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ACADIANA OUTREArH TKNTER. INC.
CONSOLIDATED FINANriAf. STATEMENTS
JUNE 30.2010
Under provisions of state law, this report is a public document Acopy ofthe report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court. Release Date M<4lL
nraEKI Postlethwaite ISSiKI & Netterville A Professional Accounting CorporoKon www.pnq)a.com ACADIANA OUTREACH CENTER. INC.
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30.2010 TABLE OF CONTENTS
^&£
Independent Anditors' Report 1
Financial Statements
Consolidated Statements of Financial Position 2
Consolidated Statements of Activities 3
Consolidated Statements of Cash Flows ^
Consolidated Statements of Functional Expenses 5-6
Notes to Consolidated Financial Statements 7-14
Independent Auditors* Report on Internal Control Over Financial Reporting And on Compliance and Other Matters Bas^ on an Andit of Financial Statements Performed in Accordance with Government Auditine Standards 15-16
Schedule of Findings and Ouestioned Costs 17-18
Summarv of Prior year Audit Findings and Ouestioned Costs 19-21 fii9|SI Postlethwaite ••aiJ& Netterville
A Profeitional Accovnting Corporation AswciDled Officei in Piincipol Ciriet of the Unitod Starei www. pncpa.com
INDEPENDENT AUDITORS' REPORT
Board of Directors Acadiana Outreach Center, Inc. Lafayette, Louisiana
We have audited the accompanying consolidated statements of fmancial position of Acadiana Outreach Center, Inc. (a non-profit organization) and its subsidiary as of June 30, 2010 and 2009, and the related consolidated statements of activities, functional expenses and cash flows for the years then ended. TTiese consolidated financial statements are the responsibility ofthe Organization's management. Our responsibility is to express an opinion on these fmancial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in ^e Uni^ States of America and Govemment Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of intemal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization's intemal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and sigm'iicant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material reacts, the financial position of Acadiana Outreach Center, Inc. and its subsidiary as of Jime 30, 2010 and 2009> and die results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated December 31,2010 on our consideration of Acadiana Outreach Center Inc.'s intemal controls over fmancial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of intemal control over financial repcHting and compliance and the results of that testing and not to provide an opinion on the intemal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Govemment Auditing Standards and should be read m conjunction with this report in considering the results of our audit. TLtJkd^jcJ^] Hi^t^^ Baton Rouge, Louisiana December3l,2010
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8550 United Plaza Blvd, Suite 1001 • Baton Rouge, L^ 70809 • Tel: 225.922.4600 • Fox; 225.922.4611 ACADIANA OUTREACH TENTER. INC LAFAYETTE. LOUISIANA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION JUNE 30.2010 AND 2009
ASSETS
2010 2009
CURRENT ASSETS Cash and cash equivalents $ 345,114 $ 568,490 Cash held on behalf of others 34,945 24,589 Accounts receivable (net of allowances of $20,000 and $0, respectively) 98,502 45,252 Pledges receivable - 69,002 Grants receivable (net of allowances of $14,(H)D and $0, rcsepectively) 313,747 58,736 Prepaid expenses 10,215 56,393 Total current assets 802,523 822,462
OTHER ASSETS ^ Deposits 35,000
PROPERTY AND EQUIPMENT Property and equipment, net 1,080,085 1,116,386 Constmction in progress 104,493 - 1.184,578 1,116,386
Total Assets $ 2,022,101 :g 1,938,848
LIABILITIES AND NET ASSETS
CURRENT LIABIUTIES Accounts payable $ 118,580 $ 70,010 Accrued expenses 29.187 8,593 Lease payable - cim^nt portion 4,459 4,159 Note payable - current portion 104,958 - Line of credit 248,869 - Amounts held on behalf of others 34,945 24.589 Total current liabilities ~ 540,998 107,351
LONG-TERM LIABILTriES Lease payable - less current portion 133,534 137,750 Lease deposit 1,000 1,000 Total long-term liabiUties 134,534 138,750
Total liabilities 675,532 246,101
NET ASSETS Unrestricted net assets 1,346,569 1,692,747 Total net assets 1,346,569 1,692,747
Total Liabilittes and Net Assets $ 2,022,101 $ 1,938,848
The accompanying notes are an integral part of these fmancial statements. -2- ACADUNA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
CONSOLIDATED STATEMENTS OF ACTIVmES YEARS ENDED JUNE 3D. 2010 AND 2009
2010 2009 REVENUES Donor contributions $ 150,862 $; 164,899 Special events 508.508 496,716 Investment income 4.313 9,905 Grants 361,711 878,472 In-kind donations 303,860 770,675 Program revenue 857,071 318,600 Total revenues 2,186,325 2,639,267
EXPENSES Program 2,035,048 2.271,707 Mana^ment and general 290,238 339.733 Fundraising 207,217 144,255 Total expenses 2,532,503 2,755,695
CHANGE IN NET ASSETS (346.178) (116,428)
Net assets at begiiming of year 1.692.747 1,809,175
Net assets at end of year 1.346.569 $ 1,692,747
The accompanying notes are an mtegral part of these financial statements. -3- ACADLVNA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30.2010 AND 2009
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets (346.178) (116,428) Adjustments to reconcile the change in net assets to net cash provided by (used in) operating activities: Depreciation 90.413 96,000 Loss on disposition of assets 33,529 Bad Debt E}q>ense 95,191 Changes in operating assets and liabilities: Deposits (35,000) Accounts receivable (134,441) (17.434) Pledges receivable 69,002 (10,734) Grants receivable (269,011) 75,183 Prepaid expenses 46,178 (7.015) Accounts payable 48,570 37,800 Accmed expenses 20,594 (8,397) Net cash provided by (used in) operating activities (414,682) 82,504
CASH FLOWS FROM INVESTING ACTlVmES Construction in Progress (104,493) Purchases of property and equipment (54,112) (200,965) Net casb used in investing activities (158,605) (200,965)
CASH FLOWS FROM FINANCING ACTIVrriES Principal payments on lease (3,916) (3.962) Proceeds from financing 104,958 Line of credit 248.869 Net cash provided by (used in) financingactivitie s 349,911 (3,962)
Net increase (decrease) in cash and cash ^uivalents (223,376) (122,423)
Cash and cash equivalents - beginning of year 568,490 690,913
Cash and cash equivalents - end of year S 345,114 $ 568,490
Supplemental Information:
Cash paid for interest expense 15,913 10,077
The accompanying notes are an integral part of these financial statements. -4- ACADUNA OUTREACH CENTER. INC. LAFAYETTE, LOUISIANA
CONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES YEARS ENDED JUNE 30.2010 AND 2009
2010
Management Program and General Fundraising Total
Salary and wages expense $ 710,335 $ 192,229 $ 58,579 $ 961,143 Professional fees 124,129 66,838 - 190.967 Client assistance expense 120.604 - - 120.604 Insurance 85,000 4,474 - 89,474 Office expenses 68,863 7,651 - 76.514 Utilities and waste expense 131,071 6,898 - 137.969 Repairs and maintenance 41,906 2,206 - 44,112 Staff development 8,225 - - 8,225 Fundr£using expense - - 148,638 148,638 Interest expense 15,913 - - 15.913 In-kind donations e;q)ense 281,516 - - 281,516 Depreciation expense . 85,892 4,521 - 90,413 Development expense 62.966 3,314 - 66,280 Homeless Management Infomiation Systems (HMIS) expense 56,592 - - 56.592 Other expenses 40,035 2,107 - 42.142 Equipment and supplies 40,646 - - 40,646 Lease Expense 66.164 - - 66,164 Bad debt expense 95,191 - - 95.191
$ 2,035,048 $ 290,238 $ 207,217 $ 2.532.503
The accompanymg notes are an integral part of these financial statements.
-5- 2009
Management Program and General Ftrndrahing Total
$ 959,047 $ 43,555 $ 10,889 $ 1.013,491 16,876 1,048 - 17.924 311.979 - - 311.979 56,162 8,471 - 64.633 17,195 72,448 - 89.643 91.400 17.102 - 108.502 7.565 36,531 - 44,096 3.254 5,348 - 8.602 - - 125,371 125371 1.594 8,483 - 10.077 741,685 20,995 7,995 770,675 - 96,000 - 96,000 - 15.956 - 15,956
57,869 _ _ 57,869 7,081 13,796 - 20.877
$ 2.271,707 S 339.733 144,255 $ 2,755,695
-6- ACADUNA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Activities
Acadiana Outreach Center, Inc. (die Organization or AOC) was organized under die provisions of R.S. 1950, Title 12, Chapter 2, as amended, of die State of Louisiana on November 5,1990. The Organization constitutes a not-for-profit corporation, organized exclusively for charitable, educational, and scientific purposes. The Acadiana Outreach Center, Inc. focuses on the needs of the poor and homeless in South Louisiana areas by providing substance abuse/mental health services, women's emergency/transitional shelter, basic needs services, comprehensive case management services and structured rehabilitative programs to fight poverty, homelessness, and mental health and substance abuse conditions.
In April 2009, Urban Ventures, LLC was created to help in the development and administration of charitable programs and the ownership and development of real properties m relation to charitable programs. Urban Ventures, LLC is a 100% owned subsidiary of Acadiana Outreach Center.
AOC*s mission is to restore the lives of our poverty stricken neighbors by providing critical recovery services - access to housing, meaningful employment and addiction treatment. These services are delivered through faith based programs easily accessible to their clients. The Organization is focused on the delivery of positive client outcomes as they assist in the transition from dependency to self-sufficiency. The Organization's major programs are as follows:
Recovery Action Center (Basic Needs Services) - Acadiana Outreach Center, Inc. provides the poor and homeless with an outreach and intake center providing basic services such as restroom. shower and laundry facilities, clothing, and necessities. The clients ofthe Recovery Action Center also receive case management, housing referrals and assistance, medical referrals, rehabilitative assistance, job placement assistance, transportation, and referrals to mental health and substance abuse counseling. In addition, the Recovery Action Center coordinates referrals for access to mainstream services such as identification, food stamps. Social Security, and Veterans Administration. During times of below freezing temperatures and life threatening weather conditions, the Recovery Action Center stays open overnight for Freeze Plan as a way to provide safety for the homeless fromth e inclement weatiier.
Tliree Graces Substance Abuse Treatment Facility - The Three Graces Substance Abuse Treatment Facility in Abbeville, LA is a 90-bed, dual diagnosis behavioral healthcare program focusing on the co-existence of mental health and substance abuse conditions. Clients are referred from a variety of sources, including inpatient treatment centers, family members. Drug Court programs from across the state, et cetera. Clients receive substance abuse and mental health counseling, vocational assessment and rehabilitative counseling, and employment preparedness, job search and placement assistance. Three Graces collaborates with Louisiana Rehabilitatimi Services (LRS) and the Louisiana Office for Addictive Disorders Access to Recoveiy Program (ATR) to provide assistance to clients with disabling conditions that are related to substance abuse. Currentiy, the facility offers intensive outpatient and sober living services, which will expand to include a 28-day medically-supported detox program, allowing clients to experience a full spectrum of care within one program.
-7- ACADUNA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Activities (continued)
Lafayette Campus Sober Living Houses - The five former JOTC houses on the Lafayette Campus have become Sober Living transitional three-qtiarter houses for clients of the Three Graces program. Once clients have completed the Abbeville program, they are eligible to move into one of these houses in order to begin their transition into a post-treatment life. Widiin these sober living houses, clients receive basic shelter services (shelter, meals, bathing, laundry, phone, mail) as well as educational, living skills activities and other support services that enable Ihem to leam new coping mechanisms and habits that will enable tiiem to maintain their sobriety post- treatment These houses include: • Naomi House: a fourteen-bed shelter for women • Joshua House: an eight-bed shelter for men • Monroe House: a fourteen-bed shelter for men • Genesis and Journey Houses: sheltering ten men and women
Lighthouse Women artd Children's Shelter - The Lighthouse is an emergency/transitional shelter for homeless women and their children. The Lightiiouse is a twenty-eigjit (28) bed facility providing case management, housing referrals, job placement assistance, life skills trammg, parentmg classes, tutoring for die children, plus the basic necessities of food, shelter, and clothing. The Lighthouse is a place where women and children can temporarily call home while they transition fix>m homelessness to self-sufficiency with support and guidance fiom a caring and nurturing staff.
Tossed & Found - Tossed & Foxmd is a program ofthe AOC in collaboration with the University of Louisiana at Lafeyette School of Architecture and Design, UL Lafeyette Building Institute and the Art Education Program in the Department of Visual Arts. Within this program, clients ofthe Three Graces Substance Abuse Treatment Facility and the accompanying Sober Living Houses are able to create mosaic art pieces and leam sidlls including grouting and woodworking. These art pieces are distributed as 'thank you* gifts to donors and sponsors of the Acadiana Outreach Center.
Community Activity Center - This facility serves as a community activity and training center for ail Acadiana Outreach Center programs. TTie facility also houses additional projects that provide free services to the poor and homeless community such as clothing at the Well-mart Closet and food at the Well-mart Pantiy. Significant gatherings are held each year in this location where free services are provided to the community at large, such as Christmas for Kids serving over 300 children vrith Christinas gifts; Thanksgiving Dinner serving over 300 meals, and Christmas Dinner serving over 300 meals complete with Santa and small gifts for children. Otiier services held in this facility include traming workshops. AA and NA meetings, and church services.
-8- ACADUNA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Activities (continued)
Homeless Management Information System (HMIS) ServicePointTM - ServicePointTM is a vreb- based consumer management information system arming its agencies with powerful management and collaborative solutions. It makes workers more efficient by automating and streamlining p^)er and manual processes, expedites the delivery of critical services and enables oi^anizations to deliver the best possible care. It enables workers to assess, refer and track clients; coordinate care; plan and manage programs; gather statistics for analysis and reporting; identify performance measurements; and share data with others in realtime . Acadiana Outreach Center, Inc. has served as the lead agency since its implementation in 2(H)0 for the eight parish region of Acadiana providing system administration, maintenance, technical support, and user training for participating agencies and their programs. ServicePointTM has proven to be a valuable tool for participating agencies, allowing for integrated and comprehensive case management regarding the client's care and services across a wide array of service providers. The Acadiana Outreach Center has had a pivotal role in the State of Louisiana's goal of combining several regional HMIS databases mto one overall statewide site.
2. Summary of Significant Accounting Policies
Principles of consolidation
The consolidated financial statements mclude Acadiana Outreach Center Inc. and its 100% owned subsidiaiy Urban Ventures, LLC, which began operations on April 30, 2009. All significant intercompany accounts and transactions have been eliminated m consolidation.
Basis of presentation
The Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and pemianentiy restricted net assets. The Organization did not have any temporarity or permanently restricted net assets at June 30,2010 or June 30,2009.
Use of estimates
The preparation of fmancial statements in conformity with accounting principles generally accepted in the United States of America requhes 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 ofthe financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual residts could differ fiom those estimates.
-9- ACADIANA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summarv of Significant Accounting Policies (continued)
Cash and Cash Equivalents
Cash and cash equivalents include all monies in banks and highly liquid investments with original maturities of less than three months.
Property and Equipment
Property and equipment are stated at historical cost. Donated assets are recorded at fair market value. Depreciation of property and equipment is based upon the estimated useful service lives of the assets, which range fh>m 5-40 years, using the straight-line method. Maintenance and repairs are chained to expense, while additions and improvements in excess of $2,000 are cq)italized.
Revenue Recognition and Receivables
All contributions are considered to be available for unrestricted use tmless specifically restricted by the donor. All donor-restricted support is reported as an increase in temporarily or peimanentiy restricted net assets, depending on the nature of the restriction. When a restriction ejq)ires (tliat is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statements of Activities as net assets released fix>m restrictions.Th e Organization does not have any temporarily or permanently restricted net assets.
Accounts receivable consist of amounts due to die Organization in accordance with contract agreements and are for services performed. Accounts are considered past due based on their contractual terms; however, tiie Organization does not charge interest on past due accounts.
Pledges receivable are recognized as revenue in die period the promise is received. Pledges receivable are recordeda t their realizablevalu e given tiiey are expected to be collected within one year.
Grants for fee mcome are recorded as unrestricted net assets in the Statement of Activities. Grants receivable represents amoimts owed to the Organization for costs incurred under federal and state grant contracts which are reimbursable to the Organization.
The allowance for doubtful accounts is based on management's estimate of collectability of receivables based on economic conditions, experience and other relevant fectors. Accounts receivable is recorded net of an allowance for bad debts of $34,000 and $0 at June 30,2010 and 2009, respectively.
-10- ACADUNA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summarv of Significant Accounting Policies (continued)
Contributed Services
The Organization recognizes contribution revenue for certain services received at the estimated fair value of those services, provided those services create or enhance non-financial assets or require specialized skills which are provided by individuals possessing those skills and would typically need to be purchased, if not provided by donation. During the years ended June 30, 2010 and 2009, the total value of contributed services meeting tiie requirements for recognition totaled $26,563 and $70,641, respectively. Contributed services represent volunteer hours worked by various social workers and other professionals.
Donated Suonlies
The Organization received various donated supplies to be used within the programs and to be distributed to clients without charge during the fiscal years June 30, 2010 and 2009. These contributions have been recorded at their estimated feir value as revenue witii tiie offset recorded to e:q>enses. The values of donated supplies received during die years ended June 30,2010 and 2009 were $277,297 and $700,034, respectively.
Functional Allocation of Expenses
The costs of providing die various programs and administrative activities have been summarized on a functional basis in the Statements of Activities and Functional Expenses. Accordingly, certain costs have been allocated between program and administrative e:q)ense based on management's estimate.
Income Taxes
The Organization is a not-for-profit oi^anization as described in Section 501(cX3) ofthe Intemal Revenue Code and is exempt from federal and state mcome taxes on related mcome pursuant to Section 501(a) of the Internal Revenue Code. Accordingly, no provision for income taxes is necessary.
The Organization adopted the recent accounting guidance related to accounting for uncertainty in income taxes, which sets out a consistent fi-amework to determine the appropriate level of tax reserves to maintain for uncertain tax positions. A tax position that meet the more-Iikely^han-not recognition threshold is initially and subsequentiy measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and mformation available at the reporting date and is subject to management's judgment. Changes in the recognition or measurement are reflected in the period in which the change in judgment occurs. Management is unaware of any uncertain tax positions which would have a material unpact to tiie financial statements. With few exceptions, tiie statute of limitations for the examination of the Organization's income tax returns is generally 3 years from the due date of the tax retum including extensions. The tax years open for assessment are the years ending on or after June 30,2007.
-11- ACADUNA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
NOTES TO CONSOLIDATED FfNANfTAI. STATEMENTS
3. Propertv and Eauipment Property and equipment acquired by the Organization is considered to be owned by the Organization. The composition of property and equipment at June 30, 2010 and 2009 was as follows: June 30.2010 June 30.2009 Land $ 224,496 $ 155,202 Buildings & Improvements 1.295.295 1,365,689 Vehicles 46,564 36,885 Furniture, Fixtures, & Equipment 354,484 310,265 $ 1,920,839 $ 1,868,041 Accumulated Depreciation (840,754) (751.655) Net book value $ 1.080,085 $. 1.116,386
Depreciation expense for the years ended June 30, 2010 and 2009 totaled $90,413 and $96,000, respectively. Construction in progress for the years ended June 30, 2010 and 2009 totaled $104,493 and $0, respectively. 4. Lease Payable The Lease Payable at June 30,2010 and 2009 consists of tiie following: A $148,750 lease payable to Round Table Real Estate, LLC 2010 2009 with a monthly payment of $1,163, with mterest at 7.0% per annum amortized over 240 months with a balloon payment due August 17,2012 $ mm The lease is a lease to purchase agreement for the property located at 114 Olivier Street. Round Table Real Estate Investment Co.. LLC financed the acquisition ofthe leased property by securing a loan from IberiaBank. The IberiaBank loan is secured by a mortgage on the leased property and assignment of Tenant's rent under the lease agreement and tenant's continuing guaranty. The amount of tiie bank loan is equal to the balance of lease payable as of June 30, 2010 and 2009. Acadiana Outreach Center, Inc. has the option to purchase the leased property at anytune during the term ofthe agreement.
Aggregate maturities of long-term lease payable are as follows: FiscalYear Ending June 30. Amount 2011 13,956 2012 13,956 2013 129.936 157.848 Less: Amount representing interest f 19.855)
-12- ACADIANA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5- Line of Credit
The Organization has a revolvinglin e of credit for up to $250,000 witii a balance of $241,350 and $0 at June 30, 2010 and 2009, respectively. An mterest rate of 5% of tiie current balance outstanding is payable monthty. The line of credit is secured by property and was due on October 22,2010. The line of credit was renewed for one year subsequent to year end.
The Organization has a second revolvmg line of credit for up to $200,000 with a balance of $7,519 and $0 at June 30, 2010 and 2009, respectively. An mterest rate of 5% of tiie current balance outstanding is payable monthly. The line of credit is secured by property and was due on October 22,2010. The line of credit was renewed for one year subsequent to year end.
Interest expense for tiie fiscal year 2010 and 2009 totaled $ 15,913 and $ 10,077, respectively.
6. Notes Payable
hi October 2009. the Organization entered into a promissory note with Local hiitiatives Support Corporation (LISC) for a loan of up to $180,000. This loan is an unsecured, fiiU recourse obligation note which bears no interest. Terms of the note dictate that the loan is due in tiie current fiscal year and thus will be classified as a current liability. The balance of the note payable as of June 30, 2010 is $104,958. The proceeds fivm this note can only be used to pay pre-development costs on properties specified by the terms of the agreement. The note has covenants which require audited fmancial statements within 120 days of year end. The Organization obtained a 90-day extension for the reporting requirement which extends the compliance date to Januaiy 25, 2011. See Note 9 for further details regarding the housing development project.
7. Related Party Transaction
The lease described in Note 4 with Round Table Real Estate Investment Co., LLC is considered a related party transaction. Round Table Real Estate Co., LLC is a single member LLC owned by a board member. Total lease payments paid in 2010 and 2009 totaled $13,956 m each year. A lease to purchase agreement was executed after being brought to the board for consideration and the board determined there was no benefit to the member. The board member's term ended October 2009.
8. Concentration of Credit Risk
The Organization maintains several accounts at a local financial instimtion. The balances, at times, may exceed tiie Federal Deposit hisurance Corporation (FDIC) insured lunits. Management believes the credit risk associated with these deposits is mmimal.
-13- ACADUNA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Subsequent Events
Management has evaluated subsequent events through the date the financial statements were available to be issued, December 31, 2010, and detemimed tiiat tiie following events have occurred that require disclosure:
Beginning in the summer of 2007, the Acadiana Outreach Center began seeking ways to mitigate the issues of housing for Lafayette residents who earn under the median income in order to address the root causes of poverty. While working with the University of Louisiana at Lafayette's Architecture Department on campus renovations, the idea of an affordable housing development was broached which has become the Joie de Vivre apartment and retail complex. This development will contain 6 buildings housing 72 apartment units as well as retail and commercial space. The residents will be limited to those earning less than 60% of the median income for Lafayette: for a one person household, this would be $24,180 per year or under, while for a household of four, this would be $34,500 or under. Initial fimdmg for pre-development costs as it relates to associated properties was financed by the LISC loan mentioned in Note 6.
As of June 30, 2010, the Acadiana Outreach Center had obtained two federal appropriations for $274,400 and $712,500 to purchase the properties to develop, and had applied for tax credits from the state in order to finance the construction. The Acadiana Outreach Center will only own .01% ofthe development, while the rest will be owned by those investors who purchase the tax credits. A professional management company will be hired to oversee the daily operations of the development.
-14- Postlethwaite & Netterville
A Profes^an°l Accounting Corporation Aisocialod OHicos in Principol Citiss of the United Slotei www.pncpa.com
Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit ofthe Financial Statements Performed in Accordance with Government Auditine Standards
Board of Directors Acadiana Outreach Center. Inc. Lafayette, Louisiana
We have audited the financial statements of Acadiana Outreach Center, Inc. (the Organization) as of and for die year ended June 30, 2010, and have issued our report thereon dated December 31, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Auditing Staruiards, issued by the Comptroller General ofthe United States.
Intemal Control Over Financial Reporting
In planning and performing our audit, we considered the Organization's intemal control over financiai reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion (»i the financial statements and not to provide an opinion on the effectiveness ofthe Organization's intemal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe Organization's internal control over financial reporting.
Our consideration of intemal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in intemal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in intemal control over financial reporting that we consider to be material weaknesses.
A deficiency m intemal control exists when tiie design or operation of a control does not allow management or employees, in the normal course of performing their assigned fiincti'ons, to fn'event, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement ofthe Organization's financial statements will not be prevented, or detected and corrected on a timety basis. We consider the deficiencies described as items 2010-1 and 2010-2 in the accompanying schedule of findings and questioned costs to be material weaknesses.
Compliance and other matters
As part of obtaining reasonable assurance about whether tiie Organization's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opmion. The resuhs of our tests disclosed no instances of noncompliance or otiier matters that are required to be reported under
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8550UnitedPlazaBlvd, Suite 1001 • Baton Rouge, LA 70809 • Tel: 225.922.4600 • Fox: 225.922.4611 Govemment Auditing Standards.
The Organization's responses to the findings identified in our audit arc described in the accompanying summaiy of findings and questioned costs. We did not audit the Organization's responses and, accordingly, we express no opinion on them.
This report is intended solely for the information and use ofthe board of directors, management of Acadiana Outreach Center, Inc. and the Legislative Auditor of the State of Louisiana and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statute 24:513, this rep(Mt is distributed by the Legislative Auditor as a public document. ^oMtliuxuJjL \/\/^Mt^i^jM Baton Rouge, Louisiana December 31,2010
-16- P&N ACADIANA OUTREACH CENTER. INC, LAFAYETTE, LOUISIANA
SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30.2010
SUMMARY OF AUDTT RESULTS
1. The auditors' report expressed an unqualified opmion on the financial statements ofthe Acadiana Outreach Center, Inc.
2. Material weaknesses relating to the audit of the financial statements are reported in the Independent Auditors' Report on Intemal Control over Fmancial Reporting and on Compliance and Other Matters Based on an Audit ofthe Financial Statements Performed in Accordance with Govemment Auditing Standards.
3. No material instances of noncompliance material to the financial statements of die Acadiana Outreach Center were disclosed during the audit.
B. FINDINGS - FINANCIAL STATEMENT AUDIT
2010-1 Finandal Statement Preparation
Criteria: The defiiution of intemal control over financial reportmg is that policies and procedures exist that pertain to an entity's ability to initiate, record, process, and report financial Condition: As part of the audit process, we assisted management in adjusting the trial balance, drafting the financial statements and drafting the related notes for the year-end audit Because our involvement is so key to that process that is an indication that the intemal control over financial reporting of the Organization meets tiie defmition of a material weakness. Cause: The material weakness was caused due to management tumover at both the CEO level and financial manager level. Effect: A material weakness exists with respect to the preparation of financial statements in accordance with GAAP. Recommendation: Management should consider die cost-benefit of hiring an outside consultant to compile financial reports on a quarterly basis. -17- ACADIANA OUTREACH CENTER. INC. LAFAYETTE. LOUISIANA SCHEDULE OF FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30.2010 2010 -1 Financial Statement Preparation (continued) View of Responsible OfficitU and Planned Corrective Action: Management believes the timing of stcff tumover just prior to the beginning ofthe audit process contributed significantly to the needfo r audit personnel to assist new staff" in compiling reports. Once the 90-day training period for the new staff is complete. Management will evaluate the cost- benefit of hiring an outside consultant to compile fincmcial reports on a quarterly basis in addition to evaluating the possibility of utilizing in-house accountmg personnel tq> to and including expanding the accounting dept to reflect a general accountant (i.e., accoimts payable, payroll) vs. financial accountant (i. e., general ledger, bank reconciliation). 2010 - 2 Accounts Receivable and Construction in Progress Tracking Criteria: Intemal controls should be in place to ensure proper accounting and reporting of an organization's assets. Condition: As part of tiie audit process we noted that policies and procedures were not m place to ensure proper reporting of accounts receivable and constmction in progress at year-end. Accounts receivable and constmction in progress listings were not maintained and were only prepared with our assistance for year-end financial reporting. Because our mvolvement was so key to tiiat process that is an indication that the intemal control over these processes of the Organization meets the definition of a material weakness. Cause: The material weakness was caused due to management tumover at both the CEO level and financial manager level. In addition, the Organization has continued to see an mcrease in grant funding due to new programs established during the fiscalyear . Effect: Weak mternal controls increase the risk of misappropriation or loss that could occur or not be detected m a timety manner, if at all. Recommendation: Management should develop policies and procedures for tracking and reporting of accounts receivable and constmction in progress on a timely basis. l^ew of Responsible OJ^ial and Planned Corrective Action: Management believes the timing of st(^ tumover just prior to the beginning ofthe audit process contributed significantly to the need for audit personnel to assist new stc^ in compiling reports. Once the 90-day training period for the new staff is complete. Management will evaluate the cost- benefit of hiring an outside consultant to compile financial reports on a quarterly basis in addition to evaluating the possibility of utilizing in-house accounting personnel up to and including expanding the accounting dept to rejlect a general accountant (le.. accounts payable, payroll) vs fmancial accountant (i.e., general ledger, bank reconciliation). -18- ACADIANA OUTREACH CENTER, INC. LAFAYETTE. LOUISUNA SUMMARY OF PRIOR YEAR AUDTT FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30.2009 A. FINDINGS - FINANCIAL STATEMENT AUDIT: 2009-1 Financial Statement Preparation Condition: As part of the audit process, we assisted management in adjusting the trial balance, drafting the financial statements and drafting the related notes for the year-end audit Because our involvement is so key to that process that is an indication that the intemal control over financial reporting of die Organization meets the definition of a material weakness. Recommendation: Management should consider the cost-benefit of hiring an outside consultant to compile financial reports on a quarterly basis. Current Status: Not Resolved. Repeat Finding: 2010-1 2009-2 Internal Control Deficiencies Condition(s): During our audit procedures we noted the following areas where enhancements could be made to either tiie design of the control or the fi:equency of oversight by management and those charged with govemance: • In some instances there is a lack of segregation of duties by those personnel that are preparing, processing and recording cash disbursements. • The spreadsheet sent to the CEO to approve cash disbursements is not being compared to what is actualty being paid after the checks have been processed. • A signature stamp of the CEO exists and currently no processes are in place to identify who has the signature stamp or what it was used for or how often. We were informed it was not used by the accounting department during the audit period. • In some instances, there is a lack of documentation on approval of salaries in personnel files and timesheets did not have the supervisor's approval. • Approval for travel and entertamment expenses ofthe CEO was not documented. -19- ACADUNA OUTREACH CENTER, INC. LAFAYETTE. LOUISIANA SUMMARY OF PRIOR YEAR AUDTT FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30.2009 A. FINDINGS - FINANCIAL STATEMENT AUDIT (continued): 2009-2 Intemal Control Deficiencies (continued) Recommendation(s): The following recommendations should be considered with respect to the conditions: • Someone otiier than die person proc^sing tiie cash disbursements should reconcile the bank statements or at a minimum review the reconciliations and scan the cash disbursements. • The spreadsheet that was used to approve the accounts payable should be compared to the accounts payable batch generated by the system for accuracy and completeness. • The signature stamp should be destroyed. • Enhanced documentation on approved salaries, tunesheets. and retention of timesheets should be made for all payroll transactions. • Documentation of the approval by either tiie board chair or the treasurer for all CEO travel and entertairunent should be maintamed. Current Status: Resolved. Man^ement has implemented procedures to address intemal control weaknesses identified during the prior year audit -20- ACADUNA OUTREACH CENTER. INC, LAFAYETTE. LOUISUNA SUMMARY OF PRIOR YEAR AUDTT FINDINGS AND OUESTIONED COSTS YEAR ENDED JUNE 30.2009 A. FINDINGS - FINANCIAL STATEMENT AUDIT (continued): 2009-3 Presentation and Disclosure in the Financial Statements Condition(s): During our audit procedures we noted tiie following items that were not recorded in accordance with generally accepted accountmg principles or were not presented appropriatety: • The values used in assigning fair values to donated items were based substantially on judgment instead of using published sources of values of items donated, such as values suggested by Goodwill, the Salvation Amiy or other well recognized national organizations. • When reimbursement grants are received by the organization a receivable for the full amount of the grant is recorded with an offset to deferred revenue. Gener^ly accepted accounting principles does not allow the recognition of deferred revenue for rehnbursement typegrants . Recommendationfs): Readily available sources to determine value fair should be used to value all donated items. Accounts receivable should only be recorded for un^mid/submitted reimbursement requests. The use of deferred revenue accounts should be discontinued unless an advance on a grant has been received. Current Status: Resolved, Management has implemented procedures to address presentation and disclosure issues identified during the prior year audit B. MANAGEMENT LETTER COMMENTS PRIOR YEAR: None -21-