BHEF FY20 Audit Draft 2.19.2021

BUSINESSHIGHER EDUCATION FORUM ______________ FINANCIAL STATEMENTS AND SINGLE AUDIT UNDER THE UNIFORM GUIDANCE Years Ended September 30, 2020and 2019 DRAFT TABLE OF CONTENTS DescriptionPage Independent Auditors’ Report 1 – 2 Statements of Financial Position 3 Statements of Activities 4 Statement of Functional Expenses (September 30, 2020) 5 Statement of Functional Expenses (September 30, 2019) 6 Statements of Cash Flows 7 Notes to Financial Statements 8 – 1 6 SupplementalInformation Independent Auditors’ 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 Standards17 – 1 8 Independent Auditors’ Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance 1 9 – 20 Schedule of Expenditures of Federal Awards2 1 Notes to Schedule of Expenditures of Federal Awards22 Schedule of Findings and Questioned Costs 23 – 2 4 Summary Schedule of Prior Audit Findings 25 DRAFT INDEPENDENT AUDITORS’ REPORT The Executive Committee Business Higher Education Forum Report on the Financial Statements We have audited the accompanyingfinancial statementsof Business Higher Education Forum, which comprise the statements of financial positionas of September 30, 2020 and 2019 , and the related statements of activities, functional expensesand cash flowsfor the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements 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 offinancial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility 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 Americaand 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The proceduresselected depend on the auditors’ judgment, including the assessment of the risks 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 entity’s 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 entity’s 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 asevaluating 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. DRAFT 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Business Higher Education Forum, as of September 30, 2020and 2019, and the changes in its net assets, functional expenses and cash flowsfor the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 2 to the financial statements, the Forumadopted Accounting Standards Update No. 2018-08, Not-for-Profit Entities: Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (Topic 958), during the year ended September30, 2020. Our opinion is not modifiedwith respect to this matter. Other Matters Our audit was conducted for the purpose of forming an opinionon the financial statements as a whole.The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal RegulationsPart 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,is presented for purposes of additional analysis and is not a required part of the financial statements.Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States o f America. In our opinion, the information is fairly stated, in all material respects, in relation to thefinancial statements as a whole. Other Reporting Required byGovernment Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February__ , 20 21, on our consideration of Business Higher Education Forum’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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standardsin considering Business Higher Education Forum’s internal control over financial reporting and compliance. Bethesda, Maryland February __, 20 21 DRAFT BUSINESS HIGHER EDUCATION FORUM STATEMENTS OF FINANCIAL POSITION September 30, 2020 and 2019 ____________ 20202019 ASSETS Current assets Cash and cash equivalents 985,376$ 840,256$ Investments 1,086,204 1,016,859 Accounts receivable 175,000 653,202 Grants receivable 8,750 528,450 Prepaid expenses51,706 4,806 Total current assets2,307,0363,043,573 Property and equipment, net (Note 10)18,597 - Deposits11,517 - Total assets2,337,150$ 3,043,573$ LIABILITIES AND NET ASSETS Current liabilities Note payable - Paycheck Protection Program249,800$ -$ Accounts payable 66,865 506,912 Deferred revenue 300,000 850,000 Total current liabilities 616,665 1,356,912 Deferred rent30,259 - Total liabilities646,924 1,356,912 Net assets Without donor restrictions1,186,768 1,070,571 With donor restrictions503,458 616,090 Total net assets1,690,226 1,686,661 Total liabilities and net assets2,337,150$ 3,043,573$ The accompanying notes are an integral part of these financial statements. 3 DRAFT BUSINESS HIGHER EDUCATION FORUM STATEMENTS OF ACTIVITIES Years Ended September 30, 2020 and 2019 ____________ 20202019 Revenue and support Membership dues1,600,000$ 1,690,000$ Grants and contributions1,203,3951,691,868 Sponsorship- 5,000 Miscellaneous- 3,206 Net assets released from donor restrictions464,124 630,287 Total revenue and support 3,267,519 4,020,361 Expenses Program services Higher education workforces 1,307,4831,548,516 Chase program 376,252500,380 Conferences 161,939 369,063 Membership 262,981256,996 Communications 175,786 239,412 Google 85,10962,416 DMV Projects 48,32820,415 Market Intelligence- 10,894 ECMC 12,943- Strada 28,166- Texas A&M 670 - Total program services 2,459,657 3,008,092 Supporting services Management and general621,857 650,301 Grant development 139,412 105,440 Total supporting services761,269 755,741 Total expenses 3,220,926 3,763,833 Change in net assets without donor restrictions46,593 256,528 Non-operating activity Investment income, net (Note 3)69,604 83,398 Net assets with donor restrictions Grants and contributions 351,492600,000 Net assets released from donor restrictions(464,124) (630,287) Change in net assets with donor restrictions(112,632) (30,287) Change in net assets 3,565 309,639 Net assets, beginning of year 1,686,661 1,377,022 Net assets, end of year 1,690,226$ 1,686,661$ The accompanying notes are an integral part of these financial statements. 4 DRAFT BUSINESS HIGHER EDUCATION FORUM STATEMENT OF FUNCTIONAL EXPENSES Year Ended September 30, 2020 ____________ HEWIChaseConferencesMembershipCommunicationsGoogle DMV Projects ECMC Strada Texas A&M Total Management and General Grant Development Total Expenses Labor Costs 515,786$ 325,744$ 99,658$ 238,407$ 85,116$ 66,393$ 46,685 11,766$ 20,325$ 670$ 1,410,550$ 429,846$ 129,390$ 1,969,786$ Consultants 349,340 19,618 - 500 80,543 - - - - - 450,001 23,304 - 473,305 Registration Services - 610 - - - - - - - - 610 - - 610 Sub-Award Payments 311,492 - - - - - - - - - 311,492 - - 311,492 Support Services Fees 3,062 - 2,695 5,985 2,076 - 1,546 - - - 15,364 165,846 2,517 183,727 Temporary Services 8,082 - - - - - - - - - 8,082 25,735 - 33,817 Travel 15,490 8,862 6,951 1,841 21 1,694 97 - - - 34,956 1,816 676 37,448 Meeting Expense 2,361 - 37,198 - - - - - - - 39,559 1,294 - 40,853 Miscellaneous 98 29 - 9 16 - - - - - 152 12,892 13 13,057 Depreciation - - - - - - - - - - - 2,325- 2,325 Telephone 51 77 172 519 - - - - - - 819 27,015 56 27,890 Office Supplies - - 337 265 - - - - - - 602 4,364 - 4,966 Bank and Investment Fees - - - - - - - - - - - 46 - 46 Printing and Photocopies 5,988 395 2,330 249 - - - - - - 8,962 - - 8,962 Insurance - - - - - - - - - - - 6,570 - 6,570 Books and Subscriptions 7,500 30 - 2,154 - - - - 4,167 - 13,851 4,717 - 18,568 Postage and Delivery 58 - 31 597 - - - - - - 686 1,409 - 2,095 Rent 7,492 - 5,207 12,455 4,447 - - - - - 29,601 22,877 6,760 59,238 Fringe Benefits - - - - - - - - - - - - - - Design and Editing 11,760 2,970 7,360 - 3,000 - - - - - 25,090 - - 25,090 Website - - - - 567 - - - - - 567 514 - 1,081 Indirect Cost Allocation 68,923 17,917 - - - 17,022 - 1,177 3,674 - 108,713 (108,713) - - Total1,307,483$ 376,252$ 161,939$ 262,981$ 175,786$ 85,109$ 48,328$ 12,943$ 28,166$ 670$ 2,459,657$ 621,857$ 139,412$ 3,220,926$ Supporting ServicesProgram Services The accompanying notes are an integral part of these financial statements. 5 DRAFT BUSINESS HIGHER EDUCATION FORUM STATEMENT OF FUNCTIONAL EXPENSES Year Ended September 30, 2019 ____________ HEWIChaseConferencesMembershipCommunicationsGoogle DMV Projects Market Intelligence Total Management and General Grant Development Total Expenses Labor Costs 366,529$ 450,725$ 184,172$ 216,391$ 89,735$ 17,630$ 17,589$ 7,704$ 1,350,475$ 487,469$ 93,676$ 1,931,620 Consultants 211,168 450 - - 138,089 32,303 - - 382,010 - - 382,010 Sub-Award Payments 864,727 - - - - - - - 864,727 - - 864,727 Support Services Fees 6,899 - 16,945 22,572 9,133 - 1,962 817 58,328 170,278 9,526 238,132 Temporary Services 4,212 322 - - - - - 1,515 6,049 43,606 - 49,655 Travel 6,962 23,708 29,817 9,013 35 - 624 - 70,159 2,623 972 73,754 Meeting Expense 7,161 - 119,924 261 - - - - 127,346 350 - 127,696 Miscellaneous 10,093 - 2,505 144 - - - - 12,742 4,015 29 16,786 Telephone 579 217 2,179 3,718 1,102 - 234 106 8,135 20,621 1,154 29,910 Office Supplies 5,498 1,054 1,102 442 100 - 6 2 8,204 1,859 83 10,146 Bank and Investment Fees - - - - - - - - - 253 - 253 Printing and Publications 7,313 62 2,051 1,367 298 - - - 11,091 - - 11,091 Insurance - - - - - - - - - 5,673 - 5,673 Books and Subscriptions 712 19 - 2,355 - - - - 3,086 2,989 - 6,075 Postage and Delivery 128 - 414 733 - - - - 1,275 406 - 1,681 Design and Editing 3,000 - 9,954 - 400 - - 750 14,104 - - 14,104 Website - - - - 520 - - - 520 - - 520 Indirect Cost Allocation 53,535 23,823 - - - 12,483 - - 89,841 (89,841) - - Total1,548,516$ 500,380$ 369,063$ 256,996$ 239,412$ 62,416$ 20,415$ 10,894$ 3,008,092$ 650,301$ 105,440$ 3,763,833$ Program ServicesSupporting Services The accompanying notes are an integral part of these financial statements. 6 DRAFT BUSINESS HIGHER EDUCATION FORUM STATEMENTS OF CASH FLOWS Years Ended September 30, 2020 and 2019 ____________ 20202019 Cash flows from operating activities Change in net assets3,565$ 309,639$ Reconciling adjustments Depreciation2,325 - Net realized and unrealized investment gains(43,880) (56,200) Changes in operating assets and liabilities: Accounts receivable478,202 (555,202) Grants receivable519,700 71,261 Prepaid expenses(46,900) 7,037 Deposits(11,517) - Accounts payable (440,047) (1,202) Deferred revenue (550,000) 110,000 Deferred rent 30,259 - Net cash used by operating activities(58,293) (114,667) Cash flows from investing activities Purchase of property and equipment(20,922) - Purchase of investments(25,465) (26,803) Net cash used by investing activities(46,387) (26,803) Cash flows from financing activities Proceeds from Paycheck Protection Program249,800 - Net increase (decrease) in cash and cash equivalents145,120 (141,470) Cash and cash equivalents, beginning of year840,256 981,726 Cash and cash equivalents, end of year985,376$ 840,256$ Supplemental cash flow information: Cash paid for interest:-$ -$ Cash paid for taxes:-$ -$ The accompanying notes are an integral part of these financial statements. 7 DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 8 1.Organization Business Higher Education Forum (the Forum) i s an organization of Fortune 500 CEOs, prominent college and university presidents, and foundation leaders working to advance innovative solutions to the nation’s education challenges in order to enhance U.S. competitiveness. The Forum and its members advance public policy, develop programs and tools to help its members and other leaders strengthen U.S. education, and inspire other corporate, academic, and foundation leaders to act. 2.Summary of Significant Accounting Policies Basis of Presentation The financial statements of the Forumhave been prepared in accordance with U.S. generally accepted accounting principles, which require the Forumto report information regarding its financial position and activities according to the following net asset classifications: Net assets without donor restrictions:Net assets that are not subject to donor- imposed restrictions and may be expended for any purpose in performing the primary objectives of the Forum. The Forum’s board may designate assets without restrictions for specific operational purposes from time to time. Net assets with donor restrictions:Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature; those restrictions will be met by actions of the Forum or by the passage of time. Donor restricted contributions are reported as increases in net assets with donor restrictions. When a restriction expires, net assets are reclassified from net assets with donor restrictions to net assets without donor restrictions in the statement of activities. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and the 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. Accordingly, actual results could differ from these estimates. Cash and Cash Equivalents The Forummaintains cash accounts with commercial banks and money market funds with financial institutions. The Forum defines cash and cash equivalents as deposits held with a maturity of three months or less. DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 9 2.Summary of Significant Accounting Policies(continued) Investments Investments are recorded at estimated fair values based on quoted market prices in active markets.Investment transactions are recorded on a trade-date basis.Investment income, including unrealized gains or losses, is reported in the statements of activities as non- operating increases or decreases in net assetswithout donor restrictions, unless otherwise restricted by the donor or law. Accounts Receivable Accounts receivables are presented at their outstanding balances. Management periodically reviews the status of all accounts receivable balances for collectability. Each accounts receivable balance is assessed based on management’s knowledge of the member and the age of the receivable balance. Based on these reviews, management charges the allowance for doubtful accounts any balances management deems to be uncollectable. Grants Receivable All unconditional promises to give are receivable within one year and are recorded at net realizable value on the statements of financial position as grants receivable. Conditional promises to give, if any, are not included as support until the conditions are substantially met. The allowance method is used to determine uncollectible amounts.The allowance is based upon prior years’ experience and management’s analysis of subsequent collections. Promises to give are considered past due and allowances on promises to give are recorded when circumstances indicate collection is doubtful for particular promises to give or as a general reserve for all promises to give. Promises to give are written off if reasonable collection efforts prove unsuccessful. Bad debt expense is reflected in grant development expense on the statements of activities when allowances on promises to give are increased or when promises to give written off exceed available allowances. There was no bad debt expense nor an allowance for doubtful accounts for the years ended September 30, 2020and 2019. Membership Revenue The membership dues are collected annually from each member in U.S. dollars and recognized during the membership year. The performance obligationconsists of providing members access to materials, members-only events, and otherresources throughout the membership period. Membership dues are recognized ratablyover the membership period as services are simultaneously received and consumed by themembers. Membership dues paid in advance are deferred to the membership period to which they relate. Due to the nature and timing of the performance and transfer of services, substantially all deferred dues at September 30 of each year are recognized in the followingyear. DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 10 2.Summary of Significant Accounting Policies(continued) Grants and Contributions Contributions are generally available for use without donor restriction in the year received unless specifically restricted by the donor. Contributions of cash and other assets are reported as donor 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, n et assetswith donor restrictionsare reclassified to net assetswithout donor restrictionsand reported in the statements of activities as net assets released from restrictions. The Forum’s policy is to treat grants from foundation as contributions. ContributedServices Donated services are recognized as contributions if the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Forum. Functional Allocation of Expenses The costs of providing programs and other activities have been summarized on a functional basis in thestatements of activities. Accordingly, most costs have been allocated directly to programs and supporting services benefited. Such allocations are determined by management on an equitable basis. Rent and utility costs are allocated to programs and supporting services in proportion to time and effort spent. General and administrative expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and management of the Forum. Measure of Operations The statementsof activities report all changes in net assets, including changes in net assets from operating and non- operating activities. Operating activities consist of those items attributable to the Forum’s ongoing services. Non-operating activities are limited to resources that generate return from investments and other activities considered to be of a more unusual or nonrecurring nature. Income Taxes The Forum is exempt from income taxes on its exempt activities under Section 501(c)(3) of the Internal Revenue Code and has been classified as other than a private foundation by the Internal Revenue Service (IRS). DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 11 2.Summary of Significant Accounting Policies(continued) The accounting standard on accounting for uncertainty in income taxes addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under that guidance, the Forum may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. Examples of tax positions include the tax-exempt status of the Forum and various positions related to potential sources of unrelated business income tax (UBIT). The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.There were no unrecognized tax benefits identified or recorded as labilities for fiscal years 2020 and 2019. The Forum’s policy would be to recognize interest and penalties, if any, on tax positions related to its unrecognized tax benefits in income tax expense in the financial statements. No interest and penalties were assessed or recorded during the years ended September 30, 2020 and 2019. Generally, the tax years before 2017 are no longer subject to examination byfederal, state, or local taxing authorities. New Accounting Pronouncements The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The guidance clarifies how entities will determine whether to account for a transfer of assets (or a reduction, settlement or cancellation of a liability) as an exchange transaction or a contribution. In addition, the ASU addresses the evaluation of whether a contribution is conditional or unconditional, which affects the timing of revenue recognition, and when a contribution is restricted. Analysis of various provisions of this standard resulted in no significant changes in the manner the Organization recognizes revenue, and therefore, no changes to the previously issued audited consolidated financial statements were required on a retrospective basis. The presentation and disclosures of revenue have been enhanced in accordance with the standards.In May 2014, the FASB issued a new standard, ASU 2014 -09, Revenue from Contracts with Customers, which outlines a single comprehensive standard for revenue recognition across all industries and supersedes most existing revenue recognition guidance. The core principle of the standard is that an entity should recognize revenue when it satisfies a performance obligation at an amount that reflects the consideration the entity expects to receive in exchange for transferring goods or services. DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 12 2.Summary of Significant Accounting Policies(continued) In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard will be effective for the Forum’s fiscal year beginning October 1, 2020. In February2016, the FASB issued ASU 2016 -02, Leases, which requires a lessee to recognize right-of- use (“ROU”) assets and lease liability on the balance sheet for most lease contracts (which include those leases that are currently classified as operating leases und er the current accounting standards). Additional disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from lease contracts. The standard will be effective for the Forum beginning October 1, 2022. The Forum is currently evaluating the impact of the new standards on the financial statements. 3.Investments The Forum has implemented accounting standardASC 820 relating to fair value measurements. This standard establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America and expands disclosures about fair value measurements. This standard uses the following prioritized input levels to measure fair value. The input levels used valuing investments are not necessarily an indication of risk. Level 1: Inputs that utilize unadjusted quoted prices in active markets for identical assets or liabilities that the Forumhas the ability to access at the measurement date, such as stock quotes. Level 2: Inputs other than quoted prices included in level 1 that are observable for the assets or liabilities, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the assets or liabilities (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 : Inputs that are unobservable inputs for the assets or liabilities, which are typically based on an entity’s own assumptions as there is little, if any, related market activity. DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 13 4.Investments (continued) The fair value of assetsare as follows: September 30, 2020Fair ValueLevel 1Level 2Level 3 Large Blend Mutual Funds1,086,204$ 1,086,204$ -$ -$ September 30, 2019Fair ValueLevel 1Level 2Level 3 Large Blend Mutual Funds1,016,859$ 1,016,859$ -$ -$ Investment return for the years ended September 30, 2020and 2019, consist of the following: 20202019 Interest and dividends25,724$ 27,208$ Investment fees- (10) Net realized and unrealized gains43,880 56,200 Net investment return69,604$ 83,398$ The investments are subject to market risks, and their values fluctuate daily. Due to the level of risk associated with investment securities, changes in the values of investment securities will occur in the near term, and such changes could materially affect the Forum’s financial position. 4.Net Assetswith Donor Restrictions All grants and contributions are considered to be available without donor restrictionfor use unless specifically restricted be the donors. Amounts received that are restricted for future periods or for specific purposes by the donors are reported as increases in net assetswith donor restrictions. The Forum’snet assetswith donor restrictionsconsisted of contributions restricted for the following purposes as of September 30, 2020and 2019: 20202019 Higher Education Workforce (HEWI)-$ 46,763$ Chase Program193,075 569,327 ECMC 238,550 - Strada71,833 - Total503,458$ 616,090$ DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 14 4.Net Assets with Donor Restrictions (continued) The follow net assets with donor restrictions were released from donor restrictions by incurring expenses, which satisfied the restricted purposes specified by the donors, or the passage of time during the years ended September 30, 2020and 2019: 20202019 Purpose and Time: Higher Education Workforce (HEWI)46,764$ 129,906$ Chase Program376,252 500,381 ECMC12,942 - Strada 28,166 - Total464,124$ 630,287$ 5. Management Agreement The Forum engaged the services of SmithBucklin Corporation (SmithBucklin) to provide infrastructure and support services, office space, and equipmentthrough May 15, 2020 . The Forum allocates these fees throughout various programs. For the years ended September 30, 2020and 2019, the Forum incurred the following fees: 20202019 Infrastructure and support services63,617$ 88,710$ IT support and telephone55,047 79,839 Accounting and financial services54,000 52,530 Human resources services24,567 35,209 Total197,231$ 256,288$ In addition, the Forum was billed by and reimbursed SmithBucklin for dedicated staff services and other direct expenses incurred by SmithBucklin on behalf of the Forum. 6 . Concentration of Credit Risk The Forum’s deposits typicallyexceed federally-insuredlimits, but management does not consider this to be a significant concentration of credit risk. As of September 30, 2020 and 2019, $765,915and $565,380, respectively,of the Forum’s deposits were uninsured. DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 15 7 . Availability and Liquidity The following reflects the Forum’s financial assets at September 30, 2020and 2019, reduced by amounts not available for general use withinone year of the statement of financial position date because of donor imposed restrictions. Amounts not available include amounts set aside for long-term investing in the board designated reserves that could be drawn upon if the governing board approves that action. 20202019 Cash and cash equivalents985,376$ 840,256$ Investments1,086,204 1,016,859 Accounts receivable175,000 653,202 Grants receivable8,750 528,450 Total financial assets2,255,330 3,038,767 Donor-imposed restrictions: With donor restrictions(511,897) (616,090) Financial assets available to meet cash needs for general expenditures within one year1,743,433$ 2,422,677$ The Forum maintains a policy structuring its financial assets to be available as its general expenditures, federal grant expenditures, liabilities, and other obligations come due. As part the Forum’s liquidity plan, excess cash is invested in money market accounts, stocks, and bonds. 8 .Note Payable -Paycheck Protection Program During2020, the Forumreceived loan proceedsof $249,800 underthe Paycheck Protection Program (PPP). Established as part of the Coronavirus Aid, Relief and Economic Securities Act (“CARES Act”), the PPP provides for loans to qualifying businesses in amountsnot to exceed two and a half times the Forum’s average monthly payroll expenses. Under the provisions of the CARES Act, the PPP proceeds must be used for eligible expenses, which includes payroll, benefits, rent and utilities. The eligible expenses may be forgiven if such expenses are incurred during the 24 -week period after receipt of the PPP loan and the Forum maintains its pre-pandemic staffing levels. Any unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a deferral of payments for 10 months after the end of the covered period. The Forumhas used the proceeds for expenses consistent with the PPP provisions. Management believes that the use of the loan proceeds will meet the conditions for forgiveness. DRAFT BUSINESS HIGHER EDUCATION FORUM NOTESTO FINANCIAL STATEMENTS Years Ended September 30, 2020 and 2019 ______________ 16 9.Commitments and Contingencies Operating Lease In May 2020, the Forum entered into an operating lease for office space in Washington DC, which expires in April of 2030. Rent abatements are being amortized on a straight- line basis over the term of the lease. The future minimum lease payments are approximately as follows: Year ending September 30, 2021128,000$ 2022131,000 2023134,000 2024138,000 2025142,000 2026 and thereafter719,000 1,392,000$ 10. Property and Equipment During the fiscal year ended September 30, 2020, the Forum purchased office equipment totaling $20,922. Depreciation expense totaled$2,325for the year ended September 30, 2020. 1 1. Subsequent Events Management has evaluated subsequent events throughFebruary __, 20 21, the date which the financial statements were available to be issued. On March 11, 2020 the World Health Organization declared the outbreak of coronavirus as a pandemic. As a result, the economic uncertainties have arisen which may negatively impact changes in net assetsand future operations. The Forumis closely monitoring its operations and net assets and is actively working to minimize the current and future impact of this unprecedented situation. As of the date of issuance of these financial statements, the full impact to the Forum’s financial position is not known. DRAFT SUPPLEMENTAL INFORMATION DRAFT INDEPENDENT AUDITORS’ 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 The Executive Committee Business Higher Education Forum We have audited, in accordance with the 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, the financial statementsof Business Higher Education Forum(the Forum), which comprise the statement of financial positionas of September 30, 2020 , and the related statements of activities, functional expensesand cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated February __ , 20 21. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Forum’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances 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 Forum’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Forum’s internal control. A deficiency in internal controlexists 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 and correct, misstatements on a timely basis. A material weaknessis a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected , on a timely basis.A significant deficiencyis a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknessesor significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. DRAFT 18 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Forum's financial statements are free from 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. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standardsin considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. February __ , 2021 Bethesda, MD DRAFT INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR FEDERALPROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE The Executive Committee Business Higher Education Forum Report on Compliance for Each Major Federal Program We have audited Business Higher Education Forum’s(the Forum)compliance with the types of compliance requirements described in the OMB Compliance Supplementthat could have a direct and material effect on each of the Forum’smajor federal programs for the year ended September 30, 2020 . Business Higher Education Forum’s major federal program is identified in the summary of auditors’results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors’Responsibility Our responsibility is to express an opinion on compliance for each of the Forum’s major federal programs based on our audit of the types of compliance requirements referred to above. 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 the audit requirements of Title 2 U.S. Code of Federal RegulationsPart 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 Forum’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 on compliance for each major federal program. However, our audit does not provide a legal determination of the Forum’s compliance. DRAFT 20 Opinion on Each Major Federal Program In our opinion, the Forumcomplied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended September 30, 2020. Report on Internal Control over Compliance Management of the Forum is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planningand performing our audit of compliance, we considered the Forum’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, 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 Forum’s internal control over compliance. A deficiency in internal control over complianceexists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over complianceis a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance witha type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over complianceis a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies.We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. February __ , 2021 Bethesda, MD DRAFT BUSINESS HIGHER EDUCATION FORUM SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended September 30, 2020 ____________ Federal Agencies and Programs Federal Grant and Contract Number / Pass Through Identifying Number Federal CFDA # Federal Expenditures Passed Through to Subrecipients Research and Development Cluster: National Science Foundation (NSF) Education and Human Resources DUE-133106347.076148,944$ -$ Office of Integrative Activities DUE-193689447.083954,451 311,492 Total Research and Development Cluster 1,103,395 311,492 Total Expenditures of Federal Awards $ 1,103,395 $ 311,492 21 DRAFT BUSINESS HIGHER EDUCATION FORUM NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended September 30, 2020 ____________ 22 Note1. Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal contract and grant activity of Business Higher Education Forum and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal RegulationsPart 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal AwardsTherefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Note 2. Indirect Cost Rate Business Higher Education Forum does not use the 10 percent de minimus contract cost rate allowed by Uniform Guidance. Instead, Business Higher Education Forum uses its negotiated indirect cost rate. DRAFT BUSINESS HIGHER EDUCATION FORUM SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended September 30, 2020 ____________ 23 SECTION A – SUMMARY OF AUDITORS’ RESULTS Financial Statements 1. Type of auditors’ report issued: Unmodified 2. Internal control over financial reporting: a.Material weakness(es) identified?No b. Significant deficiency(ies) identified that are not considered to be material weakness(es)?No 3. Noncompliance material to financial statements noted?No Federal Awards 4. Internal control over major programs: a.Material weakness(es) identified?No b. Significant deficiency(ies) identified that are not considered to be material weakness(es)?No 5. Type of auditors’report issued on compliance for major programs: Unmodified 6. Any audit findings disclosed that are required to be reported in accordancewith 2 CFR 200.516(a)?No 7. Identification of major program: Name of Federal ProgramCFDA No.Expenditures Research and Development Cluster Office of Integrative Activities Education and Human Resources 47.083 47.076 $ 954,451 $ 148,944 8. Dollar threshold used to distinguish between Type A and type B programs$ 750,000 9. Auditee qualified as low-risk auditee? Yes DRAFT BUSINESS HIGHER EDUCATION FORUM SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended September 30, 2020 ____________ 24 SECTION B– FINANCIAL STATEMENTSFINDINGS None SECTION C– FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None DRAFT BUSINESS HIGHER EDUCATION FORUM SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Year Ended September 30, 2019 ____________ 25 SECTION D –PRIOR YEARFINANCIAL STATEMENTS FINDINGS None SECTION E –PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None DRAFT