Covenant House Florida, Inc.

Financial Statements and Uniform Guidance Schedules Together With Independent Auditors’ Reports

June 30, 2019 and 2018

Covenant House Florida, Inc.

Financial Statements and Uniform Guidance Schedules Together With Independent Auditors’ Reports

June 30, 2019 and 2018

TABLE OF CONTENTS

Page

Independent Auditors’ Report

FINANCIAL STATEMENTS

Statements of Financial Position 3

Statements of Activities 4

Statements of Functional Expenses 5-6

Statements of Cash Flows 7

Notes to Financial Statements 8-18

SUPPLEMENTARY INFORMATION

Schedule of State Actual Expenses and Revenues 19-21

Schedule of Expenditures of Local Awards 22

Schedule of Expenditures of Federal Awards 23

Notes to Schedule of Expenditures of Federal Awards 24

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards

Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance

Schedule of Findings and Questioned Costs 29-30

Independent Auditors' Report

Board of Directors Covenant House Florida, Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of Covenant House Florida, Inc., (the “Organization”) which comprise the statements of financial position as of June 30, 2019 and 2018 and the related statements of activities, functional expenses and cash flows for the years 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 statements in accordance with accounting principles generally accepted in the of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the 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 financial statements in order to 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 no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

PKF O’CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Harrison, NY 10528 I Tel: 914.381.8900 I Fax: 914.381.8910 I www.pkfod.com

PKF O’Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Board of Directors Covenant House Florida, Inc. Page 2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Covenant House Florida, Inc. as of June 30, 2019 and 2018 and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, during the year ended June 30, 2019, the Organization adopted new accounting guidance resulting in a change in the manner in which it presents net assets and reports certain aspects of its financial statements. Our opinion is not modified with respect to this matter.

Report on Supplementary Information

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying Schedule of State Actual Expenses and Revenues and the Schedule of Expenditures of Local Awards are required by the State of Florida and are presented for purposes of additional analysis and are not a required part of the financial statements. The Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 31, 2019, on our consideration of Covenant House Florida, Inc.’s, internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Covenant House Florida, Inc.’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Covenant House Florida, Inc.’s internal control over financial reporting and compliance.

December 31, 2019

Covenant House Florida, Inc.

Statements of Financial Position

June 30, 2019 2018 ASSETS Cash and cash equivalents$ 427,677 $ 264,709 Grants receivable 326,292 493,820 Pledges and other receivables 2,331,715 244,985 Promise of contributed use of building 1,035,120 1,552,680 Prepaid expenses and other assets 55,478 40,637 Due from Parent - 254,519 Property and equipment, net 1,437,151 1,465,689

$ 5,613,433 $ 4,317,039

LIABILITIES AND NET ASSETS Liabilities Accounts payable$ 60,941 $ 268,622 Accrued expenses 470,233 448,892 Capital leases 107,945 142,432 Due to Parent 19,880 - Total Liabilities 658,999 859,946

Net Assets Without donor restrictions Undesignated 695,641 370,170 Investment in property and equipment 1,329,206 1,323,257 Total Without Donor Restrictions 2,024,847 1,693,427 With donor restrictions 2,929,587 1,763,666 Total Net Assets 4,954,434 3,457,093

$ 5,613,433 $ 4,317,039

See notes to financial statements 3 Covenant House Florida, Inc.

Statements of Activities

Year Ended June 30, 2019 Year Ended June 30, 2018

Without Donor With Donor Without Donor With Donor Restrictions Restrictions Total Restrictions Restrictions Total SUPPORT AND REVENUE Contributions $ 2,627,054 $ 2,559,740 $ 5,186,794 $ 1,797,444 $ 308,210 $ 2,105,654 Contributed services and merchandise 167,760 - 167,760 183,190 - 183,190 Government grants 2,558,597 - 2,558,597 2,334,156 - 2,334,156 Branding dollars from Parent 2,167,440 - 2,167,440 2,334,440 - 2,334,440 Grants from Parent related to National Sleep Out Events 220,323 - 220,323 195,272 - 195,272 Special event revenue, net of direct benefits to donors of $113,535 and $103,542 321,561 - 321,561 321,413 - 321,413 Net assets released from restrictions 1,393,819 (1,393,819) - 618,380 (618,380) - Total Support and Revenue 9,456,554 1,165,921 10,622,475 7,784,295 (310,170) 7,474,125

INVESTMENT AND OTHER INCOME Interest and dividends 6,709 - 6,709 4,402 - 4,402 Other income 3,412 - 3,412 71,911 - 71,911 Gain from insurance claims - - - 76,876 - 76,876 Total Investment and Other Income 10,121 - 10,121 153,189 - 153,189

Total Support and Revenue and Investment and Other Income 9,466,675 1,165,921 10,632,596 7,937,484 (310,170) 7,627,314

EXPENSES Program services 7,275,102 - 7,275,102 7,318,117 - 7,318,117 Supporting Services Management and general 1,331,459 - 1,331,459 1,070,157 - 1,070,157 Fundraising 528,694 - 528,694 481,219 - 481,219

Total Expenses 9,135,255 - 9,135,255 8,869,493 - 8,869,493

Change in Net Assets 331,420 1,165,921 1,497,341 (932,009) (310,170) (1,242,179)

NET ASSETS Beginning of year 1,693,427 1,763,666 3,457,093 2,625,436 2,073,836 4,699,272

End of year$ 2,024,847 $ 2,929,587 $ 4,954,434 $ 1,693,427 $ 1,763,666 $ 3,457,093

See notes to financial statements 4 Covenant House Florida, Inc.

Statement of Functional Expenses Year Ended June 30, 2019

Program Services Supporting Services Community Total Total Cost of Direct Shelter and Mother / Service Public Rights of Program Management Supporting Benefits to Total Crisis Care Outreach Child Medical Centers Education Passage Services and General Fundraising Services Donors Expenses

Salaries and wages$ 2,181,913 $ 94,559 $ 880,237 $ 130,366 $ 66,833 $ 1,153 $ 268,544 $ 3,623,605 $ 702,488 $ 309,880 $ 1,012,368 $ - $ 4,635,973 Payroll taxes 172,735 9,848 37,396 17,856 1,584 61 20,512 259,992 49,972 26,309 76,281 - 336,273 Employee benefits 543,304 53,011 13,254 92,746 5 - 53,007 755,327 151,362 66,252 217,614 - 972,941 Total Salaries and Related Expenses 2,897,952 157,418 930,887 240,968 68,422 1,214 342,063 4,638,924 903,822 402,441 1,306,263 - 5,945,187 Medical professional fees 17 - 12 - - - - 29 - - - - 29 Accounting fees ------38,500 - 38,500 - 38,500 Legal fees ------12,546 - 12,546 - 12,546 Consulting fees 5,224 510 127 892 - - 510 7,263 213,708 52,826 266,534 - 273,797 Supplies 61,512 1,154 8,364 32,566 2,901 351 10,924 117,772 4,215 1,963 6,178 - 123,950 Telephone and fax charges 27,827 1,227 3,715 840 1,405 118 5,013 40,145 2,392 2,466 4,858 - 45,003 Printing, postage and mailing 9,087 155 1,727 269 53 53 1,127 12,471 986 4,035 5,021 233 17,725 Occupancy Fuel and utilities 117,762 2,160 13,506 4,220 7,282 640 20,798 166,368 7,632 2,704 10,336 - 176,704 Repairs and maintenance 51,489 970 7,333 1,997 1,586 348 8,132 71,855 4,087 1,259 5,346 - 77,201 Contributed facilities 347,180 6,828 58,789 13,636 - 2,789 46,425 475,647 32,768 9,145 41,913 - 517,560 Rent and other 11,266 183 1,296 394 784 51 1,930 15,904 596 5,411 6,007 763 22,674 Rent to Parent 45,239 890 7,660 1,777 - 363 6,049 61,978 4,270 1,192 5,462 - 67,440 Equipment, maintenance and rental 12,944 251 1,920 507 301 92 1,964 17,979 10,117 526 10,643 - 28,622 Travel and transportation 21,479 479 3,946 1,004 528 122 4,121 31,679 27,506 3,503 31,009 333 63,021 Conferences, conventions and meetings 3,562 337 190 738 54 - 341 5,222 1,036 856 1,892 - 7,114 Specific assistance to individuals 493,271 1,444 157,707 3,065 5,711 406 270,888 932,492 6,318 4,421 10,739 6,953 950,184 Temporary help 3,220 44 48 109 587 - 813 4,821 - 44 44 - 4,865 Other purchased services 98,667 3,581 8,902 7,807 5,525 369 19,863 144,714 12,389 16,869 29,258 105,103 279,075 Dues, licenses and permits 6,206 60 2,199 207 368 7 649 9,696 962 8,831 9,793 150 19,639 Subscriptions and publications 174 2 - 6 34 - 47 263 - 481 481 - 744 Staff recruitment 9 1 - 1 - - 1 12 2 1 3 - 15 Insurance 116,037 2,282 19,649 4,558 - 932 16,079 159,537 14,326 3,057 17,383 - 176,920 In-kind contributions 134,208 - 33,552 - - - - 167,760 - - - - 167,760 Other expenses 10,138 1,072 935 1,118 104 6 1,506 14,879 8,108 3,189 11,297 - 26,176 Bank charges and fees ------17,665 747 18,412 - 18,412 Interest and loan closing costs 15,286 301 2,588 600 - 123 2,044 20,942 1,626 403 2,029 - 22,971 Depreciation 109,488 1,908 10,553 4,152 9,143 501 21,005 156,750 5,882 2,324 8,206 - 164,956 Total Functional Expenses 4,599,244 183,257 1,275,605 321,431 104,788 8,485 782,292 7,275,102 1,331,459 528,694 1,860,153 113,535 9,248,790

Less cost of direct benefits to donors ------(113,535) (113,535)

Total Expenses Reported by Function on the Statements of Activities$ 4,599,244 $ 183,257 $ 1,275,605 $ 321,431 $ 104,788 $ 8,485 $ 782,292 $ 7,275,102 $ 1,331,459 $ 528,694 $ 1,860,153 $ -$ 9,135,255

See notes to financial statements 5 Covenant House Florida, Inc. Statement of Functional Expenses Year Ended June 30, 2018

Program Services Supporting Services Community Total Total Cost of Direct Shelter and Mother/ Service Public Rights of Program Management Supporting Benefits Total Crisis Care Outreach Child Medical Center Education Passage Services and General Fundraising Services to Donors Expenses

Salaries and wages$ 2,081,511 $ 168,425 $ 1,008,808 $ 142,129 $ 117,578 $ 40,249 $ 214,723 $ 3,773,423 $ 550,410 $ 208,585 $ 758,995 $ - $ 4,532,418 Payroll taxes 211,659 20,650 5,162 36,137 - - 20,650 294,258 46,920 25,812 72,732 - 366,990 Employee benefits 319,200 31,141 7,785 54,498 - - 31,142 443,766 75,286 38,927 114,213 - 557,979 Total Salaries and Related Expenses 2,612,370 220,216 1,021,755 232,764 117,578 40,249 266,515 4,511,447 672,616 273,324 945,940 - 5,457,387 Medical professional fees 3,273 - 1,403 - - - - 4,676 - - - - 4,676 Accounting fees ------37,000 - 37,000 - 37,000 Legal fees ------6,636 - 6,636 - 6,636 Consulting fees ------86,600 125,947 212,547 - 212,547 Supplies 80,422 1,728 8,697 42,474 4,435 390 18,070 156,216 6,639 3,055 9,694 - 165,910 Telephone and fax charges 18,762 2,737 2,061 642 1,553 79 3,774 29,608 3,949 2,414 6,363 - 35,971 Printing, postage and mailing 5,156 63 988 99 61 15 348 6,730 595 7,757 8,352 4,208 19,290 Occupancy Fuel and utilities 120,596 2,171 13,903 7,455 7,461 660 21,320 173,566 7,749 2,719 10,468 - 184,034 Repairs and maintenance 111,806 2,064 19,302 4,197 2,022 781 16,881 157,053 9,179 2,713 11,892 - 168,945 Contributed facilities 347,180 6,828 58,789 13,636 - 2,789 46,425 475,647 32,768 9,145 41,913 - 517,560 Rent and other 14,310 228 1,937 483 716 71 2,182 19,927 840 289 1,129 - 21,056 Rent to Parent 45,239 890 7,660 1,777 - 363 6,049 61,978 4,270 1,192 5,462 - 67,440 Equipment, maintenance and rental 20,770 329 3,871 705 1,260 96 3,348 30,379 10,887 408 11,295 - 41,674 Travel and transportation 23,620 1,244 3,879 917 436 76 5,179 35,351 21,566 2,010 23,576 188 59,115 Conferences, conventions and meetings 5,468 497 1,040 479 141 - 559 8,184 4,107 931 5,038 - 13,222 Specific assistance to individuals 258,319 10,839 164,951 546 1,504 52 231,265 667,476 742 - 742 4,679 672,897 Temporary help 151,319 - 144,978 - - - - 296,297 - - - - 296,297 Other purchased services 131,298 4,456 12,165 8,603 8,706 433 26,844 192,505 14,408 40,717 55,125 92,589 340,219 Dues, licenses and permits 8,500 186 1,013 851 570 35 2,672 13,827 17,985 2,345 20,330 1,594 35,751 Subscriptions and publications 709 10 - 26 137 - 190 1,072 146 225 371 - 1,443 Staff recruitment 2,100 264 77 230 44 - 220 2,935 56,982 209 57,191 - 60,126 Insurance 94,746 1,864 16,044 3,721 - 761 13,015 130,151 9,794 2,496 12,290 - 142,441 In-kind contributions 146,552 - 36,638 - - - - 183,190 - - - - 183,190 Other expenses 5,957 695 - 1,025 37 3 704 8,421 5,611 991 6,602 284 15,307 Bank charges and fees 74 1 12 3 - 1 10 101 23,293 2 23,295 - 23,396 Interest and loan closing costs ------7,090 - 7,090 - 7,090 Bad debt ------22,415 - 22,415 - 22,415 Depreciation 106,349 1,885 11,285 4,052 7,696 535 19,578 151,380 6,290 2,330 8,620 - 160,000 Total Functional Expenses 4,314,895 259,195 1,532,448 324,685 154,357 47,389 685,148 7,318,117 1,070,157 481,219 1,551,376 103,542 8,973,035

Less cost of direct benefits to donors ------(103,542) (103,542)

Total Expenses Reported by Function on the Statements of Activities $ 4,314,895 $ 259,195 $ 1,532,448 $ 324,685 $ 154,357 $ 47,389 $ 685,148 $ 7,318,117 $ 1,070,157 $ 481,219 $ 1,551,376 $ -$ 8,869,493

See notes to financial statements 6 Covenant House Florida, Inc.

Statements of Cash Flows

Year Ended June 30, 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets$ 1,497,341 $ (1,242,179) Adjustments to reconcile change in net assets to net cash from operating activities Depreciation 164,956 160,000 Gain from extinguishment of capital lease - (3,412) Discount to present value 26,941 22,415 In-kind contribution use of building 517,560 517,560 Net change in operating assets and liabilities Grants receivable 167,528 (70,131) Pledges and other receivables (2,113,671) (266,600) Prepaid expenses and other assets (14,841) 12,060 Accounts payable and accrued expenses (186,340) 225,489 Due to/from Parent 274,399 (16,230) Net Cash from Operating Activities 333,873 (661,028)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from extinguishment of capital lease - 18,645 Purchase of property and equipment (136,418) (64,910) Net Cash from Investing Activities (136,418) (46,265)

CASH FLOWS FROM FINANCING ACTIVITIES Payments on capital leases (34,487) (13,255)

Change in Cash and Cash Equivalents 162,968 (720,548)

CASH AND CASH EQUIVALENTS Beginning of year 264,709 985,257

End of year$ 427,677 $ 264,709

SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest$ 22,971 $ 1,518

NON-CASH INVESTING AND FINANCING ACTIVITY Acquisition of equipment under capital lease obligations - 121,981

See notes to financial statements 7 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

1. Organization and Nature of Activities

Covenant House Florida, Inc. (the “Organization”), a not-for-profit organization, is an operating affiliate of Covenant House (the “Parent”), a New York-based organization. The Organization provides shelter, residential services, community services, and outreach services to youth in the Fort Lauderdale and Orlando metropolitan area. Covenant House (Parent) is a not-for-profit organization founded in 1968 and incorporated in 1972. Covenant House (Parent) and affiliates (collectively “Covenant House”), provided shelter, food, clothing, medical attention, crisis intervention, public education and prevention, and other services that reached approximately 74,000 and 89,000 young people during fiscal 2019 and 2018.

Covenant House (Parent) is the sole member of the following not-for-profit affiliates:

 Covenant House Alaska  Covenant House Texas  Covenant House California  Covenant House Washington, D.C.  Covenant House  Covent House Western Avenue  Covenant House Connecticut  Covenant House Testamentum  Covenant House Georgia  Covenant House Holdings, LLC  Covenant House Illinois  Covenant International Foundation  Covenant House Michigan  CH Housing Development Fund  Covenant House Missouri Corporation  Covenant House New Jersey  Rights of Passage, Inc.  Covenant House  Under 21 Boston, Inc.  Covenant House New York/Under 21  268 West 44th Corporation  Covenant House Pennsylvania/Under 21  460 West 41st Street, LLC  Covenant House (Parent) is also the sole member of Covenant International Foundation (“CIF”), a not-for-profit corporation, and Covenant House (Parent), together with CIF, represent the controlling interest of the following international not-for-profit affiliates:

 Asociación La Alianza ()  Covenant House  Casa Alianza De  Covenant House Vancouver  Casa Alianza Internacional  Fundación Casa Alianza México,  Casa Alianza I.A.P.

Covenant House (Parent) is the founder of Fundación Casa Alianza México, I.A.P.

The Organization has been determined to be a non-profit organization exempt from federal and state income taxes under Section 501(c)(3) of the United States Internal Revenue Code.

8 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

1. Organization and Nature of Activities (continued)

Components of Program and Supporting Services

Program Services

Shelter and Crisis Care The Organization provides a safe haven for runaway and homeless teens under the age of 21 by providing shelter 24 hours a day, 7 days a week. Youth are provided nourishing meals, clean clothes, and a safe place to sleep. The youth are offered comprehensive services - from health services, substance abuse treatment and counseling to education and job readiness assistance.

Trained outreach counselors travel by foot and van to areas where street kids congregate offering an introduction to the Organization through informal dialogue that affirms each youth, non-perishable food, clean clothing, hygiene supplies, first aid, and counseling about issues that affect the youth’s current situation, referrals to safe shelter, medical care, or other services. If requested by the youth, the team will provide transportation to the Crisis Shelter.

Outreach The Street Outreach Program teams are comprised of staff and the Organization’s resident youth who are familiar with the areas homeless youth tend to hide. They go out onto the streets on a weekly basis to engage homeless teens and provide information about the Organization’s services. Food and other supplies are provided as needed.

Mother/Child Program This program provides emergency shelter, food and counseling to run away and homeless youth with infants or toddlers, as well as parenting education and pre and post natal care.

Medical Services This program provides an on-site health program which recognizes and responds to the actual and potential health and medical problems of the homeless youth residing at its Crisis Shelter. The nurses, supported by a volunteer Medical Director, work closely with the Organization’s Case Management and Clinical staff to help improve and ensure the health, welfare and safety of each youth, their babies and children.

Community Service Centers The Community Services Program provides an array of services to homeless youth ages 18 to 21 living on the streets, who feel they are not ready to accept the structure of a residential shelter or for youth who have achieved stable housing but are in need of on-going supportive services in an aftercare environment. Services provided include case management, counseling, food pantry, hygiene supplies, clothing, laundry services, family reunification, transportation assistance, and access to education.

9 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

1. Organization and Nature of Activities (continued)

Components of Program and Supporting Services (continued)

Program Services (continued)

Public Education This program informs and educates the public on how to identify potential “runaway” and “throwaway” adolescents; public and private resources are available to help such adolescents before they leave home and public support services are also available to these families to improve their home environment.

Rights of Passage Rights of Passage (“ROP”) helps older adolescents progress from to productive lifestyles through stable residency, improved life skills and employment opportunities, and increased self-responsibility for determining their future. Rights of Passage Apartment Living (“ROPAL”) offers youth up to two years of independent living in a furnished apartment with supportive case management. The ROPAL Program consists of 66 beds at scattered sites.

Supporting Services

Management and General Management and general services include administration, finance and general support activities. Certain administrative costs that relate to specific programs have been allocated to those programs.

Fundraising Fundraising services relate to the activities of the development program in raising general and specific contributions.

Direct Benefit-to-Donor Costs Direct benefit-to-donor costs are costs incurred in conjunction with items such as meals and entertainment benefiting attendees of special events.

2. Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly actual results could differ from those estimates.

10 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

2. Summary of Significant Accounting Policies (continued)

Change in Accounting Principle

On July 1, 2018, the Organization adopted new guidance regarding Accounting Standard Update (“ASU”) 2016-14 the Presentation of Financial Statements for Not-for-Profit Entities. This guidance requires the Not-for-Profit entities to collapse the three-category (unrestricted, temporarily restricted, and permanently restricted) classification of net assets into two categories: with donor restrictions and without donor restrictions. In addition, the new guidance requires the Organization to make certain expanded disclosures relating to (1) the liquidity of financial assets, and (2) expenses by both their natural and functional classification in one location in the financial statements. The changes have the following effect on the net assets at June 30, 2018:

As Originally After Adoption Net Asset Class Presented of ASU 2016-14

Unrestricted net assets$ 1,693,427 $ - Temporarily restricted net assets 1,763,666 - Net assets without donor restrictions - 1,693,427 Net assets with donor restrictions - 1,763,666 $ 3,457,093 $ 3,457,093

Net Asset Presentation

The Organization reports information regarding its financial position and activities according to two classes of net assets: without donor restrictions and with donor restrictions. Support that is restricted by the donor is reported as an increase in net assets without donor restrictions if the restriction expires in the reporting period in which the support is received. All other donor- restricted support is reported as an increase in net assets with donor restrictions depending on the nature of the restriction. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the statements of activities as assets released from restrictions.

Revenue Recognition

Revenue is recognized as services are performed or expenditures are incurred under the Organization’s contracts with its clients and funders.

Functional Allocation of Expenses

The costs of providing the various programs and supporting services have been allocated on the statements of activities and the statement of functional expenses. While most expenses can be directly allocated to one of the programs or supporting functions, certain categories of expenses are attributed to more than one program or supporting function. Therefore, these expenses require allocation on a reasonable basis that is consistently applied. The expenses in this category include occupancy, depreciation, office expenses, insurance, certain salary and personnel costs, including the Executive’s, and accounting. These expenses are allocated based on either estimates of time and effort, square footage or days of care depending of the nature of the expenditures. 11 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

2. Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

The Organization considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

Property and Equipment

Property and equipment is recorded at cost. The Organization’s policy is to capitalize all purchases of $3,000 or greater. Leasehold improvements are depreciated over the lesser of the life of the asset or the term of the lease.

Depreciation is provided using the straight-line method over the estimated useful lives of the assets, as follows:

Buildings 31 years Furniture, fixtures and equipment 3 to 5 years Vehicles 3 years

Asset Recoverability

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There is no such impairment for the years ended June 30, 2019 and 2018.

Contributions and Pledges Receivable

Contributions to the Organization are recorded as revenue upon the receipt of an unconditional pledge of cash or other assets. Contributions are considered available for general use, unless the donors restrict their use. Contributions received that are due in more than one year are discounted at a risk adjusted rate.

The Organization maintains an allowance for doubtful accounts for estimated losses that may result from the inability of its donors to make required payments. Such allowances are based upon several factors including, but not limited to, historical collection experience and financial condition of the respective donor. At June 30, 2019 and 2018, no allowance was considered necessary by management.

Special Events

Revenues and expenses incurred relative to special events are recognized upon occurrence of the respective event. Revenues are shown net of the cost of direct benefits to donors.

12 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

2. Summary of Significant Accounting Policies (continued)

Donated Goods and Services and Use of Building

The Organization recognizes the fair value of donated services which create or enhance nonfinancial assets, or require specialized skills provided by individuals possessing those skills and would typically be purchased if not provided by donation. Contributed services which do not meet these criteria are not recognized as revenue and are not reported in the accompanying financial statements.

As described in Note 7 under leases, on July 1, 2016 the Organization entered into a five year lease with the Parent expiring June 30, 2021 and requires the payment of base rent which was $67,440 for each of the years ended June 30, 2019 and 2018. The Organization is responsible for all related repairs and maintenance and utility costs. The use of the rented facilities is restricted to accommodate facilities and operations which achieve the Parent’s mission.

Advertising Costs

Advertising costs are expensed as incurred.

Accounting for Uncertainty in Income Taxes

The Organization recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Management has determined that the Organization had no uncertain tax positions that would require financial statement recognition and/or disclosure. The Organization is no longer subject to examinations by the applicable taxing jurisdictions for years prior to June 30, 2016.

Reclassifications

Certain accounts in the 2018 financial statements have been reclassified to conform to the current year financial statement presentation.

Subsequent Events Evaluation by Management

Management has evaluated subsequent events for disclosure and recognition in the financial statements through the date that the financial statements were available to be issued, which date is December 31, 2019.

3. Grants Receivable

Grants receivable of $326,292 and $493,820 at June 30, 2019 and 2018 represent the amounts due from various governmental agencies for the Organization’s programs. All grants receivable at June 30, 2019 are expected to be collected within one year.

13 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

4. Pledges and Other Receivables

Pledges and other receivables at June 30 are summarized as follows:

2019 2018 Due within one year$ 1,493,924 $ 60,600 Due within two to five years 887,147 206,800 2,381,071 267,400 Discount to present value (49,356) (22,415) $ 2,331,715 $ 244,985

A present value discount using rates ranging from 2.33% to 3.04% has been calculated using discount factors that approximate the risk and expected timing of future contribution payments.

5. Property and Equipment

Property and equipment consists of the following at June 30:

2019 2018

Land$ 404,800 $ 404,800 Buildings 1,656,184 1,656,184 Vehicles 246,549 231,799 Leasehold improvements 940,456 831,333 Furniture, fixtures and equipment 957,249 944,704 4,205,238 4,068,820 Accumulated depreciation (2,768,087) (2,603,131) $ 1,437,151 $ 1,465,689

6. Capital Leases

The Organization has leased equipment under capital leases. The recorded costs for the assets under the capital leases are reflected as equipment within property and equipment on the statements of financial position. Amortization for the equipment under the capital lease is included in depreciation expense.

At June 30, 2019 and 2018, the Organization’s assets under capital leases were as follows:

2019 2018 Leased equipment 121,981$ 121,981 Accumulated amortization (29,333) (6,099) $ 92,648 $ 115,882

14 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

6. Capital Leases (continued)

Future minimum payments for equipment under capital leases for the years ending June 30 are as follows:

2020$ 38,868 2021 38,868 2022 38,868 2023 38,868 Total minimum obligations 155,472 Amount representing interest (47,527) $ 107,945

7. Commitments and Contingencies

Leases

The Organization leases facilities from the Parent and entered into a five year lease agreement commencing on July 1, 2016 and expiring June 30, 2021. As described in Note 2, Donated Goods and Services and Use of Building, rent expense paid for each of the years ended June 30, 2019 and 2018 was $67,440. For the years ended June 30, 2019 and 2018, the Organization recognized $517,560 of expense per year for the contributed use of the building.

The Organization also leases equipment from unrelated parties under operating leases. The rent expense related to these leases for the years ended June 30, 2019 and 2018 was $10,499 and $13,828.

Future minimum annual lease payments for the years ending June 30, are payable as follows:

2020$ 67,440 2021 67,440 $ 134,880

Government Grants

In accordance with the terms of certain government grants, the records of the Organization are subject to audit for varying periods after the date of final payment of the grants. The Organization is liable for any disallowed costs; however, management believes that the amounts of disallowed costs, if any, would not be significant. Government grants amounted to $2,558,597 and $2,334,156 for the years ended June 30, 2019 and 2018.

15 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

8. Net Assets with Donor Restriction

Net assets with donor restrictions at June 30 are available for the following:

2019 2018 Capital Campaign Infrastructure$ 1,145,719 $ 192,390 Time restricted - operations 745,152 15,000 Time restricted - use of building 1,035,120 1,552,680 Purpose restricted - education 3,596 3,596 $ 2,929,587 $ 1,763,666

Amounts released from restrictions in the years ended June 30, are as follows:

2019 2018 Capital Campaign Infrastructure$ 861,259 $ 100,820 Time restricted - operations 15,000 - Time restricted - use of building 517,560 517,560 $ 1,393,819 $ 618,380

9. Related Party Transactions

The Parent provides financial support as well as management and organizational support for its affiliated organizations. The Parent conducts fundraising activities for its own programs and the programs of the affiliates. Contributions and promises to give totaled approximately $66 million and $64 million directly to the Parent for the years ended June 30, 2019 and 2018. Contributions received from the Parent are generally not specifically restricted by donors to specific affiliates.

The Parent combines contributions received directly from individuals, corporations and foundations plus a Parent subsidy and appropriates funds classified as “Branding Dollars” or “Contributions Received from Parent” to each Covenant House affiliate. Total funds allocated to affiliates, based on the Parent’s policy, approximated $34 million and $35 million for the years ended June 30, 2019 and 2018. In fiscal 2019 and 2018, the Organization received $2,167,440 and $2,334,440 in contributions from the Parent.

Use of Building

As described in Notes 2 and 7, the Organization entered into a five year lease agreement with the Parent commencing on July 1, 2016 and expiring June 30, 2021.

16 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

10. Employee Benefit Plan

The Organization participates in a noncontributory defined benefit pension plan (the “Plan”), which was established on August 1, 1982, sponsored by the Parent covering substantially all of the employees of the Parent and its domestic affiliates. Benefits are generally based on years of service and final average salary. Effective August 1, 2009, the Board of Directors of the Parent approved to freeze the future benefit accruals of all employees of Covenant House participating in the Plan. As set forth in the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), the Parent is responsible for maintaining an annual minimum funding requirement that is reported and paid by the Parent. Although the Parent is responsible for maintaining the total annual minimum funding requirement, the Plan's actuary has determined the respective allocable share to the various affiliates that participate in the Plan. The Organization contributed $249,139 and $70,681 during the years ended June 30, 2019 and 2018 for its allocable share of the Parent’s minimum funding requirement, which is included in employee benefits on the statements of functional expense.

Effective January 1, 2007, the Parent adopted a defined contribution 403(b) savings and retirement plan. Employees are immediately eligible to participate in the plan. Employees who work at least 1,000 hours per year are eligible to receive an employer contribution. The Organization makes annual contributions into the plan on behalf of employees ranging from 1% to 9% of employee compensation determined using a formula based on points, which equal the sum of age and years of service. Employer contributions to the plan are 100% vested after employees have completed three years of service. Total expense related to the 403(b) plan was $166,405 and $146,289 for the years ended June 30, 2019 and 2018.

11. Concentration of Credit Risk

Financial instruments that potentially subject the Organization to concentrations of credit risk consist primarily of cash, cash equivalents and receivables. The Organization maintains its cash in bank deposit accounts which generally exceed federally insured limits. The Organization has not experienced any losses in such accounts. Concentrations of credit risk with respect to receivables are generally diversified due to the number of entities and individuals comprising the Organization’s programs and donor base. The Organization performs ongoing credit evaluations and writes off uncollectible amounts as they become known.

17 Covenant House Florida, Inc.

Notes to Financial Statements June 30, 2019 and 2018

12. Liquidity and Availability of Resources

The following reflects the Organizations financial assets as of the balance sheet date, including amounts not available within one year of the balance sheet date. Amounts not available include amounts with donor-imposed restrictions:

Financial assets: Cash and cash equivalents$ 427,677 Grants receivable 326,292 Pledges and other receivables 2,331,715 Total Financial Assets 3,085,684

Less: Contractual or donor imposed restrictions amounts Contributions receivable without restriction in excess of one year 593,448 Restricted contributions 1,149,315 1,742,763

Less: Outstanding current liabilities 599,499

Financial Assets Available to Meet General Expenditures Over the Next Twelve Months$ 743,422

The Organization is conducting a capital campaign to raise $10 million, of which $6 million is for the construction of a new facility in Fort Lauderdale, Florida, $3 million to expand services in Orlando, Florida, $500,000 for investigation into improvement of care and services and $500,000 to invest in critical research. As part of the Organization’s liquidity management for the year ended June 30, 2019, it structures its financial assets to be available as its general expenditures, liabilities, and other obligations come due and consistently monitors cash activities to ensure timely availability. In addition, the Organization invests cash in excess of daily requirements in short-term investments. To help manage unanticipated liquidity needs, the Organization has a line of credit available in the amount of $1 million.

13. Subsequent Events

On July 1, 2019, the Organization borrowed a total of $1,750,000 from the Parent to be used for the Organization’s operations. Of this loan $1,000,000 was drawn down from the Parent’s line-of-credit and transferred to the Organization to be repaid within twelve months with an interest rate of the thirty-day London Interbank Offered Rate (“LIBOR”) plus 150 basis points. The remaining $750,000 borrowed was in the form of an interest free loan from the Parent and is to be repaid within twelve months.

* * * * *

18

Covenant House Florida, Inc.

Supplementary Information June 30, 2019

Covenant House Florida, Inc. Schedule of State Actual Expenses and Revenues

AGENCY: Covenant House Florida, Inc. BUDGET PERIOD: FROM 7/1/2018 - 6/30/2019

PART I: ACTUAL FUNDING SOURCES & REVENUES

SAMH COVERED SERVICES STATE-FUNDED Program 1 Program 2 Total for State Total for Non- FUNDING Total for All Non-SAMH SAMH-Funded State-Funded Total SOURCES & Assessment Intervention Outreach Residential II Covered Covered Covered Covered Funding REVENUES Services Services Services Services

(B+…+Bx) (D+E) (F+G)

A B1-a B1-b B2-a B2-b DEFGH IA. STATE SAMH FUNDING (1) CMH$ 12,606 $ - $ - $ - $ 12,606 xxxxxxxxx$ 12,606 xxxxxxxxx$ 12,606 (2) ASA - 77,750 - 4,195 81,945 xxxxxxxxx 81,945 xxxxxxxxx 81,945 (3) CSA - 18,988 13,155 - 32,143 xxxxxxxxx 32,143 xxxxxxxxx 32,143 (4) - - - - - xxxxxxxxx - xxxxxxxxx - (5) - - - - - xxxxxxxxx - xxxxxxxxx - (6) From Other Districts - - - - -xxxxxxxxx - xxxxxxxxx - TOTAL STATE SAMH FUNDING = $ 12,606 $ 96,738 $ 13,155 $ 4,195 $ 126,694 $ -$ 126,694 $ -$ 126,694

IB. OTHER GOVT. FUNDING (1) Other State Agency Funding$ - $ - $ - $ - $ - $ - $ - $ 45,597 $ 45,597 (2) Medicaid ------(3) Local Government - - - 451,285 451,285 - 451,285 636,620 1,087,905 (4) Federal Grants and Contracts ------1,298,402 1,298,402 (5) In-kind from local govt. only ------TOT. OTHER GOVT. FUNDING = $ - $ -$ -$ 451,285 $ 451,285 $ -$ 451,285 $ 1,980,619 $ 2,431,904

IC. ALL OTHER REVENUES (1) 1st & 2nd Party Payments$ - $ - $ - $ - $ - $ - $ - $ - $ - (2) 3rd Party Payments (except Medicare) ------(3) Medicare ------(4) Contributions and Donations 90,456 63,902 70,193 590,525 815,076 - 815,076 6,750,503 7,565,579 (5) Other ------10,121 10,121 (6) In-kind ------167,760 167,760 TOT. ALL OTHER REVENUES = $ 90,456 $ 63,902 $ 70,193 $ 590,525 $ 815,076 $ -$ 815,076 $ 6,928,384 $ 7,743,460

TOTAL FUNDING = $ 103,062 $ 160,640 $ 83,348 $ 1,046,005 $ 1,393,055 $ -$ 1,393,055 $ 8,909,003 $ 10,302,058 See independent auditors' report 19 Covenant House Florida, Inc. Schedule of State Actual Expenses and Revenues AGENCY: Covenant House Florida, Inc. BUDGET PERIOD: FROM 7/1/2018 - 6/30/2019 PART II: ACTUAL EXPENSES

SAMH COVERED SERVICES STATE FUNDED Program 1 Program 2 *except IIC & IID

Total for Non- Total for State State-Funded Total for All SAMH-Funded Non-SAMH Covered Covered Services Covered Services Covered Other Support Total Services EXPENSE CATEGORIES Assessment Intervention Outreach Residential II Services Costs (optional) Administration Expenses (B+…+B) (D+E) (F+G+H*+I*)

A B1-a B1-b B2-a B2-b DEFGHIJ IIA. PERSONNEL EXPENSES (1) Salaries$ 67,127 $ 99,715 $ 54,075 $ 648,146 $ 869,063 $ - $ 869,063 $ 2,754,542 $ 309,880 $ 692,488 $ 4,625,973 (2) Fringe Benefits 13,694 20,342 11,031 132,222 177,289 - 177,289 838,030 92,561 200,584 1,308,464 TOTAL PERSONNEL EXPENSES = $ 80,821 $ 120,057 $ 65,106 $ 780,368 $ 1,046,352 $ - $ 1,046,352 $ 3,592,572 $ 402,441 $ 893,072 $ 5,934,437

IIB. OTHER EXPENSES (1) Building Occupancy$ 11,671 $ 4,600 $ 7,325 $ 42,220 $ 65,816 $ - $ 65,816 $ 208,376 $ 19,711 $ 49,353 $ 343,256 (2) Professional Services ------49,205 43,681 231,986 324,872 (3) Travel ------31,679 3,503 27,506 62,688 (4) Equipment ------17,979 526 10,117 28,622 (5) Food Services - - - 103,268 103,268 - 103,268 456,545 1,735 5,859 567,407 (6) Medical and Pharmacy - 17,191 - - 17,191 - 17,191 14,066 - - 31,257 (7) Subcontracted Services ------(8) Insurance 442 2,212 1,637 13,269 17,560 - 17,560 141,977 3,057 14,326 176,920 (9) Interest Paid ------20,942 403 1,626 22,971 (10) Operating Supplies & Expenses 844 2,109 1,772 12,654 17,379 - 17,379 656,106 148,742 21,405 843,632 (11) Other ------20,101 4,792 26,809 51,702 (12) Donated Items ------167,760 - - 167,760 TOTAL OTHER EXPENSES = $ 12,957 $ 26,112 $ 10,734 $ 171,411 $ 221,214 $ - $ 221,214 $ 1,784,736 $ 226,150 $ 388,987 $ 2,621,087

TOT. PERSONNEL & OTH. EXP. = $ 93,778 $ 146,169 $ 75,840 $ 951,779 $ 1,267,566 $ - $ 1,267,566 $ 5,377,308 $ 628,591 $ 1,282,059 $ 8,555,524

IIC. DISTRIBUTED INDIRECT COSTS (a) Other Support Costs (Optional) $ - $ - $ - $ - $ - $ - $ - $ $ - $ - $ - (b) Administration 9,284 14,471 7,508 94,226 125,489 - 125,489 1,114,454 42,116 (1,282,059) - TOT. DISTR'D INDIRECT COSTS = $ 9,284 $ 14,471 $ 7,508 $ 94,226 $ 125,489 $ - $ 125,489 $ 1,114,454 XXXXXXXXXXX XXXXXXXXX $ -

TOTAL ACTUAL OPER. EXPENSES = $ 103,062 $ 160,640 $ 83,348 $ 1,046,005 $ 1,393,055 $ - $ 1,393,055 $ 6,491,762 $ 670,707 $ -$ 8,555,524

IID. UNALLOWABLE COSTS $ - $ -$ -$ -$ -$ - $ - $ -XXXXXXXXXXX XXXXXXXXX $ -

TOT. ALLOWABLE OPER. EXP. = $ 103,062 $ 160,640 $ 83,348 $ 1,046,005 $ 1,393,055 $ - $ 1,393,055 $ 6,491,762 XXXXXXXXX XXXXXXXXX $ 8,555,524

IIE. CAPITAL EXPENDITURES $ - $ -$ -$ -$ -$ - $ - $ -$ - $ -$ -

See independent auditors' report 20 Covenant House Florida, Inc.

Schedule of State Actual Expenses and Revenues Year Ended June 30, 2019

1 Total Expenditures$ 1,393,055

2 Less Other State and Federal Funds -

3 Less Non-Match SAMH Funds (32,143)

4 Less Unallowable Costs per 65E-14, F.A.C. -

5 Total Allowable Expenditures 1,360,912 (Sum of lines 1, 2, 3, and 4)

6 Maximum Available Earnings 1,020,684 (Line 5 times 75%)

7 Amount of State Funds Requiring Match 94,551

8 Amount Due to Department$ -

See independent auditors' report 21 Covenant House Florida, Inc.

Schedule of Expenditures of Local Awards Year Ended June 30, 2019

Grantor/Program Title Grantor Number Expenditures

Broward County 16-CP-CSA-8202-01/1 & 19-CP- Broward - CHAMP at Ft Lauderdale Shelter CSA-8202-01/1$ 451,285 Broward - Mental Health Counseling 16-CP-CSA-8202-01/1 & 19-CP- at Fort Lauderdale Shelter CSA-8202-01/1 148,834 Broward - Respite at Fort Lauderdale Shelter 18-CP-CSA-8202-01 411,708 Broward Sheriff's Office Law Enforcement Trust Funds 10,000 Healthy Start of Broward (Provide Parenting Education to Moms with Infants) CHF-FY18-19 1,300 Other City of Hollywood (Shelter for Hollywood Youth) Not Available 14,778 City of Orlando Not Available 30,000 City of Oakland Park (CHF Services to Oakland Park Youth) Aid to Non-Profits 20,000

Total Expenditures of Local Awards$ 1,087,905

See independent auditors' report 22 Covenant House Florida, Inc.

Schedule of Expenditures of Federal Awards Year Ended June 30, 2019

Federal Total Federal Grantor/Pass-Though CFDA Pass-Through Entity Provided to Federal Grantor/Program or Cluster Title Number Identifying Number Subreceipients Expenditures

Department of Agriculture Programs

Pass-Through the Florida Department of Agriculture and Consumer Services Child Nutrition Cluster School Breakfast Program 10.553 Not Available$ - $ 45,597

Child Nutrition Discretionary Grants Limited Availability 10.579 01-0237 - 7,269

Total Department of Agriculture Programs - 52,866

Department of Housing and Urban Development Programs

Direct Program Continuum of Care Program 14.267 - 175,986

Pass-Through Homeless Services Network of Orange County, Florida Continuum of Care Program FL0090L4H071710/ 14.267 FL0091L4H071508 - 222,380

Pass-Through Broward County, Florida Continuum of Care Program 16-CP-HIP-8202-HUD15-01/ 18- 14.267 CP-HIP-8264-HUD17-01 - 424,239

Total Continuum of Care Program - 822,605

Pass-Through Orange County, Florida Housing and Community Development Division Emergency Solutions Grant Program 14.231 ESGCH - 64,820

CDBG - Entitlement Grants Cluster

Pass-Through Broward County Community Development Community Development BlockGrants/Entitlement Grants 14.218 Not Available - 28,500

Pass-Through Broward City of Pompano Beach Community Development Block Grants/Entitlement Grants 14.218 Not Available - 6,390

Pass-Through Orange County, Florida Housing and Community Development Division Community Development Block Grants/Entitlement Grants 14.218 CDBGCH - 35,880 Community Development Block Grants/Entitlement Grants 14.218 B-17-UC-12-0003 - 70,000

Total Community Development Block Grants Entitlement Grants Program - 140,770

Total Department of Housing and Urban Development - 1,028,195

Department of Health and Human Services

Direct Program Basic Center Grant 93.623 - 144,600

Pass-Through Florida Department of Children and Families Block Grants for Prevention and Treatment of Substance Abuse 93.959 34353-18 - 114,826

Pass-Through Florida Department of Children and Families Block Grants for Community Mental Health Services 93.958 34353-18 - 11,868

Pass-Through Broward County Healthy Start Coalition Maternal and Child Health Services Block Grant to the States 93.994 CHF-FY18-19 - 62,400

Total Department of Health and Human Services - 333,694

Department of Homeland Security

Pass-Through Emergency Food and Shelter Local Boards Emergency Food and Shelter National Board Program 97.024 157000-017 - 47,345

Total Expenditures of Federal Awards $ - $ 1,462,100

See independent auditors' report and notes to schedule of expenditures of federal awards

23 Covenant House Florida, Inc.

Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2019

1. Basis of Presentation

The accompanying Schedule of Expenditures of Federal Awards (the “Schedule”) includes the federal award activity of Covenant House Florida, Inc. (the “Organization”) under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (“Uniform Guidance”). Because the Schedule presents only a selected portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Organization.

2. Summary of Significant Accounting Policies

Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

3. Indirect Cost Rate

The Organization has elected not to use the 10-percent de minimis indirect cost rate allowed under Uniform Guidance.

24

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards

Independent Auditors’ Report

Board of Directors Covenant House Florida, Inc.

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Covenant House Florida, Inc., (the “Organization”), which comprise the statement of financial position as of June 30, 2019, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated December 31, 2019.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Organization’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Organization’s internal control. Accordingly, we do not express an opinion on the effectiveness of Organization’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, 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 of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

PKF O’CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Harrison, NY 10528 I Tel: 914.381.8900 I Fax: 914.381.8910 I www.pkfod.com

PKF O’Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Board of Directors Covenant House Florida, Inc. Page 2

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Organization’s financial statements are free from 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 opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

December 31, 2019

Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance

Independent Auditors’ Report

Board of Directors Covenant House Florida, Inc.

Report on Compliance for Each Major Federal Program

We have audited Covenant House Florida, Inc.’s (the “Organization”) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Organization’s major federal programs for the year ended June 30, 2019. The Organization’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditors’ Responsibility

Our responsibility is to express an opinion on compliance for each of the Organization’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals and Audit Requirements for Federal Awards (“Uniform Guidance”). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Organization’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Organization’s compliance.

PKF O’CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Harrison, NY 10528 I Tel: 914.381.8900 I Fax: 914.381.8910 I www.pkfod.com

PKF O’Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

Board of Directors Covenant House Florida, Inc. Page 2

Opinion on Each Major Federal Program

In our opinion, the Organization complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019.

Report on Internal Control Over Compliance

Management of the Organization is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Organization’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Organization’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

December 31, 2019

Covenant House Florida, Inc.

Schedule of Findings and Questioned Costs Year Ended June 30, 2019

Section I - Summary of Auditors’ Results

Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Noncompliance material to financial statements noted? yes X no

Federal Awards Internal control over major federal programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? _ yes X none reported Type of auditors’ report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? _ yes X no

Identification of major federal programs:

CFDA Number(s) Name of Federal Program or Cluster

14.267 Continuum of Care Program

Dollar threshold used to distinguish between Type A and Type B programs $750,000

Auditee qualified as low-risk auditee? yes X no

Section II – Financial Statement Findings

None

Section III – Federal Award Findings and Questioned Costs

None

29 Covenant House Florida, Inc.

Schedule of Findings and Questioned Costs (continued) Year Ended June 30, 2019

Section IV – Prior Year Audit Findings

Finding: 2018-001 – Submission of Reporting Package and Data Collection Form

Status: This finding has been corrected and the auditee submitted the data collection form and the reporting package timely.

Finding: 2018-002 – Budget estimates were used for grant reimbursement of salaries and other expenses for the Continuum of Care Program.

Status: This finding has been corrected and the Organization implemented an expenditure tracking schedule, and requested reimbursement from the pass-through entity based off the actual expenditures from the spreadsheet.

30