1. NATURE OF ORGANIZATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation (Continued) • Reserve — This fund is used to account for Board designated reserve funds which are to be used to supplement the cash needs of AWS. • AWS Foundation — The Foundation’s temporarily restricted net assets consists of donor-restricted contributions to be used for awards and scholarships. Permanently restricted net assets consist solely of an endowment fund. • Property Fund — This fund is used to account for the net assets of AWS associated with its new headquarter facility located in Doral, Florida. Management Estimates The preparation of combined financial statements in conformity with U.S. GAAP 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 combined financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Risks and Uncertainties Financial instruments that potentially subject the Organizations to a concentration of credit risk are cash, investments and accounts receivable. The Organizations place their temporary cash and cash equivalents with high quality financial institutions. At times, cash deposits may be in excess of the Federal Deposit Insurance Corporation’s insured limits. The Organizations’ customer base is relatively stable; management closely monitors outstanding balances and relationships with customers; collection losses have historically been immaterial. The Organizations have investments in mutual funds that are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term could materially affect the Combined Statement of Activities. To minimize risks, the Organizations, through their investment advisor and investment committee, monitor these investments and the associated risks on a regular basis. Cash Equivalents The Organizations consider all highly liquid investments with a purchase date maturity of three months or less to be cash equivalents. Accounts and Other Receivables, Net Accounts and other receivables consist of balances related to convention, certification exams, royalties and other miscellaneous programs and are stated at the amount management expects to collect from outstanding balances at yearend. Management provides for probable uncollectible amounts through a provision for bad debt expense based upon a review of outstanding balances, historical collection information and current economic conditions. Balances that are still outstanding after management has used reasonable collection efforts and the potential for recovery are considered remote are written off through a charge to the allowance. Management believes the allowance for doubtful accounts is adequate to absorb reasonably foreseeable losses. Inventory Inventory consists primarily of publications including standards, handbooks, education and training materials, procedure manuals and other and is valued at lower of cost or market determined by the weighted average method. Cost is determined by the actual expenditures incurred in the production process. JUNE 2016 / WELDING JOURNAL 47 AMERICAN WELDING SOCIETY, INC., AND AWS FOUNDATION NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 2015
Welding Journal | June 2016
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