Law, Redd, Crona Munroe, P.A. rpts/2017...the annuity receivable, capital assets, net of accumulated depreciation, and other assets. A comparative summary of changes in fund net position

The Florida Endowment Foundation for Vocational Rehabilitation, Inc.

d/b/a The Able Trust

Financial Statements and Additional Information

Years ended June 30, 2017 and 2016

Law, Redd, Crona & Munroe, P.A.

Table of Contents

Independent Auditor’s Report......................................................................................................1 Management’s Discussion and Analysis ......................................................................................4 Basic Financial Statements Statements of Net Position ...............................................................................................................9 Statements of Revenues, Expenses, and Changes in Fund Net Position .......................................10 Statements of Cash Flows ..............................................................................................................11 Notes to Financial Statements ........................................................................................................12 Other Financial Information Schedule of Budgeted and Actual Revenues .................................................................................25 Schedule of Budgeted and Actual Expenses ..................................................................................26 Other Reports and Schedules 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 Standards .............................28 Management Letter ........................................................................................................................30

Law, Redd, Crona & Munroe, P.A. INDEPENDENT AUDITOR'S REPORT Certified Public Accountants

The Board of Directors The Florida Endowment Foundation for Vocational Rehabilitation, Inc.

d/b/a The Able Trust

Report on the Financial Statements

We have audited the accompanying financial statements of The Florida Endowment Foundation for Vocational Rehabilitation, Inc. d/b/a The Able Trust (the Foundation), a component unit of the State of Florida, which comprise the statements of net position as of June 30,2017 and 2016, and the related statements of revenues, expenses, and changes in fund net position, and cash flows for the years then ended and the related notes to the financial statements, which collectively comprise the Foundation's basic financial statements as listed in the table of contents.

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

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 misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

1 2075 Centre Pointe Boulevard, Suite 200 • Tallahassee, Florida 32308 • Telephone (850) 878-6189 • Fax (850) 942-5301

Members: American Institute qjCertjfied Public Accountants and Florida Institute qfCertified Public Accountants

The Board of Directors The Florida Endowment Foundation for Vocational Rehabilitation, Inc. d/b/a The Able Trust Page Two

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of The Florida Endowment Foundation for Vocational Rehabilitation, Inc. d/b/a The Able Trust, as of June 30, 2017 and 2016, and the respective changes in fund net position, and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 4-8 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Foundation’s basic financial statements. The budgetary comparison schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The Board of Directors The Florida Endowment Foundation for

Vocational Rehabilitation, Inc. d/b/a The Able Trust Page Three

The budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary comparison schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 3, 2017, on our consideration of the Foundation's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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 Government Auditing Standards in considering the Foundation's internal control over financial reporting and compliance.

LA W, REDD, CRONA & MUNROE, P.A. Tallahassee, Florida November 3, 2017

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MANAGEMENT’S DISCUSSION AND ANALYSIS The Foundation’s management discussion and analysis presents an overview of its financial activities for the fiscal year ended June 30, 2017. Please read it in conjunction with the Foundation’s financial statements. This section of the report is intended to provide a brief, objective, and easily readable analysis of the Foundation’s financial performance for the year and its financial position at fiscal year end June 30, 2017. Overview of the Financial Statements The Foundation is considered an Enterprise Fund and utilizes the accrual basis of accounting. The basic financial statements for an Enterprise Fund include: Statement of Net Position; Statement of Revenues, Expenses and Changes in Fund Net Position; and a Statement of Cash Flows. The basic financial statements provide readers with a broad view of the Foundation’s finances, in a manner similar to a private-sector business. The notes provide additional information that is essential to a full understanding of the data provided in the basic financial statements. Financial Analysis A comparison summary of the Statement of Net Position is presented below: 2017 2016 % Change

Current Assets $ 24,255,795 $ 22,761,606 7% Restricted Assets 9,048,310 8,372,283 8% Other Assets 951,341 918,009 4% Capital Assets 134,443 139,493 (4%) Total Assets $ 34,389,889 $ 32,191,391 7% Current Liabilities $ 6,108,343 $ 5,484,114 11% Total Liabilities 6,108,343 5,484,114 11% Net Position Invested in Capital Assets, Net 134,443 139,493 (4%) Nonexpendable Contributions 3,907,504 3,764,767 4% Unrestricted 24,239,599 22,803,017 6% Total Net Position 28,281,546 26,707,277 6% Total Liabilities and Net Position $ 34,389,889 $ 32,191,391 7%

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)

Current assets comprised primarily of cash, investments, and funds receivable from State agencies increased by $1,494,189 from the prior year. Restricted assets consist of funds received by the Foundation as fiscal agent for disbursements for the James Patrick Memorial Program and for disbursements to various designated organizations pursuant to two Florida Statutes. It also consists of investments held within endowment brokerage accounts. Other assets are comprised of contributions receivable from deferred gifts, the long-term portion of the annuity receivable, capital assets, net of accumulated depreciation, and other assets. A comparative summary of changes in fund net position is presented below: 2017 2016 % Change Operating Revenues $ 2,310,839 $ 2,414,570 (4%) Operating Expenses 3,856,047 3,246,225 18% Operating Loss (1,545,208) (831,655) (86%) Nonoperating Revenues (Expenses) 3,034,730 (13,626) 22,371% Endowment Contributions 84,747 89,196 (5%) Change in Net Position $ 1,574,269 $ (756,085) 308% Net Position There was an increase in net position during the current year, primarily due to the increase in investment income. Nonoperating Revenue Nonoperating revenues for the fiscal year ended June 30, 2017 are comprised of net realized gains on investments of $45,355, interest and dividends of $915,236, net unrealized gains on investments of $1,758,544, decrease in present value of annuity receivable of ($27,672), increase in present value of deferred gifts of $52,161 and fundraising efforts that resulted in BP Oil Spill Settlement funds of $291,106. Like other foundations, The Able Trust uses interest and dividends to cover operating expenses.

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Graphic presentation of revenues follows to assist in the analysis of the Foundation’s activities for fiscal year 2017.

As graphically portrayed above and discussed earlier, the Foundation received a substantial portion of its income during the fiscal year ended June 30, 2017, from grants from the State of Florida (15%). Funds from civil traffic penalties which flowed through the Department of Revenue (DOR) provided 33% of the Foundation’s total revenue; funds from sales of temporary handicap parking permits which flowed through the Department of Transportation (DOT) provided 8% and interest and dividend income on investments provided 25%. The balance of the revenues are from program and fundraising events, contributions, service fees for fiscal agent activities and the BP Oil Spill Settlement.

25%

15%

33%

13%

8%

3% 3%

Fiscal Year 2017 Revenues by Source

Interest and Dividends

Grants

Civil Penalties

Contributions and BP Oil SpillSettlement

Temporary Handicap ParkingPermits

Program Events

Other

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Graphic presentation of operating expenses follows to assist in the analysis of the Foundation’s activities for fiscal year 2017.

Operating expenses increased $609,822 from the prior year, primarily due to an increase in grant expenses. Budgetary Highlights The Foundation’s revenue budget for fiscal year 2017 was $3,321,423. This was a decrease of $512,787 from the previous year budget. Other Highlights

1. The High School High Tech program added a special project-based learning initiative at one of its 43 sites. The Brevard HSHT program is building a tiny house as a learning team-building project.

2. Internship training continued throughout the state, with training changes developed to accommodate special requests by large businesses.

3. Two large multi-year grants were awarded, one to an organization assisting individuals with mental illnesses, and the other assisting students with disabilities to obtain employment after completing the post-secondary education needed to pursue their choice of career.

4. Research on employment barriers for people with disabilities continued to be supported with results addressed in program design.

5. Several interns with disabilities were placed in paid positions, to provide work experiences for them and to provide experiences working with people with disabilities to staff of the businesses involved.

74%

19%

4% 3%

Fiscal Year 2017 Operating Expenses

Grants and Related Expenses

Public Awareness, Education, andNongrant Programs

Fundraising

Management and General

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MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Contacting the Foundation’s Financial Management This financial report is designed to provide a general overview of the Foundation’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact The Able Trust/Dr. Susanne Homant at [email protected] or 850-224-4493.

2017 2016

CURRENT ASSETSCash and Cash Equivalents - Note 2 2,450,033$ 2,704,271$ Investments - Note 3 21,624,154 19,856,500 Due from DOE/DVR for High School / High Tech Program 137,456 137,456 Accounts Receivable - Other 1,000 15,000 Annuity Receivable, Current - Note 7 36,538 39,112 Prepaid Expenses 6,614 9,267

Total Current Assets 24,255,795 22,761,606

RESTRICTED ASSETSRestricted for Fiscal Agent Liabilities - Note 11

Cash and Cash Equivalents - Note 2 2,259,606 3,132,500 Investments 3,749,838 2,319,163

Restricted Investments - Other 3,038,866 2,920,620 Total Restricted Assets 9,048,310 8,372,283

OTHER ASSETSContributions Receivable from Deferred Gifts, Net - Note 6 777,834 725,673 Annuity Receivable, Long Term - Note 7 54,266 79,364 Capital Assets, Net - Note 4 134,443 139,493 Deposits and Other Noncurrent Assets - Note 12 119,241 112,972

Total Other Assets 1,085,784 1,057,502

Total Assets 34,389,889$ 32,191,391$

CURRENT LIABILITIESAccounts Payable 63,909$ 8,651$ Fiscal Agent Liabilities - Note 11 6,009,444 5,451,663 Accrued Expenses 34,990 23,800

Total Current Liabilities 6,108,343 5,484,114

NET POSITION - Note 5Invested in Capital Assets - Net of Related Debt 134,443 139,493 Restricted - Nonexpendable Contributions 3,907,504 3,764,767 Unrestricted 24,239,599 22,803,017

Total Net Position 28,281,546 26,707,277

Total Liabilities and Net Position 34,389,889$ 32,191,391$

THE FLORIDA ENDOWMENT FOUNDATION FOR VOCATIONAL REHABILITATION, INC.

ASSETS

LIABILITIES AND NET POSITION

JUNE 30, 2017 AND 2016STATEMENTS OF NET POSITION

d/b/a THE ABLE TRUST

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

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2017 2016

OPERATING REVENUES:Public Support

DOE/DVR High School / High Tech Program 549,823$ 549,823$ Program Events 106,550 122,755 Special Events - 13,034 DOT for Sales of Temporary Handicap Parking Permits 272,588 267,360 DOR for Civil Penalties 1,179,536 1,289,377 Contributions 86,395 63,965 Other Revenue 115,947 108,256

Total Operating Revenues 2,310,839 2,414,570

OPERATING EXPENSES:Program Services:

Public Awareness, Education, and Nongrant Programs 736,290 700,641 Grants and Related Expenses 2,836,666 2,291,799

Total Program Services 3,572,956 2,992,440 Supporting Services:

Management and General 111,613 99,080 Fundraising 171,478 154,705

Total Supporting Services 283,091 253,785 Total Operating Expenses 3,856,047 3,246,225

Operating Loss (1,545,208) (831,655)

NONOPERATING REVENUESInvestment Income (Loss) - Note 3 2,719,135 (3,939) Decrease in Present Value of Annuity Receivable (27,672) (32,110) Increase in Present Value of Deferred Gifts 52,161 22,423 BP Oil Spill Settlement - Note 13 291,106 -

Total Nonoperating Revenues (Expenses) 3,034,730 (13,626)

Income (Loss) Before Endowment Contributions 1,489,522 (845,281)

Endowment Contributions 84,747 89,196 Total Endowment Contributions 84,747 89,196

Increase (Decrease) in Net Position 1,574,269 (756,085)

Net Position at Beginning of Year 26,707,277 27,463,362 Net Position at End of Year 28,281,546$ 26,707,277$

d/b/a THE ABLE TRUSTSTATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016



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2017 2016

OPERATING ACTIVITIESReceipts from Public Support 2,208,893$ 2,709,014$ Other Cash Receipts 115,947 109,006 Payments for Grants and Related Expenses (2,405,799) (1,849,843) Cash Payments for Operating Expenses (7,277) (57,708) Cash Payments for Program Services (483,089) (536,432) Cash Payments for Fundraising (74,491) (71,482) Cash Payments to Employees for Services (808,222) (756,571)

Net Cash Used in Operating Activities (1,454,038) (454,016)

INVESTING ACTIVITIESInterest and Dividends 579,433 809,027 Fiscal Agent Cash Receipts, Net of Disbursements 557,781 409,533 Purchase of Capital Assets (3,020) - Purchases of Investment Securities (1,877,437) (4,077,473) Sales of Investment Securities 694,296 4,082,981

Net Cash (Used in) Provided by Investing Activities (48,947) 1,224,068

NONCAPITAL FINANCING ACTIVITIES

Endowment Contributions 84,747 89,196 BP Oil Spill Settlement 291,106 -

Net Cash Provided by Noncapital Financing Activities 375,853 89,196

Net (Decrease) Increase in Cash and Cash Equivalents (1,127,132) 859,248 Cash and Cash Equivalents at Beginning of Year 5,836,771 4,977,523 Cash and Cash Equivalents at End of Year 4,709,639$ 5,836,771$

Components of Cash and Cash Equivalents at End of YearCash and Cash Equivalents 2,450,033$ 2,704,271$ Restricted Cash and Cash Equivalents for Fiscal Agent Liabilities 2,259,606 3,132,500

4,709,639$ 5,836,771$

RECONCILIATION OF OPERATING LOSS TO NET CASHUSED IN OPERATING ACTIVITIES

Operating Loss (1,545,208)$ (831,655)$ Adjustments to Reconcile Operating Loss to

Net Cash Used in Operating Activities:Depreciation 8,070 9,282 Changes in Operating Assets and Liabilities

Accounts Receivable - Net 14,000 403,450 Prepaid Expenses 2,652 (984) Accounts Payable 55,258 (27,332) Accrued Expenses 11,190 (6,777)

Net Cash Used in Operating Activities (1,454,038)$ (454,016)$

OTHER SUPPLEMENTAL DISCLOSURES OF NONCASHACTIVITIES

Increase in Deposits and Other Noncurrent Assets 6,269$ 3,030$ Increase in Present Value of Contributions Receivable from Deferred Gifts 52,161$ 22,423$ Decrease in Present Value of Annuity Receivable (27,672)$ (32,110)$ Increase (Decrease) in Fair Value of Investments 1,758,544$ (1,142,599)$

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016STATEMENTS OF CASH FLOWS

d/b/a THE ABLE TRUSTTHE FLORIDA ENDOWMENT FOUNDATION FOR VOCATIONAL REHABILITATION, INC.


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d/b/a THE ABLE TRUST NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2017 AND 2016

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Florida Endowment Foundation for Vocational Rehabilitation, Inc. d/b/a The Able Trust (the Foundation) was created by the 1990 Florida Legislature and was incorporated on February 25, 1991, as a not-for-profit corporation. The Foundation was established as a direct support organization for the Florida Division of Vocational Rehabilitation for the purpose of raising funds to support public and private nonprofit vocational rehabilitation programs and services and for providing public awareness, education, and grants, all of which to promote the employment of Florida citizens with disabilities. Funding for the Foundation is primarily provided under Florida Statutes through surcharges on both noncriminal moving traffic violations (received from the Department of Revenue) and temporary handicap parking permits (received from the Department of Transportation), and by an annual appropriation from the Division of Vocational Rehabilitation. In addition, the Foundation receives revenue through corporate support, grants, and private gifts and donations. Financial statements of the Foundation are an integral part of the financial statements of the State of Florida (the primary government). There are no component units for the Foundation to consider for inclusion in its financial statements. Basis of Accounting – The Foundation follows financial reporting requirements for enterprise funds, which use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recognized when they are incurred. Cash and Cash Equivalents – Cash and cash equivalents include demand deposits with financial institutions, deposits in highly-liquid money market funds, and certificates of deposit with original maturities of twelve months or more. Restricted Cash – Cash held by the Foundation as fiscal agent for other entities is reported as restricted cash. Investments – Investments consist of certain mutual funds and fixed maturity investments and are carried at market value, which is based on quoted market values for these or similar instruments. Restricted investments consist of permanently restricted endowment funds. Earnings on restricted investments are recorded as unrestricted revenues unless its use is limited by donor restrictions. Investment earnings received with donor-imposed restrictions that expire during the fiscal year are recorded as unrestricted income.



JUNE 30, 2017 AND 2016

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Endowments – The Foundation’s endowments consist of multiple funds established for a variety of purposes and include both donor-restricted endowment funds and funds designated by the Board of Directors to function as endowments. These endowments are a result of Foundation fundraising and development efforts since the creation of the Foundation in 1990. The Board of Directors requires the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. The Foundation classifies as restricted-nonexpendable contributions net position the original value of the gifts donated to the permanent endowment and the original value of subsequent gifts to the permanent endowment. Any investment earnings or losses from the permanently restricted endowment fund are classified as unrestricted earnings to be used to fund the operations of the Foundation unless there are specific donor restrictions regarding the use of investment earnings. The general investment objectives of the Foundation are to achieve a competitive long-term rate of return and marketability within reasonable and prudent levels of risk. The Foundation’s investment goal is to earn an average annual rate of return over 5 years which exceeds the average rate of inflation (CPI). To achieve the goals and objectives of the Foundation, the following target asset allocation for the Foundation’s investment portfolio has been established:

Target Allocation

Standard Benchmark

Domestic Large Capitalization Equities 35% S&P 500 Domestic Small Capitalization Equities 12% R2000 Foreign Equities 10% EAFE Fixed Income Securities 40% ML Domestic Master Global Alterative Investments 3% N/A

As of June 30, 2017, the investment portfolio asset allocation is as follows:

Domestic Large Capitalization Equities 43% Domestic Small Capitalization Equities 10% Foreign Equities 8% Fixed Income Securities 38% Global Alterative Investments 1%



JUNE 30, 2017 AND 2016

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounts Receivable – Accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect, are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for accounts receivable. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. As of June 30, 2017 and 2016, the valuation allowance was $0, as management deems the balances to be fully collectible. Capital Assets – Capital assets are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life for furniture and equipment is three to ten years. Leasehold improvements are depreciated over the lesser of the useful life or the lease term (10 years). The Able Trust capitalizes all capital assets with a purchase price over $1,000. Contributions Receivable from Deferred Gifts – Contributions receivable from deferred gifts consist of amounts receivable from various irrevocable charitable remainder and life insurance trust agreements and are considered promises to give. Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on the charitable remainder trusts are based on the Internal Revenue Service (IRS) Applicable Federal Rate (AFR) for determining the present value of remainder interests as of the fiscal year end. The discounts on the life insurance trusts are based on the Foundation’s average rate of investment earnings for the fiscal year. Amortization of the discounts, as well as changes in the estimated future cash flows, is included on the Statements of Revenues, Expenses and Changes in Fund Net Position as change in present value of deferred gifts. Income Taxes – Pursuant to a determination letter received from the IRS, the Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. It is, however, subject to corporate income taxes on net income earned from unrelated business activities (Note 14).



JUNE 30, 2017 AND 2016

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Operating Revenues – Operating revenues consist of funds received from public dollars, fundraising and development, grants, special events, and public support programs that are used by the Foundation to carry out its exempt purpose. Revenues from these sources are recorded in the period in which they are earned. Contributions – Annual contributions and gifts are recorded as revenue at the time they are received, or when all eligibility requirements are met, whichever is first. Contributions received with permanent restrictions are presented as nonexpendable contributions on the Statements of Net Position. Use of 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 the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Functional Allocation of Expenses – The costs of providing the various programs and supporting services have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs benefited. Election to Apply FASB Statements – As permitted by GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, the Foundation has elected to apply all FASB and AICPA pronouncements issued after November 30, 1989, except for those that conflict with GASB pronouncements. Reclassification – Certain prior year amounts have been reclassified to conform to current year presentation. NOTE 2 – CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of accounts maintained at several commercial financial institutions located in Florida and an external investment pool. The carrying amount and bank balances at June 30, 2017 are $4,709,639 and $4,881,042, respectively. Cash account balances are secured by the Federal Deposit Insurance Corporation (FDIC), up to $250,000 per bank. Deposits with commercial financial institutions in excess of FDIC limits are covered by the State of Florida’s Public Depository Act as described in Chapter 280, Florida Statutes.



JUNE 30, 2017 AND 2016

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NOTE 2 – CASH AND CASH EQUIVALENTS (Continued) The Foundation also invests in Florida PRIME administered by the Florida State Board of Administration (SBA). Florida PRIME is an external investment pool that is not a registrant with the SEC; however, the SBA has adopted operating procedures consistent with the requirements for a SEC Rule 2a-7 fund. Florida PRIME is governed by Chapter 19-7 of the Florida Administrative Code, which identifies the Rules of the SBA. These rules provide guidance and establish the general operating procedures for the administration of Florida PRIME. Additionally, the State of Florida, Office of the Auditor General performs the operational audit of the activities and investments of the SBA. Throughout the year and as of June 30, 2017, Florida PRIME contained certain floating rate and adjustable rate securities that were indexed based on the prime rate and/or one and three-month LIBOR. These floating rate and adjustable rate securities are used to hedge against interest risk and provide diversification to the portfolio. Exposure to a single issuer is limited to 5% of the portfolio’s amortized cost. Investments in Florida PRIME are not evidenced by securities that exist in physical or book entry form. The current rating for the Florida PRIME is AAAm by Standard and Poors. The weighted average of dates to maturity of the Florida PRIME at June 30, 2017 is 39 days. The fair value of the Foundation’s position in the pool approximates the value of the pool shares. At June 30, 2017, the Foundation had $931,606 invested in Florida PRIME. Florida PRIME’s most recent financial statements can be found on the SBA website at: https://www.sbafla.com/prime/Audits/tabid/582/default.aspx. NOTE 3 – INVESTMENTS Fair Value Measurement and Disclosures Topic of the FASB Accounting Standards Codification establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the Fair Value Measurement and Disclosures Topic are described as follows: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market based inputs or unobservable inputs that are corroborated by the market data. Level 3: Unobservable inputs that are not corroborated by market data.



JUNE 30, 2017 AND 2016

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NOTE 3 – INVESTMENTS (Continued) Investments at June 30, 2017 consist of the following:

Market and Carrying Value

(Level 1) Mutual funds: Fixed Income

$ 10,672,746

Large Market Capitalization 12,294,833 Small / Middle Market Capitalization 2,811,884 International 2,318,157 Alternative 315,238 Total Investments

28,412,858

Less: Restricted Investments (6,788,704) Unrestricted Investments $ 21,624,154

At June 30, 2017, all investments have maturities of one year or less. Investments at June 30, 2016 consist of the following:

Market and Carrying Value

(Level 1) Mutual funds: Fixed Income

$ 10,047,327

Large Market Capitalization 10,219,708 Small / Middle Market Capitalization 2,509,953 International 2,019,466 Alternative 299,829 Total Investments

25,096,283

Less: Restricted Investments (5,239,783) Unrestricted Investments

$ 19,856,500



JUNE 30, 2017 AND 2016

18

NOTE 3 – INVESTMENTS (Continued)

At June 30, 2016, all investments have maturities of one year or less. Investment income for the years ended June 30, 2017 and 2016 consists of the following:

2017 2016 Interest and dividends $ 915,236 $ 1,202,935 Unrealized gains (losses), net 1,758,544 (1,142,599) Realized gains (losses), net 45,355 (64,275) $ 2,719,135 $ (3,939)

Interest Rate Risk – To limit exposure to fair value losses resulting from rising interest rates, the Foundation’s investment policy provides for all investments to be highly liquid. Each investment is monitored by management on at least a monthly basis for performance in comparison to benchmarks set by the Foundation. Credit Risk – Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligation. As of June 30, 2017, all mutual funds had ratings of three stars to five stars by Morningstar. The Foundation’s certificates of deposit were unrated. Custodial Credit Risk – Custodial credit risk is the risk that, in the event of the failure of the counterparty, the Foundation will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Custody of the Foundation’s investments is maintained in the Foundation’s name by five brokerage firms pursuant to custodial agreements. All of the Foundation’s brokerage firms are members of the Securities Investor Protection Corporation (SIPC). The SIPC protects the securities and cash in brokerage accounts up to $500,000, which includes up to $250,000 protection for cash balances. The Foundation believes custodial credit risk related to these accounts is minimal.

Endowment Investments – Endowment activity for the year ended June 30, 2017 was as follows: Endowments Board

Designated Donor

Restricted

Total Balance, July 1, 2016 $ 20,415,004 $ 3,764,767 $ 24,179,771 Contributions from fundraising activity

-

84,747

84,747

Distribution of investment income to fund operations

(950,000)

(243,000)

(1,193,000)

Investment income, net 827,017 77,281 904,298 Net gain 1,598,411 223,709 1,822,120 Balance, June 30, 2017 $ 21,890,432 $ 3,907,504 $ 25,797,936



JUNE 30, 2017 AND 2016

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NOTE 4 – CAPITAL ASSETS Capital assets consist of the following: June 30,

2016

Additions

Deletions June 30,

2017 Furniture and fixtures $ 145,383 $ 1,990 $ (2,343) $ 145,030 Leasehold improvements 164,921 - - 164,921 Computer equipment 87,554 1,030 - 88,584 397,858 3,020 (2,343) 398,535 Less: accumulated depreciation (258,365) (8,070) 2,343 (264,092) $ 139,493 $ (5,050) $ - $ 134,443 Depreciation expense for the years ended June 30, 2017 and 2016, totaled $8,070 and $9,282, respectively. NOTE 5 – NET POSITION The Board has designated a portion of the unrestricted net position as follows:

2017 2016 Board designated grant reserves $ 2,138,037 $ 2,106,072 Board designated for endowments 21,890,432 20,415,004 Unrestricted, undesignated 211,130 281,941 $24,239,599 $22,803,017

Unrestricted net position that is Board designated grant reserves represents resources designated for the payment of grants approved but not yet paid at year end. Certain agreements are subject to funding availability, based on State of Florida Legislative approval and appropriation. Unrestricted net position that is Board designated endowments represents resources earmarked by the Foundation to increase endowment principal. Board designated general reserves represents unrestricted net position available only for Board approved projects. Net position reported as nonexpendable contributions represents endowment contributions received from donors to be invested in perpetuity and permanently restricted net position from the present values of an annuity and deferred gifts, the proceeds of which are to be invested in perpetuity.



JUNE 30, 2017 AND 2016

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NOTE 6 – DEFERRED GIFTS The Foundation is a beneficiary of various charitable remainder and life insurance trusts. A charitable remainder trust provides for the payment of distributions to the donor or other designated beneficiary over the trust’s term (usually the designated beneficiary’s lifetime). At the end of the trust’s term, the remaining assets will be transferred to the Foundation. The present value of the future benefits is determined using the fiscal year end AFR, established by the IRS for determining the present value of remainder interests. A life insurance trust is an irrevocable, non-amendable trust which is both the owner and beneficiary of one or more life insurance policies. The present value of the future benefits of life insurance trusts is determined using the Foundation’s average rate of earnings for the fiscal year. The portion of the trusts attributable to the present value of the future benefits to be received by the Foundation is recorded in the Statements of Revenues, Expenses and Changes in Fund Net Position as contributions in the period the trust is established. The present value of the contributions at June 30, 2017 and 2016, net of unamortized discounts of $929,839 and $951,087, totaled $777,834 and $725,673, respectively. There were no new charitable remainder or life insurance trusts received during the fiscal years ended June 30, 2017 and 2016. Discount amortization and re-evaluations of expected future benefits of $52,161 and $22,423 were recorded on the Statements of Revenues, Expenses and Changes in Fund Net Position as the change in present value of deferred gifts for the years ended June 30, 2017 and 2016, respectively. Contributions receivable from deferred gifts are recorded on the Statements of Net Position, and the portions from the charitable remainder and life insurance trusts are expected to be received in more than five years. No provision for uncollectible contributions has been recorded for the years ended June 30, 2017 and 2016. NOTE 7 – ANNUITY RECEIVABLE Due to the death of a donor in December 2004, an irrevocable charitable lead trust was created with payments due to the Foundation for 15 years. As of June 30, 2017 and 2016, the present value of the future annuity payments is $90,804 and $118,476, respectively, using the AFR established by the IRS for December 2004 of 4.68%.



JUNE 30, 2017 AND 2016

21

NOTE 8 – OPERATING LEASE The Foundation entered into a ten-year lease agreement for office space beginning December 1, 2008. Rent expense for the years ended June 30, 2017 and 2016, was $115,702 and $112,334, respectively. Future minimum lease payments follow:

For the year ending June 30, 2018 $ 119,173 2019 50,389 Total $ 169,562

NOTE 9 – COMMITMENTS As previously discussed in Note 5, the Foundation had approved unpaid grants of $2,138,037 as of June 30, 2017 because grant periods often do not coincide with the Foundation’s fiscal year. Although the payment of the outstanding grants is contingent upon the grantee’s satisfactory compliance with grant conditions, it is probable the Foundation will fund the entire unpaid balance. NOTE 10 – RETIREMENT PLAN Effective January 31, 1998, the Foundation implemented a defined contribution pension plan that covers substantially all employees. Effective July 1, 2014, the plan is administered by American Funds (previously Raymond James & Associates, Inc.). Employees are 100% vested in employer contributions to the plan after five years of service to the Foundation. The employer contributions to the plan are contingent upon a minimum contribution by the participant. Contributions charged to expense for the years ended June 30, 2017, 2016 and 2015 were $32,423, $29,076, and $27,653, respectively. Employee voluntary contributions during the years ended June 30, 2017, 2016 and 2015 were $52,230, $44,139, and $30,457, respectively.



JUNE 30, 2017 AND 2016

22

NOTE 11 – FISCAL AGENT AGREEMENTS Pursuant to Section 413.402, Florida Statutes, the Foundation, as fiscal agent, receives and disburses funds for the James Patrick Memorial Program. At June 30, 2017 and 2016, the Foundation has restricted cash, certificates of deposit and investments of $5,981,484 and $5,423,203, respectively, related to the program. Pursuant to Section 320.08068, Florida Statutes, the Foundation, as fiscal agent, receives and disburses funds collected from the sale of motorcycle specialty license plates to several designated organizations. At June 30, 2017 and 2016, the Foundation has restricted cash of $27,960 and $28,460, respectively, related to the program. Total restricted cash, certificates of deposit and investments for fiscal agent liabilities for the years ended June 30, 2017 and 2016 consists of the following:

2017 2016 Restricted Cash $ 1,827,080 $ 2,449,432 Restricted Certificates of Deposit 432,526 683,068 Restricted Mutual Funds 3,749,838 2,319,163 $ 6,009,444 $ 5,451,663

See Note 16 related to revised legislation effective July 1, 2017. NOTE 12 – DEPOSITS AND OTHER NONCURRENT ASSETS Deposits and Other Noncurrent Assets consists primarily of loan principal that will be collected by the Foundation from life insurance proceeds pursuant to a collateral assignment provision of an insurance policy on the life of a former executive. NOTE 13 – BP OIL SPILL SETTLEMENT During 2017, the Foundation received a settlement of $291,106, resulting from a claim filed against the BP Deepwater Horizon Oil Spill. The total award is shown net of attorney’s fees of $97,035 on the Statements of Revenue, Expenses and Changes in Fund Net Position.



JUNE 30, 2017 AND 2016

23

NOTE 14 – INCOME TAXES For the year ended June 30, 2017, the Foundation has no unrelated business income and, accordingly, has incurred no income tax liability from unrelated business activities. The Foundation has filed all required tax returns in all jurisdictions in which it operates. Tax years after 2012 remain subject to examination by the applicable taxing authorities. NOTE 15 – RISK MANAGEMENT The Foundation is exposed to various risks of loss including, but not limited to, general liability, property and casualty, auto and physical damage, and workers’ compensation. Coverage is provided through independent commercial carriers to insure against such risks and minimize the Foundation’s financial exposure to such risks. NOTE 16 – EVALUATION OF SUBSEQUENT EVENTS Effective July 1, 2017, there were revisions to the statutes governing the Foundation and their funding by the Florida Legislature. The Foundation will no longer serve as fiscal agent for the James Patrick Memorial Work Incentive Personal Attendant Services and Employment Assistant Program and the Motorcycle Specialty License Plates Program (Note 11). As of June 30, 2017, the Foundation had cash, certificates of deposit and investments totaling $6,009,444 related to these programs. The balances are presented as restricted assets on the Statement of Net Position as of June 30, 2017. As of August 31, 2017, the Foundation had transferred out all of the funds held for these programs to the recipient organizations designated by the Florida Legislature. The total amount transferred out was $6,127,634, which included additional receipts from the state of Florida and also interest earned from June 30 until August 31, 2017, the date of final liquidation. The Foundation previously received a percentage from the proceeds of temporary disabled parking permit fees and all civil penalties received by county courts. Those amounts will now be deposited in the Grants and Donations Trust Fund of the Division of Vocational Rehabilitation, Florida Department of Education. The Foundation has evaluated subsequent events through November 3, 2017, the date which the financial statements were available to be issued.

Other Financial Information

VarianceFavorable

Budget Actual (Unfavorable)

DOR for Civil Penalties 1,250,000$ 1,179,536$ (70,464)$ DOT for Temporary Handicap Parking Permits 266,000 272,588 6,588 DOE/DVR High School / High Tech Program 549,823 549,823 - Program Events - 106,550 106,550 Gifts, Contributions and BP Oil Spill Settlement 442,000 462,248 20,248 Bank and Certificate of Deposit Interest 704,500 915,236 210,736 Other Revenue 109,100 115,947 6,847

3,321,423$ 3,601,928$ 280,505$

Note:

THE FLORIDA ENDOWMENT FOUNDATION FOR VOCATIONAL REHABILITATION, INC.d/b/a THE ABLE TRUST

SCHEDULE OF BUDGETED AND ACTUAL REVENUESFOR THE YEAR ENDED JUNE 30, 2017

The Foundation does not budget for gains and/or losses with respect to its investments, disposal of capital assets, or change in the present value of annuity receivable or deferred gifts.

See independent auditor's report.

25

Public Awareness, VarianceGrants and Related Education, and Management Favorable

Expenses Nongrant Programs Fundraising and General Total Budget (Unfavorable)

Non-Officer Salaries 286,036$ 180,961$ 70,050$ 46,700$ 583,747$ 563,025$ (20,722)$ Officer Salaries 109,993 69,587 26,937 17,958 224,475 224,475 - Payroll Taxes 22,220 14,057 5,442 3,628 45,347 43,101 (2,246) Employee Benefits 24,960 15,791 6,113 4,075 50,939 50,600 (339) Retirement 15,887 10,051 3,891 2,594 32,423 32,000 (423) Payroll Processing 251 159 62 41 513 550 37 Auditing & Accounting Fees 15,314 9,688 3,750 2,500 31,252 31,825 573 Board Meetings 21,062 13,325 5,158 3,439 42,984 65,800 22,816 Board Member Travel 3,559 2,252 872 581 7,264 6,500 (764) CEO Program Management 30,577 19,345 7,488 4,992 62,402 148,300 85,898 Depreciation 3,954 2,502 968 646 8,070 - (8,070) Development and Marketing - 194,840 - - 194,840 358,560 163,720 Development of Alumni Association - 2,718 - - 2,718 10,000 7,282 DOE/DVR Staff Events 44,976 - - - 44,976 45,000 24 Endowment Department - - 4,057 - 4,057 4,600 543 Equipment/Furniture 4,082 2,582 1,000 666 8,330 17,400 9,070 Equipment Maintenance 839 531 206 137 1,713 1,800 87 Insurance 4,818 3,048 1,180 787 9,833 9,730 (103) Investment Advisory Fees 1,960 1,240 480 320 4,000 4,000 - IT Support 2,250 1,424 551 367 4,592 5,500 908 Legislative Consultants 66,813 42,269 16,362 10,908 136,352 151,800 15,448 Office Supplies 1,966 1,244 482 321 4,013 4,300 287 Printing 2,052 1,298 503 335 4,188 5,000 812 Postage 2,247 1,422 550 367 4,586 4,700 114 Rent 56,694 35,868 13,884 9,256 115,702 117,802 2,100 Program Events: Disability Mentoring Day - 3,924 - - 3,924 - (3,924) Youth Leadership Forum - 102,309 - - 102,309 110,000 7,691 Staff Education 1,829 1,157 448 299 3,733 5,000 1,267 Telephone and Internet 4,264 2,698 1,044 696 8,702 6,992 (1,710) Grant Obligations - Prior Year 177,918 - - - 177,918 464,000 286,082 Grant Awards - Current Year 822,833 - - - 822,833 660,000 (162,833) Grants - HS/HT 970,000 - - - 970,000 926,000 (44,000) High School/High Tech-Other Expenses 111,378 - - - 111,378 247,900 136,522 Grants Administration 25,934 - - - 25,934 27,378 1,444

Total 2,836,666$ 736,290$ 171,478$ 111,613$ 3,856,047$ 4,353,638$ 497,591$

Note: The Foundation prepares their budget on the cash basis and, therefore, does not budget for bad debt and depreciation.

THE FLORIDA ENDOWMENT FOUNDATION FOR VOCATIONAL REHABILITATION, INC.d/b/a THE ABLE TRUST

SCHEDULE OF BUDGETED AND ACTUAL EXPENSESFOR THE YEAR ENDED JUNE 30, 2017

See independent auditor's report.26

Other Reports and Schedules

Law, Redd, Crona & Munroe, P.A. Certified Public Accountants

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 STANDARDS


Vocational Rehabilitation, Inc. d/b/a The Able Trust

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of the Florida Endowment Foundation for Rehabilitation, Inc. d/b/a The Able Trust (the Foundation), a component unit of the state of Florida, which comprise the statement of net position as ofJune 30, 2017, and the related statements of revenues, expenses and changes in fund net position, and cash flows as of and for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated November 3,2017.

Internal Control over Financial Reporting

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

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

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

28

2075 Centre Pointe Boulevard, Suite 200 • Tallahassee, Florida 32308 • Telephone (850) 878-6189 • Fax (850) 942-5301 Members: American Institute qf Cer(ijied Public Accountants and Florida Institute qf Certified Public Accountants

The Board of Directors The Florida Endowment Foundation for Vocational Rehabilitation, Inc.

d/b/a The Able Trust Page Two

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Foundation'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 .

We noted certain matters that we reported to Foundation management III a separate letter dated November 3,2017.

Purpose of this Report

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

LAW, REDD, CRONA & MUNROE, P.A. Tallahassee, Florida November 3, 2017

29

Law, Redd, Crona & Munroe, P.A. Certified Public Accountants

MANAGEMENT LETTER


Vocational Rehabilitation, Inc. d/b/a The Able Trust

Report on the Financial Statements

We have audited the financial statements of The Florida Endowment Foundation for Vocational Rehabilitation, Inc. d/b/a The Able Trust (the Foundation), as of and for the fiscal year ended June 30, 2017, and have issued our report thereon dated November 3,2017.

Auditor's Responsibility

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.

Other Reporting Requirements

We have issued our Independent Auditor's 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. Disclosures in that report, which is dated November 3, 2017, should be considered in conjunction with this management letter.

During our audit, we became aware of the following deficiencies in internal control, other than significant deficiencies or material weaknesses, and other matters that are opportunities for strengthening internal controls and operating efficiency.

We will review the status of these comments during our next audit engagement. We have already discussed these comments and suggestions with various Foundation personnel, and we will 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 recommendations.

30

2075 Centre Pointe Boulevard. Suite 200' Tallahassee. Florida 32308 • Telephone (850) 878-6189' Fax (850) 942-5301 Members: American Institute Q/ Certified Public Accountants and Florida Institute Q/ Certified Public Accountants

The Board of Directors The Florida Endowment Foundation for Vocational Rehabilitation, Inc. d/b/a The Able Trust Page Two

31

Prior Year Recommendations See current year recommendations below for the following: Policies and Procedures Travel Bank Reconciliation Review

Current Year Recommendations Policies and Procedures During the prior year audit, we observed areas of the Foundation’s operations for which policies should be developed or where actual practice does not appear to be consistent with existing policies and procedures. Such areas of observation included the following:

Travel – We noted that certain travel expenses were not submitted timely and as a result the expenses were not reported in the correct fiscal year.

We continue to recommend that the travel policy be enforced to require that travel expenses for all employees and members of the Board or leadership committees be submitted on a timely basis.

Bank Reconciliation Review –We reviewed five months of reconciliations during the current year audit, noting that all five were timely prepared but not timely approved. Management has represented that the following mitigating procedures have been implemented:

The CEO/President opens each account statement, scans account activity and reviews copies of cleared check images for unusual activity prior to review of the reconciliation prepared by the Accountant.

The review of the bank statement and digital images of corresponding checks takes place within 30 days of receipt of the bank statement.

We continue to recommend that the Foundation incorporate a method for documentation of timely review of account reconciliations in their Financial Policies and Procedures.

Security of Information Technology and Communications Equipment The Foundation’s internal server, backup appliance, Comcast router, and phone switches are kept in an unlocked room which is also used for other purposes, such as storing paper records. Although the Foundation’s office suite is locked after hours, under these conditions the risk is increased of accidental or malicious modification or destruction of information technology and communications equipment.


Vocational Rehabilitation, Inc. d/b/a The Able Trust Page Three

To improve protection over information technology and communications equipment, we recommend management keep the sen1er room locked at all times, with access allowed on~)l to those persons with a business need to work with the sen'er, other IT equipment, or phone equipment. In addition, management should evaluate the feasibility of relocating paper records from the server room so that access to the server room can be limited to fewer personnel. As an alternative, the Foundation could install lockable storage racks in the room to house the IT equipment and limit the number of persons with keys to the racks.

Passwords

Our audit disclosed that Windows Active Directory was not set by the Foundation to enforce password policies such as minimum password length or complexity or an account lockout after a set number of invalid access attempts. Employee password composition was monitored manually by the President/CEO, as computer material policy requires all employee passwords to be disclosed to at least one member of management, generally the President/CEO, for backup purposes. However, employees could change their passwords from what was disclosed. Additionally, without a limit on invalid access attempts, intruders may repeatedly attempt to crack passwords without restriction. Under these conditions, the risk was increased that passwords could be compromised and misused to gain unauthorized access to data and information technology resources.

To improve protection of the corifidentiality, integrity, and availability of data and IT resources, we recommend management consider configuring Active Directory to enforce the use of strong passwords by network users and limit the allowed number of invalid logon attempts.

Purpose of this Letter

Our management letter is intended solely for the information and use of the Audit Committee, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.

LA W, REDD, CRONA & MUNROE, P.A. Tallahassee, Florida November 3, 2017

32

Documents

Law, Redd, Crona Munroe, P.A. rpts/2017...the annuity receivable, capital assets, net of accumulated depreciation, and other assets. A comparative summary of changes in fund net position