AMVETS (A V Hamvetsct.org/.../2018/12/resources-amvets-2017-fs.pdf · AMVETS (AMERICAN VETERANS)...

FINANCIAL STATEMENTS

AMVETS (AMERICAN VETERANS)NATIONAL HEADQUARTERS

FOR THE YEAR ENDED AUGUST 31, 2017WITH SUMMARIZED FINANCIAL

INFORMATION FOR 2016

AMVETS (AMERICAN VETERANS) NATIONAL HEADQUARTERS

CONTENTS

PAGE NO.

INDEPENDENT AUDITOR'S REPORT 2 - 3

EXHIBIT A - Statement of Financial Position, as of August 31, 2017, withSummarized Financial Information for 2016 4

EXHIBIT B - Statement of Activities and Change in Net Assets, for the YearEnded August 31, 2017, with Summarized Financial Informationfor 2016 5

EXHIBIT C - Statement of Functional Expenses, for the Year Ended August 31,2017, with Summarized Financial Information for 2016 6 - 7

EXHIBIT D - Statement of Cash Flows, for the Year Ended August 31, 2017,with Summarized Financial Information for 2016 8

NOTES TO FINANCIAL STATEMENTS 9 - 16

1

INDEPENDENT AUDITOR'S REPORT

To the Board of DirectorsAMVETS (American Veterans) National HeadquartersLanham, Maryland

We have audited the accompanying financial statements of AMVETS (American Veterans)National Headquarters (AMVETS), which comprise the statement of financial position as of August 31,2017, and the related statements of activities and change in net assets, functional expenses and cashflows 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 statementsin accordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud orerror.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures 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 tofraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the financial statements in order to design audit proceduresthat 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 alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,the financial position of AMVETS as of August 31, 2017, and the change in its net assets and its cashflows for the year then ended in accordance with accounting principles generally accepted in the UnitedStates of America.

4550 MONTGOMERY AVENUE · SUITE 650 NORTH · BETHESDA, MARYLAND 20814(301) 951-9090 · FAX (301) 951-3570 · WWW.GRFCPA.COM

___________________________

MEMBER OF CPAMERICA INTERNATIONAL, AN AFFILIATE OF HORWATH INTERNATIONAL

MEMBER OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS' PRIVATE COMPANIES PRACTICE SECTION

2

Report on Summarized Comparative Information

We have previously audited AMVETS' 2016 financial statements, and we expressed anunmodified audit opinion on those audited financial statements in our report dated December 2, 2016. Inour opinion, the summarized comparative information presented herein as of and for the year endedAugust 31, 2016, is consistent, in all material respects, with the audited financial statements from which ithas been derived.

December 8, 2017

3

EXHIBIT A


STATEMENT OF FINANCIAL POSITIONAS OF AUGUST 31, 2017

WITH SUMMARIZED FINANCIAL INFORMATION FOR 2016

ASSETS

2017 2016CURRENT ASSETS

Cash and cash equivalents $ 384,521 $ 972,308Investments - Unorganized Departments 122,386 120,896Accounts receivable 2,850 52,689Pledges receivable 48,597 124,439Prepaid and other receivables 69,083 72,903

Total current assets 627,437 1,343,235

FIXED ASSETS

Furniture and equipment, net of accumulated depreciationand amortization of $2,670,072 and $2,617,564 in 2017and 2016, respectively 396,047 421,215

OTHER ASSETS

Investments - Life Membership Fund 7,413,454 6,489,892

TOTAL ASSETS $ 8,436,938 $ 8,254,342

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES

Accounts payable and accrued liabilities $ 607,328 $ 372,483Deferred revenue 34,097 34,309

Total current liabilities 641,425 406,792

NET ASSETS

Unrestricted:General (1,814,844) (1,084,900)Board designated for Life Membership 8,443,114 7,792,792Board designated for Unorganized Departments 122,386 120,896Net investment in fixed assets 396,047 421,215

Total unrestricted net assets 7,146,703 7,250,003

Temporarily restricted 648,810 597,547

Total net assets 7,795,513 7,847,550

TOTAL LIABILITIES AND NET ASSETS $ 8,436,938 $ 8,254,342

See accompanying notes to financial statements. 4

EXHIBIT B


STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETSFOR THE YEAR ENDED AUGUST 31, 2017


2017 2016

UnrestrictedTemporarilyRestricted Total Total

REVENUE

Fundraising revenue $ 1,360,103 $ - $ 1,360,103 $ 1,632,334Membership dues:

Annual membership dues 820,797 - 820,797 967,067Life Membership dues 162,418 - 162,418 98,306

Contributions and grants 824,817 402,860 1,227,677 1,260,261Convention 62,071 - 62,071 38,923Silver Helmet 24,169 - 24,169 -Gain on sale of assets - - - 8,171Investment income 556,512 - 556,512 352,089Corporate sponsorship 138,716 - 138,716 340,861Advertising revenue and other 18,406 - 18,406 125,655Unorganized Departments 35,113 - 35,113 37,060Net assets released from donor

restrictions 351,597 (351,597) - -

Total revenue 4,354,719 51,263 4,405,982 4,860,727

EXPENSES

Program Services:Programs 937,182 - 937,182 1,059,818Communications 514,454 - 514,454 707,229Membership 479,689 - 479,689 371,134Legislative 159,394 - 159,394 186,166Convention 178,036 - 178,036 223,235Silver Helmet 67,658 - 67,658 61,517Commander 284,584 - 284,584 315,258Unorganized Departments - - - 120,766

Total programservices 2,620,997 - 2,620,997 3,045,123

Supporting Services:Management and General 1,378,632 - 1,378,632 1,368,796Fundraising 458,390 - 458,390 558,227

Total supportingservices 1,837,022 - 1,837,022 1,927,023

Total expenses 4,458,019 - 4,458,019 4,972,146

Change in net assets (103,300) 51,263 (52,037) (111,419)

Net assets at beginning of year 7,250,003 597,547 7,847,550 7,958,969

NET ASSETS AT END OF YEAR $ 7,146,703 $ 648,810 $ 7,795,513 $ 7,847,550



STATEMENT OF FUNCTIONAL EXPENSESFOR THE YEAR ENDED AUGUST 31, 2017


2017Program Services

Programs Communications Membership Legislative ConventionSilver

Helmet

Salaries $ 255,426 $ 187,434 $ 222,217 $ 76,291 $ - $ -Payroll taxes and benefits 87,886 38,246 70,628 26,604 - -Printing and production 13,045 227,106 37,836 34,279 149 914Consulting 6,068 - 26,763 6,892 774 -Utilities - - - - - -Accounting/audit - - - - - -Insurance - - - - - -Depreciation and amortization - - - - - -Telephone 717 10,000 - - - -Travel and entertainment 16,996 677 1,730 221 42,670 11,820Legal fees - - - - - -Postage and delivery 4,809 73 29,697 818 - -Repairs and maintenance - 5,097 - - 1,547 -Supplies 286 - 4,196 49 - -Dues, fees and licenses - - - - - -Meetings and conventions 48,641 - - 6 114,650 44,313Advertising and promotion 15,329 43,629 6,250 - - -Bank fees - - - - - -Payroll processing - - - - - -Equipment rental 312 - - - 3,111 -Telemarketing expenses 458,645 - - - - -Flag and chair - - - - - -Internet technology services 6,155 1,911 62,466 - - -Contributions - - - - - -Awards 15,675 100 5,670 - 150 10,611Lease expense - - - - - -Band and color guard - - - - - -Miscellaneous expenses 7,192 181 12,236 14,234 14,985 -

TOTAL $ 937,182 $ 514,454 $ 479,689 $ 159,394 $ 178,036 $ 67,658


EXHIBIT C

2016Supporting Services

Commander

TotalProgramServices

Managementand General Fundraising

TotalSupporting

ServicesTotal

ExpensesTotal

Expenses

$ 130,904 $ 872,272 $ 331,262 $ - $ 331,262 $ 1,203,534 $ 1,325,94122,681 246,045 108,328 - 108,328 354,373 336,115

179 313,508 2,929 - 2,929 316,437 473,291- 40,497 87,610 - 87,610 128,107 93,759

5,272 5,272 48,920 - 48,920 54,192 41,836- - 30,926 - 30,926 30,926 67,675- - 85,254 - 85,254 85,254 79,971- - 52,508 - 52,508 52,508 66,042- 10,717 5,860 - 5,860 16,577 9,181

68,526 142,640 52,888 - 52,888 195,528 237,722- - 5,619 - 5,619 5,619 3,375

1,603 37,000 1,876 - 1,876 38,876 153,0502,332 8,976 40,765 - 40,765 49,741 59,915

467 4,998 29,514 - 29,514 34,512 85,434- - 2,050 - 2,050 2,050 4,760

15,460 223,070 124,737 - 124,737 347,807 376,093- 65,208 - - - 65,208 101,574- - 73,617 900 74,517 74,517 45,936- - - - - - 4,764- 3,423 2,530 - 2,530 5,953 7,606- 458,645 16,854 457,490 474,344 932,989 1,050,810

1,363 1,363 - - - 1,363 2,174- 70,532 83,597 - 83,597 154,129 130,929

35,000 35,000 - - - 35,000 15,438376 32,582 - - - 32,582 15,711

- - 36,442 - 36,442 36,442 33,266- - - - - - 1,775421 49,249 154,546 - 154,546 203,795 148,003

$ 284,584 $ 2,620,997 $ 1,378,632 $ 458,390 $ 1,837,022 $ 4,458,019 $ 4,972,146


EXHIBIT D


STATEMENT OF CASH FLOWSFOR THE YEAR ENDED AUGUST 31, 2017


2017 2016CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets $ (52,037) $ (111,419)

Adjustments to reconcile change in net assets to net cash used by operating activities:

Depreciation and amortization 52,508 66,042Unrealized gain (152,846) (389,315)Realized (gain) loss (333,709) 308,377Gain on disposal of fixed assets - (8,171)

Decrease (increase) in:Accounts receivable 49,839 (12,066)Pledges receivable 75,842 63,115Prepaid and other receivables 3,820 38,581

Increase (decrease) in:Accounts payable and accrued liabilities 234,845 (175,172)Deferred revenue (212) (14,723)

Net cash used by operating activities (121,950) (234,751)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (27,340) -Purchase of investments (1,921,615) (7,430,640)Proceeds from sale of investments 1,483,118 7,767,079

Net cash (used) provided by investing activities (465,837) 336,439

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on capital lease obligation - (7,496)

Net cash used by financing activities - (7,496)

Net (decrease) increase in cash and cash equivalents (587,787) 94,192

Cash and cash equivalents at beginning of year 972,308 878,116

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 384,521 $ 972,308

SUPPLEMENTAL INFORMATION

Interest Paid $ - $ 1,304

Forgiveness of Capital Lease Obligation $ - $ 58,977



NOTES TO FINANCIAL STATEMENTSAUGUST 31, 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION

Organization -

AMVETS (American Veterans) National Headquarters (AMVETS) is a not-for-profit organizationcreated by an act of Congress under U.S. Code Title 36, Subtitle 1.2.2, Chapter 227, onJune 23, 1947, as a federally chartered member corporation. The purposes of AMVETS are touphold and defend the Constitution of the United States; to safeguard the principles of freedom,liberty and justice for all; to promote the cause of peace and goodwill among nations; tomaintain inviolate the freedom of our country; and to preserve the fundamentals of democracy.

AMVETS is organized with a National Headquarters and six geographical divisions that arecomposed of departments and posts in most states. AMVETS National Headquarters is locatedin Lanham, Maryland.

Basis of presentation -

The accompanying financial statements are presented on the accrual basis of accounting, andin accordance with FASB ASC 958, Not-for-Profit Entities.

The financial statements include certain prior year summarized comparative information in totalbut not by net asset class. Such information does not include sufficient detail to constitute apresentation in conformity with generally accepted accounting principles. Accordingly, suchinformation should be read in conjunction with AMVETS's financial statements for the yearended August 31, 2016, from which the summarized information was derived.

Cash and cash equivalents -

AMVETS considers all cash and other highly liquid investments with initial maturities of threemonths or less to be cash equivalents, excluding money market funds in the amount of$122,386.

Bank deposit accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up toa limit of $250,000. At times during the year, AMVETS maintains cash balances in excess of theFDIC insurance limits. Management believes the risk in these situations to be minimal.

Investments -

Investments are recorded at their readily determinable fair value. Interest, dividends, realizedand unrealized gains and losses less management fees are included in investment income inthe Statement of Activities and Change in Net Assets.

Receivables -

Accounts receivable and pledges receivable approximate fair value. Management considers allamounts to be fully collectible. Accordingly, an allowance for doubtful accounts has not beenestablished.

Fixed assets -

Fixed assets in excess of $1,000 are capitalized and stated at cost. Fixed assets aredepreciated on a straight-line basis over the following estimated useful lives of the relatedassets:

Building 30 yearsBuilding improvements 3 to 10 yearsFurniture, fixtures and office equipment 3 to 10 yearsMembership database software 4 yearsAutomobiles 3 to 5 years

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION(Continued)

Fixed assets (continued) -

The cost of maintenance and repairs is recorded as expenses are incurred. Depreciation andamortization expense for the year ended August 31, 2017 totaled $52,508.

Impairment of long-lived assets -

Management reviews asset carrying amounts whenever events or circumstances indicate thatsuch carrying amounts may not be recoverable. When considered impaired, the carryingamount of the assets is reduced, by a charge to Statement of Activities and Change in NetAssets, to its current fair value.

Income taxes -

AMVETS is exempt from Federal income taxes under Section 501(c)(19) of the InternalRevenue Code, other than for net unrelated business income. Accordingly, no provision forincome taxes has been made in the accompanying financial statements. During the year endedAugust 31, 2017, AMVETS had no significant net unrelated business income.

Uncertain tax positions -

For the year ended August 31, 2017, AMVETS has documented its consideration of FASB ASC740-10, Income Taxes, that provides guidance for reporting uncertainty in income taxes andhas determined that no material uncertain tax positions qualify for either recognition ordisclosure in the financial statements.

Net asset classification -

The net assets are reported in two self-balancing groups as follows:

Unrestricted net assets include unrestricted revenue and contributions received without

donor-imposed restrictions. These net assets are available for the operation of AMVETS and

include both internally designated and undesignated resources. Amounts within this class of

net assets have been designated in accordance with Board policy or AMVETS bylaws as

follows:

General - Funds that are available for support and operations in carrying out the aims

and purpose of AMVETS, as defined in its charter.

Life Membership - Funds that have been designated by the Board that represent life

membership dues available for investment that allow investment income from the

cumulative funds to be used for general purposes.

Unorganized Department - Funds that have been designated by the Board representing

a portion of members' dues in those states that, as yet, have not met AMVETS's criteria

for operating an organized state department. The designated funds are to be utilized for

developing those nondepartment states.

Fixed Assets - Funds invested in net fixed assets.

10




Net asset classification (continued) -

Temporarily restricted net assets include revenue and contributions subject to donor-

imposed stipulations that will be met by the actions of AMVETS and/or the passage of time.

When a restriction expires, temporarily restricted net assets are reclassified to unrestricted

net assets and reported in the Statement of Activities and Change in Net Assets as net

assets released from restrictions.

Revenue recognition -

Deferred revenue consists of member dues and conference and meeting registrations.Membership dues are assessed on an annual basis and are billed twice a year. AMVETSrecognizes member dues based on the timing of cash receipts. Collections in the fourth quarterof the fiscal year are deferred, and collections in the first three quarters are recognized in theperiod received. AMVETS recognizes conference and meeting revenue when the related eventhas occurred.

Fundraising revenue represent the gross receipts, recorded on an accrual basis, as reported toAMVETS under solicitation agreements with fundraisers (see Note 9).

Contributions and grants are recorded as revenue in the year notification is received from thedonor. Temporarily restricted contributions and grants are recognized as unrestricted supportonly to the extent of actual expenses incurred in compliance with the donor-imposed restrictionsand satisfaction of time restrictions. Such funds in excess of expenses incurred are shown astemporarily restricted net assets in the accompanying financial statements.

Use of estimates -

The preparation of the financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenue and expenses during the reporting period.Accordingly, actual results could differ from those estimates.

Functional allocation of expenses -

The costs of providing the various programs and other activities have been summarized on afunctional basis in the Statement of Activities and Change in Net Assets. Accordingly, certaincosts have been allocated among the programs and supporting services benefited.

Risks and uncertainties -

AMVETS invests in various investment securities. Investment securities are exposed to variousrisks such as interest rates, market and credit risks. Due to the level of risk associated withcertain investment securities, it is at least reasonably possible that changes in the values ofinvestment securities will occur in the near term and that such changes could materially affectthe amounts reported in the accompanying financial statements.

Fair value measurement -

AMVETS adopted the provisions of FASB ASC 820, Fair Value Measurement. FASB ASC 820defines fair value, establishes a framework for measuring fair value, establishes a fair valuehierarchy based on the quality of inputs (assumptions that market participants would use inpricing assets and liabilities, including assumptions about risk) used to measure fair value, andenhances disclosure requirements for fair value measurements.

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Fair value measurement (continued) -

AMVETS accounts for a significant portion of its financial instruments at fair value or considersfair value in their measurement.

New accounting pronouncements (not yet adopted) -

In August 2016, the FASB issued ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities (Topic 958), intended to improve financial reporting for not-for-profit entities.The ASU will reduce the current three classes of net assets into two: with and without donorrestrictions. The change in each of the classes of net assets must be reported on the Statementof Activities and Change in Net Assets. The ASU also requires various enhanced disclosuresaround topics such as board designations, liquidity, functional classification of expenses,investment expenses, donor restrictions, and underwater endowments. The ASU is effective foryears beginning after December 15, 2017. Early adoption is permitted. The ASU should beapplied on a retrospective basis in the year the ASU is first applied. While the ASU will changethe presentation of AMVETS's financial statements, it is not expected to alter AMVETS'sreported financial position.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic606) (ASU 2014-09). The ASU establishes a comprehensive revenue recognition standard forvirtually all industries under generally accepted accounting principles in the United States (U.S.GAAP) including those that previously followed industry-specific guidance. The guidance statesthat an entity should recognize revenue to depict the transfer of promised goods or services tocustomers in an amount that reflects the consideration to which the entity expects to be entitledin exchange for those goods or services. The FASB issued ASU 2015-14 in August 2015 thatdeferred the effective date of ASU 2014-09 by a year thus the effective date is fiscal yearsbeginning after December 15, 2018. Early adoption is permitted. AMVETS has not yet selecteda transition method and is currently evaluating the effect that the updated standard will have onthe financial statements.

In 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The ASU changes the accountingtreatment for operating leases by recognizing a lease asset and lease liability at the presentvalue of the lease payments in the Statement of Financial Position and disclosing keyinformation about leasing arrangements. The ASU is effective for private entities for fiscal yearsbeginning after December 15, 2019. Early adoption is permitted. The ASU should be applied atthe beginning of the earliest period presented using a modified retrospective approach.

AMVETS plans to adopt the new ASUs at the required implementation dates.

2. INVESTMENTS

Investments consisted of the following at August 31, 2017:

Fair Value

Common stocks $ 3,229,933Exchange traded funds/closed-end funds 4,183,521

TOTAL INVESTMENTS $ 7,413,454

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2. INVESTMENTS (Continued)

Included in investment income are the following for the year ended August 31, 2017:

Interest and dividends $ 103,927Unrealized gain 152,846Realized gain 333,709Management fees (33,970)

TOTAL INVESTMENT INCOME $ 556,512

Investments consist of funds designated in accordance with Board policy or AMVETS's bylaws forthe Life Membership Fund and the Unorganized Departments.

At August 31, 2017, designated investments comprised $7,413,454 and $122,386 in the LifeMembership Fund and the Unorganized Departments, respectively.

3. FIXED ASSETS

Fixed assets consisted of the following at August 31, 2017:

Land $ 199,134Building 1,290,672Building improvements 393,101Furniture and fixtures 316,990Office equipment 266,031Membership database software 509,865Automobiles 90,326

Total fixed assets 3,066,119Less: Accumulated depreciation and amortization (2,670,072)

NET FIXED ASSETS $ 396,047

4. COPIER LEASES

In 2013, AMVETS entered into a capital lease obligation for copiers, which was set to expire in2018. During 2016, AMVETS entered into an operating lease agreement for new copiers to replacethose acquired with the capital lease. Under this arrangement, the new vendor agreed to settle theoutstanding balance on AMVETS' capital lease. Accordingly, the capital lease asset and capitallease liability were written off during 2016.

Future minimum lease payments at August 31, 2017 on the new copier lease are as follows:

Year Ending December 31,

2018 $ 26,1872019 26,1872020 26,1872021 8,729

$ 87,290

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5. TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets consisted of the following at August 31, 2017:

Time Restricted $ 48,598Leadership Conference and Career Centers 1,200Arizona Memorial Fund 23,908Aultman Fund 200Commander's Project 29,537Warrior Transition Workshop 1,883Miscellaneous Programs 269Call of Duty 543,215

TOTAL TEMPORARILY RESTRICTED NET ASSETS $ 648,810

The following temporarily restricted net assets were released from donor restrictions by incurringexpenses (or through the passage of time), which satisfied the restricted purposes specified by thedonors:

Passage of Time $ 28,559Warrior Transition Workshops 48,852Commander's Project 35,000Call of Duty 238,455Other 731

TOTAL NET ASSETS RELEASED FROM DONORRESTRICTIONS $ 351,597

6. ALLOCATION OF JOINT COSTS

AMVETS conducts telemarketing and other fundraising campaigns that include appeals forcontributions as well as program components. As required by FASB ASC 958, Not-for-ProfitEntities, AMVETS allocates the cost of the campaigns to the supported functional categories. Thecost of these campaigns totaled $933,889 for the year ended August 31, 2017.

The campaign expenses are allocated as follows at August 31, 2017:

Programs $ 458,645Fundraising 458,390Management and General 16,854

TOTAL CAMPAIGN EXPENSES $ 933,889

7. RETIREMENT PLAN

AMVETS maintains a 401(k) profit-sharing plan and trust retirement plan for all employees whomeet certain age and length of service requirements. Under the terms of the plan, AMVETSmatches 150% of the participant's deferral up to the first 4% of salary deferred by each participant.Retirement expense for the year ended August 31, 2017 totaled $45,577.

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8. CONTINGENCIES

AMVETS has entered into agreements with several hotels to provide conference facilities androom accommodations for certain meetings through 2019. The agreements contain variousclauses whereby AMVETS is liable for liquidated damages in the event of cancellation or lowerthan anticipated attendance. The management of AMVETS does not believe that any losses will beincurred under these contracts. As of August 31, 2017, the maximum possible amount of liquidateddamages was approximately $430,800.

9. FUNDRAISING AGREEMENTS

In April 2013, AMVETS entered into a new agreement with Heritage Company to continue toprovide direct marketing and related services on an ongoing basis. The term of the agreement isfrom May 16, 2013 to August 31, 2016. Under this agreement, Heritage Company chargesAMVETS an hourly rate for its services. Regardless of collection efforts on pledges received,Heritage Company guaranteed to pay AMVETS $625,000 for the first year of the campaign.AMVETS signed a new agreement with Heritage Company during 2016 extending the term of thearrangement through August 31, 2018.

In December 2013, AMVETS entered into an agreement with Harris Connect, LLC to providevarious fundraising services, including direct mail and telemarketing solicitations. The originalagreement was valid through December 1, 2018. Harris Connect, LLC charged AMVETS a flatmonthly fee for these services. In September 2015, AMVETS and Harris Connect, LLC mutuallyagreed to discontinue their relationship. During the year ended August 31, 2017, AMVETScollected $41,485 of outstanding pledges raised by Harris Connect, LLC, and wrote off $47,282 inpledges raised by Harris Connect, LLC which were deemed uncollectible.

For the year ended August 31, 2017, gross revenue collected by these fundraisers and directexpenses for solicitation, production of the yearbook, and direct mail campaigns are reported in theaccompanying Statement of Activities and Change in Net Assets as fundraising revenue andtelemarketing expenses, respectively. AMVETS allocated a portion of the costs to programs (seeNote 6).

At August 31, 2017, the balance in the bank account maintained by Heritage Company was$6,206, and is included in cash and cash equivalents in the accompanying Statement of FinancialPosition.

10. RELATED PARTY

AMVETS is related to the following organizations:

AMVETS National Service Foundation

AMVETS Charities

AMVETS does not have a controlling interest in either of these organizations. However, theNational Commander and Executive Director of AMVETS are members of the Board of Trustees ofthe AMVETS National Service Foundation and AMVETS Charities.

On September 1, 2016, AMVETS received a grant for $750,000 from the AMVETS NationalService Foundation, to be paid monthly at $50,000 per month, plus four quarterly installments of$37,500. As of August 31, 2017, there was no remaining balance owed on this grant.

15



11. FAIR VALUE MEASUREMENT

In accordance with FASB ASC 820, Fair Value Measurement, AMVETS has categorized itsfinancial instruments, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices inactive markets for identical assets or liabilities (Level 1) and the lowest priority to unobservableinputs (Level 3). If the inputs used to measure the financial instruments fall within different levels ofhierarchy, the categorization is based on the lowest level input that is significant to the fair valuemeasurement of the instrument.

Investments recorded in the Statement of Financial Position are categorized based on the inputs tovaluation techniques as follows:

Level 1. These are investments where values are based on unadjusted quoted prices for identicalassets in an active market AMVETS has the ability to access.

Level 2. These are investments where values are based on quoted prices for similar instruments inactive markets, quoted prices for identical or similar instruments in markets that are not active, ormodel-based valuation techniques that utilize inputs that are observable either directly or indirectlyfor substantially the full-term of the investments.

Level 3. These are investments where inputs to the valuation methodology are unobservable andsignificant to the fair value measurement.

Following is a description of the valuation methodology used for investments measured at fairvalue. There have been no changes in the methodologies used at August 31, 2017.

Common stocks - Valued at the closing price reported on the active market in which the

individual securities are traded.

Exchange traded funds/closed-end funds - Fair value is equal to the reported net asset value of

the fund, which is the price at which additional shares can be obtained.

The table below summarizes, by level within the fair value hierarchy, AMVETS' investments as ofAugust 31, 2017:

Level 1 Level 2 Level 3 TotalAsset Class:

Common stocks $ 3,229,933 $ - $ - $ 3,229,933Exchange traded funds/closed-

end funds 4,183,521 - - 4,183,521

TOTAL $ 7,413,454 $ - $ - $ 7,413,454

12. SUBSEQUENT EVENTS

In preparing these financial statements, AMVETS has evaluated events and transactions forpotential recognition or disclosure through December 8, 2017, the date the financial statementswere issued.

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