Page 12 - 2019 - 2020 Child Care Resource Center Audited Financial Statements

Child Care Resource Center, Inc. Notes to Financial Statements
Note 2 – Summary of Significant Accounting Policies
Basis of presentation – The financial statements of CCRC have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and accordingly reflect all significant receivables, payables, and other liabilities. The significant accounting policies followed by CCRC are described below to enhance the usefulness of the financial statements to the reader.
Cash, cash equivalents, and cash held in reserve – For the purpose of the statement of cash flows, CCRC considers all temporary, short-term, highly liquid investments purchased with original maturities of three months or less to be cash, cash equivalents, and cash held in reserve.
The following table provides a reconciliation of cash, cash equivalents, and cash held in reserve reported within the statements of financial position that sum to the total of the same such amounts shown in the statements of cash flows:
Cash and cash equivalents Cash held in reserve
Total cash, cash equivalents, and cash held in reserve as presented on the statements of cash flows
June 30,
2020 2019
$ 12,672,595 $ 20,699,025 586,938 581,781
$ 13,259,533 $ 21,280,806
Cash held in reserve relates to an advance payment from California Department of Education (CDE), which is maintained in a separate deposit account pursuant to the requirements of certain child development grant contracts with CDE. The related liability has been reflected in Reserve Funds in the accompanying statements of financial position at June 30, 2020 and 2019. On an annual basis, CDE reviews and calculates the Reserve Funds liability in the accompanying statements of financial position, and as result, either CDE will submit an additional advance payment to CCRC for an increase in Reserve Funds liability or CCRC will return to CDE the amount in excess of the Reserve Funds liability. Under CDE’s rules, the advance payment may be used for operations in certain cases. Any unused reserve funds must be returned to CDE upon termination of services under the child development contracts. Cash held in reserve pursuant to contracts with the CDE at June 30, 2020 and 2019, was $586,938 and $581,781, respectively.
Government contracts receivable – Government contracts receivable consist of unsecured reimbursements due from various program funding sources for services performed prior to year-end. CCRC recognized an allowance for uncollectable receivables of $20,911 and $0, respectively, at June 30, 2020 and 2019.
Other receivables – Other receivables consist of unsecured amounts due from various sources. CCRC carries its receivables at invoiced amounts less allowance for doubtful accounts. CCRC does not accrue interest on its receivables. On a periodic basis, CCRC evaluates its accounts receivable and establishes allowances based on overdue accounts and a history of past write-offs. There were no allowances recorded for the years ended June 30, 2020 and 2019.
10