SAMUEL W. STEVENS, III Certified Public Accountant

REACH OUT AND TOUCH, INC. Shreveport, LOUISIANA

Audited Financial Statements

December 31, 2014

REACH OUT AND TOUCH, INC. SHREVEPORT, LOUISIANA

For the Year ended December 31. 2014

TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT

Statement of Financial Position

Statement of Activities

Statement of Functional Expenses

Statement of Cash Flows

Notes to Financial Statements

INDEPENDENT AUDITORS' REPORT ON INTERNAE CONTROE OVER FINANCIAE REPORTING AND ON COMPEIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAE STATEMENTS PEREORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

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INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

Schedule Of Findings and Questioned Costs Section I - Summary of Auditor's Report

Schedule Of Findings and Questioned Costs Section I - Financial Statement Findings

Summary Schedule of Prior Audit Findings -Financial Statement and Other Matters

Schedule of Expenditures Of Federal Awards

Notes to the Schedule of Expenditures Of Federal Awards

Schedule of Compensation, Benefits and Other Payments to Agency Head

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SAMUEL W. STEVENS, III CPA P.O. Box 52631 • Shreveport LA 71135 • (318) 458-0930 • Fax (866) 531-9558

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors Reach Out and Touch, Inc. Shreveport, Louisiana

Report on the Financial Statements

I have audited the accompanying statements of financial position of Reach Out and Touch, Inc., a nonprofit organization, as of December 31, 2014, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I 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 auditor's 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, I 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Reach Out and Touch, Inc. as of December 31, 2014, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Other Information

My audit was conducted for the purpose of forming an opinion on the financial statements of Reach Out and Touch, Inc. taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit

Organizations, and the Schedule of Compensation, Benefits, and Other Payments to the Agency Head are presented for purposes of additional analysis and are not required parts of the basic 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 fmancial statements. The information has been subjected to the auditing procedures applied in the audit of the fmancial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the fmancial statements or to the fmancial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the information is fairly stated, in all material respects, in relation to the fmancial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, 1 have also issued my report dated May 16, 2016, on my consideration of Reach Out and Touch, Inc.'s internal control over fmancial reporting and on my 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 my testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over fmancial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Reach Out and Touch, Inc.'s internal control over fmancial reporting and compliance.

May 16, 2016

REACH OUT AND TOUCH, INC

Statement of Financial Position

December 31. 2014

Assets Current Assets:

Cash $ 5,850 Grants Receivable 44,215

Total Current Assets 50,065

Property: Machinery & Equipment 9,588 Vehicles 9,290

Total Cost 18,878 Less: Accumulated Depreciation (4,366)

Net Book Value 14,512

Other Assets:

Due From Officers 10.385

Total Assets $ 74,962

Liabilities and Net Asset Current Liabilities:

Payroll Liabilities $ 6,210 Line Of Credit 9.782

Total Current Liabilities 15,992

Net Asset Net Asset:

Unrestricted 58.970

Total Net Asset 58.970

Total Liabilities and Net Asset $ 74.962

The accompanying notes are an integral part of these financial statements 3

REACH OUT AND TOUCH, INC

Statement of Activities

For the Year Ended December 31. 2014

Support:

Grants

Feeding Program $ 591,624

Tutoring 7,537

Program Revenue

Transportation Fees 53,318

Summer Camp Fees 15,887

Total Support 668,366

Expenses:

Program Services

Feeding 538,246

Tutoring 20,697

Transportation 48,781

Summer Camp 9,637

Total Program Services 617,361

Supporting Services

Administrative 15,059

Total Supporting Services 15,059

Total Expenses 632,420

Change in Unrestricted Net Asset 35,946

Unrestricted Net Asset

Beginning of Year 23,024

End of Period $ 58.970

The accompanying notes are an integral part of these financial statements 4

REACH OUT AND TOUCH, INC

Statement of Functional Expenses For the Year Ended December 31, 2014

Summer Total Feeding Tutoring Transportation Camp Administrative Expenses

Payroll Ejq^ense $ 252,994 $ 4,984 : $ 17,672 $ 0 : S 0 $ ; 275,650 Advertising 1,015 0 0 0 0 1,015 Automobile Expense 0 125 17,879 0 55 18,059 Bank Service Charge 929 355 0 0 0 1,284 Business Licenses and Permits 0 0 0 0 15 15 Computer and Internet Expense 49 240 0 0 0 289 Dues & Subscriptions/Memberships 0 0 0 0 100 100 Insurance Expense 0 0 9,846 0 824 10,670 Interest Ejq^ense 0 0 0 0 993 993 Miscellaneous Expense 0 0 0 0 9,214 9,214

Office Supplies 1,221 681 0 0 0 1,902 Postage and Shipping 0 124 0 0 0 124 Legal & Professional Fees 2,445 2,650 0 0 0 5,095 Rent Expense 10,500 9,900 0 0 571 20,971 Repair & Maintenance 2,467 819 1,730 0 0 5,016 Security Expense 316 0 0 0 0 316 Telephone Expense 2,429 806 1,654 0 190 5,079 Utilities Expense 10,270 0 0 0 0 10,270 Garbage 1,922 0 0 0 0 1,922 Food Expense 251,689 13 0 146 0 251,848 Camp Ej^enses 0 0 0 9,491 0 9,491 Depreciation 0 0 0 0 3,097 3,097

$ 538,246 $ 20,697 ! $ 48,781 $ 9,637 : 5 15,059 $ ; 632,420

The accompanying notes are an integral part of these fmancial statements 5

REACH OUT AND TOUCH, INC

Statement of Cash Flows

For the Year Ended December 31. 2014

Cash Flows from Operating Activities

Chmige in Net Assets $ 35,946

Adjustments to Reconcile Change in Net Assets to

Net Cash Provided from Operations:

Depreciation 3,097

(Increase)/Decrease in Grants Receivable (18,798)

(Increase)/Decrease in Other Assets (10,385) Increase/(Decrease) in Payroll Liabilities (35,747)

Total Adjustments (61,832)

Net Cash Used by Operating Activities (25,886)

Cash Flows from Financing Activities Proceeds from Line of Credit 9.782

Net Cash Flows Provided by Financing Activities 9,782

Net Decrease in Cash (16,104)

Cash, Beginning of Year 7,769

Cash, End of Year $ 5,850

The accompanying notes are an integral part of these financial statements 6

REACH OUT AND TOUCH, INC LOUISIANA NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

Reach Out and Touch, Inc. is a Louisiana not-for-profit organization incorporated under the laws of the State of Louisiana on February 8, 2007. Reach Out and Touch's purpose is to meet the Shreveport-Bossier community development needs of low-to-moderate income citizens by providing programs that currently include feeding, tutoring, transportation, and summer camp.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Reporting The financial statements are presented on the accrual basis of accounting and are prepared in accordance with current recommendations of the American Institute of Certified Public Accountants for Not-for-Profit Organizations. The significant accounting policies are described below:

Basis of Presentation Financial statement presentation follows the recommendations of the Financial Accounting Standards Board ASC 958, Financial Statements of Not-for-Profit Organizations. Reach Out and Touch has elected to present a classified statement of financial position, under ASC 958; Reach Out and Touch 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 permanently restricted net assets.

Net Assets Net Assets are included in one of the following three classes, depending on the presence and type of donor-imposed restrictions.

• Unrestricted Net Assets - Net Assets not subject to donor-imposed restrictions.

• Temporarily restricted Net Assets - Net assets subject to donor-imposed restrictions that may be met either by an action and/or through the passage of time. As of December 31, 2014 Net Assets included no temporarily restricted net assets.

• Permanently restricted Net Assets - Net Assets subject to donor-imposed restrictions that will not expire through the passage of time and/or an action. As of December 31, 2014, Net Assets included no permanently restricted net assets.

Functional Allocation of Expenses The costs of providing the various programs and activities have been summarized on a functional basis in the statement of activities. Accordingly, program and support service expenses are specifically identified with or allocated to Reach Out and Touch's various functions. Expenses requiring allocation include services provided by Reach Out and Touch's management and administrative staff to specific program-related activities. Expense allocations are prorated based on a percentage of time or actual usage.

Income Tax Status Reach Out and Touch is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code Section and corresponding state code as a charitable organization whereby

only unrelated business income, as identified by Section 509(a)(1) of the Code, is subject to income tax. Reach Out and Touch had no unrelated business income in 2014. Accordingly, no provision for income taxes has been recorded in the accompanying financial statements.

Reach Out and Touch adheres to the provisions of FASB ASC 740-10-25. Under FASB ASC 740-10-25, an organization must recognize the tax benefit associated with tax taken for tax return purposes when it is more likely than not the position will be sustained. Reach Out and Touch does not believe there are any material uncertain tax positions and, accordingly, it has not recognized any liability for unrecognized tax benefits or any related interest or penalties.

Advertising and Public Relations Costs Advertising and public relations costs are charged to operations when incurred. Advertising and public relations costs charged to operations for the year ended December 31, 2014 totaled $2,000.

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets during the reporting period. Actual results could differ from those estimates.

Revenue Recognition Restricted contributions and grants whose restrictions are met in the same reporting period as they are made are reported as unrestricted revenues and support.

Cash Cash includes amounts in petty cash, demand deposits, interest bearing demand deposits, and time deposits. Reach Out and Touch considers money market funds and short-term investments, with a maturity of less than 90days from the acquisition date to be cash equivalents. As of December 31, 2014, there are no cash equivalents.

Depreciable Assets Depreciable assets acquired by the organization are considered to be owned by Reach Out and Touch, Inc. The Organization follows the practice of capitalizing, at cost, all expenditures for property, furniture, fixtures, and office equipment in excess of $500. Lesser amounts are expensed. Donated fixed assets are valued at fair market value at the date of the gift. Depreciation of all such items is computed on a straight-line method over the estimated useful lives of the assets generally as follows:

Machinery & Equipment 3-5 years Vehicles 3-5 years

NOTE 2 - REVENUES AND SUPPORT

Reach Out and Touch received the following grant for 2014: Feeding Programs -

U.S. Department of Agriculture -Louisiana Department of Education $ 591,624

Other Caddo Parish 5,000

City of Shreveport 2,537 Total Grant Funding $ 599,161

During 2014, The Organization's sources of revenue and support were distributed from the following sources:

Source Amount

% of T otal Revenue &

Support Revenue & Support Grant Revenue

Louisiana Department of Education $ 591,624 88.52% Caddo Parish 5,000 0.75% City of Shreveport 2,537 0.38%

Total Grant Revenue 599,161 89.65%

Program Revenues Transportation Fees 53,318 7.98% Summer Camp Fees 15,887 2.38%

Total Revenue & Support $ 668,366 100.00%

NOTE 3 - CONCENTRATION, RISK AND UNCERTAINTIES Reach Out and Touch maintains a cash balance at one financial institutions. At December 31, 2014, the account at the institution is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At December 31, 2014, the cash balance on deposit at the institution did not in exceed the federally insured limit.

NOTE 4. COMMITMENTS AND CONTINGENCIES Reach Out and Touch entered into a two year lease starting May 15, 2014 for property at 4725 Linwood Ave, Shreveport, La. The monthly lease payment is $1,500.00. The property is used as a kitchen for its feeding program.

Reach Out and Touch entered into a seventeen month lease starting January 1, 2013 and ending May 31, 2014, for property at 3017 West 70th, Shreveport, La. The monthly lease payment is $1,000.00. The property is used for residential dwelling its tutoring, transportation, feeding and community support programs.

Reach Out and Touch entered into a seventeen month lease starting June 2, 2014 and ending August 8, 2014, and thereafter month to month, for property at 5804 Southern Ave, Shreveport, La. The monthly lease payment is $1,200.00. The property is used for its camp program

Total rents allocated and paid for the year was $20,400.

Reach Out and Touch receives grants and contracts that are subject to review and audit by the agency (ies) providing the funding. Such reviews and audits could result in expenses being disallowed under the terms and conditions of the grants or contracts. In the opinion of management, such disallowances, if any, would be immaterial.

NOTE 5. PROPERTY Property activity as of and for the year ended December 31, 2014 is as follows:

Beginning Balance Additions Dispositions

Ending Balance

Property and Equipment: Machinery and Equipment ! Vehicles

G 0 $ 9,290

9,588 0

$ 0 $ 0

9,588 9,290

Total Property and Equipment 9,290 9,588 0 18,878

Accumulated Depreciation: Machinery and Equipment Vehicles

0 258

1,011 3,097

0 0

1,011 3,355

Total Accumulated Depreciation 258 4,108 0 4,366

Net Property and Equipment: Machinery and Equipment Vehicles

0 9,032

8,577 (3,097)

0 0

8,577 5,935

Total Net Property and Equipment ! G 9,032 $ 5,480 $ 0 $ 14,512

NOTE 6. LINE OF CREDIT On October 17, 2014, Reach Out and Touch, Inc. obtained $10,000 unsecured line of credit from a national bank. Terms include an interest rate of Wall Street Journal Prime plus 4% with monthly payments equal to 1.5% of the outstanding principal balance plus the total of accrued interest, and any past due amounts with a minimum amount due of $150 or payment in full of the outstanding Line of Credit balance, whichever is less.

NOTE 7. RELATED PARTY TRANSACTIONS As needed, it's Executive Director and Co-Director have loaned funds and received repayment from the organization. Terms are not documented. As of December 31, 2014, documented repayments exceeded loans by $10,385.

The Executive Director leased a vehicle in her name only and allowed its full-time use by the organization. In exchange for use of the vehicle, the organization remits lease payments to the lessor. Total payments during 2014 were $6,664.

NOTE 8. SUBSEQUENT EVENTS Subsequent events were evaluated through May 16, 2016, which is the date the financial statements were available to be issued. There were no events requiring disclosure.

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INDEPENDENT AUDITORS' 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

To the Board of Directors Reach Out and Touch, Inc. Shreveport, Louisiana

I 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 Reach Out and Touch, Inc., (a nonprofit organization), which comprise the statement of financial position as of December 31,2014, 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 me report thereon dated May 16, 2016.

Internal Control Over Financial Reporting

In planning and performing my audit of the financial statements, I considered Reach Out and Touch, Inc.'s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing my opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Reach Out and Touch, Inc.'s internal control. Accordingly, I do not express an opinion on the effectiveness of Reach Out and Touch's internal control.

My consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, I identified certain deficiencies in internal control that we consider to be material weaknesses.

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. I consider the deficiencies described in the accompanying schedule of findings and questioned costs to be material weaknesses. 14-01 and 14-02.

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. I did not identify any deficiencies in internal control that I consider to be significant deficiencies.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Reach Out and Touch, Inc.'s financial statements are free of material misstatement, I 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 my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of

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noncompliance or other matters that are required to be reported under Government Auditing Standards.

Reach Out and Touch, Inc.'s Response to Findings

Reach Out and Touch, Inc. response to the findings identified in my audit is described in the accompanying schedule of findings and questioned costs. I did not audit Reach Out and Touch, Inc. response and, accordingly, I express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of my testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Reach Out and Touch'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 organization's internal control and compliance. Accordingly, this report is not suitable for any other purpose and is intended solely for the information and use of management, the Board of Directors, the Louisiana Legislative Auditor, and federal and state awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than those specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

May 16, 2016

SAMUEL W. STEVENS, III CPA P.O. Box 52631 • Shreveport LA 71135 • (318) 458-0930 • Fax (866) 531-9558

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE

REQUIRED BY OMB CIRCULAR A-133

To the Board of Directors Reach Out and Touch, Inc. Shreveport, Louisiana

Report on Compliance for Each Major Federal Program

I have audited Reach Out and Touch, Inc.'s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Reach Out and Touch, Inc.'s major federal programs for the year ended December 31, 2014. Reach Out and Touch, Inc.'s major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditor's Responsibility

My responsibility is to express an opinion on compliance for each of Reach Out and Touch, Inc.'s major federal programs based on my audit of the types of compliance requirements referred to above. I conducted my 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that I 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 Reach Out and Touch, Inc.'s compliance with those requirements and performing such other procedures as I considered necessary in the circumstances.

I believe that my audit provides a reasonable basis for my opinion on compliance for each major federal program. However, my audit does not provide a legal determination of Reach Out and Touch, Inc.'s compliance.

Opinion on Each Major Federal Program

In my opinion. Reach Out and Touch, Inc. 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 December 31, 2014.

Report on Internal Control Over Compliance Management of Reach Out and Touch, Inc. is responsible for establishing and maintaining effective intemal control over compliance with the requirements of laws, regulations.

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contracts, and grants applicable to federal programs. In planning and performing my audit, I considered Reach Out and Touch, Inc.'s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing my opinion on compliance and to test and report on internal control over compliance in aecordance with 0MB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal eontrol over compliance. Aceordingly, I do not express an opinion on the effeetiveness of Reaeh Out and Touch, Inc.'s internal control over compliance.

My 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 defieieneies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or signifieant defieieneies may exist that were not identified. However, as discussed below, I identified certain deficiencies in internal control over compliance that I consider to be signifieant defieieneies.

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 intemaf control over compfiance is a defieiency, or combination of deficiencies, in intemaf control over compliance, such that there is a reasonable possibility that material noncompfiance with a type of compfiance requirement of a federal program wiff not be prevented, or deteeted and eorreeted, on a timely basis.

A significant deficiency in internal control over compliance is a defieiency, or combination of deficiencies, in intemaf control over compfiance with a type of compfiance requirement of a federal program that is less severe than a material weakness in intemaf control over compfiance, yet important enough to merit attention by those eharged with govemance. f consider the deficiency in intemaf control over compfiance described in the accompanying schedule of findings and questioned costs as items f 4-Of to be a signifieant deficieney.

Reach Out and Touch, Inc.'s response to the intemal eontrof over eompfianee finding identified in my audit is described in the accompanying schedule of findings and questioned costs. Reach Out and Touch, Inc.'s response was not subject to the auditing proeedures applied in the audit of compfiance and, accordingly, f express no opinion on the response.

The purpose of this report on intemaf control over compfiance is solely to describe the scope of my testing of intemaf control over eompfianee and ^e results of that testing based on the requirements of 0MB Circular A-f33. Accordingly, this report is not suitable for any other purpose and is intended solely for the information and use of management, the Board of Direetors, the Louisiana Legislative Auditor, and federal and state awarding agencies and pass-tfnough entities and is not intended to be and should not be used by anyone other than those speeified parties. Under Louisiana Revised Statute 24;5f3, this report is distributed by the Legislative Auditor as a publie document.

Mavl6. 2016

^A

Schedule of Findings and Questioned Costs Section I - Summary of Auditor's Report

Financial Statements

Type of auditor's report issued

Internal Control over financial reporting

Material weaknesses identified

Significant deficiencies identified

Noncompliance material to financial statements noted

Federal Awards

Internal control over major programs

Material weaknesses

Significant deficiencies identified

Type of auditor's report issued on compliance for major program

Any audit findings disclosed that are required to be reported in accordance with section 510 (a) of OMB Circular A-133

Major program identified

Summer Food Service Program

Dollar threshold used to distinguish between type A and Type B programs

Auditee qualified as a high risk auditee

Unqualified

[x] Yes

[] Yes

[] Yes

[ ] Yes

[ X ] Yes

Unmodified

[ ] Yes

[ x] Yes

CFDA 10.559

$300,000

[]No

[x] No

[x] No

[x] No

[ ]No

[x] No

[ ]No

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Schedule of Findings and Questioned Costs Section II - Financial Statement Findings

Item 14-01

a. CONDITION: General ledger, bank reconciliations and basic financial statements are not prepared a timely basis.

b. CRITERIA Information must be gathered and communicated to management to management identifying potential risks of misstatement in the financial statements, estimating their significance, assessing the likelihood of their occurrence, and implementing control activities or taking other steps to address those risks. Available and timely information (both internal and external) is necessary for internal controls and the financial reporting system (and, if applicable, to achieve compliance with laws, regulations, and the provisions of contracts or grant agreements relative to major federal award program requirements) to function properly.

c. CAUSE OF CONDITION: Reach Out and Touch did not have a qualified accountant on staff or outsourced to provide timely accounting services.

d. POTENTIAE EFFECT OF CONDITION: As the right information is not made available to the right people at the right time there is an increase in the risks that appropriate corrective actions cannot be taken timely enough to avoid misstatements of financial information and misappropriation of cash and other assets.

e. RECOMMENDATION: It is recommended that ROAT hires a qualified accountant to prepare a monthly general ledger, bank reconciliations and basic financial statements

CEIENT RESPONSE Corrective Action Reach Out and Touch Inc. will consider the recommendation.

Person Responsible Myitis Edwards, Executive Director

Item 14-02

a. CONDITION: There is no evidence that invoices, p.o. (s), receiving reports, and other documents relative to the payment of expenses are examined and reviewed by an authorized person.

b. CRITERIA Every transaction must be properly authorized if controls are to be satisfactory. Evidence must exist that the transactions have been authorized according to management's policy. Evidence would be in the form of the person responsible for authorizing the transaction to initial or sign-off on the original document, indicating that the transaction has been authorized.

c. CAUSE OF CONDITION:

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Reach Out and Touch has limited personnel and is closely held. The check signer authorizes all transactions and considers that since no other employees are involved in the process that no other procedures are required.

d. POTENTIAL EFFECT OF CONDITION: Although there is limited involvement in the payment process, there exist the risks that misappropriation of assets could occur by the reuse of vendor invoices that have been previously processed and paid.

e. RECOMMENDATION: It is recommended that management include in its policies that all transactions include evidence of proper authorization. This can be accomplished by obtain an "approved for payment" stamp, whereby the person authorizing transactions will have ability to initial or sign off on the document submitted for payment.

CLIENT RESPONSE Corrective Action Reach Out and Touch Inc. will consider the recommendation.

Person Responsible Myitis Edwards, Executive Director

Item 14-03

a. CONDITION: The audit was not submitted to the Louisiana Legislative Auditor by June 30, 2015.

b. CRITERIA Criteria or Specific Requirement: Under Louisiana Stature 24:513, Reach Out and Touch, Inc. is required to submit an audit of its annual financial statements to the Louisiana Legislative Auditor within six months of its year-end which is December 31, 2014. This requirement is unique to the state of Louisiana and applies because total grant funds of $599,161 received from the State of Louisiana and local governments are total "public" funds that exceed the threshold of $500,000.

c. CAUSE OF CONDITION: Reach Out and Touch, Inc. was unaware of its obligation to comply with the Stature.

d. POTENTIAL EFFECT OF CONDITION: Noncompliance with Louisiana law regarding financial reporting.

e. RECOMMENDATION: To increase timely compliance. Reach Out and Touch should obtain qualified services to have a properly prepared general ledger and bank reconciliations complete not later than January 3 and engage a CPA to perform the audit starting not later than mid-February.

CLIENT RESPONSE Corrective Action Reach Out and Touch Inc. will consider the recommendation.

Person Responsible Myitis Edwards, Executive Director

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Summary Schedule of Prior Audit Findings -Financial Statement and Other Matters For the Year Ended December 31, 2013

Ref. No

Fiscal Year Finding Initially

Occurred Description of Finding

Corrective Action Taken

(Yes, No, Partially)

Planned Corrective Action/Partially

Corrective Action Taken

Section II - Financial Statement Findings:

As the audit of its financial statement for the year ended December 31, 2014 was its first audit. Reach Out and Touch, Inc. has no prior year Findings.

Section III - Other Matters:

As the audit of its financial statement for the year ended December 31, 2013 was its first audit. Reach Out and Touch, Inc. has no prior Matters.

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REACH OUT AND TOUCH, INC.

Schedule Of Expenditures Of Federal Awards For the Year Ended December 31. 2014

CEDA Federal Federal Grantor / Pass - Through Grantor: Program Title Number Expenditures

U.S. Department of Agriculture Passed through State of Louisiana Department Of Education:

Child and Adult Care Feeding Program 10.558 $ 280,701

Summer Food Service Program 10.559 310,923 Total Passed through State of Louisiana Department Of Education 591.624

Total U.S. Department of Agriculture g ^24

See accompanying notes to Schedule of E^enditures of Federal Awards and independent auditors' report on compliance with requirements applicable to each major program and internal conttol over compliance in accordance

with 0MB Circular A-133. 19

REACH OUT AND TOUCH, INC. NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

DECEMBER 31, 2014

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

The accompanying schedule of expenditures of federal award of Reach Out and Touch, Inc., has been prepared utilizing the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of 0MB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.

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REACH OUT AND TOUCH, INC

Schedule of Compensation, Benefits and Other Payments to Agency Head For the Year Ended December 31. 2014

Agency Head Name: Myitis Edwards

Purpose Amount Salary $ 57,601 Expense Reimbursement 50,348 Other - Mileage 2,095

$ 110.043

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