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FRONTIER TEXAS!, INC.Abilene, TexasFINANCIAL STATEMENTS ANDINDEPENDENT AUDITORS’ REPORTSeptember 30, 2017 and 2016
FRONTIER TEXAS!, INC.Abilene, TexasCONTENTSSeptember 30, 2017 and 2016PageIndependent Auditors’ Report1Financial Statements:Statements of Financial Position2Statements of Activities3Statements of Cash Flows4Notes to Financial Statements5
993 North Third StreetPO Box 2993Abilene, Texas 796042993Phone 325-677-6251Fax 325-677-0006Certified Public Accountants and Business AdvisorsDecember 18, 2017Board of DirectorsFrontier Texas!, Inc.Abilene, TexasIndependent Auditor’s ReportReport on the Financial StatementsWe have audited the accompanying statement of financial position of Frontier Texas!, Inc. as of September 30, 2017, andthe related statements of activities and cash flows for the year then ended, and the related notes to the financial statements.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance withaccounting principles generally accepted in the United States of America; this includes the design, implementation, andmaintenance of internal control relevant to the preparation and fair presentation of financial statements that are free frommaterial misstatement, whether due to fraud or error.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits inaccordance with auditing standards generally accepted in the United States of America. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of significant accounting estimates made bymanagement, 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.OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofFrontier Texas!, Inc. as of September 30, 2017, and the changes in net assets and its cash flows for the year then ended inaccordance with accounting principles generally accepted in the United States of America.Report on Summarized Comparative InformationWe have previously audited Frontier Texas!, Inc. financial statements, and we expressed an unmodified audit opinion onthose audited financial statements in our report dated February 8, 2017. In our opinion, the summarized comparativeinformation presented herein as of and for the year ended September 30, 2016, is consistent, in all material respects, withthe audited financial statements from which it has been derived.Certified Public Accountants1
FRONTIER TEXAS!, INC.Abilene, TexasSTATEMENTS OF FINANCIAL POSITIONSeptember 30,ASSETS2017Current Assets:Cash and cash equivalentsAccounts receivableAccounts receivable from related partyInventoryPledges receivablePrepaid expenses Total Current AssetsCapital assets, netSculptures, historical artifacts and other non-depreciable assetsTOTAL ASSETS2016395,493012,14850,79520,02431,713 3,271,528294,1673,507,828294,167 4,075,868 4,252,304 10,84325,2683,013 18,75421,8922,810LIABILITIES AND NET ASSETSCurrent Liabilities:Accounts payableAccrued liabilitiesCurrent portion of capital leaseTotal Current LiabilitiesLong term Liabilities:Long-term portion of capital leaseTotal Long Term LiabilitiesTotal LiabilitiesNet Assets:UnrestrictedTemporarily restrictedTotal Net AssetsTOTAL LIABILITIES AND NET ASSETS The accompanying notes are an integral part of the financial 075,868 4,252,304
FRONTIER TEXAS!, INC.Abilene, TexasSTATEMENTS OF ACTIVITIESUnrestrictedREVENUES, GAINS AND OTHER SUPPORT:Contributions, Grants and Sales:Charges for servicesLocal government grant - venue taxContributions and fundraising, net of costsGift shop sales, netNet assets released from restrictions 163,951437,04526,98949,670842Total Contributions, Grants and Sales 842(842)678,497Other Revenues:Interest incomeYear Ended September Total Other RevenuesTotal Revenues, Gains and Other SupportEXPENSES:Program services:PersonnelDepreciationAdvertisingBuilding maintenanceUtilitiesEmployee developmentEvent expensesOther expensesInsuranceTotal Program Services Expenses163,951437,04527,83149,6700 5,4266,5902,623138,131758,240Supporting services:General and administrative:PersonnelCredit card feesOffice supplies and postageInterest expenseAccounting feesTotal General and Administrative 45,13235413,20073,223Fundraising:PersonnelTotal tal ExpensesEXCESS (DEFICIT) OF REVENUE OVER EXPENSESNet Assets at Beginning of YearNET ASSETS AT END OF YEAR4,202,332 4,033,240The accompanying notes are an integral part of the financial statements.32,981 2,9814,205,313 4,036,2214,390,593 4,205,313
FRONTIER TEXAS!, INC.Abilene, TexasSTATEMENTS OF CASH FLOWSYear Ended September 30,20172016CASH FLOWS FROM OPERATING ACTIVITIES:Change in net assetsAdjustments to reconcile change in net assets to net cashprovided (used) by operating activities:Depreciation and amortizationLoss on sale of property and equipment(Increase) Decrease in operating assets:Accounts receivableAccounts receivable from related partyPledges receivableInventoryPrepaid expenses and other assetsDecrease in operating liabilities:Accounts payable and accrued expenses (169,092) 5)(2,809)(2,621)Net Cash Used by Financing Activities(2,809)(2,621)Net Increase (Decrease) in Cash and Cash Equivalents84,481(257,933)311,012568,945Net Cash Provided (Used) by Operating ActivitiesCASH FLOWS FROM INVESTING ACTIVITIES:Acquisition of property and equipmentNet Cash Used by Investing ActivitiesCASH FLOWS FROM FINANCING ACTIVITIES:Principal paid on long-term debt and line-of-creditCash and Cash Equivalents at Beginning of YearCASH AND CASH EQUIVALENTS AT END OF YEAR 395,493 311,012Supplemental Information:Interest paid 354 541The accompanying notes are an integral part of the financial statements.4
FRONTIER TEXAS!, INC.Abilene, TexasNOTES TO FINANCIAL STATEMENTSSeptember 30, 2017 and 2016NOTE 1:STATEMENT OF ORGANIZATION AND PURPOSEFrontier Texas!, Inc., (the “Museum”) was incorporated on June 1, 2003, under the lawsof the State of Texas as a non-profit corporation. The purpose of the Museum is topromote the cultural and educational welfare of the citizens of the City of Abilene andsurrounding region, using historical, educational, and cultural perspective of life on theTexas frontier.NOTE 2:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe accounting and reporting policies of the Museum conform to accounting principlesgenerally accepted in the United States of America. Policies and practices whichmaterially affect the determination of financial position are summarized as follows:Method of AccountingThe Museum uses the accrual method of accounting for support, revenues, and expenses.Revenues and support are recognized when the right to receive them occurs. Expenses arerecognized when incurred.Financial Statement PresentationThe Museum has adopted Accounting Standards Codification (ASC) 958-605,Not-for-Profit Entities: Revenue Recognition. ASC 958-605 requires the Museum torecord contributions received as unrestricted, temporarily restricted, or permanentlyrestricted support depending on the nature of any restrictions made by the donor.Contributions include gifts of cash and promises to give.Contributions and related gains and investment income received with donor-imposedrestrictions that are met in the same year as received are reported as revenues ofunrestricted net assets. In addition, the Museum is required to present a statement of cashflows.The classifications of net assets are as follows:Unrestricted – Net assets that are not subject to donor-imposed restrictions as to theiruse.Temporarily restricted – Net assets subject to donor-imposed restrictions that may orshall be met, either by actions of the Museum and/or by the passage of time. When arestriction expires, temporarily restricted net assets are reclassified to unrestricted netassets.Permanently restricted – Resources that include a donor imposed restriction thatstipulates that resources be maintained permanently, but permits the Museum to useor expend part or all of the income (or other economic benefit) derived from thedonated assets.5
Cash and Cash EquivalentsFor purposes of the statement of cash flows, the Museum considers any short-terminvestment convertible to cash within three months or less with little or no change in theprincipal amount to be a cash equivalent.InventoryInventory is generally stated at cost on the first-in, first-out basis.Donor Restricted GiftsUnconditional promises to give cash and other assets to the Museum are reported at fair valueat the date the promise is received. Unconditional promises to give and indications ofintentions to give are reported as temporarily or permanently restricted support if they arereceived with donor stipulations that limit the use of the donated assets. When a donorrestriction expires, that is, when a stipulated time restriction ends or purpose restriction isaccomplished, temporarily restricted net assets are reclassified as unrestricted net assets andreported in the statement of activities as net assets released from restrictions. Donorrestricted contributions whose restrictions are met within the same year as received arereported as unrestricted contributions in the accompanying financial statements.Capital AssetsThe Museum’s capital assets are reported at historical cost. All equipment purchaseswith a cost over 100 and a useful life of more than one year are capitalized.Contributed capital assets are reported at their estimated fair value at the time of theirdonation. All capital assets other than land are depreciated using the straight-line methodof depreciation using these asset lives:Exhibit construction and programmingAudio visual equipmentEquipment and softwareTent25 years7 years3-5 years15 yearsSculptures, Historical Artifacts and Other Non-depreciable AssetsThe Museum’s sculptures, historical assets and other non-depreciable assets are reportedat historical cost. Contributed items are reported at their estimated fair market value.Federal Income TaxesThe Museum has been granted an exemption from federal income taxes under Section501(c)(3) of the Internal Revenue Code in an exemption letter dated October 10, 2003.Management evaluated the Museum’s tax positions and concluded that the Museum hadtaken no uncertain tax positions that require adjustment to financial statements andtherefore no adjustments have been included in the financial statements for 2017 or 2016.With few exceptions, the Museum is no longer subject to income tax examinations by theU.S. federal, state or local tax authorities for years before 2014.6
Venue TaxThe City of Abilene is responsible for the collection, and apportionment of a hotel venuetax. The Museum recognizes venue tax revenue when amounts are earned fromcollections made by the City.Functional Allocation of ExpensesThe costs of providing the various programs and other activities have been detailed on afunctional basis in the statement of activities. Accordingly, certain costs have been allocatedamong the programs and supporting services benefited.Contributions and FundraisingContributions and fundraising revenues totaled 30,181 and 25,243 for the years endedSeptember 30, 2017 and 2016, respectively. Fundraising expenditures totaled 2,350and 1,056 for the years ended September 30, 2017 and 2016, respectively.Contributed Property and EquipmentContributed property and equipment is recorded at fair value at the date of donation. Ifdonors stipulate how long the assets must be used, the contributions are recorded asrestricted support. In the absence of such stipulations, contributions of property andequipment are recorded as unrestricted support.Advertising CostsAdvertising costs are expensed in the year they are incurred.Use of EstimatesThe preparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements andthe reported amounts of revenue and expenses during the reporting period. Actual resultscould differ from those estimates.Custodial Credit RiskCustodial credit risk is the risk that, in the event of a bank failure, the Museum’s depositsmay not be returned to it. The Museum does not have a deposit or investment policy forcustodial credit risk. As of September 30, 2017, the Museum’s bank balance was notexposed to custodial credit risk as uninsured and uncollateralized.Risk ManagementThe Museum is exposed to various risks of loss from torts; theft of, damage to anddestruction of assets; business interruption; errors and omissions; employee injuries andillnesses; natural disaster; and employee health, dental, and accidental benefits.Commercial insurance coverage is purchased for claims arising from such matters. TheMuseum includes an additional monthly employee allowance as part of the basecompensation for health, dental, or accidental benefits; employees are responsible forobtaining their own insurance coverage.7
Compensated AbsencesEmployees of the Museum are entitled to paid time off. All eligible employees canaccumulate paid time off from their date of employment. Depending upon their length ofemployment, employees can accrue up to 240 hours of paid time off. Terminatedemployees are paid for unused paid time off when their employment is ended.Recent Accounting PronouncementsASU 2014-09 In May 2014, the Financial Accounting Standards Board (FASB) andInternational Accounting Standards Board (IASB) issued substantially converged finalstandards on revenue recognition. The FASB’s Accounting Standards Update (ASU)2014-09, Revenue from Contracts with Customers, was issued in three parts: (1) SectionA, “Summary and Amendments That Create Revenue from Contracts with Customersand Other Assets and Deferred Costs – Contracts With Customers”; (2) Section B,“Conforming Amendments to Other Topics and Subtopics in the Codification and StatusTables”; and (3) Section C, “Background Information and Basis for Conclusions”.ASU 2014-09 provides a robust framework for addressing revenue recognition issuesand, upon its effective date, replaces almost all existing revenue recognition guidance,including industry-specific guidance, in current U.S. generally accepted accountingprinciples (GAAP). This standard will help with improved comparability of revenuerecognition practices across entities, industries, jurisdictions, and capital markets. Giventhe broad applicability and potentially significant ramifications of the guidance in theASU, the ASU is not effective until 2017 for calendar end public entities, which includesnot-for-profit entities that have issued, or are conduit bond obligors for, securities that aretraded, listed or quoted on an exchange or an over the count market and in 2018 for allother entities. On April 1, 2015 the FASB voted to delay the effective date for privatecompanies with a calendar year end date to December 31, 2019.ASU, Leases (Topic 842): a revision of the 2010 proposed Accounting StandardsUpdate, Leases (Topic 840) will require revised accounting for leases to increasetransparency and comparability among organizations by recognizing lease assets andliabilities on the balance sheet and disclosing key information about leasingarrangements. The standard would be effective for public business entities, certain notfor-profit entities, and certain employee benefit plans for annual reporting periodbeginning after December 15, 2018 and for all other entities for annual reporting periodsbeginning after December 15, 2019. Early application will be permitted for all entitiesupon issuance of the final standard. The FASB Board has directed the staff to draft afinal ASU for vote by ballot.ASU 2016-14 Not-for-Profit Entities (Topic 958): Presentation of Financial Statementsof Not-for-Profit Entities, includes significant pervasive changes to the financialreporting requirements for Not-for-Profit Entities. ASU No. 2016-14 is effective on aretrospective basis for Not-for-Profit Entities for fiscal years beginning after December15, 2017, and interim periods within fiscal years beginning after December 15, 2018.Other recent accounting pronouncements issued by the FASB (including its EmergingIssues Task Force) and the American Institute of Certified Public Accountants did not orare not believed by management to have a material impact on the Museum's present orfuture financial statements.Subsequent EventsThe Museum has evaluated subsequent events through December 18, 2017 the date thefinancial statements were available to be issued.8
NOTE 3:PLEDGES AND GRANTS RECEIVABLEAs of September 30, 2017 and 2016, it was not deemed necessary to record an allowancefor uncollectible pledges and grants receivable. Gross pledges receivable totaled 20,024and 15,452 as of September 30, 2017 and September 30, 2016, respectively. Pledgesreceivable due within less than one year totaled 20,024 as of September 30, 2017. Theportion of pledges receivable due in more than one year totaled 0 as of September 30,2017.NOTE 4:CAPITAL ASSETSCapital asset additions, retirements, and balances for the years ended September 30, 2017and 2016, respectively were as follows:BalanceSeptember 30,2016Exhibit construction andprogrammingExhibit redevelopmentAudio visual equipmentOffice and computerequipmentSoftware 3,573,3971,935,261137,681Totals at historical costTotal accumulateddepreciationCapital assets, netAdditions 101,3071,7193,7081,8285,749,4656,845(2,241,537) 3,507,828 BalanceSeptember 30,2015Exhibit construction andprogrammingExhibit redevelopmentAudio visual equipmentOffice and computerequipmentSoftware 3,573,3971,935,241125,528Capital assets, netReductions 3,145)0(2,484,682)(236,300) 0Additions BalanceSeptember 30,2016Reductions 50012,1533,271,528 241,537)Totals at historical costTotal accumulate
Frontier Texas!, Inc. Abilene, Texas Independent Auditor’s Report Report on the Financial Statements We have audited the accompanying statement of financial position of Frontier Texas!, Inc. as of September 30, 2017, and the related statements of activities and cash flows for the year then
