Columbia Pacific Economic Development District of Oregon, Inc. (Col-Pac EDD)

Transcription

1 Columbia Pacific Economic Development District of Oregon, Inc. (Col-Pac EDD) REQUEST FOR PROPOSALS AUDITING SERVICES & 990 TAX PREPARATION August 22, 2016 Projected Timeline RFP Release August 22, 2016 Proposals Due September 16, 2016 Selection of Finalists September 21, 2016 Interviews if Necessary September 23, 2016 Complete Contract Process September 30, 2016 Columbia-Pacific EDD Request for Auditing Services and 990 Preparation 1 P age

2 TABLE OF CONTENTS I. Description of Col-Pac EDD and Its Accounting System...3 II. General Instructions for Submission of Proposal...4 III. Audit Objectives and Scope of Services...5 IV. Evaluation Criteria...6 V. Proposal Requirements...6 VI. VII Technical Criteria...7 Price Quote...8 Columbia-Pacific EDD Request for Auditing Services and 990 Preparation 2 P age

3 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT OF OREGON, INC. REQUEST FOR PROPOSAL - AUDITING SERVICES & 990 Tax Return Preparation Columbia-Pacific Economic Development District of Oregon, Inc. (Col-Pac EDD) invites proposals from qualified independent licensed non-profit auditors (hereinafter called auditor ) having sufficient governmental and non-profit auditing experience in performing an audit in accordance with the specifications outlined in this Request for Proposal (RFP). I. DESCRIPTION OF COL-PAC EDD AND ITS ACCOUNTING SYSTEM Columbia-Pacific Economic Development District of Oregon, Inc.is a non-profit (501c3) located in St. Helens, Oregon. We serve Northwest Oregon including Columbia, Clatsop, Tillamook and rural (west of Hillsboro) Washington counties. Our 24-member volunteer Board meets every other month in one of the four counties. Col-Pac has two salaried full time and one hourly (approximately 35 hours per week) employees. Staff receive a monthly allowance for health care, paid vacation and up to 80 hours of accrued sick leave. There is no Retirement or 401k plan offered. While Col-Pac provides regional economic development services, including technical assistance and fee-for-service grant management, most of the District s budget is comprised of two loan funds. Col-Pac EDD borrows money from USDA and lends it out to small businesses for the purpose of job retention and job creation. A secondary lender to conventional financing, Col-Pac provides gap financing and higher risk loans that commercial lenders often decline. The District s Mission statement is: Promote and sustain healthy communities in the district through retention, diversification and expansion of the economic base. Because our two loan funds comprise approximately $1.8 million in capitalization, a Single Audit is required. In addition to borrowing funding from USDA for our Intermediary Lending Program, we also receive an annual US Department of Commerce Economic Development Administration grant, and USDA Small Business Development grants. Col-Pac uses QuickBooks 2014 Pro. We have 3 funds that must be kept separate and 12 different bank accounts. These Funds include: General Fund (Administrative Cash) funded by the annual EDA Grant, fee-for-service revenue and membership dues. RLF Loan Fund (USDA revolving loan fund). Contractually, Col-Pac is obligated to pay back all of loan funds borrowed from USDA over 30-year period, regardless of any bad debt accrued over that time from lending out those funds. We originally borrowed $2,460,000 from USDA, in 4 separate loan contracts. We have paid back 2 of the loans and currently owe $861,144 on the two remaining notes. We have $742, in current outstanding loan balances owed to Col-Pac on the eight loans currently open. We also are required to set aside a Loan Loss Reserve of 6% of our outstanding loan balance ($44,576) on the RLF Loan fund only. RBEG Loan Fund We received this grant in 2008 initially to assist businesses with storm damage repairs. We relend the loan fund money and do not have to repay any of the funds to USDA. The Grant(s) totaled $598,999. We currently have $227,530 in outstanding RBEG Loans with four open loans. Columbia-Pacific EDD Request for Auditing Services and 990 Preparation 3 P age

4 A copy of Col-Pac s fund budgets, 990 tax return and audit from the prior year are included in this packet. Col-Pac receives a Federal USDA review every one to three years. One is scheduled for September, Our Fiscal year runs October 1 through September 30. II. GENERAL INSTRUCTIONS FOR SUBMISSION OF PROPOSALS All proposals must be submitted not later than 4:00 p.m. September 16, 2016 to Mailing Address: Columbia-Pacific EDD ATTN: Karen Kent PO Box 534 Columbia City, OR Hand Delivery: Columbia-Pacific EDD ATTN: Karen Kent 375 S 18 th Street, Suite B-1 St. Helens, OR The outer envelope in which proposals are tendered should be marked "Audit Proposal. A. Two (2) copies of the proposal are required, not to be opened until after the final submission date and hour noted above. These submissions shall become the property of the Columbia-Pacific Economic Development District of Oregon, Inc. without obligation. B. The selection of the external auditor will be based upon responses received to the criteria included in Part III of this proposal. C. Any questions should be directed to Karen Kent, Administrative Manager in writing at colpac@nworegon.org D. This RFP is for a three (3) year timeframe, with separate audits each year. The periods to be audited are fiscal years ending September 30, 2016, 2017 and It is Col-Pac s intent to negotiate a three (3) year contract with the succeeding year s contingent upon the successful completion of the first year of the contract as determined by Col-Pac EDD. One-year extensions may be granted for fiscal years ending September 30, 2019 and thereafter. The audit contract may start as soon after the contract document is executed as is agreeable with both parties. The written audit report for audit year shall be completed and delivered within a reasonable time, but not later than February 1, 2017, and by February 1 in each successive year thereafter. E. The Columbia-Pacific Economic Development District of Oregon, Inc. reserves the right to reject any and all proposals, and has the right, in its sole discretion, to accept the proposal it considers most favorable to the District s interest and the right to waive minor irregularities in procedure. Columbia-Pacific EDD Request for Auditing Services and 990 Preparation 4 P age

5 F. The proposal should include preparation of Exempt Organization Income Tax Returns (990) in a timely manner. III. AUDIT OBJECTIVES AND SCOPE OF SERVICES The Audit will be for all business-type activities, each major fund, and the aggregate remaining fund information and preparation of the District s Exempt Organization Annual Tax Return Preparation of 990. A. The auditing services performed by the auditor shall: Express an opinion on whether the financial statements of Col-Pac EDD present fairly the financial position and results of financial operations in conformity with Generally Accepted Accounting Principles (GAAP); Express an opinion on whether Col-Pac EDD has complied with laws and regulations that may have a material effect on the audited financial statements; and Issue a management letter. B. A minimum standard for audits of Oregon Non-Profit Corporations, adopted by the Secretary of State and approved by the State Board of Accountancy, shall govern the audit. C. The financial and compliance audit shall apply industry standards for auditing, and shall be made in accordance with all of the following: Generally accepted auditing standards, Government auditing standards, and Oregon minimum standards; and Applicable laws and regulations. D. The audit will be used as a single document which will contain the basic financial statements, notes, and as supplementary data, the Combining and Individual Fund Financial Statements and Schedules. E. Recommendations based upon the auditing firm's review of the adequacy of internal accounting controls and other audit investigations shall be made a part of a formal management report separate from the financial audit. Such associated costs shall be included in the audit fee. The discussion of these recommendations shall be with the Executive Director and Administrative Manager. F. The auditor shall contact the Administrative Manager prior to the commencement of each audit to discuss the planned approach to the audit work and to provide a list of schedules to be prepared by Col-Pac personnel prior to the beginning of fieldwork. An exit conference is required of the auditing firm on completion of all field work so as to inform the Executive Director and Administrative Manager of pertinent findings. A summary presentation of the audit findings shall be made to the Board of Directors at Col-Pac s Annual meeting, held the second Thursday in March of each year. Columbia-Pacific EDD Request for Auditing Services and 990 Preparation 5 P age

6 IV. G. Col-Pac EDD will make available the information and work papers necessary in conjunction with the financial and compliance audit engagement. EVALUATION CRITERIA Proposals will be evaluated based on technical responses and price with the following points: Experience, Qualifications and References 40% Audit Approach and Understanding of Col-Pac s Auditing Needs 30% Cost Proposal 30% Total 100% We may elect to interview those candidates deemed most suitable to perform the audit. Proposals will be reviewed by Col-Pac s Executive Director and the Administrative Manager. Based upon this review, we will choose to award. V. PROPOSAL REQUIREMENTS In order to achieve a uniform review process and to obtain the maximum degree of comparability, it is required that proposals be organized in the manner specified in this part. A. Title Page Name of the proposal s firm, firm address, telephone number, name of contact person, address, and the date. B. Table of Contents Clear identification of the material by section and by page number. C. List of partners, managers and other key staff persons who will be assigned to Col-Pac s engagement and the amount of time each will be spending on the audit. Provide resumes and indicate their experience in auditing governmental, non profit corporations. D. Field work staffing level that will be assigned to the Col-Pac audit. E. Work plan and related time schedule for each significant segment of the work. F. Degree to which Col-Pac personnel will be used, if at all, to assist during the audit and the approximate time requirement. Columbia-Pacific EDD Request for Auditing Services and 990 Preparation 6 P age

7 VI. TECHNICAL CRITERIA Proposals must clearly respond to the following: A. Organization/Local Office Technical Qualifications and Approach. 1. State whether your audit organization is national, regional, or local. 2. Indicate the number of people (by level) located within the local office that will handle the audit. 3. Provide a list of the local office's current and prior government/ non-profit audit clients indicating the type(s) of services performed and the number of years served for each. 4. Indicate the local office's experience in providing additional services to non-profit clients by listing the name of each non-profit, the type(s) of service performed, and the year(s) of engagement. 5. Describe your audit organization's participation in AICPA-sponsored or comparable quality control programs. Include a copy of your most recent peer inspection report. 6. Disclose any and all judgments, pending or expected litigation, or other real or potential financial reversals that might materially affect the viability or stability of the proposing organization, or warrant that no such condition is known to exist. If the proposer is a national firm, it must disclose the above information for its region and all material judgments and pending or expected litigation on a nation-wide basis. 7. If the proposer has had a contract terminated for default during the past five (5) years, all such incidents must be described. The audit firm must not have a record of substandard work. Col-Pac EDD will verify this requirement by communication with the Oregon State Board of Accountancy. 8. The proposer must state if subcontractors will be used, and provide the above information for each subcontractor. 9. Describe your approach to the examination: This should include at least the following points: a. Description of audit approach. b. Use of statistical sampling. c. The firm s knowledge and use of computer and programs to assist in the audit process. d. Organization of audit team and approximate percentage of time spent on audit. e. Management letter (provide a sample letter). f. Typical assistance expected from Col-Pac staff. g. Tentative schedule for completing audit. h. Policy on rotation of personnel to be assigned to Col-Pac the first year and each year thereafter. Columbia-Pacific EDD Request for Auditing Services and 990 Preparation 7 P age

8 B. Individual Audit Staff Technical Qualifications 1. Describe experience in audits, specifically special-purpose non-profits, of each senior and higher level person assigned to the audit, including years on each job and their position while on the audit. Indicate the percentage of the time the senior will be on-site. 2. Describe the relevant educational background of each individual assigned to the audit. VII. PRICE QUOTE Provide the firm's proposed all-inclusive audit fee for each of the first three fiscal years and a statement regarding determination of increases in succeeding years should the contract be extended. Price quote should include 990 tax preparation fee. Also include the hourly rates for each staff employee classification, and any other fees associated with the completion of the audit. Additionally, please state if there are any opportunities to reduce audit fees should Col-Pac institute additional procedures such as an internal audit function, provision of additional schedules, or other recommended procedures. Ownership of the audit reports shall belong to the Columbia-Pacific Economic Development District of Oregon, Inc. and it is expressly understood that publication of the audit report (in whole or in part) or reference for such audit report shall be at the sole discretion of Col-Pac EDD. Any unusual conditions encountered during the course of the audit where services of the auditing firm must be extended beyond the normal work anticipated will require written notification to Col- Pac EDD s Executive Director, who will respond in writing concerning the additional services. Columbia-Pacific EDD Request for Auditing Services and 990 Preparation 8 P age

9 Col-Pac EDD General Fund Approved Budget Approved Approved Yr End Proposed Change From Budget Revenue--General Administrative Budget Projected Budget Opening Balance 63,264 70,430 42,974-32% Bank Interest % CCET health care reimbursement ,200 7, % CCET Employee PR Reimbursement 79,000 86,200 90,500 15% EDA Partnership Planning (3 Qrtrs+1Qrtr) 75,000 75,000 75,000 0% Ford Family Foundation 10, % Membership Dues 19,000 18,500 18,500-3% Misc. (Lunch donations) % CCET Copier/Internet / Rent 4,140 2,750 3,700-11% Explanation Revenue--Fee for Service/Grants Agora 22,000 Astoria Senior Center CDBG Grant Management 25,000 5,000 20,000-20% Buy Local 50,000 CCET Administrative Support 12,000 11,000 12,000 0% City of Garibaldi 3,000 2,000 Manufacturers & Suppliers Connectory 11, % NW Oregon Connector Alliance Management 16,000 16,000 16,000 0% POTB 2,500 2,500 2,000-20% Revenue 247, , ,535 33% Total Revenue 311, , ,509 20% Expenditures--General Administrative Audit (1/3 Audit & Tax Preparation Total) 5,700 6,227 6,538 15% Bank Fees % Computer 2,000 2,785 3,000 50% Conferences/Seminars/ Education 1, ,500 0% Copier lease 1, % Health Insurance (Col-Pac) 11,500 11,750 12,750 11% CCET Health care 7,200 7,200 7,200 0% Insurance (1/3 Total) 1, ,000-33% Memberships: NADO/OEDA/OEDD aka SCOEDD 3,000 2,688 3,000 0% Payroll--EDA/ Col-Pac & CCET 152, , ,000 8% Payroll Taxes 15,000 13,000 14,000-7% Phone / Internet 1,800 1,855 1,900 6% Postage % Rent 4,800 4,800 4,800 0% Supplies 4,000 4,000 4,000 0% Travel 3,500 3,500 3,500 0% Transfer to RBEG (yrs 2 and 3 of 5) 10,000 10,000 10,000 0% Misc. (Gifts/cards/ subscriptions) % Prepaid, adjustments, outstanding, misc Expenditures--Fee for Service/Grants Agora 22,000 Astoria Senior Center CDBG Grant Management 8,250 3,000 5,000-39% Buy Local 50,000 CCET Administrative Support 8,640 8,640 8,640 0% City of Garibaldi 1,500 1,000 Manufacturers & Suppliers Connectory 11, % NW Oregon Connector Alliance Management 11,040 8,201 11,680 6% WWNW 5,000 2, % POTB 1,000 1, % Total Expense 271, , ,908 24% Balance (Rev-Exp) 39,729 42,974 35,601-10%

10 Col-Pac EDD USDA Revolving Loan Fund Approved Budget Approved Budget Yr End Prjtd Proposed 15-16Budget Change from Budget USDA -- Revolving Loan Fund Revenue Opening/Ending Balances 661, , ,903 0% Loan Loss Reserve 71,459 37,974 52,559-26% Loan Application/ Late Fees 8,500 8,500 7,075-17% Bad debt collection 6,000 0 Bank Interest 650 1, % Bank of the West CRA grant 5,000 5,000 Loan Interest Repaid from Loans 52,983 29,733 43,322-18% Loan Principal Repaid from Loans 142, ,241 82,949-42% Total Revenue 937, , ,458-9% Transfer from RBEG 17, ,000 13% Total Revenue/RBEG Transfer 954, , ,458 Expenditures Audit and tax prep & fees ( 1/3 Total) 5,000 5,000 6,000 20% Bank Fees % Computer 1, % Education/Training/Seminars % Insurance (1/3) 1, ,000-33% Legal 2,000 1,200 2,000 0% NACM Membership (Credit Bureau) % Payroll (Contracted) 4,000 2,000 3,000-25% Payroll 4,000 6,000 6,000 50% Payroll Tax % Phone / Postage % RLF Loan Costs % RLF Marketing 500 Supplies % Travel % USDA Loan Payments 61,997 61,997 61,997 0% Total Expense 81,897 79,651 83,467 2% New Loans Made (Revolved Funds) 615, , ,000-47% Difference in Bad Debt Allowance 35,991 7,824 14,585-59% Total Expenses 732, , ,052-42% Balance (Rev--Exp) 221, , , %

11 Col-Pac EDD USDA IRP Approved Budget Approved Budget Projected Budget Revenue Loan Interest Repaid from Loans 52,983 29,733 43,322 Application/Loan/Processing Fees 8,500 8,500 7,075 Bad Debt collection 6,000 Bank of the West 5,000 5,000 Bank Interest 650 1, Fund Transfer 28,000 Expenditures Total Revenue 62,133 50,533 84,047 USDA Principal Loan Payments (61,977 total pymt) 51,997 50,477 51,997 INT ONLY USDA Interest Payments 10,000 11,500 10,000 10,000 Bad Debt allowance 71,459 37,974 52,559 52,559 Legal Costs 2,000 2,000 2,000 2,000 Loan Costs Loan Fund Marketing NACM Membership Staff 8,400 8,600 9,600 9,600 Travel Education/Training/Seminars Computer 1, Supplies Phone Postage Audit/Tax prep/ Professional fees 5,000 5,000 6,000 6,000 1/3 Insurance 1, ,000 1,000 Bank Fees Total Expenditures 153, , ,026 84,029

12 Col-Pac EDD RBEG Loan Fund Apporved Budget Approved USDA -- Disaster Assistance Loans (RBEG) Approved Yr End Proposed Budget Change from Budget Budget Projected Starting/Ending Balance 265, , ,597-2% Application/Loan/Late/Processing Fees 1,500 3,000 3, % Bank Interest % Transfer from General Fund yr 2 10,000 10,000 10,000 Loan Interest Repaid from Loans 20,990 15,000 26,360 26% Loan Principal Repaid from Loans 54,299 31,032 53,836-1% Sub Total 87,089 59,407 93,696 8% Total Revenue 352, , ,293 1% Expenditures Audit and Tax Prep (1/3 Total) 6,100 6,158 6,466 6% Bank Fees % Computer 1, ,000 0% Insurance (1/3 Total) 1, ,000-33% DUES % Payroll 4,000 4,500 4,500 13% Payroll Tax % Contracted Payroll 4,000 3,000 4,000 0% RBEG Loan Costs % Supplies/ postage % Transfer to RLF 17, ,000 65% Travel % Total Expense 35,725 15,971 46,466 30% New Loans 50,000 50, ,000 New Loans + Expenses 85,725 65, ,466 Balance (Rev-Exp) 267, , ,827-41%

13 Administrative Consolidated Budget (Projected) Proposed Gen Fund RLF RBEG Totals Revenues Starting Cash Balance 42,974 47,594 90,568 Late fee/app fees/ EDC 7,075 3,250 10,325 Bank Interest Bank of the West Grant 5,000 Loan Interest 43,322 26,360 69,682 Dues 18,500 18,500 EDA PP 75,000 75,000 Ford Family Grant 10,000 10,000 CCET Employee Reimbursement 90,500 90,500 CCET Health Care Reimbursement 7,200 7,200 CCET Office Reimbursement 3,700 3,700 CCET Administrative Support 12,000 12,000 City of Garibaldi 2,000 2,000 Agora 22,000 22,000 Astoria SC Block Grant Managemt 20,000 20,000 Buy Local RBDG 50,000 50,000 NW Oregon Connector Alliance 16,000 16,000 POTB 2,000 2,000 Interfund Transfers ,000 10,000 38,600 Total Revenues 372,509 84,047 87, ,010 Expenses Audit/Tax prep 6,538 6,000 6,466 19,004 Computer Maintenance 3, ,000 4,500 Copier lease Education/Seminars/Conferences 1, ,600 Health Insurance 19,950 19,950 Insurance 1,000 1,000 1,000 3,000 Legal 2,000 2,000 Loan Costs Loan Marketing 500 Memberships 3, ,120 Office Supplies 4, ,500 Other (Bank fees) Payroll (Col pac & CCET) 164,000 6,000 4,500 Payroll- Contracted 3,000 4,000 Payroll Taxes 2, ,150 Phone/Internet/Postage 14, ,050 Prof Services (NWOTA, CDBG, etc.) 98,570 98,570 Rent 4,800 4,800 Travel 3, ,400 USDA Loan Payment 61,997 61,997 Interfund Transfers 10,000 28,000 38,000 Total Expenses 336,908 83,467 46, ,841 Revenues vs Expenses 35, ,988 49,169

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58 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION Years Ended September 30, 2015 and 2014

59 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) TABLE OF CONTENTS INDEPENDENT AUDITOR S REPORT 1-2 FINANCIAL STATEMENTS Statements of Financial Position 3 Statements of Activities 4 Statements of Functional Expenses 5 Statements of Cash Flows 6 Notes to Financial Statements 7-11 OTHER INFORMATION Combining Statements of Financial Position 12 Combining Statements of Activities 13 Combining Statements of Functional Expenses 14 COMPLIANCE SECTION 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 Independent Auditor s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by OMB Circular A Schedule of Expenditures of Federal Awards 19 Notes to the Schedule of Expenditures of Federal Awards 20 Schedule of Findings and Questioned Costs 21 Page

60 475 Cottage Street NE, Suite 200, Salem, Oregon (503) INDEPENDENT AUDITOR S REPORT Board of Directors Columbia Pacific Economic Development District 375 S. 18 th Street St. Helens, Oregon Report on the Financial Statements We have audited the accompanying financial statements of Columbia Pacific Economic Development District (a nonprofit organization), which comprise the statements of financial position as of September 30, 2015 and 2014, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the 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 audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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 District 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 District s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

61 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Columbia Pacific Economic Development District as of September 30, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Other Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The other information is presented for purposes of additional analysis and is not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the combining statements are presented for purposes of additional analysis and are not required parts of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 20, 2015, on our consideration of the District 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 District s internal control over financial reporting and compliance. CERTIFIED PUBLIC ACCOUNTANTS January 20, 2015

62 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) STATEMENTS OF FINANCIAL POSITION SEPTEMBER 30, 2015 AND ASSETS Cash $ 1,019,105 $ 1,071,218 Accounts receivable 12,261 4,306 Loans receivable (less allowance for bad debts of $37,942 and $35,468, respectively) 928, ,528 Interest receivable 9,435 6,263 Prepaid expenses 3,346 2,271 Total Assets $ 1,972,893 $ 2,005,586 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ - $ 1,169 Accrued interest 4,373 4,557 Accrued payroll and payroll taxes 6,745 8,348 Notes payable 1,167,375 1,217,196 Total Liabilities 1,178,493 1,231,270 Net Assets Restricted - IRP loan loss reserve 37,942 35,468 Unrestricted 756, ,848 Total Net Assets 794, ,316 Total Liabilities and Net Assets $ 1,972,893 $ 2,005,586 The accompanying notes are an integral part of the financial statements

63 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) STATEMENTS OF ACTIVITIES YEARS ENDED SEPTEMBER 30, 2015 AND REVENUES Grants and contracts $ 209,910 $ 225,317 Interest income 63,964 62,896 Membership dues 18,500 19,000 Loan fees 4,054 2,282 Other 11,966 9,962 Total Revenues 308, ,457 EXPENSES Administrative expenses 285, ,960 Bad debt expense (recovery) 2,474 (12,796) Total Expenses 288, ,164 CHANGE IN NET ASSETS 20,084 53,293 NET ASSETS, Beginning of year 774, ,023 NET ASSETS, End of year $ 794,400 $ 774,316 The accompanying notes are an integral part of the financial statements

64 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) STATEMENTS OF FUNCTIONAL EXPENSES YEARS ENDED SEPTEMBER 30, 2015 AND Personnel costs $ 222,283 $ 208,193 Bad debt expense (recovery) 2,474 (12,796) Bank fees Computer and internet 2,882 3,675 Continuing education 455 1,607 Dues and subscriptions 3,476 3,205 Insurance 2,087 2,949 Interest 11,971 12,294 Loan fees Miscellaneous expense Office costs 5,467 3,679 Phone 2,785 2,145 Professional fees 23,337 29,823 Rent 4,400 4,296 Travel 6,324 6,351 $ 288,310 $ 266,164 The accompanying notes are an integral part of the financial statements

65 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2015 AND CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 20,084 $ 53,293 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Adjustment of loan reserves and write-offs 2,474 (12,796) Change in cash due to operating assets and liabilities: Accounts receivable (7,955) 31,581 Prepaid expenses (1,075) 385 Interest receivable (3,172) (688) Accounts payable (1,169) 1,169 Accrued interest (184) (39) Accrued payroll and payroll taxes (1,603) 2,510 Deferred revenue - (1,000) Net Cash Provided by Operating Activities 7,400 74,415 CASH FLOWS FROM INVESTING ACTIVITIES Principal collected on loans receivable 188, ,230 New loans made (198,000) (379,920) Net Cash Provided by (Used in) Investing Activities (9,692) 154,310 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowing - 129,500 Principal payments on notes payable (49,821) (49,646) Net Cash Provided by (Used in) Financing Activities (49,821) 79,854 NET CHANGE IN CASH (52,113) 308,579 CASH, Beginning of year 1,071, ,639 CASH, End of year $ 1,019,105 $ 1,071,218 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for interest $ 12,155 $ 12,334 The accompanying notes are an integral part of the financial statements

66 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2015 AND 2014 NATURE OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of the Organization Columbia Pacific Economic Development District is a non-profit located in Northwest Oregon and comprises Columbia, Tillamook, Clatsop, and Western Washington counties. The District was created to establish economic development opportunities in small rural communities. Columbia Pacific Economic Development District (CPEDD) is organized for the following objectives: 1) Advocate the economic development interests of the region; 2) Promote coordination, cooperation, and communication among economic development groups and organizations; 3) Provide access to a range of resources including financial incentives for business and industry in the region; 4) Import outside capital into the region for economic development and public works projects; 5) Conduct research and business development activities in order to identify new economic development opportunities for the region; 6) Provide supporting services for marketing the region for business and industrial expansion; 7) Support and promote capacity building and leadership development for our partners in the District. CPEDD is a public, nonprofit corporation, exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Basis of Accounting The financial statements of the District have been prepared on the accrual basis of accounting. Cash and Cash Equivalents The District considers all highly liquid debt instruments purchased with an original maturity of twelve months or less to be cash equivalents. The District maintains bank accounts at several institutions. Accounts at an institution are insured by the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Association (NCUA) up to legal limits. Cash held in the Intermediate Relending Program and loan loss reserve accounts is restricted for use in the Columbia Pacific Economic Development District Intermediary Relending Program, and is required to be accounted for separately. Loans Receivable The collectability of notes is reviewed periodically by management and allowances for amounts not considered collectable are set. Furniture and Equipment Furniture and equipment is stated at cost, if purchased, or, if donated, at fair market value as of the date of gift. It is the District s policy to capitalize expenses for such items that have a value greater than $2,500. Depreciation is computed on the straight-line method over the estimated useful lives of the assets

67 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) NOTES TO FINANCIAL STATEMENTS (Continued) YEARS ENDED SEPTEMBER 30, 2015 AND 2014 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue Recognition Grant and contract awards received in advance of the period in which they will be utilized are reflected as deferred. Interest income from notes receivable is recognized when earned, which is over the term of the loan as payments are made. 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; disclosure of contingent assets and liabilities as of the financial statement date; and the amounts of revenue and expenses during the reporting period. Specific estimates required are loan loss reserves. Actual results may differ from those estimates. Income Taxes The District has qualified as an organization whose activities, related to its nonprofit status, are exempt from income tax under Section 501(c)(3) of the Internal Revenue Code; therefore, no provision has been made for income taxes in these financial statements. The District follows Accounting Standards Codification (ASC) 740, Accounting for Uncertainty in Income Taxes. Disclosure is not required of a loss contingency involving an unasserted claim or assessment when there has been no manifestation by a potential claimant of an awareness of a possible claim or assessment unless it is considered probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable. As of September 30, 2015, the District has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements based on this guidance. The District s federal and state income tax returns are subject to possible examination by the taxing authorities until the expiration of the related statutes of limitations on their tax returns. In general, the federal and state income tax returns have a three year statute of limitations. LOANS RECEIVABLE The U.S.D.A. Rural Business Cooperative Services (USDA) has awarded loans totaling $2,460,000 to Columbia Pacific Economic Development District under the Intermediary Relending Program which is re-loaned to eligible small business borrowers. Six loans totaling $632,373 were financed as of September 30, In addition, the District was awarded Rural Business Enterprise Grant (RBEG) totaling $598,999 to provide loans to eligible small business borrowers. Four loans totaling $334,315 were financed as of September 30, In the event of a loan failure, the District maintains a loan loss reserve account for the Intermediary Relending Program. As of September 30, 2015, the loan loss reserve balance was $37,942. Loans receivable consist of loans made in the amounts of $48,000 to $250,000. Interest rates vary from 3.65% to 6.75%. Management uses the specific identification method when accounting for bad debts. At September 30, 2015 it was determined by management that an allowance for doubtful accounts of $37,942 was adequate. Amounts are due as follows: - 8 -

68 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) NOTES TO FINANCIAL STATEMENTS (Continued) YEARS ENDED SEPTEMBER 30, 2015 AND 2014 LOANS RECEIVABLE (Continued) For the Year Ending September 30, 2016 $ 221, , , , ,325 Thereafter 308, ,688 Less allowance for doubtful accounts (37,942) $ 928,746 FURNITURE AND EQUIPMENT Equipment $ 5,260 $ 5,260 Office furniture ,436 5,436 Less accumulated depreciation (5,436) (5,436) $ - $

69 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) NOTES TO FINANCIAL STATEMENTS (Continued) YEARS ENDED SEPTEMBER 30, 2015 AND 2014 NOTES PAYABLE CPEDD received a direct loan of $400,000 from the USDA under the Intermediary Relending Program. Interest is at a rate of 1.00 percent. Annual payments of $16,980, are required, including interest The loan is secured by all accounts and notes receivable arising from the Intermediary Relending Fund, all funds held in the Intermediary Relending Fund and all funds held in the loan loss reserve fund, and is due December 11, $ 292,336 $ 306,278 CPEDD received a direct loan of $400,000 from the USDA under the Intermediary Relending Program. Interest is at a rate of 1.00 percent. Annual payments of $16,980 are required, including interest. The loan is secured by all accounts and notes receivable arising from the Intermediary Relending Fund and all funds held in the loan loss reserve fund, and is due April 6, , ,718 CPEDD received a direct loan of $660,000 from the USDA under the Intermediary Relending Program. Interest is at a rate of 1.00 percent. Annual payments of $28,017 are required, including interest. The loan is secured by all accounts and notes receivable arising from the Intermediary Relending Fund and all funds held in the loan loss reserve fund, and is due April 6, , ,200 Total $ 1,167,375 $ 1,217,196 Notes payable maturities outstanding are as follows: Year Ending September 30, 2016 $ 51, , , , ,773 Thereafter 903,785 $ 1,167,

70 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) NOTES TO FINANCIAL STATEMENTS (Continued) YEARS ENDED SEPTEMBER 30, 2015 AND 2014 SUBSEQUENT EVENTS Management has evaluated subsequent events through January 20, 2015, the date on which the financial statements were available to be issued. Management indicated that there were two events occurring subsequent to year-end that should be disclosed. On October 16, 2015 the District issued one new RBEG loan in the amount of $50,000. Additionally, November 6, 2015, the Pelican Pub paid off the RBEG loan that was outstanding in the amount of $126,917 as of September 30,

71 OTHER INFORMATION

72 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) COMBINING STATEMENTS OF FINANCIAL POSITION SEPTEMBER 30, 2015 AND Rural Business Intermediary Enterprise General Relending Grant Fund Fund Loan Fund Totals ASSETS Cash and investments $ 33,419 $ 672,006 $ 313,680 $ 1,019,105 Accounts receivable 12, ,261 Loans receivable (less allowance for bad debts of $37,942 and $35,468 respectively) - 594, , ,746 Interest receivable - 3,519 5,916 9,435 Due from other funds ,996 29,996 Prepaid expenses 1, ,346 Total Assets $ 47,573 $ 1,270,788 $ 684,528 $ 2,002,889 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ - $ - $ - $ - Accrued interest - 4,373-4,373 Accrued payroll and payroll taxes 6, ,745 Notes payable - 1,167,375-1,167,375 Due to other funds 29, ,996 Total Liabilities 36,741 1,171,748-1,208,489 Net Assets Restricted - IRP loan loss reserve - 37,942-37,942 Unrestricted 10,832 61, , ,458 Total Net Assets 10,832 99, , ,400 Total Liabilities and Net Assets $ 47,573 $ 1,270,788 $ 684,528 $ 2,002,889

73 General Fund Intermediary Relending Fund 2014 Rural Business Enterprise Grant Loan Fund Totals $ 69,323 $ 737,459 $ 264,436 $ 1,071,218 4, , , , ,528-2,893 3,370 6, ,996 39, ,271 $ 74,544 $ 1,296,721 $ 674,318 $ 2,045,583 $ 783 $ 86 $ 300 $ 1,169-4,557-4,557 8, ,348-1,217,196-1,217,196 39, ,996 49,128 1,221, ,271,267-35,468-35,468 25,416 39, , ,848 25,416 74, , ,316 $ 74,544 $ 1,296,721 $ 674,318 $ 2,045,

74 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) COMBINING STATEMENTS OF ACTIVITIES YEARS ENDED SEPTEMBER 30, 2015 AND Rural Business Intermediary Enterprise General Relending Grant Fund Fund Loan Fund Totals REVENUES Grants and contracts $ 204,910 $ 5,000 $ - $ 209,910 Interest income 45 41,059 22,860 63,964 Membership dues 18, ,500 Loan fees - 3, ,054 Other 5,540 5,195 1,231 11,966 Total Revenues 228,995 54,348 25, ,394 EXPENSES Administrative expenses 243,579 27,716 14, ,836 Bad debt expense - 2,474-2,474 Total Expenses 243,579 30,190 14, ,310 CHANGE IN NET ASSETS (14,584) 24,158 10,510 20,084 NET ASSETS, Beginning of year 25,416 74, , ,316 NET ASSETS, End of year $ 10,832 $ 99,040 $ 684,528 $ 794,400

75 General Fund Intermediary Relending Fund 2014 Rural Business Enterprise Grant Loan Fund Totals $ 214,817 $ 10,500 $ - $ 225, ,051 15,767 62,896 19, ,000-1,250 1,032 2,282 2,972 5,626 1,364 9, ,867 64,427 18, , ,698 22,520 17, ,960 - (12,796) - (12,796) 238,698 9,724 17, ,164 (1,831) 54, ,293 27,247 20, , ,023 $ 25,416 $ 74,882 $ 674,018 $ 774,

76 COLUMBIA PACIFIC ECONOMIC DEVELOPMENT DISTRICT (A Nonprofit Corporation) COMBINING STATEMENTS OF FUNCTIONAL EXPENSES YEARS ENDED SEPTEMBER 30, 2015 AND Rural Business General Intermediary Relending Enterprise Grant Fund Fund Loan Fund Totals Personnel costs $ 211,295 $ 5,881 $ 5,107 $ 222,283 Bad debt expense (recovery) - 2,474-2,474 Bank fees Computer and internet 2, ,882 Continuing education Dues and subscriptions 3, ,476 Insurance ,087 Interest - 11,971-11,971 Loan fees Miscellaneous expense Office costs 5, ,467 Phone 2, ,785 Professional fees 7,552 7,791 7,995 23,337 Rent 4, ,400 Travel 5, ,324 $ 243,579 $ 30,190 $ 14,541 $ 288,310

77 2014 Rural Business General Intermediary Relending Enterprise Grant Fund Fund Loan Fund Totals $ 201,399 $ 2,323 $ 4,471 $ 208,193 - (12,796) - (12,796) , ,218 3,675 1, ,607 2, ,205 1, ,949-12,294-12, , ,679 1, ,145 14,899 5,173 9,751 29,823 4, ,296 5, ,351 $ 238,698 $ 9,724 $ 17,742 $ 266,

78 475 Cottage Street NE, Suite 200, Salem, Oregon (503) 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 Board of Directors Columbia Pacific Economic Development District St. Helens, Oregon We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Columbia Pacific Economic Development District (a nonprofit organization), which comprise the statement of financial position as of September 30, 2015, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated January 20, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District 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 District s internal control. Accordingly, we do not express an opinion on the effectiveness of the District 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 District 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether the District 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

79 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 District 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 District s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. CERTIFIED PUBLIC ACCOUNTANTS January 20,

80 475 Cottage Street NE, Suite 200, Salem, Oregon (503) INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Board of Directors Columbia Pacific Economic Development District St. Helens, Oregon Report on Compliance for Each Major Federal Program We have audited Columbia Pacific Economic Development District s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the District s major federal programs for the year ended September 30, The District s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of the District s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the District s compliance. Opinion on Each Major Federal Program In our opinion, Columbia Pacific Economic Development District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30,