Goodwill Industries of North Louisiana Inc.app1.lla.la.gov/PublicReports.nsf/0E980EA6A1ED9F6C...Goodwill provides work opportunities and training for people who have disabilities and/or

GOODWILL INDUSTRIES OF

NORTH LOUISIANA, INC.

SHREVEPORT, LOUISIANA

DECEMBER 31,2013

GOODWILL INDUSTRIES OF NORTH LOUISIANA. INC.

SHREVEPORT, LOUISIANA

TABLE OF CONTENTS

AUDITED FINANCIAL STATEMENTS

Page

Independent Auditor's Report 1 -2

Statement of Financial Position 3

Statement of Activiti^ 4

Statement of Functional Expenses 5

Statement of Cash Flows 6

Notes to Financial Statements 7-16

OTHER REPORTS

Independent Auditor's 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 Stcmdards 17-18

Sclicdule of Findings and Responses 19-20

Summai'y Schedule of Prior Audit Findings 21

AUDITED FINANCIAL STATEMENTS

HEARD, MCELROY, & VESTAL L I.C

CERTIFIED PUBLIC ACCOUNTANTS

333 TEXAS STREET, SUITE 1525 SHREVEPORT, LOUISIANA 71101

318-429-1525 PHONE • 318-429-2070 FAX

June 25,2014

The Board of Directors Goodwill Industries of North Louisiana, Inc. Shreveport, Louisiana

Iiidenendent Auditor's Report

Report ou the Financial Statements

We have audited the accompanying financial statements of Goodwill Industries of North Louisiana, Inc., which comprise the statement of financial position as of December 31, 2013, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements. The prior year summarized comparative information has been derived from Goodwill's 2012 financial statements and, in our report dated June 27, 2013, we expressed an unqualified opinion on those financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair piesentation 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

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in 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 auditor's judgment, including the assessment of the risks of material niisstatenient 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.

HW A PROFESSTONAI, SERVICES FIRM

.^HTJCvcpriTJT • XfoMPnc • DPI HI

[email protected] E-MAIL ii'umiIimi'rna rnm WPP Annopcc

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Goodwill Industries of North Louisiana, Inc. as ofDecember 31,2013, 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 Reporting Required by Government AtuUdng Standards

In accordance with Government Auditing Standards^ we have also issued our report dated June 25,2014, on our consideration of Goodwill's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Govenunent Auditing Standards in considering Goodwill's internal control over financial reporting and compliance.

Shreveport, Louisiana


STATEMENT OF FINANCIAL POSITION

AT DECEMBER 31.2013

ASSETS

C»rreiif assets: Cash Investments-Note 4 Accounts receivable-net of allowance

for bad debts of $-0- and $-0-Accounts receivable-other Inventory Prepaid expenses and other

Temporarily Unrestricted Restricted

171,168 2,981,251

523,390 8,055

479,524 294.106

48,000 84,771

Permanently Restricted

6,680

2013 Total

225,848 3,066,022

523,390 8,055

479,524 294.106

2012 Summary

Total

259,728 2,977,126

464,290 6,854

731,039 153.283

Total current assets 4,457,494 132,771 6,680 4,596,945 4,592,320

Fixed assets: Land, buildings and equipment, at

cost less accumulated depreciation-Notes 5 and 9 12,932,664 12,932,664 13,296,246

Other assets: Beneficial interest in net assets of

foundation-Note 15 Investment in pailnership Other assets-Note 16

58,273 115.423

- 389,902 389,902 58,273

115.423

365,928 58,757 10.587

Total assets 17.563.854 132.771 18.093.207 18.323.838

LIABILITIES AND NET ASSETS

Current liabilities: Accounts payable Sales tax payable Accrued payroll and withholdings Other payables Current portion of long-term debt-Note 9

577,358 58,724

424,856 72,623

570.347

-- 577,358

58,724 424,856

72,623 570.347

433,450 43,110

498,048 59,582

1.412.879 Total current liabilities 1,703,908 - - 1,703,908 2,447,069

Lone-term liabilities: Long-term debt less portion classified

as current-Note 9 7.088.888 7.088.888 6.330,875 Total liabilities 8,792,796 - - 8,792,796 8,777,944

Net assets: Unrestricted Temporarily restricted-Note 3 Permanently restricted-Note 3

8,771,058 132,771

396.582

8,771,058 132,771 396.582

8,929,041 244,245 372.608

Total net assets 8.771.058 132.771 396.582 9.300.411 9.545.894

Total liabilities and net assets 17.563.854 132.771 18.093.207 18.323.838

The accompanying notes to financial statements are an integral part of the financial statements.

3


STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED DECEMBER 31.2013

Public sunnort and revenues: Public support:

Douateci goods-Note 10 United Way contributions Other contributions

Total public support

Revenues: Sales;

Sales of goods purchased Less-cost of purchased goods Gross profit

Sales of donated goods Contract sei'vices Workforce development Investment return-Note 4 Other miscellaneous

Total revenues

Net assets released from restrictions-Note 3

Total public support, revenues and reclassifications

Exneiises; Production and sales Workforce development Contract services Management and general

Total expense

Change in net assets

Net assets, beginning of year

Net assets, end of year

2012 Temporarily Permanently 2013 Summary

Unrestricted Restricted Restricted Total Total

3,936,933 3,936,933 6,645,176 117,819 - - 117,819 179,657 284.517 _ _ 284,517 137.882

4,339,269 - - 4,339,269 6,962,715

424,584 424,584 437,031 276.499 _ _ 276.499 262.771 148,085 - - 148,085 174,260

7,223,945 - - 7,223,945 4,930,127 1,907,182 148,000 - 2,055,182 2,175,950 1,350,669 - - 1,350,669 1,558,011

228,166 730 37,615 266,511 144,268 37.067 _ _ 37.067 14.074

10,895,114 148,730 37,615 11,081,459 8,996,690

273.845 (2602Q4^ 113,641)

15,508,228 (111,474) 23,974 15,420,728 15,959,405

9,428,822 9,428,822 9,947,109 2,203,340 - - 2,203,340 1,997,878 2,239,560 - - 2,239,560 2,112,448 1.794.489 _ 1.794.489 1.671.406

15.666.211 _ _ 15.666.211 15.728.841

(157,983) (111,474) 23,974 (245,483) 230,564

8.929.041 244.245 372.608 9.545.894 9.315.330

8.771.058 132.771 396.582 9.300.411 9.545.894



STATEMENT OF FUNCTIONAL EXPENSES

FOR THE YEAR ENDED DECEMBER 31.2013

Production Workforce Conti^act and Sales Develooment Services

Salaries and wages 5,013,156 1,340,985 1,477,546 Employee healtli and retirement benefits 213,072 151,138 350,757 Payroll taxes 561.690 117.362 175.930

Total salaries and related expenses 5,787,918 1,609,485 2,004,233

Professional fees and contract service 40,109 46,743 10,818 Supplies 327,225 49,998 98,385 Telecommunications 92,881 47,154 13,356 Postage and shipping 104,275 2,163 509 Occupancy 1,781,228 182,620 38,037 Rental and maintenance of equipment 50,461 8,059 5,068 Printing and publications 131,836 9,466 2,583 Travel and agency vehicles 277,703 78,773 34,829 Conferences, conventions and meetings 810 5,648 125 Specific assistance to individuals 29,702 16,150 280 Membership dues and support payments 93,948 16,732 16,992 Awards and grants 69 15 318 Miscellaneous 304.820 24.889 3.309

Total other expenses before depreciation expense 3.235.067 488.410 224.609

Total expenses before depreciation expense 9,022,985 2,097,895 2.228,842

Depreciation expense 405.837 105.445 10.718

Total expenses 9.428.822 2.203.340 2.239..560


Management 2012 and 2013 Summary

General Total Total

1,013,438 8,845,125 8,865,939 245,278 960,245 882,341

86.061 941.043 858.287 1,344,777 10,746,413 10,606,567

132,880 230,550 284,313 39,700 515,308 555,171 21,485 174,876 147,958 2,982 109,929 135,757

34,494 2,036,379 2,122,034 17,781 81,369 114,678 5,858 149,743 137,605

53,483 444,788 441,271 7,518 14,101 43,855 4,182 50,314 20,435 4,724 132,396 129,225 4,526 4,928 2,842

74.006 407.024 360.317

403.619 4.351.705 4.495.461

1,748,396 15,098,118 15,102,028

46.093 568.093 626.813

1.794.489 15.666.211 15.728.841


STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31. 2013

Cash flows from oncrating activities; Change in net assets Adjustments to reconcile change in net assets to net

cash provided by operating activities: Net realized and unrealized (gain) on investments Depreciation Amortization (Ijicrease) decrease in:

Accounts receivable Inventoiy Prepaid expenses and other

Increase (decrease) in: Accounts payable Sales tax payable Accrued payroll and withholdings Other payables

Total adjustments Net cash provided by operating activities

Cash flows from invesfing activities: Capital purchases and improvements Net redemption (purchase) of investments Investment in beneficial interest in assets of foundation Decrease (increase) in investment in partnership Purchase of intangible asset

Net cash (used) by investing activities

Casli flows from financing activities; Cash borrowings on debt Debt reduction

Net cash (used) by financing activities

Net (decrease! increase in cash

Casli at beginning of the year

Cash at end of the year

2013 Total

(245,483)

(200,802) 568,093 20,647

(60,301) 251,515

(142,423)

143,908 15,614

(73,192) 13.041

536.100 290,617

(204,511) 111,906 (23,974)

484 (123.883) (239,978)

ash paid during the year for interest

88,743 (173.262) (84.519)

(33,880)

259.728

225.848

335.393

2012 Summary

Total

230,564

(76,672) 626,813

(14,713) 64,439 (6,229)

153,687 (L625)

(136,382) (65.966) 543.352 773,916

(139,473) (54,169) (19,020) (58,757)

(271,419)

(334.071) (334.071)

168,426

91.302

259.728

365.795


GOODWILL TNDUSTRIES OF NORTH LOUISIANA. INC.

NOTES TO FINANCIAL STATEMENTS

AT DECEMBER 31.2013

1. Nature of Business Goodwill Industries of North Louisiana, Inc. ("GoodwiH") is a nonprofit, privately supported public service organization. Revenues are derived primarily from the following:

(a) Sales of used clothing and other household materials donated by the public and refiirbished by employees who have disabilities and/or are disadvantaged.

(b) Salvage sales.

(c) Sub-contract work for various types of companies by employees who have disabilities and/or are disadvantaged.

(d) Vocational rehabilitation fees and grant funding tluough the State of Louisiana.

(e) United Way of North Louisiana, Inc. and The Community Foundation of Shreveport-Bossier.

(f) Miscellaneous contributions.

Goodwill provides work opportunities and training for people who have disabilities and/or are disadvantaged, utilizing sales of reconditioned goods and contracted services to pay their wages.

2. Significant Accounting Policies Following is a summai-y of significant policies by Goodwill:

(a) Financial Statement Presentation: Goodwill reports information regarding its financial position and activities based on the absence or existence of donor-imposed restrictions, as follows:

Unresh'icied Net Assets - Net assets that are not subject to donor-imposed stipulations. Some unrestricted net assets may be designated by the Board for specific purposes.

Tempororily Restricted Net Assets - Net assets subject to donor-imposed stipulations that may or will be met by actions of Goodwill, and/or by the passage of time.

Permamntly Restricted Net Assets - Net assets subject to donor-imposed stipulations that they be maintained permanently by Goodwill. Generally, donors permit all or part of the income earned on these assets to be used for general or specific purposes.

(b) Contributions: Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions.

2. Sigmficant Accounting Policies (Coiifiiiued)

(c) Promises to Give: Contributions are recognized when the donor makes a promise to give to Goodwill that is, in substance, unconditional. Contributions that are restricted by the donor are reported as increases in umestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets.

Goodwill uses the allowance method to determine uncollectible unconditional promises receivable, when material. The allowance is based on prior years' experience and management's analysis of specific promises made.

(d) Contributed Goods and Sei-vices: During the years ended December 31, 2013 and 2012, the value of contributed services meeting the requirements for recognition in the financial statements was not material and has not been recorded. Goods purchased for resale and donated goods are stated at the lower of cost or market on the first-in, first-out basis.

(e) Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near term relate to the valuation of donated goods, and the estimated fair values of investment securities.

(f) Investments: Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported in the statement of financial position at their fair values. Fail' values for marketable securities are based on quoted market prices. Gains and losses on the sale of marketable securities are determined using the specific identification method. Unrealized gains and losses are included in the change in net assets.

(g) Bad Debts: Goodwill uses the allowance method to estimate uncollectible accounts receivable, when material. The allowance is based on prior years' experience and management's analysis of specific receivables. Receivables are charged off when management determines, after reviewing customer accounts, that collection is unlikely. Past due status of accounts receivable is based on contractual terms.

(h) Land. Buildings and Equipment: Donations of property and equipment are recorded as support at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained. Goodwill reports expirations of donor restrictions when the

2. Significant Accounting Policies (Continued)

donated or acquired assets are placed in service as instructed by the donor. Goodwill reclassifies temporarily restricted net assets to unrestricted net assets at that time. Property and equipment are depreciated using the straight-line method. Buildings are assigned useful lives of forty years. Furniture and equipment generally are assigned ten-year useful lives and vehicles are assigned three to five year useful lives. Goodwill uses a capitalization policy of $1,000 for fixed assets.

(i) Cash and Cash Equivalents: For purposes of the statement of cash flows, Goodwill considers all cash on hand and demand deposits with financial institutions to be cash equivalents. Certain demand deposits include amounts that are "swept" overnight into daily investments in U.S. Treasury or Agency Securities.

(j) Prior Year Financial Information: The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with Goodwill's financial statements for the year ended December 31, 2012. Certain amounts for the prior year have been reclassified to conform to the current-year presentation.

(k) Advertising Costs: Advertising costs are expensed as incurred. Such costs amounted to $127,654 and $77,225 for 2013 and 2012.

(I) Income Taxes: As a nonpi^ofit, privately supported organization, Goodwill is exempt from income taxation under Section 501(c)(3) of the Internal Revenue Code, but must file an annual return with the Internal Revenue Service that contains information on its financial operations. Goodwill is required to review various tax positions it has taken with respect to its exempt status and determine whether in fact it continues to qualify as a tax exempt errtity. It must also consider whether it has nexus in jurisdictions in which it has income and whether a tax return is required in those jurisdictions. In addition, as a tax exempt entity, Goodwill must assess whether it has any tax positions associated with unrelated business income subject to income tax. Goodwill does not expect any of these tax positions to change significantly over the next twelve months. Any penalties related to late filing or other requirements would be recogjuzed as penalties expense in Goodwill's accounting records.

Goodwill is required to file U.S. federal Form 990 for informational purposes. Its federal income tax returns for the tax years 2010 and beyond remain subject to examination by the Internal Revenue Semce.

(m) Beneficial Interest in Assets of Foundation: Any transfers by Goodwill of its own funds to the Community Foundation of North Louisiana, specifying itself as the beneficiary, are accounted for as an asset in accordance with generally accepted accounting principles.

Restiicfions ou Assets

Temporarily restricted - substantially all of the restrictions on these assets relate to funds donated to help fund retirement benefits paid to a former executive director. These funds will become available for use by Goodwill's general operations after the demise of the former executive director.

Permanently restricted - the restrictions on these assets relate to endowments received by Goodwill. Most of these assets are transferred to the Community Foundation of Shreveport-Bossier, as described in Note 15.

Investments Investments at December 31,2013 and 2012, are summarized as follows:

2013 Unrealized

Approximate Appreciation Cost Fair Value fDepreciationI

U.S. Treasury and Agency debt securities 681,389 688,938 7,549 Corporate debt seeurities 864,672 858,315 (6,357) Corporate equity securities 734,994 959,114 224,121 Government mutual funds 84,771 84,771 -Equity mutual funds 196,108 241,372 45,264 Fixed mutual funds 167,477 163,807 (3,671) Cash and equivalents 69.705 69.705 -Cash and equivalents

2.799.116 3.066.022 266.906

2012 Unrealized

Approximate Appreciation Cost Fair Value ('Depreciation')

U.S. Treasuiy and Agency debt securities 856,789 890,951 34,162 Corporate debt securities 807,353 819,352 11,999 Corporate equity securities 764,895 822,344 57,449 Government mutual funds 85,177 85,177 -Equity mutual funds 100,000 123,991 23,991 Cash and equivalents 235.311 235.311 _ Cash and equivalents

2.849.525 2.977.126 127.601

. summaiy of investment return for each year follows:

2013 Temporarily Permanently

Unrestricted Restricted Restricted Total

Interest income 61,683 730 3,296 65,709 Net realized and

unrealized aain riossl 166.483 _ 34.319 200.802 228,166 730 37.615 266.511

10

4. Investments (Continued)

2012 Temporarily Permanently

Unrestricted Restricted Restricted Total

Interest Income 65,977 731 888 67,596 Net realized and

unrealized gain (loss) 46.042 _ 30.630 76.672 unrealized gain (loss) 112.019 731 31.518 144.268

5. Land, Building and Eauinmcnt Fixed assets and related accumulated depreciation at December 31, 2013 and 2012, are as follows:

2013 2012

Buildings and improvements 11,836,308 11,803,469 Equipment 3,251,539 3,078,059 Vehicles 215.038 220.212

Total depreciable assets 15,302,885 15,101,740

Accumulated depreciation f6.421.4751 15.877.8171 Book value of depreciable assets 8,881,410 9,223,923

Land 4,051,254 4,051,254 Work in progress - 21.069

Book value of fixed assets 12.932.664 13.296.246

Goodwill accepted the donation of land adjacent to itsMinden store in 2007. Such donation had an estimated value of $155,000 and is unrestricted as to time and purpose of use. However, the act of donation stipulates that Goodwill may not dispose of the propeity for five years.

Work in progress consists of miscellaneous renovation work at the main office location for 2012.

6. Tax-Defened Annuities Goodwill has available to its employees tax deferred annuity contracts which are administered by several investment companies. The employees may, at their option, elect to take a reduction in salary to invest in the tax deferred annuity contracts. Goodwill matches 60% of employees' contributions up to 6% of employees' gross earnings. Total contributions by Goodwill were $47,336 and $66,993 in 2013 and 2012.

7. Rent Goodwill rents various store facilities to serve as retail outlets for its household goods and other purposes. Goodwill has rental agreements for store locations in Monroe, West Monroe, Ruston, Minden, Shreve City, Kings Highway, Natchitoches (for 60 months), Haughtoii (for 120 months), and Bossier City-Texas Street (for 36 months). The Monroe and Alexandria Workforce Development rental agreements have terms of 24 and 60 months, respectively. All rental agreements are noncapitaiizable. Rent expense for 2013 and 2012 was $708,798 and $691,493.

Goodwill also has agreements to lease several trucks. These lease agreements are accounted for as operating leases, and provide for lease terms of seven years at apj)roximate annual rentals of $16,596 per vehicle. Vehicle rent expense for 2013 and 2012 was $118,987 and $120,804.

11

Rent (Continued)

A suinmaiy of future miniiniiin rental payments under noncancelable leases for all operating leases for the next five years and in the aggregate, is as follows:

Year Ended December 31 Amount

2014 2015 2016 2017 2018 Thereafter

726,238 633,746 443,791 326,907 208,973 151.872

2.491.527

Commitments Goodwill entered into an agreement to provide supplemental retirement and medical benefits to a former executive director upon his retirement in January 1986. These benefits amount to approximately $22,200 per year for the remainder of the life of the former director.

Ill addition, Goodwill also entered into an agreement to provide annually supplemental medical insurance benefits up to $3,500 each to its President/CEO Emeritus and his spouse for the remainder of their lives, effective with his retirement on June 30,2012. Goodwill also has agreed to employ its President/CEO Emeritus as a consultant for five years from his retirement date of June 30, 2012, adjusted annually for inflation, for $84,800 per year, and to reimburse certain travel expenses of up to $6,000 per year.

Long-Term Debt Listed below is a schedule of long-term debt at December 31,2013 and 2012:

Due To Terms 2013 2012

* Regions Capital Advantage




Loan for $2,765,000 to refinance debt, payable $19,890 per month through June 2028 including interest at 3.59%; secured by store in north Bossier City. 2,694,768

Loan for $514,000 to refinance debt, payable $ 11,320 per month through June 2017 including interest at 2.75%; secured by store in Pineville. 452,796

Loan for $1,087,000 to refinance debt, payable $7,819 per month through June 2028 including interest at 3.59%; secured by Linwood Warehouse property. 1,059,392

Loan for $3,434,000 to refinance debt, payable $24,700 per month through June 2028 including interest at 3.59%; secured by store at Pierremont. 3,346,790

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9. Long-Term Debt (Continued)

Due To

Capital One

Prcgiessive Waste Solutions

Regions Equipment Finance Corporation

Rapides Parish Finance Authority

Regions Bank

La. Local Government Environmental Facilities & Community Development Authority (Red River Bank)

Capital One, N.A.

Terms

Loan for $19,262, payable $569 per month through July 2016 including interest at 3.95%, unsecured.

Capital lease for $46,010 to acquire equipment, payable $778 per month through March 2018 including interest at 1.20%, secured by equipment leased.

Loan for $3,060,000 for constructing and equipping store in North Bossier City; interest at 5.28%, payable interest only monthly through February 2010; monthly payments of principal and interest through July 2018; balloon payment August 2018; secured by the propeily purchased.

$12,065 per month including interest at 5.25%, maturing April 1,2017, secured by real estate and buildings located in Alexandria and in Pineville.

Line of credit for $1,500,000; interest at the greater of 3.00% or LIBOR plus 2.50% (3.00% at 12-31-12) due monthly; principal due July 31,2013; secured by investment portfolio.

Loan for $3,500,000 for construction of Pierremont store; interest at 4.6%, payable monthly; interest only for the first year; balloon payment at maturity in September 2020; secured by property purchased.

Line of credit for $225,000; interest at Wall Street Journal prime (3.25% at 12-31-13) due monthly; principal and remaining unpaid items due at loan termination at lender demand; unsecured.

Less-portion classified as current Notes payable-long-term

2013

16,746

2012

38,743

2,762,027

556,607

1,062,500

3,362,620

50.000 7,659,235 570.347

7.088.888

7,743,754 1.412.879 6.330.875

13

9. Long-Term Debt (Continued)

*Goodwill entered into an agreement, dated June 28, 2013, for the issuance of revenue bonds on its behalf of the total amount of the debt incurred by the Louisiana Local Government Environmental Facilities and Community Development Authority, which serves as a conduit between tiie borrower and lender in order for the debt to be treated as tax-exempt. As required by state law, this agreement was approved by the Louisiana State Bond Commission.

The approximate book value of collateralized fixed assets at December 31, 2013, was $9,768,000.

Maturities of long-term debt for the next five years are as follows:

2014 570,347 2015 538,063 2016 553,530 2017 499,980 2018 441,278 Thereafter 5.056.037

7.659.235

Interest expense was $335,393 and $365,795 for 2013 and 2012, respectively.

Red River Bank enforced the full prepayment penalty of 3% or $99,163, on the Pierremoiit store debt, which is charged to miscellaneous expense.

10. Donated Goods Effective January 1, 1996, in conformity with generally accepted accounting principles. Goodwill began recognizing donated goods as revenue when received. During 2013 and 2012, contributed merchandise with an approximate fair value of $3,937,000 and $6,645,000, respectively, was recognized as contribution revenue. This donated-goods merchandise requires program-related expenses and processes which are accomplished by people with disabilities and other disadvantaging conditions before it reaches the point of sale. The value of donated goods inventoiy and donated goods revenue is dependent upon the level of sales of donated goods and allocation estimates of processing costs. These estimates are periodically reviewed and revised by management. Donated goods included in inventory amounted to approximately $463,000 and $717,000 at December 31, 2013 and 2012.

11. CoiuUtional Piomises Conditional promises consist of the unftinded portions of approved governmental awards, either currently in effect or approved for commencement after December 31, 2013. Future funding of such awards is conditioned upon Goodwill's operation of certain programs, incurrence of certain costs, and possibly meeting certain matching requirements. Because such awards represent conditional promises to Goodwill, they have not been recognized in the financial statements at December 31, 2013. Such conditional promises amounted to approximately $1,604,000 at December 31,2013.

12. Concciiti atioiis of Credit Risk Financial instruments that potentially subject Goodwill to concentrations of credit risk consist principally of cash, investments, and receivables. Concentrations of credit risk with respect to receivables are limited, since most of these amounts are due from governmental agencies and private businesses under grants or fee for service arrangements. Goodwill maintains cash balances at several financial institutions. At December 31, 2013, total cash held at financial institutions was $265,913, none of which exceeded FDIC-insured limits by a significant amount. Substantial

14

12. Coiiccnti atioiis of Credit Risk (Coiitiimed)

investment amounts, including certain mutual funds, are invested in securities of the federal government or its agencies. However, approximately $2,292,000 in corporate debt securities, corporate equity securities, and various equity mutual funds at December 31, 2013, are dependent solely upon the faith and credit of the corporate issuer.

13. Fundraisiiig Expenses Direct fundraising expenses amounted to approximately $66,000 for 2013 and $131,000 for 2012.

14. Fair Value Measurements The following table presents Goodwill's fair value hierarchy for assets measured at fair value on a recurring basis at December 31,2013 and 2012:

Quoted Prices in Active

Markets for Identical Assets

(Level 11

Significant Other Significant

Observable Unobservable Inputs

(Level 21 Inputs

(Level 31 Value

December 31. 2013: Investments:

U.S. Treasury and Agency debt securities

Corporate debt securities Corporate equity securities Government mutual funds Equity mutual funds Fixed mutual funds Cash and equivalents

688,938 858,315 959,114 84,771

69.705 2.660.843

241,372 163,807

405.179

688,938 858,315 959,114 84,771

241,372 163,807 69.705

3.066.022

Donated goods inventoiy 463.236

December 31.2012: Investments:

U.S. Treasury and Agency debt securities

Corporate debt securities Corporate equity securities Government mutual funds Equity mutual funds Cash and equivalents

Donated goods inventoiy

890,951 819,352 822,344 85,177

235.311 2.853.135

123,991

123.991

716.654

890,951 819,352 822,344 85,177 123,991 235.311

2.977.126

716.654

Fair values for most investments are determined by I'eference to quoted market prices generated by market transactions (Level 1). Fair values for other investments are determined by reference to net asset values that are not current. The fair value of donated goods inventoiy is estimated based on a methodology using annual processing costs and inventoiy turnover factors applied to the retail sales value of the goods.

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14. Fair Value Measurements (Continued)

Nonfinancial assets measiued at fair value on a recurring basis, using significant unobservable inputs, ciianged in value as follows:

Donated Goods Inventory 2013 2012

Beginning balance 716,654 776,813 Change in value ("253.4181 (60.159') Ending balance 463.236 716.654

Unobservable inputs utilized include the sales value of the donated goods applied to an industiy-accepted computational model that adjusts the value of those monthly sales, using inventoiy turnover rates and costs incurred in processing the goods sold.

15. Beneficial Interest in Assets of Foundation Goodwill established an endowment fund, the income distribution of which is designated by Goodwill to help flind the cost of placement programs. Goodwill transferred control of this endowment fund in 2008 to the Community Foundation of North Louisiana. Under the terms of the agreement, variance power and legal ownership of the ftinds rest with the Foundation, and net investment income and capital appreciation/depreciation accumulate in the endowment fund. The Foundation is obligated to distribute 4% of the average market value of the fiind to Goodwill annually, provided the average market value is greater than the amount contributed to the fund.

Activity of this beneficial interest is summarized as follows:

Beginning balance, endowment fund Interest Net realized and unrealized gains (losses) Administrative fees Distributions to Goodwill Ending balance, endowment fund

2013 2012

365,928 346,908 6,820 3,959

34,319 30,630 (3,523) (3,071)

(13,642) (12.498) 389.902 365.928

16. Other Assets Included in other assets is an intangible asset for computer software costs acquired in 2013, as shown in the following table.

Capitalized computer software costs-point of sale system 123,883 Accumulated amortization (20.6471 Net book value 103.236

The estimated useful life of this Intangible is three years, with no estimated residual value. Future estimated amortization by year is: 2014 - $41,294; 2015 - $41,294; 2016 - $20,648.

17. Subsequent Events Goodwill is required to evaluate events or transactions that may occur after the balance sheet date for potential recognition or disclosure in the financial statements. Goodwill performed such an evaluation tlnough June 25,2014, the date which the financial statements were available to be issued, and noted no subsequent events.

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OTHER REPORTS

HEARD, MCELROY, & VESTAL LLC

CERTIFIED PUBLIC ACCOUNTANTS

333 TEXAS STREET, SUITE 1525 SHREVEPORT, LOUISIANA 71101

318-429-1525 PHONE • 318-429-2070 FAX

June 25,2014

The Board of Directors Goodwill Industries of North Louisiana, Inc. Shreveport, Louisiana

Iiidenendeut Auditor's Renoi t on Internal Control Over Financial Renorting and oil ComDliaiice and Other Matters Based on an Andit of

Financial Statements Performed in Accordance with Government A mUtins Standards

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 Aucliling Standards issued by the Comptroller General of the United States, the financial statements of Goodwill Industries of North Louisiana, Inc., which comprise the statement of financial position as of December 31,2013, 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 June 25, 2014.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Goodwill's internal conti'ol 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 Goodwill's internal control. Accordingly, we do not express an opinion on the effectiveness of Goodwill's internal control.

Our 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 responses, we identified certain deficiencies in internal control that we consider to be significant deficiencies.

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. We consider deficiencies 2013-01, 2013-02, and 2013-03, described in the accompanying schedule of findings and responses, to be significant deficiencies.

HMV A PROFESSIONAL SERVICES FIRM

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[email protected] E-MAIL TATCD A r*i

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Goodwill'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 of 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.

Shrevepoit, Louisiana

I \lj/diC(A^ LLC.

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SCHEDULE OF FINDINGS AND RESPONSES


A. Summary of Audit Results

1. The auditor's report expresses an unmodified opinion on the financial statements of Goodwill Industries of North Louisiana, Inc.

2. No material weaknesses relating to the audit of the financial statements were reported.

3. Three significant deficiencies relating to the audit of the financial statements were reported.

4. No Instances of noncompliance material to the financial statements of Goodwill Industi-ies of North Louisiana, Inc. were disclosed during the audit.

5. Goodwill Industries of North Louisiana, Inc. was not subject to a federal single audit for the year ended December 31,2013.

B. Findings - Financial Statement Audit

2013-01 Dates on Operating Checks Out of seven cancelled checks tested at year end for Goodwill's operating account, we noted that three were dated out of sequence according to the ciiecks' numerical order. Further inquiry indicated that checks are automatically dated by the computerized accounting system according to the month's work currently being performed. If the aecounting clerk is working in an accounting month different from the date of check preparation, the wrong date is assigned to the check.

Proper identification of outstanding items on reconciliations are dependent upon accurate dating of those items. Because strong internal control requires proper identification of these outstanding and uncleared items, we urge accounting personnel to pay close attention to the preparation of checks and to accurately date them.

Management has indicated that it is revising its procedures to address this issue.

2013-02 Store Change Funds There was no documentation to support management's periodic counts of store change funds for two store locations during the year and it seems likely that such counts were not performed at these locations. Internal control over cash assets would be strengthened by a periodic, rotating, and documented surprise test count of all store change funds at least once per year.

Management has agreed with this finding, and will surprise test count all stores.

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2013-03 Purchases of Products In four of six disbursements indicating product purchases that were tested, no packing slip or receiving report documentation was present to indicate receipt of the goods by Goodwill. Cash controls dictate that payment should not be made without evidence that the purchased goods have been timely received by an autliorized representative, and that this evidence be in the form of signed and dated packing slips and/or receiving reports.

Management has begun implementing procedures to retain all packing slips and receiving reports, and include them with the invoice support when approving disbursements.

C. Findings and Questioned Costs - Major Federal Award Programs

Not Applicable

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SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


No findings were reported for the prior year.

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Documents

Goodwill Industries of North Louisiana Inc.app1.lla.la.gov/PublicReports.nsf/0E980EA6A1ED9F6C...Goodwill provides work opportunities and training for people who have disabilities and/or