Grace Outreach Center - Louisianaapp1.lla.la.gov/PublicReports.nsf/9B3A5BF28E23113D... · Grace Outreach Center leases the facility used as the group home for homeless clients with

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GRACE OUTREACH CENTER

FINANCIAL AND COMPLIANCE AUDIT TOGETHER WITH

INDEPENDENT AUDITORS' REPORT

FOR THE YEAR ENDED DECEMBER 31,2009

Under provisions of state law, this report is a public document. Acopy ofthe report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and. where appropriate, at the office of the parish clerk of court.

Release Date llS^ j i t %\mi

SearLM. Bruno Certified Public Accountants

TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITORS'REPORT 1

STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31,2009 3

STATEMENT OF ACTTVITIES FOR THE YEAR ENDED DECEMBER 31,2009 • 4

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31,2009 5

NOTES TO THE FINANCIAL STATEMENTS 6

SUPPLEMENTARY INFORMATION

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FORTHEYEARENDED DECEMBER 31,2009 11

NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 12

TABLE OF CONTENTS, CONTINUED

PAGE 1

SCHEDULE OF FUNCTIONAL EXPENSES FOR THE j YEAR ENDED DECEMBER 31,2009 13

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH • GOVERNMENT AUDITING STANDARDS 14

INDEPENDENT AUDITORS' REPORT ON COMPLLANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULARA-133 17

SUMIMARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Schedule I: Summary of Independent Auditors' Results 20

Schedule II: Fmancial Statement Findings ..; .,... 22

Schedule EI: Federal Award Findings and Questioned Costs 24

SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS FOR THE YEARENDED DECEMBER 31,2009 25

INDEPENDENT AUDITORS' REPORT (CONTINUED)

To the Board of Directors Grace Outreach Center New Orleans, Louisiana Page 2

In accordance with Government Auditing Standards, I have also issued my report dated June 1, 2010, on my consideration of the Center's intemal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The piirpose of that report is to describe the scope of my testing of intemal control over fmancial reporting or on compliance and tiie results of that testing, and not to provide an opinion on the intemal control over financial reporting or on compliance. TTiat report is an integral part of an audit perfonned in accordance with Government Auditing Standards and should be considered in assessing the results of my audit.

My audit .was conducted for the purpose of forming an opinion on the basic financial statements ofthe Center taken as a whole. The accompanying Schedule of E3q)enditures of Federal Awards is presented for the purpose of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of State, Local Government and Non-profit Organizations, and is not a required part ofthe basic financial statements. Such mformation has been subjected to the auditing procedures applied in the audit ofthe basic financial statements and, in my opinion, is fairly stated, in all material respects in relation to the basic consolidated financial statements taken as a whole.

The other supplementary information which,is prepared in accordance with accounting principles generally accepted in the United States of America and is not a required part of the financial statements has also been subjected to auditing procedures applied in the audit of the financial statements and, in my opinion, is fairly stated in all material respects in relation to the basic consolidated fmancial statements taken as a whole.

SEAN M. BRUNO CERTIFIED PUBLIC ACCOUNTANTS

%s.

June 1,2010

Sean M. Bruno Certified Public Accountants

GRACE OUTREACH CENTER STATEMENT OFFINANCIAL POSITION

AS OF DECEMBER 31,2009

ASSETS

Cash and cash equivalents (NOTE 2) $ 25 Grants and contracts receivable (NOTE 4) 105,712 Other receivables 1,253 Deposits 3,915 Fixed assets net of accimiulated depreciation/amortization .

of $22,484 (NOTES 2 and 3) 59.753

Total assets $ 170.658

LIABILITIES AND NET ASSETS

Liabilities: Accounts payable $ 40,655 Payroll liabihties 11,112 Short-term loan payable (NOTE 6) 48,208 Other liabilities 5,765 Notes payable (NOTE 5) 27.177

Total liabilities 132.917

Net Assets (NOTE 2):

Unrestricted 37.741

Total net assets 37.741

Total liabilities and net assets $ 170.658

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

GRACE OUTREACH CENTER STATEMENT OF ACTIVITTES


Revenues and Support: Grants and contracts $ 875,759 Other Income 666

Total rev^ues and support 876.425

Expenses: Program services 815,599 Support services 103.158

Total expenses 918,757

Change in net assets (42,332)

Net Assets: Beginning of year 80.073

End of year

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

GRACE OUTREACH CENTER STATEMENT OF CASH FLOWS


CASH FLOWS FROM OPERATING ACTIVITIES

Changes in net assets $ (43,332) Adjustments to reconcile change

in net assets to net cash used in operating activities:

Depreciation/Amortization 18,521 Increase in grant receivables (1,967) Increase in other receivables (1,153) Increase in deposits (915) Decrease in prepaid assets 1,700 Increase in accounts payable 17,884 Increase in payroll liabihties 7,589 Increase in short-term loan payable 34,407 Increase in other current liabilities 3.532

Net cash provided by operating activities 37.266

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (54.9971

Net cash used in investing activities (54.9971

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds fiom notes payable 7.852

Net cash provided by financing activities 7.852

Net decrease in cash and cash equivalents

Cash-January 1.2009

Cash - December 31,2009

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

GRACE OUTREACH CENTER NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

Grace Outreach Center is a non-profit organization, which serves as a faith based intensive outpatient treatment and residential facility that provides a variety of services to adults with addictive disorders in the New Orleans area to assist them in maintaining a lifestyle fiee firom the harmful effects of addiction.

Basis Presentation

The financial statements and supplemental schedules of Grace Outreach Center have been prepared on tiie accrual basis and in conformity with accounting principles generally accepted in the United States for nonprofit organizations. Accordingly Grace Outreach Center is required to report information regarding its financial position and activities according to three categories of net assets.

A description ofthe three net asset categories is as follows:

Unrestricted net assets include fimds not subject to donor-imposed stipulations. The revenues received and expenses incurred in conducting the missions of Grace Outreach Center are mcluded in this category.

Temporarily restricted net assets include realized gains and losses, investment income and gifts and contributions for which donor-imposed restrictions (capital unprovements, etc.) have not been met

Permanentiy restricted net assets are contributions which are required by the donor-knposed restriction to be invested in perpetuity and only the mcome be made available for program operations m accordance with the donor restrictions. Such income is reflected in temporarily restricted net assets until utilized for donor-unposed restrictions.

At December 31, 2009, Grace Outreach Center did not have any temporarily or permanentiy restricted net assets.

GRACE OUTREACH CENTER NOTES TO THE FINANCIAL STATEMENTS, CONTINUED

N0TE2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Functional Allocation of Expenses

The costs of providmg the various programs and activities have been summarized on a fimctional basis m the statement of activities. Accordingly, certain costs have been allocated among the programs and supportmg services benefitted.

Cash and Cash Equivalents

Cash consist solely of demand deposits and a money market account that is secured by federal deposit insurance. All highly liquid debt instruments purchased with an origmal maturity of three (3) months or less are considered to be cash equivalents for purposes of the statement of cash flows. All deposits are secured by federal deposit insurance.

Fixed Assets

Fixed assets that exceed $1,000 are recorded at cost (or fair market value for donated assets) and are depreciated using the straight-line method over the estimated useful lives of the related assets, which varies fi:om five to seven years.

Income Taxes

Grace Outreach Center is a tax exempt corporation under Section 501(c)(3) ofthe Intemal Revenue Code. Accordingly, no provisions for federal or state income taxes have been recorded in the accompanying financial statements.

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 liabihties at the date of the financial statements and the reported amoimts of revenues and expenses during the reporting period. Actual results could differ fiom those estimates.


N0TE2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. CONTINUED:

Fair Values of Financial Institutions

Generally accepted accounting principles require disclosure of fair value information about financial instruments for which it is practicable to estimate fair value, whether or not recognized in the statement of financial position. Cash and cash equivalents carrying amounts reported in the statement of financial position approximate fair values because of the short maturities of those mstruments.

N0TE3- FIXED ASSETS

Changes in the net book value of office fumiture, computer equipment, and capitalized software costs during tiie year ended December 31, 2009 wei-e as follows:

Description

Fumiture & fixtures Truck Accumulated depreciation

Sub-total

Leasehold improvements Accumulated amortization

Sub-total

Total

Balance January 1,

2009

$ 4.050 23,190 (3.963^

23,277

-0--0-

-0-

$_2^^2I

Additions/ Deletions

$ -0-19,735 (5.298)

14.437

35,262 (13.223)

22.039

S 36.476

Balance December 31,

2009

$ 4,050 42,925 (9.2611

37.714

35,262 (13.223)

2.039

S 59,753,

Depreciation and amortization expense totaled $18,521 for the year ended December 31,2009.


NOTE 4- GRANTS AND CONTRACTS RECEIVABLE:

Grants and contracts receivable consists ofthe followkig as of December 31, 2009:

Metropolitan Human Services District: Block Grant for Prevention and Treatment of Substance Abuse

United States District Court for the Eastem District of Louisiana and the Bureau of Prisons:

Transitional Dmg Abuse Treatment Program

Louisiana Department of Health and Hospitals: Access to Recovery Program

$ 15,748

Total

47,744

42.220

$105.712

N0TE5- NOTE PAYABLE

Grace Outreach Center entered into a loan agreement with a local car dealership to purchase two (2) vans to transport cHents with addictive disorders. The loan is to be repaid in five years at an annual interest rate of approximately 11.59% for the van purchased in March 2008 and approximately 12.89% for the van purchased in September 2009. The notes payable balance at December 31,2009 totaled $27,177.

NOTE 6 - RELATED PARTY TRANSACTION

Grace Outreach Center leases the facility used as the group home for homeless clients with addictive disorders from the Executive Director. Under the lease agreement, Grace Outreach Center is responsible for all utility and telephone charges. During the year ended December 31, 2009, the Executive Director was paid $49,700 for rent payments. In addition, during tiie year ended December 31, 2009 Grace Outreach Center borrowed fiinds in the amount of $48,208 from executives withm the organization.


NOTE 7 - CONTINGENCY

Grace Outreach Center is the recipient of grant funds from various sources. The grants are governed by various guidehnes, regulations, and contractual agreements. The administration ofthe programs and activities funded by the grants are under the control and administration of Grace Outreach Center and are subject to audit and/or review by the applicable funding sources. Any grant funds found not to be properly spent in accordance with the terms, conditions, and regulations of the funding source may be subject to recapture.

10

SUPPLEMENTARY INFORMATION

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GRACE OUTREACH CENTER NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


NOTEl. - Basis of Accounting

The accompanying schedule of expenditures of federal awards includes the federal grant activity of Grace Outreach Center and is presented on the accrual basis of accounting. The information m this schedule is presented in accordance with the reqmrements of OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Therefore, some amoimts presented in this schedule may differ from amounts presented, or used, in the preparation ofthe basic financial statements.

12-

GRACE OUTREACH CENTER SCHEDULE OF FUNCTIONAL EXPENSES


Depreciation expense Amortization expense Office rent Group home rent Utiiities Telephone and internet services License, permits and fees Bank charges and interest Food 1 Storage Equipment rental and maintenance Printing and copying Repairs and mamtenance Security expenses Insurance Automobile tuel Automobile repair and maintenance Property taxes Relocation expenses Training sessions Supplies Postage Client personal care Practical nurse and counselor's fees Professional fees Director fees Medical service fees Salaries and related benefits Conferences and meeting Miscellaneous expenses

Total Expenses

Program Services

$ 5,298 13,223 38,458

114,033 12,259 14,240 4,701 1,492 9,597 2,389 3,021 2,179

37,354 5,569

48,400 9,358 1,613 1,505 6,250 1,811

25,841 192

1,617 9,055

33,038 79,118

1.000 315,902

3,655 13.431

$ 815,599

Support Services

$ -

38,458 -

12,260 8,702

• -

---

3,021 2,179

-------

-30

-

-----

38,395 -

113

$ 103,158

Total

$ 5,298 13,223 76,916

114,033 24,519 22,942 4,701 1,492 9,597 2.389 6,042 4,358

37,354 5,569

48,400 9,358 1,613 1.505 6,250 1,811

25,871 192

1,617 9,055

33,038 79,118 1.000

354,297 3,655

13.544

$ 918,757

See the Independent Auditors' Report on Supplemental Information.

13


Member American Institute of Certified Public Accountants

Society of Louisiana Certified Public Accountants

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL ItEPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED

ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

(CONTINUED)

To tiie Board of Durectors Grace Outreach Center New Orleans, Louisiana

I have audited the financial statements of Grace Outreach Center as of and for the year ended December 31, 2009, and have issued my report thereon dated June 1, 2010. I conducted my audit in accordance with auditing standards generally accepted hi the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States.

Internal Control over Financial Reporting

In planning and performing my audit, I considered Grace Outreach Center's intemal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressmg my opinion on the financial statements, but not for the purpose of ejcpressing an opinion on the effectiveness of Grace Outreach Center's internal control over financial reporting. Accordingly, I do not express an opmion on the effectiveness of Grace Outreach Center's intemal control over financial reporting.

14

4949 Bullard Avenue-Suite 100 New Orleans, LA 70128 (504)241-3411 Fax:(504)241-3412

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

(CONTINUED)

Internal Control over Financial Reporting, (Continued)

My consideration of intemal control over financial reportmg was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in intemal control over financial reporting that might be significant deficiencies or material weaknesses, and therefore, there can be no assurance that all deficiencies, sigruficant deficiencies, or material weaknesses have been identified. However, as described in the accompanying Schedule of Fmdings and Questioned Costs, I identified a deficiency in intemal control over financial reporting that I consider to be a material weakness.

A deficiency in intemal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned fimctions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in intemal 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 deficiency described in the accompanying Schedule of Findings and Questioned Costs to be a material weakness as item 2009-01.

Compliance and Other Matters

As part of obtainmg reasonable assurance about whether Grace Outreach Center'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 amoimts. However, providing an opinion on compliance with those provisions was not an objective of my audit, and accordingly, I do not express such an opmion. The results of my tests disclosed an instance of noncompliance that is required to be reported under Government Auditing Standards and which is described m the accompanying Schedule of Fmdings and Questioned Costs as item 2009-01.

Sean M. Bruno 15

Certified Public Accountants

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 AUDTIING STANDARDS

(CONTINUED)

Compliance and Other Matters, continued

I noted certain other matters that I reported to management of Grace Outreach Center in a separate letter dated June 1, 2009. Grace Outreach Center's response to the finding identified m my audit is described m the accompanymg Schedule ofFindings and Questioned Costs. I did not audit Grace Outreach Center's response and, accordingly, I express no opinion on it.

This report is intended solely for the information and use of Grace Outreach Center, it's Board of Directors, management and the Legislative Auditor of the State of Louisiana, and federal awarding agencies and pass-through entities and is not mtended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by tbe Legislative Auditor as a public document.


June 1,2010

Sean M. Bruno 16



Member American Institute of Certified PubUc Accountants


INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM

AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

To the Board of Directors Grace Outreach Center New Orleans, Louisiana"'

Compliance

I have audited the compliance of Grace Outreach Center (a non-profit organization) with the types of compliance requirements described m the U.S, Office of Management and Budget (OMB) Circular A-133 Compliance Siq?plement that are applicable to its major federal program for the year ended December 31, 2009. Grace Outreach Center's major federal program is identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants appHcable to its major federal program is the responsibility of Grace Outreach Center's management. My responsibility is to express an opiruon on Grace Outreach Center's compliance based on my audit.

I conducted the audit of compHance m accordance with auditing standards generally accepted in the United States of America; the standards appHcable to financial audits contained m Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133, Audits of States, Local Govemments, 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 requnements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examming, on a test basis, evidence about Grace Outreach Center's compUance with those requirements and performing such other procedures as I considered necessary in the circumstances. I beheve that my audit provides a reasonable basis for my opinion. My audit does not provide a legal determination on Grace Outreach Center's compliance with those requirements.

17

4949 Bullard Avenue-Suite 100 New Orleans LA 70128

(504)241-3411 Fax:(504)241-3412

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM


(CONTINUED)

Compliance, (Continued)

In my opmion, Grace Outreach Center complied m all material respects, with the requirements referred to above that are applicable to its major federal program for the year ended December 31, 2009. However, the results of my auditing procedures disclosed an instance of noncompHance with those requkements, which is required to be reported in accordance with OMB Curcular A-133 and which is described in the accompanying schedule of findings and questioned costs as item 2009-01.

Intemal Control Over Compliance

The management of Grace Outreach Center is responsible for establishing and maintaining effective intemal control over compliance with the reqiurements of laws, regulations, contracts and grants applicable to federal programs. In plaiming and performing my audit, I considered Grace Outreach Center's intemal control over compliance with requirements that could have a direct and material effect on a major federal program m order to determine my auditing procedures for the purpose of expressing my opinion on compHance and to test and report on intemal control over compHance in accordance with OMB Ckcular A-133, but not for the purpose of e?qpressing an opinion on the effectiveness of intemal control over compliance. Accordingly, I do not e5q)ress an opinion on the effectiveness of Grace Outreach Center's internal controi over compliance.

My consideration of intemal control over compHance was for the limited purpose described in the first paragraph of this section and was not designed to identify aU deficiencies in intemal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, I identified a deficiency in internal control over compliance that I consider to be a material weakness.

Sean M. Bruno 18


INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WTTH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM


(CONTINUED)

Internal Control over Compliance, (Continued)

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 intemal control over compliance, such that there is a reasonable possibility that material noncompHance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. I consider the deficiency in intemal control over compHance described m the accompanying schedule of findings and questioned costs as item 2009-1 to be a material weakness. . •

Grace Outreach Center's response to the finding identified in my audit is described in the accompanymg schedule of fmdings and questioned costs. I did not audit Grace Outreach Center's response and, accordingly, I express no opiiuon on the response.

This report is intended solely for the infomiation and use ofthe Board of Directors, the. audit committee, management, State of Louisiana and federal awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. Under Louisiana Revised Statute 24:513, this report is distributed by the Legislative Auditor as a public document


June 1,2010

Sean M. Bruno ^ Certified Public Accountants

GRACE OUTREACH CENTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS


SCHEDULE I - Summary ofthe Independent Auditors' Results

Financial statements

1. Type of auditor's report issued: Unqualified

2. Did the audit disclose any material weaknesses in intemal control over financial reporting: Yes

3. Did the audit disclose any significant deficiencies in intemal control over financial reporting that are not considered to be material weaknesses: Yes

4, Did the audit disclose any non-compUance which is material to the financial statements ofthe organization:

Federal awards

5. Did the audit disclose any material weaknesses in mtemal control over major federal programs:

No

No

6. Did the audit disclose any significant deficiencies in intemal control over major programs that are not considered to be material weaknesses: Yes

7. Type of report issued on compHance for major programs: Unqualified

8. Did the audit disclose any audit findings which the independent auditor is required to report under OMB Curcular A-133, Section 510(a): Yes

-20-

GRACE OUTREACH CENTER SCHEDULE OF FINDINGS. AND QUESTIONED COSTS


SCHEDULE I - Summary of the Independent Auditors' Results, Continued

9. The followmg is an identification of major program:

CFDA Number Federal Program

93.275 Substance Abuse and Mental Health Services - Access to , . ' Recovery

10. The doUar threshold used to distinguish between Type A and Type B Programs, as described in • OMB Circular A433, Section 520(b) is as foUows:

Program Amount

Type A . $300,000

11. Did the auditee qualify as a low-risk auditee under OMB Curcular A-133, Section 530: No

12. Were management letter comments issued: Yes

•24-

GRACE OUTREACH CENTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS, CONTINUED


SCHEDULE H - Financial Statement Findings

Audit Finding Reference Number

2009-01 - Fmancial Reporting

Criteria

OMB Curcular A-110 specifies that financial management systems must be maintauied in accordance with certain standards.

Condition

During the audit, I noted that Grace Outreach Center's financial reporting process and intemal controls were not adequate to ensure the accuracy of amounts reported in the financial statements includmg the identification and correction of reporting errors and omissions. Audit procedures revealed unrecorded receivables and payables which totaled $105,712 and $40,438, respectively. I noted that bank reconciliations were not completed timely and signed off for indication of review and approval and one of the bank reconciliations contained an unreconciled difference not e3q3lained by management. In addition to the above, I noted that there were several transactions selected for testing that were either not coded properly in the general ledger and/or not canceled to prevent double payments. I also noted that management did not have an accounting policies and procedural manual.

Effect

Grace Outreach Center is in non-compliance with OMB Ckcular A-110 financial reporting standards.

•52-



SCHEDULE n - Financial Statement Findings, Continued

Audit Finding Reference Number

2009-01 - Financial Reportmg, Continued

Cause

There was some tumover in key accounting positions (such as billing specialist and the staff accountant) before the completion of the year-end closmg. This factor required additional effort to determine the year-end balances and estabUsh adequate documentation.

Recommendation

I recommend that Grace Outreach Center develop specific written poHcies and procedures to foHow while preparing year-end adjustmg entries and implement written intemal control procedures to identify and correct reportkig errors and omissions and ensure the accuracy of amounts reported in the financial statements.

Management's Response

Management concurs witii the findmg and has implemented procedures to ensure that receivables and payables are properly recorded and reconciled to detailed report on a monthly basis. In addition, we are also in the process of developing a poHcies and procedures manual to ensure that an adequate system of intemal control is in place to ensure proper financial reporting.

^3- -



SCHEDULE HI - Federal Award Findings and Questioned Costs

None noted.

- ^ 4 -

GRACE OUTREACH CENTER SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS


Audit Fmding Reference Number

2008-01 - Late Submission of Audit Report

Condition

The December 31, 2008 audited financial statements were not submitted to the Legislative Auditor's office by the statutory due date of June 30,2009.

Recommendation

I recommended that Grace Outreach Center review its financial reporting procedures to ensure that audit engagements are submitted to the State of Louisiana Legislative Auditor within the required time fi-ame.

Current Status

Resolved.

-25-


Member American Institute of Certified Public A«;ountants


INDEPENDENT AUDITORS' COMMENTS TO MANAGEMENT

To the Board of Directors Grace Outreach Center New Orleans, Louisiana

In planning and performing our audit of the financial statements of Grace Outreach Center for the year ended December 31, 2009, in accordance with auditing standards generally accepted m the United States of America, we considered Grace Outreach Center's intemal control over financial reporting (intemal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on tiie effectiveness of Grace Outreach Center's mtemal control. Accordingly, we do not express an opinion on the effectiveness of Grace Outreach Center's intemal control.

However, during our audit we became aware of several matters that are opportunities for strengthening mtemal controls and operating efficiency. The memorandum that accompanies this letter summarizes our comments and suggestions regarding those matters. Also, we have reviewed Management's Corrective Action Plan witii regard to the December 31, 2009 comments to management. This letter does not affect our report dated June 1, 2010 on the fmancial statements of Grace Outreach Center.

4949 Bullard Avenue-Suite 100 New Orleans, LA 70128 (504)241-3411 Fax:(504)241-3412

GRACE OUTREACH CENTER CURRENT YEAR MANAGEMENT LETTER COMMENTS

FOR THE YEAR ENDED DECEMBER 31.2009

09-01 Segregation of Cash Duties

internal controls are designed to safeguard assets and help or detect losses fiom employee dishonesty or error. A fundamental concept in a good system of internal control is the segregation of duties. During the performance of the audit procedures, I noted several segregation of duties issues regarding cash duties which were primarily caused by the tumover in the accounting staff.

Recommendation

Although the size of the Grace Outreach Center's accountmg staff prohibits complete adherence to this concept, I beHeve that the foUowing practices could be implemented to improve existing intemal control without impairing efficiency:

• Mail should be opened by an employee not responsible for accountmg, such as the receptionist. Cash receipts could be recorded and the deposit prepared by this person. The cash receipts joumal, supplemented by remittance advices, could be forwarded to an accounting staff for postings to the general ledger.

• Bank statements, canceled checks, and appropriate advices should be received by someone other than employees maintaining cash records. Such items could be periodically reviewed prior to turning them over for reconciHation. Unusual items noted during the review should be investigated promptiy.

• Signed checks should be also mailed without allowing theiri to be retumed to the employee responsible for accounts payable.

• Joumal entries should be approved by an employee other than the one who prepared the entry.


The lack of segregation of duties is the result of employee tumover tiiat occurred during tiie year. We wiU review intemal controls and implement procedures to correct detected deficiencies.


FOR THE YEAR ENDED DECEMBER 31,2009 .

09-02 Personnel Files

During the audit, I observed that some personnel files were incomplete. Comprehensive personnel files compile data for all employees in one area and a complete file should be prepared for all new employees.

Recommendation

"We recommend that the following items be in an employee's personnel file and be maintained by an mdividual who does not have payroH preparation responsibihties:

• Signed and dated appHcation of employment;

• Form 1-9 Employment EligibiHty Verification;

• Date of hire;

• Approved pay rate (updated as changes occur);

• Signed W-4 form;

• Insurance and other benefits election forms, if appHcable;

• Beneficiary designation form;

• Employee's current address and phone number,

• Next of kin's or other emergency contact's name, address, and current daytime phone number;

• Employee evaluations;

• Benefit election forms for terminated or retired employees, if appHcable.


We concur with the finding and will take the necessary steps to immediately update all employee files for the noted deficiencies.


FOR THE YEAR ENDED DECEMBER 31.2009

09-03 Director's Fees

Based on procedures performed, I noted that Grace Outreach Center did not prepare/issue a Form 1099 to the Director for Director's fees paid during 2009. The amount paid for Director's fess during the year was $79,118.

Recommendation

We recommend that management develop and implement intemal controls procedures to ensure that amounts paid to contractors and/or directors and . recorded in the general ledger are appropriately reported on appHcable IRS forms.


This was an oversight that occurred as a result of employee tumover. We will issue a 1099 to the Director for amounts paid to him during the year.


FOR THE YEAR ENDED DECEMBER 3L 2009

^ : i i i i [ * : i ( : i i i l ( i i i 4 : * * * * * * * ) i t ^ F * ) t ! * i ^ * * * * i ^ l l f i t l * * i : * * * * * * * * * : i f * * * ^ ' ¥ * * * * *

We wiU review the status of these comments during our next audit engagement. We have already discussed many of these comments and suggestions with appropriate personnel of Grace Outreach Center, and we vdll be pleased to discuss them" in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendation.

This report is intended solely for the information and use of the Board of Directors, and management and is not intended to be and should not be used by anyone other than these specified parties.

y ^ ^ B ^ ^ ^ SEAN M. BRUNO CERTIFIED PUBLIC ACCOUNTANTS

June 1,2010

Sean M. Bruno 5 Certified Public Accountants

Documents

Grace Outreach Center - Louisianaapp1.lla.la.gov/PublicReports.nsf/9B3A5BF28E23113D... · Grace Outreach Center leases the facility used as the group home for homeless clients with