THE OWASP FOUNDATION, INC. AND AFFILIATECOMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2016

THE OWASP FOUNDATION, INC. AND AFFILIATE
Contents
December 31, 2016

Pages
Independent Auditor's Report .........................................................................................................

1

Combined Financial Statements:
Combined Statement of Financial Position ....................................................................................

2

Combined Statement of Activities and Changes in Net Assets .....................................................

3

Combined Statement of Cash Flows .............................................................................................

4

Notes to Combined Financial Statements .....................................................................................

5-9

50 Washington Street
Westborough, MA 01581
508.366.9100
aafcpa.com

Independent Auditor's Report

To the Board of Directors of
The OWASP Foundation, Inc. and Affiliate:
Report on the Combined Financial Statements
We have audited the accompanying combined financial statements of The OWASP Foundation, Inc. (aDelaware corporation, not for profit) and Affiliate, which comprise the combined statement of financial
position as of December 31, 2016, and the related combined statements of activities and changes in net
assets and cash flows for the year then ended, and the related notes to the combined financial
statements.
Management’s Responsibility for the Combined Financial Statements
Management is responsible for the preparation and fair presentation of these combined 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 combined 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 combined financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United Statesof America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the combined financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the combined financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the combined 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 combined financial statements in orderto 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 nosuch opinion. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of significant accounting estimates made by management, as well as evaluating theoverall presentation of the combined financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the combined financial statements referred to above present fairly, in all material
respects, the combined financial position of The OWASP Foundation, Inc. and Affiliate as of December
31, 2016, and the changes in their net assets and their cash flows for the year then ended in accordancewith accounting principles generally accepted in the United States of America.

Boston, Massachusetts
October 11, 2017
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THE OWASP FOUNDATION, INC. AND AFFILIATE
Combined Statement of Financial Position
December 31, 2016

AssetsCurrent Assets:
Cash
Accounts receivable
Prepaid expenses
Inventory$ 1,374,690
135,757
53,14250,987

Total current assets

1,614,576

Property and Equipment, net
Total assets

2,575$ 1,617,151

Liabilities and Net Assets
Current Liabilities:
Accounts payable
Accrued expenses
Deferred revenue$

99,47835,823
240,196

Total current liabilities

375,497

Net Assets:
Unrestricted:
Operating
Property and equipment
Cumulative adjustment for foreign currencytranslation adjustment

1,209,129
2,575
12,916

Total unrestricted

1,224,620

Temporarily restricted

17,034

Total net assets
Total liabilities and net assets

1,241,654$ 1,617,151

The accompanying notes are an integral part of these combined statements.

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THE OWASP FOUNDATION, INC. AND AFFILIATE
Combined Statement of Activities and Changes in Net Assets
For the Year Ended December 31, 2016

Unrestricted
Operating Revenue and Support:
Conference
Membership fees
Contributions and grants
Donated services
Other
Net assets released from purpose restrictions$ 2,190,969
442,740
22,45952,236
1,527
178,669

Total operating revenue and support

Temporarily
Restricted

116,549
79,154(178,669)$ 2,190,969
559,289
101,613
52,236
1,527-

2,888,600

17,0342,905,634

Operating Expenses:
Personnel and related:
Salaries
Payroll taxes and fringe benefits

407,829
112,626-

407,829
112,626

Total personnel and related

520,455-

520,455

1,441,883
201,139
112,125
84,26264,97459,02352,236
14,552
9,804
9,059
4,282
517

-

1,441,883
201,139
112,125
84,26264,97459,02352,236
14,552
9,804
9,059
4,282
517

2,574,311-

2,574,311

314,289

17,034331,323

Non-Operating Revenue:
Foreign currency translation adjustment

11,480-

11,480Changes in net assets

325,769

17,034

342,803

898,851-

898,851

17,034$ 1,241,654

Conference
Chapter
ProgramProfessional fees
Travel and entertainment
Office supplies and expenses
Donated services
Bank charges
Insurance
VAT expense
Depreciation
MarketingTotal operating expenses
Changes in net assets from operations

Net Assets:
Beginning of year
End of year

$ 1,224,620

$

Total

$

The accompanying notes are an integral part of these combined statements,

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THE OWASP FOUNDATION, INC. AND AFFILIATE
Combined Statement of Cash Flows
For the Year Ended December 31, 2016

Cash Flows from Operating Activities:
Changes in net assets
Adjustments to reconcile changes in net assets to net cash
provided by operating activities:
Depreciation
Foreign currency translation adjustment
Changes in operating assets and liabilities:
Accounts receivable
Prepaid expenses
Inventory
Accounts payable
Accrued expenses
Deferred revenue$

342,803

4,282(11,480)
60,47347,416(32,715)
60,96223,937
13,134

Net cash provided by operating activities

508,812

Effect of Exchange Rate Changes on Cash

11,480Net Change in Cash

520,292

Cash:
Beginning of year

854,398

End of year

$ 1,374,690

The accompanying notes are an integral part of these combined statements.

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THE OWASP FOUNDATION, INC. AND AFFILIATE
Notes to Combined Financial Statements
December 31, 2016

1.

OPERATIONS AND NONPROFIT STATUSThe OWASP Foundation, Inc. (OWASP) is a not-for-profit entity that is an open community
dedicated to enabling organizations to develop, purchase, and maintain software applications
that can be trusted. All of OWASP's tools, documents, forums, and chapters are free and open
to anyone interested in improving application security. OWASP advocates approaching
application security as a people, process, and technology problem because the most effective
approaches to application security include improvements in all these areas.
OWASP is a new kind of organization. Freedom from commercial pressures allows OWASP toprovide unbiased, practical, cost effective information about application security. OWASP is notaffiliated with any technology company, although OWASP supports the informed use ofcommercial security technology. Similar to many open-source software projects, OWASP
produces many types of materials in a collaborative, open way.
OWASP Europe VZW (the Affiliate) is a Belgian not-for-profit organization established toorganize knowledge-sharing activities and undertake activities that directly or indirectly
contribute to the achievement of OWASP's aims. OWASP and the Affiliate (collectively, theFoundation) are affiliates through common Board of Directors.
OWASP is exempt from Federal income taxes as a foundation (not a private foundation) formed
for charitable purposes under Section 501(c)(3) of the Internal Revenue Code (IRC). OWASP is
also exempt from state income taxes. Donors may deduct contributions made to OWASP within
IRC requirements.

2.

SIGNIFICANT ACCOUNTING POLICIESThe Foundation prepares its combined financial statements in accordance with generally
accepted accounting standards and principles (U.S. GAAP) established by the Financial
Accounting Standards Board (FASB). References to U.S. GAAP in these notes are to the FASB
Accounting Standards Codification (ASC).
Basis of Presentation
The combined financial statements include the accounts of OWASP and the Affiliate. All
material intercompany accounts and transactions have been eliminated.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are carried at the original invoice amount less an estimate of doubtfulreceivables. Accounts receivable are written off when deemed uncollectible. Recoveries ofreceivables previously written off are recorded as revenue when received.
An allowance for potentially uncollectible accounts receivable is provided based upon
management’s assessment of potential defaults. This assessment includes such factors ascollection history and type of receivable. No allowance was deemed necessary as of December
31, 2016.
Inventory
Inventory is stated at the lower of cost or market value. Cost is determined on an average cost
method. Market value is determined based on net realizable value. Appropriate consideration
is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net
realizable value.
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THE OWASP FOUNDATION, INC. AND AFFILIATE
Notes to Combined Financial Statements
December 31, 2016

2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment and Depreciation
Property and equipment are recorded at cost, if purchased, or at fair value at the time ofdonation. Renewals and betterments with an expected life greater than one year are
capitalized, while repairs and maintenance are expensed as incurred.
Property and equipment are depreciated using the straight-line basis over estimated useful livesof three years and consist of the following as of December 31, 2016:
Equipment
WebsiteLess - accumulated depreciation$ 33,686
30,00063,686
61,111$ 2,575

Net Assets
Unrestricted Net Assets
Unrestricted net assets are those net resources that bear no external restrictions and are
generally available for use by the Foundation. The Foundation has grouped its unrestricted net
assets into the following categories:
Operating Net Assets represent funds available to carry on the operations of theFoundation.
Property and Equipment Net Assets represent the net book value of the Foundation’s
property and equipment.
Cumulative Adjustment for Foreign Currency Translation Adjustment Net Assets represent
the cumulative effect of translating the Affiliate's financial activities and position into theFoundation's reporting currency (U.S. dollars).
Temporarily Restricted Net Assets
Temporarily restricted net assets represent funds contributed by donors for specific purposes ortime periods. When a stipulated time restriction ends, or a purpose restriction is accomplished,temporarily restricted funds are reclassified to unrestricted net assets and are reflected as net
assets released from restrictions in the accompanying combined statement of activities andchanges in net assets. All temporarily restricted net assets as of December 31, 2016, are purpose
restricted.
Revenue Recognition
Unrestricted contributions and grants are recorded as revenue when received or unconditionallypledged. Restricted contributions and grants are recorded as temporarily restricted revenues
and net assets when received or unconditionally pledged. Transfers are made to unrestricted
net assets as costs are incurred or time restrictions or program restrictions have lapsed.

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THE OWASP FOUNDATION, INC. AND AFFILIATE
Notes to Combined Financial Statements
December 31, 2016

2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (Continued)
The Foundation receives membership fees from various members and registrations for various
events and conferences. Membership fees are recognized as revenue on the membership startdate each year. Conference revenue is recognized when the conference occurs. Deferred
revenue in the accompanying combined statement of financial position consists of event
registration fees paid in advance. Other revenue is recognized as earned.
Foreign Currency Translation
The financial activity of the Affiliate is translated in accordance with the provisions of the ASC
Topic, Foreign Currency Matters. Under these provisions, current assets and liabilities of theAffiliate are translated into U.S. dollars at year-end exchange rates. Property and equipment aretranslated at the exchange rate in effect at acquisition. Revenue and expenses are translated at
the average rates in effect during the year. Translation effects are shown within non-operating
section of the combined statement of activities and changes in net assets.
Donated Services
Donated services are recorded based on pro-bono invoices or statements submitted from therelevant service providers. The Foundation received donated services totaling $52,236 for theyear ended December 31, 2016. These expenses are reflected as donated services in theaccompanying combined statement of activities and changes in net assets.
Expense Allocations
Expenses related directly to a program are distributed to that program, while other expenses
are allocated based upon management’s estimate of the percentage attributable to eachprogram.
Total expenses are comprised of the following for the year ended December 31, 2016:
Program expenses
General and administrative
FundraisingTotal$ 2,274,181
208,772
91,358$ 2,574,311

Chapter expenses of $201,139 included in the accompanying combined statement of activities
and changes in net assets consist of reimbursements to members for travel, meals andentertainment for the year ended December 31, 2016.
Estimates
The preparation of combined financial statements in accordance with U.S. GAAP requires
management to make estimates and assumptions that may affect the reported amounts ofassets and liabilities and the disclosure of contingent assets and liabilities as of the date of the
combined financial statements and the reported amounts of revenues and expenses during thereporting periods. Actual results could differ from these estimates.

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THE OWASP FOUNDATION, INC. AND AFFILIATE
Notes to Combined Financial Statements
December 31, 2016

2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value Measurements
The Foundation follows the accounting and disclosure standards pertaining to Fair Value
Measurements for qualifying assets and liabilities. Fair value is defined as the price that theFoundation would receive upon selling an asset or pay to settle a liability in an orderlytransaction between market participants.
The Foundation uses a framework for measuring fair value that includes a hierarchy thatcategorizes and prioritizes the sources used to measure and disclose fair value. This hierarchy isbroken down into three levels based on inputs that market participants would use in valuing thefinancial instruments based on market data obtained from sources independent of theFoundation. Inputs refer broadly to the assumptions that market participants would use inpricing the financial instrument, including assumptions about risk. Inputs may be observable orunobservable. Observable inputs are inputs that reflect the assumptions market participants
would use in pricing the financial instrument developed based on market data obtained fromsources independent of the reporting entity. Unobservable inputs are inputs that reflect thereporting entity’s own assumptions about the assumptions market participants would use inpricing the asset developed based on the best information available. The three-tier hierarchy of
inputs is summarized in the three broad levels as follows:
Level 1: Inputs that reflect unadjusted quoted prices in active markets for identicalassets at the measurement date.
Level 2: Inputs other than quoted prices that are observable for the asset either directly
or indirectly, including inputs in markets that are not considered to be active.
Level 3: Inputs that are unobservable and which require significant judgment or
estimation.
An asset or liability's level within the framework is based upon the lowest level of any input thatis significant to the fair value measurement. All qualifying assets and liabilities are valued using
Level 1 inputs.
Income Taxes
The Foundation accounts for uncertainty in income taxes in accordance with ASC Topic, Income
Taxes. This standard clarifies the accounting for uncertainty in tax positions and prescribes arecognition threshold and measurement attribute for the combined financial statements
regarding a tax position taken or expected to be taken in a tax return. The Foundation has
determined that there are no uncertain tax positions which qualify for either recognition or
disclosure in the combined financial statements at December 31, 2016. The Foundation's
information returns are subject to examination by the Federal and state jurisdictions andgenerally remain open for the most recent three years.
Subsequent Events
Subsequent events have been evaluated through October 11, 2017, which is the date the
combined financial statements were available to be issued. There were no events that met thecriteria for recognition or disclosure in the combined financial statements.

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THE OWASP FOUNDATION, INC. AND AFFILIATE
Notes to Combined Financial Statements
December 31, 2016

3.

CONCENTRATIONS
Credit Risk
The Foundation maintains their cash balances in United States banks. At certain times during
the year, the cash balances in some of the accounts exceed the maximum amount of insurance
provided by the Federal Deposit Insurance Corporation. The Foundation has not experienced
any losses in such accounts. The Foundation also maintains one bank account in euros that had
a balance totaling $60,394 as of December 31, 2016.
Economic Dependency
At December 31, 2016, 75% of operating revenue is from four annual conferences.
Net Assets in Foreign Countries
Net assets in Europe of $49,746 are included in the accompanying combined statement offinancial position as of December 31, 2016.

4.

CONTINGENCY
In the ordinary course of business, the Foundation is from time-to-time a party to various claims
and lawsuits. If management determines, based on the underlying facts and circumstances, that
it is probable a loss will result from a litigation contingency and the amount of the loss can bereasonably estimated, the estimated loss is accrued for. Management does not expect any
adverse financial impact from open litigation matters occurring in the normal course of businessas of December 31, 2016.

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