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ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
FINANCIAL STATEMENTS
AND AUDITOR’S REPORT
DECEMBER 31, 2014
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
TABLE OF CONTENTS
Independent Auditor’s Report
Exhibit
A -
Balance Sheet
B -
Statement of Activities
C -
Statement of Cash Flows
Notes to Financial Statements
Independent Auditor’s Report
Board of Trustees
Alexander Muss Institute for
Israel Education, Inc.
Report on the Financial Statements
We have audited the accompanying financial statements of Alexander Muss Institute for
Israel Education, Inc., which comprise the balance sheet as of December 31, 2014, and the
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 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 of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We did not audit the financial statements of the school in Israel, which statements reflect
total assets as of December 31, 2014 of $4,544,187 and total revenues of $6,728,603 for the
year then ended. Those statements were audited by the component auditors, whose report
has been furnished to us, and our opinion, insofar as it relates to the amounts included for the
school in Israel, is based solely on the report of the component auditors. We conducted our
audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
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2.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
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 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 qualified audit opinion.
Basis for Qualified Opinion
As stated in Note 2 to the financial statements, assets transferred to the branch during the
year ended August 31, 1999 from an affiliate have been included at a nominal amount. No
valuation has been prepared which would enable these assets to be presented at fair value at
the date of the transfer, as required by generally accepted accounting principles.
Qualified Opinion
In our opinion, except for the possible effects of the matter described in the Basis for
Qualified Opinion paragraph, the financial statements referred to above present fairly, in all
material respects, the financial position of Alexander Muss Institute for Israel Education,
Inc. as of December 31, 2014, and the changes in its net assets and its cash flows for the year
then ended in accordance with accounting principles generally accepted in the United States
of America.
Report on Summarized Comparative Information
We have previously audited Alexander Muss Institute for Israel Education, Inc.’s
December 31, 2013 financial statements, and we expressed a qualified audit opinion on
those audited financial statements in our report dated October 23, 2014. In our opinion, the
summarized comparative information presented herein as of and for the year ended
December 31, 2013 is consistent, in all material respects, with the audited financial
statements from which it has been derived.
May 5, 2015
EXHIBIT A
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
BALANCE SHEET
DECEMBER 31, 2014
(With Summarized Financial Information for December 31, 2013)
2014
2013
ASSETS
Cash and cash equivalents
Investments (Note 2)
Contributions receivable - net (Note 3)
Inventories
Prepaid expenses and other assets
Beneficial interest in trusts held by a
third party (Note 8)
Fixed assets - net (Note 4)
Land held for investment
Total assets
$
4,747,492
107,928
52,500
21,362
147,831
$
583,488
4,269,029
17,710
3,738,051
106,045
728,010
10,686
479,746
540,272
3,665,188
17,710
$
9,947,340
$
9,285,708
$
1,748,312
1,371,284
$
1,106,494
1,356,691
LIABILITIES AND NET ASSETS
Liabilities
Accounts payable and accrued expenses
Deferred income
Total liabilities
3,119,596
2,463,185
Net assets (Exhibit B)
Unrestricted
Temporarily restricted (Note 5)
Permanently restricted (Note 6)
2,765,210
3,949,020
113,514
2,640,505
4,073,504
108,514
Total net assets
6,827,744
6,822,523
Total liabilities and net assets
See independent auditor's report.
The accompanying notes are an integral part of these statements.
$
9,947,340
$
9,285,708
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
EXHIBIT B
STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2014
(With Summarized Financial Information
for the Year Ended December 31, 2013)
2014
Temporarily
Restricted
Unrestricted
Revenues
Tuition and fees
Less financial aid awards
$
Net tuition and fees
Supporting services
Management and general
Fund raising
Total supporting services
Total expenses
Change in net assets (Exhibit C)
6,728,927
(257,532)
1,593,982
4,524
70,774
870,798
11,890
204,201
5,000
9,051,082
7,558,284
8,509,181
8,509,181
6,900,416
525,950
10,730
525,950
10,730
708,995
55,630
536,680
536,680
764,625
9,045,861
9,045,861
7,665,041
2,765,210
245,975
2,566
$
(373,025)
(124,484)
(124,484)
2,640,505
$
$
5,000
$
124,705
Net assets - beginning of year
7,789,008
(407,206)
6,471,395
9,170,566
Expenses
Program services
Education
The accompanying notes are an integral part of these statements.
$
2013
7,381,802
1,343,007
1,958
70,774
373,025
Total revenues
See independent auditor's report.
7,789,008
(407,206)
Total
7,381,802
Contributions
Investment income (Note 2)
Miscellaneous income
Net assets released from restrictions (Note 5)
Net assets - end of year (Exhibit A)
Permanently
Restricted
4,073,504
$
3,949,020
$
5,000
5,221
108,514
6,822,523
113,514
$
6,827,744
(106,757)
6,929,280
$
6,822,523
EXHIBIT C
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2014
Cash flows from operating activities
Change in net assets (Exhibit B)
Adjustments to reconcile change in net assets to
net cash provided by operating activities
Depreciation
Unrealized gain on investment
Permanently restricted contributions
Decrease (increase) in assets
Contributions receivable
Inventories
Prepaid expenses and other assets
Beneficial interest in trusts held by a third party
Increase in liabilities
Accounts payable and accrued expenses
Deferred income
$
5,221
322,943
(2,566)
(5,000)
675,510
(10,676)
331,915
(43,216)
641,818
14,593
Net cash provided by operating activities
1,930,542
Cash flows from investing activities
Proceeds from sales of investments
Purchase of investments
Fixed asset acquisitions
5,683
(5,000)
(926,784)
Net cash used by investing activities
(926,101)
Cash flows from financing activities
Proceeds from contributions restricted to
long-term investments
5,000
Net change in cash and cash equivalents
1,009,441
Cash and cash equivalents - beginning of year
3,738,051
Cash and cash equivalents - end of year
See independent auditor's report.
The accompanying notes are an integral part of these statements.
$
4,747,492
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 1 - NATURE OF ORGANIZATION
Alexander Muss Institute for Israel Education, Inc. (“AMIIE”) provides an Israel educational
experience to students. This experience brings 4,000 years of Israel’s history to life.
AMIIE d/b/a Alexander Muss High School in Israel, or AMHSI, is a Section 501(c)(3) Florida
not-for-profit organization registered to do business in New York and is exempt from federal
income taxes under Section 501(a) of the Internal Revenue Code (the “Code”). AMIIE is also
exempt from state and local income taxes.
On April 27, 1998, the American Seminar in Israel Ltd. (the “Seminar” or “affiliate”), a property
holding company associated with AMIIE - Israeli Branch, entered into voluntary liquidation.
According to the Memorandum of Association of the Seminar, upon its liquidation it is obliged
to give or to transfer the assets remaining after satisfaction of all its debts and liabilities to some
other institution having objectives similar to the objectives of the Seminar, such institution to be
determined by the Members of the Seminar. The Members of the Seminar have resolved to
approve the transfer by the liquidator of the Seminar without consideration of all the assets of
the Seminar to AMIIE - Israeli Branch. The Seminar was liquidated on December 31, 2006.
The Seminar’s assets, recorded on its books at a value of $562,051 (cost of $1,214,599 less
accumulated depreciation of $652,548), were transferred to AMIIE - Israeli Branch at a nominal
value of $1.
On January 30, 2014, AMIIE’s by-laws were amended and restated effective January 1, 2014,
authorizing The Jewish National Fund (“JNF”) Board of Directors to appoint all members of the
AMIIE Board.
AMIIE is principally funded by tuition and fees and contributions.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting - The financial statements are prepared on the accrual basis of accounting.
Use of estimates - The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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. Actual results could differ from those estimates.
-continued-
2.
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Net assets classification - To ensure observance of limitations and restrictions placed on the use
of resources available to AMIIE, AMIIE’s accounts are maintained in accordance with the
principles of fund accounting. Separate accounts are maintained for each fund; however, in the
accompanying financial statements, funds that have similar characteristics have been combined
into three net asset classes: unrestricted, temporarily restricted and permanently restricted.
Unrestricted net assets - Unrestricted net assets include funds having no restriction as to use or
purpose imposed by donors.
Temporarily and permanently restricted net assets - Temporarily restricted net assets are those
whose use has been limited by donors to a specific time period or purpose. Permanently
restricted net assets have been restricted by donors to be maintained by AMIIE in perpetuity.
Cash and cash equivalents - Cash equivalents include highly liquid investments with maturities,
when acquired, of three months or less.
Investments - Investments are recorded at fair value. AMIIE invests in various investment
securities. Investment securities are exposed to various risks such as interest rate, market and
credit risks. Due to the level of risk associated with investment securities, it is at least
reasonably possible that changes in the values of investment securities will occur in the near
term, based upon the markets’ fluctuations, and that such changes could affect AMIIE’s
financial statements.
Contributions receivable - Unconditional promises to give that are expected to be collected
within one year are recorded at net realizable value. Unconditional promises to give that are
expected to be collected in future years are recorded at the present value of their estimated
future cash flows. The discounts on those amounts are computed using risk-adjusted interest
rates applicable to the years in which the promises are received. Amortization of the discounts
is included in contribution revenue. Conditional promises to give are not included as support
until the conditions are substantially met. Interest is not accrued or recorded on outstanding
receivables. Management has determined that an allowance for doubtful accounts was not
required.
Inventories - Inventories are stated at the lower of cost or market. Cost is determined by the
first-in, first-out (“FIFO”) method. Inventories consist of books and supplies.
Beneficial interest in trusts held by a third party - The fair value of the beneficial interest is
estimated by discounting the estimated future cash flows using a risk-adjusted rate.
-continued-
3.
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fixed assets - Fixed assets are recorded at cost. Depreciation is recorded on the straight-line
method over the estimated useful lives of the assets of 10-40 years. Items with a cost of $1,000
and an estimated useful life of greater than one year are capitalized. Fixed assets transferred
during the year ended December 31, 1999 and December 31, 2006 from the Seminar (see Note
1) without consideration are included at a nominal amount of approximately NIS 4 (US $1). No
valuation has been prepared which would enable these assets to be presented at fair value at the
date of the transfer, as required by generally accepted accounting principles.
Tuition and fees/deferred income - Tuition and fees are recognized on the accrual basis when
earned. Tuition and fees include payments contributed by third parties to cover tuition and fees
shortfalls. The portion of tuition and fees collected and not yet earned is reflected as deferred
income. Deferred income is earned within one year.
Contributions - Unconditional contributions, including promises to give cash and other assets,
are reported at fair value at the date the contribution is received. The gifts are reported as
temporarily or permanently restricted support if they are received with donor stipulations that
limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated
time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are
reclassified as unrestricted net assets and reported in the statement of activities as net assets
released from restrictions.
Functional expenses - The costs of providing services have been summarized on a functional
basis. Accordingly, certain costs have been allocated among the program and supporting
services benefited.
Summarized financial information - The financial statements include certain prior-year
summarized comparative information in total but not by net asset class. Such information does
not include sufficient detail to constitute a presentation in conformity with accounting principles
generally accepted in the United States of America. Accordingly, such information should be
read in conjunction with the organization’s financial statements for the year ended
December 31, 2013, from which the summarized information was derived.
-continued-
4.
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value Measurements
In accordance with generally accepted accounting principles, AMIIE adopted provisions of Fair
Value Measurements, which establishes a framework for measuring fair value. The framework
provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below.
Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or
liabilities in active markets that AMIIE has the ability to access. Level 2 inputs to the valuation
methodology include:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in inactive markets;

Inputs other than quoted prices that are observable for the asset or liability;

Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable
for substantially the full term of the asset or liability. Level 3 inputs to the valuation
methodology are unobservable and significant to the fair value measurement. The asset or
liability’s fair value measurement level within the fair value hierarchy is based on the lowest
level of any input that is significant to the fair value measurement. Valuation techniques used
need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The following is a description of the valuation methodology used for assets measured at fair
value. There has been no change in the methodology used at December 31, 2014 as compared to
2013.
Funds managed by the Greater Miami Jewish Federation (GMJF) - Estimated fair values,
in the absence of readily ascertainable market values, have been determined by the GMJF.
-continued-
5.
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value Measurements (continued)
The methods and procedures used to value these investments may include, but are not limited to:
(1) performing comparisons with prices of comparable or similar securities; (2) obtaining
valuation-related information from issuers; and/or (3) other analytical data relating to the
investment and using other available indications of value, absent readily available market
values.
The methods described above may produce a fair value calculation that may not be indicative of
net realizable value or reflective of future fair values. Furthermore, while AMIIE believes its
valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement at the reporting date.
The following table sets forth by level, within the fair value hierarchy, the assets at fair value as
of December 31, 2014:
Level 3
Funds managed by the GMJF
$
107,928
The table below sets forth a summary of changes in fair value of Level 3 assets for the year
ended December 31, 2014.
Level 3
Balance, beginning of year
Contributions
Sales
Unrealized gains relating to instruments still held at the reporting date
$
105,645
5,000
(5,283)
2,566*
Balance, end of year
$
107,928
* The amount of total gains for the period attributable to the changes in
unrealized gains or losses relating to assets still held at the
reporting date.
$
2,566
-continued-
6.
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value Measurements (continued)
Fair Value
Funds managed by
the GMJF
$
107,928
Unfunded
Commitments
$
-
Redemption
Frequency
Redemption
Notice Period
N/A
5 days
Funds managed by the GMJF - A share in the pooled investments of the GMJF to benefit from
the various diversified strategies that the GMJF invests in, including stocks, bonds, and
alternative investments. The purpose is to generate appreciation while managing risk through
diversification.
Investment income consists of:
Interest
Unrealized gains
$
1,958
2,566
$
4,524
Uncertainty in income taxes - AMIIE has determined that there are no material uncertain tax
positions that require recognition or disclosure in the financial statements. Periods ending
December 31, 2011 and subsequent remain subject to examination by applicable taxing
authorities.
Subsequent events - Subsequent events have been evaluated through May 5, 2015, which is the
date the financial statements were available to be issued.
-continued-
7.
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 3 - CONTRIBUTIONS RECEIVABLE
Contributions receivable have been discounted over the payment period using a discount rate of
0.58%-1.58%. Contributions receivable are due as follows:
2015
2016
2017
2018
$
53,900
13,700
5,740
500
73,840
Less allowance for doubtful receivables
Less discount to present value
(20,442)
(898)
$
52,500
NOTE 4 - FIXED ASSETS
At December 31, 2014, fixed assets consisted of the following:
Buildings and building improvements
Furniture and fixtures
$ 8,304,577*
331,394
8,635,971
(4,366,942)
Less accumulated depreciation
$ 4,269,029
* The building in Israel was built on land provided by the Israeli government, which has
not been valued.
-continued-
8.
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 5 - TEMPORARILY RESTRICTED NET ASSETS
At December 31, 2014, temporarily restricted net assets were restricted for the following
purposes and time:
Goldstein Building
Israel programs
Scholarships
$
170,000
3,736,720
42,300
$ 3,949,020
During 2014, net assets in the amount of $373,025 were released from restriction for the
following purposes:
Israel programs
Scholarships
$
305,850
67,175
$
373,025
NOTE 6 - ENDOWMENT FUNDS
General
AMIIE’s endowment consists of donor-restricted endowment funds established principally for
the award of scholarships for participants for Israel programs. At the discretion of the Board, a
portion of these funds may also be used for the acquisition of educational technology. As
required by generally accepted accounting principles, net assets associated with endowment
funds are classified and reported based on the existence or absence of donor-imposed
restrictions.
Interpretation of Relevant Law
AMIIE is a Florida State not-for-profit corporation operating with its principal office located in
the State of New York. On July 1, 2012, AMIIE became subject to the newly enacted Florida
Uniform Prudent Management of Institutional Funds Act (FUPMIFA), which set forth the
standards under which endowment funds generally are to be managed, accumulated and
appropriated for expenditure but consistent with explicit donor restrictions or stipulations where
they exist. As required by ASC 958-205 (formerly known as FSP FAS 117-1), AMIIE’s Board
has undertaken the project to determine whether any of the endowments which are herein
reported as permanently restricted need to be reclassified. Such a Board determination, based on
clarifying written donor stipulations as permitted by FUPMIFA, was completed in 2013.
-continued-
9.
ALEXANDER MUSS INSTITUTE FOR
ISRAEL EDUCATION, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
NOTE 6 - ENDOWMENT FUNDS (continued)
Return Objectives, Strategies Employed and Spending Policy
The objective of AMIIE is to maintain over a period of time the value of the amounts
contributed. To this end, the endowment funds are managed by GMJF and are invested for total
return in a diversified portfolio of stocks, bonds and alternative investments so as to prudently
achieve long-term return objectives. AMIIE’s endowment funds spending policy is to disburse
annually an amount equal to 5% of a fund’s average year-end balances for the prior three
calendar years. As a measure of prudence, no such disbursements were made in 2014 given the
losses sustained by these funds in prior periods due to market conditions.
Funds with Deficiencies
AMIIE does not have any funds with deficiencies.
Endowment Net Asset Composition by Type of Fund as of December 31, 2014
The endowment net asset composition of $113,514 consists of permanently donor-restricted
funds.
Changes in Endowment Net Assets for the Year Ended December 31, 2014
Temporarily
Restricted
Endowment net assets, beginning of year
Unrealized gains
Contribution
$
Endowment net assets, end of year
$
Permanently
Restricted
$
108,514
2,566
5,000
2,566
$
113,514
NOTE 7 - CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject AMIIE to a concentration of credit risk consist
of cash and cash equivalents with financial institutions in excess of FDIC insurance limits.
NOTE 8 - BENEFICIAL INTEREST IN TRUSTS HELD BY THIRD PARTY
AMIIE has a beneficial interest in trusts held by a third party. The fair value of the fund at
December 31, 2014 was $583,488.