDERSON & REED, LLP, CERTIFIED PUBLIC ACCOUNTANTS

THE SOUTHWESTERN VIRGINIA SECOND HARVEST FOOD BANK, INC.

Statements of Cash Flows

For the Years Ended June 30, 2009 and 2008

Cash Flows from Operating Activities:

Net cash provided by operating activities $ 245,422 $ 349,149

Cash Flows from Investing Activities:

Net cash used in investing activities $ (31,744) $ (13,094)

Cash Flows from Financing Activities:

Net cash used in financing activities $ (117,613) $ (337,282)