East Baton Rouge Truancy Assessment, Inc. Baton Rouge, Louisiana June 30, 2017

Transcription

1 Baton Rouge, Louisiana June 30, 2017

2 Table of Contents Independent Auditor's Report Financial Statements Statements of Financial Position Statements of Activities Statements of Functional Expenses Statements of Cash Flows Notes to Financial Statements Supplemental)' Information Schedule of Compensation, Benefits, and Other Payments to Agency Head or Chief Executive Officer 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 Schedule of Findings and Responses Schedule of Prior Year Findings and Responses Page 3 Page 5 Page 6 Page 7 Page 9 Page 10 Page 16 Page 17 Page 19 Page 21 2

3 HAWTHORN WAYMOUTH & CARROLL, L.L.P. Certified Public Accountants Independent Auditor's Report To the Board of Directors East Baton Rouge Truancy Assessment, Inc. Baton Rouge, Louisiana Report on the Financial Statements We have audited the accompanying financial statements of East Baton Rouge Truancy Assessment, Inc. (a nonprofit organization), which comprise the statements of financial position as of June 30, 2017 and 2016, 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 fmancial 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 fmancial 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 entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion United Plaza Blvd., Suite 200 Baton Rouge, LA Tel: Fax:

4 Opinion In our opinion, the fmancial statements referred to above present fairly, in all material respects, the fmancial position of East Baton Rouge Truancy Assessment, Inc. as of June 30, 2017 and 2016, 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 Our audit was conducted for the purpose of forming an opm10n on the fmancial statements as a whole. The accompanying schedule of compensation, benefits, and other payments to agency head or chief executive officer is presented for purposes of additional analysis and is not a required part of the fmancial 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 fmancial statements and certain additional procedures, including comparing and reconciling such infornmtion 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 fmancial statements as a whole. Reporting Required by Government Auditing Standards In accordance with Government Auditing Standard~, we have also issued our report dated December 14, 2017, on our consideration of East Baton Rouge Truancy Assessment, Inc.'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 Standard~ in considering East Baton Rouge Truancy Assessment, Inc.'s internal control over fmancial reporting and compliance. #fu,tdtn, Jhy"''t/vfi::)lf'~ K'ot:l' December 14,2017-4

5 Statements of Financial Position June 30, 2017 and 2016 Assets Current Assets Cash and cash equivalents Accounts and other receivables Prepaid expenses $ 241, ,757 7,541 $ 462, ,895 13,309 Total Current assets 361, ,634 Property and Equipment, net 497, ,639 Total Assets $ 859,233 $ I,259,273 Current Liabilities Line of credit Accounts payable Accrued liabilities Liabilities and Net Assets $ I, ,537 38,442 $ 3, ,617 54,936 Total Current liabilities 165, ,448 Net Assets Unrestricted 694,062 1,041,825 Total Liabilities and Net Assets $ 859,233 $ I,259,273 The accompanying notes are an integral part of these financial statements. 5

6 Statements of Activities Years Ended June 30,2017 and (Restated) Revenue and Other Support Grants and contributions $ 824,921 $ 794,933 In-kind contributions 584, ,300 Rent and utilities 93, ,657 Miscellaneous 3,778 39,885 Interest Total revenue and other suppoti 1,506,815 2,028,832 Expenses Program Family and Youth Service Center 1,219,381 I,259,279 Truancy Assessment Service Center 320, ,873 Total program 1,539,668 1,615,152 Management and general 314, ,032 Total expenses 1,854,578 1,870,184 Change in Unrestricted Net Assets, as restated for 2016 (347,763) 158,648 Unrestricted Net Assets, beginning of year 1,041, ,177 Unrestricted Net Assets, end ofyear $ 694,062 $ 1,041,825 The accompanying notes are an integral part of these financial statements. 6

7 Statement of Functional Expenses Year Ended June 30,2017 Total FYSC TASC Program Management and General Total Expenses Accounting Advertising Bad debts Computer Contract labor Depreciation Equipment Insurance Interest Meals and ente11ainment Miscellaneous Occupancy, in-kind Office Payroll taxes Repairs and maintenance Salaries and wages Supplies Travel Utilities $ 8,183 $ 1,286 $ 9, ,493 63,493 99,456 99,456 58,312 58,312 3,051 3,051 7,758 2,824 10,582 1,182 1, ,490 21, ,874 4, ,488 23,312 16,240 39, , , , , ,635 3,808 3,808 3,868 6,366 10, , ,149 $ 28,407 50,978 6,479 31, ,567 48,674 13,466 6, , ,017 $ 37, ,978 63,493 99,456 64,791 3,051 42, ' , ,548 17,954 46, , ,772 4,231 10, ,166 Total expenses $I,219,381 $ 320,287 $ 1,539,668 $ 314,910 $ 1,854,578 The accompanying notes are an integral part of these financial statements. 7

8 Statement of Functional Expenses Year Ended June 30, 2016 Total FYSC TASC Program Management and General Total Expenses Accounting Advetiising Bad debts Community outreach Computer Contract labor Depreciation Equipment Insurance Interest Meals and entertainment Miscellaneous Occupancy, in-kind Office Payroll taxes Repairs and maintenance Salaries and wages Supplies Travel Utilities $ 8,176 $ 1,050 $ 9, ,545 1,545 79,850 79,850 95,298 95,298 56,525 3,854 60,379 I,618 2,545 4,163 4,559 2,306 6,865 1,444 1,444 2,378 2, ,250 21, ,634 7, ,400 21,522 18,438 39, , , , , ,038 3,164 3, ,328 5, , ,082 $ 27,679 2,853 6,709 20, ,959 23,114 7,052 I 03, ,898 $ 36, ,853 1,545 79,850 95,298 67,088 4,163 27, ,444 3, ,593 31,514 47, , ,986 3,516 5, ,980 Total expenses $ 1,259,279 $ 355,873 $1,615,152 $ 255,032 $1,870,184 The accompanying notes are an integral part of these financial statements. 8

9 Statements of Cash Flows Years Ended June 30, 2017 and 2016 Cash Flows from Operating Activities Change in net assets $ Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation and amortization Bad debts (Increase) Decrease in assets: Accounts and other receivables Prepaid expenses Increase (Decrease) in liabilities: Accounts payable Accrued liabilities Net cash provided by (used in) operating activities Cash Flows from Investing Activities Purchase of property and equipment Net cash used in investing activities Cash Flows from Financing Activities Change in line of credit Net cash used in financing activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, beginning of year Cash and Cash Equivalents, end of year $ 2017 (347,763) 64,791 50,978 57,160 5,768 (33,080) ( 16,494) (218,640) (2,703) (2,703) (221,343) 462, , $ 158,648 67,088 2,853 (82,259) (6,517) (5,423) 8, ,121 (226,618) (226,618) (83,497) 545,927 $ 462,430 The accompanying notes are an integral part of these financial statements. 9

10 Notes to Financial Statements June 30,2017 Note 1-Nature of Operations East Baton Rouge Truancy Assessment, Inc. (the "Organization") is a Louisiana non-profit organization, incorporated on February 21, 2001, operating in East Baton Rouge Parish, for the purpose of identifying children who have exhibited truant tendencies, assessing the causal problems for these tendencies, and providing services or referring the identified children and their families to necessary services to eliminate or alleviate the causal problems for the truant behavior. The Organization operates the following programs: Truancy Assessment Service Center (TASC) and Family and Youth Service Center (FYSC). TASC- Designed to provide early identification, rapid assessment, and intensive truancy reduction services to at-risk students in grades kindergarten through fifth grade. The TASC program targets children that are most in need of services as well as "high risk" schools. TASC is funded by the East Baton Rouge Parish School Board. FYSC- Designed to offer services for youth and families in a convenient and caring environment. FYSC is funded by the East Baton Rouge Parish School Board, City-Parish, Sheriffs Office, District Attomey's Office, and private grants. Note 2-Summary of Significant Accounting Policies A. Basis of Accounting and Presentation The accompanying fmancial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted. Unrestricted net assets include those net assets whose use by the Organization is not restricted by donors, even though their use may be limited in other respects, such as by contract or board designation. Temporarily restricted net assets are those net assets whose use by the Organization has been limited by donors (a) to later periods of time or other specific dates or (b) for specified purposes. Permanently restricted net assets are those net assets received with donor-imposed restrictions limiting the Organization's use of the assets. At June 30, 2017 and 2016, the Organization had no temporarily or permanently restricted net assets. B. 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 disclosure of contingent assets and liabilities at the date of the fmancial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates that were used. 10

11 Notes to Financial Statements June 30, 2017 Note 2-Summary of Significant Accounting Policies (Continued) C. Cash and Cash Equivalents For purposes of the statements of cash flows, the Organization considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. D. Accounts Receivable Accounts receivable are recorded at net realizable value consisting of the carrying amount Jess an allowance for doubtful accounts. The Organization determines its allowance for doubtful accounts based on prior years' experiences and management's analysis of possible bad debts. The Organization uses the specific identification allowance method, charging off receivables on a case-by-case basis. As of June 30, 2017 and 2016, management has deemed all accounts to be fully collectible; therefore, no allowance was established. E. Propertv and Equipment Property and equipment are stated at cost or, if donated, at fair market value at the date of donation. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives of the respective assets: (Equipment (3 to 7 years); Leasehold Improvements (3 to 15 years); Parking Lot (15 years); and Software (5 years). Expenditures for major repairs and improvements in excess of$1,000 that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and minor repairs are charged to expense as incurred. F. Revenue Recognition Contributions received are recorded as increases in unrestricted, temporarily restricted, or permanently restricted net assets, depending on the existence and/or nature of any donor restrictions. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire (that is, when a stipulated time restriction ends or purpose restriction is accomplished) in the reporting period in which revenue is recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a restriction expires, temporarily or permanently restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Grants, which are considered exchange transactions, are recognized as revenue when allowable costs are incnrred to provide the services specified under the terms of the grant agreements. Advances under the grants are recorded as deferred income until such time as they can be recognized as revenue. 11

12 Notes to Financial Statements June 30, 2017 Note 2-Summary of Significant Accounting Policies (Continued) G. Income Taxes The Organization is exempt from federal income taxes under Section 50I(c)(3) of the Internal Revenue Code and has been classified as an entity other than a private foundation within the meaning of Section 509(a). Accordingly, no provision has been made for income taxes. Management has determined that there are no uncertain tax positions that would require recognition in the fmancial statements. If the Organization were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax would be reported as income taxes. Management's conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based on ongoing analysis of tax laws, regulations, and interpretations thereof, as well as other factors. H. Compensated Absences The Organization provides paid time off (PTO) for its employees. Unused PTO, up to a maximum of 80 hours at the end of the fiscal year, may be canied forward. Any unused PTO in excess of 80 hours will be forfeited if not used by the end of the fiscal year. Note 3-Property and Equipment The following is a summary of property and equipment as of June 30: Land Leasehold Improvements Equipment Parking Lot Software Less: accumulated depreciation and amortization 2017 $ 73, ,894 I 72,4I5 52,423 43, ,8I3 394,965 $ 497, $ 73, ,894 I72,4I5 52,423 43, ,8I3 330,174 $ 562,639 Note 4-Line of Credit The Organization has a $20,000 revolving line of credit with a bank, of which $I,I92 and $3,895 were drawn as of June 30, 2017 and 20 I 6, respectively, bearing interest at 6.00% per annum, unsecured. I2

13 Notes to Financial Statements.June 30, 2017 Note 5-In-Kind Contributions The East Baton Rouge School System and the Sheriffs Office each provide an employee on an in-kind basis. The estimated value of the in-kind contribution of the employees recognized in the statements of activities is $105,187 for the years ended June 30, 20 I 7 and 20 I 6 with the related in-kind expenses included in salaries. The Department of Education provides office space on an in-kind basis. The estimated value of the in-kind contribution of the facilities' rent recognized in the statements of activities is $479,548 and $538,113 for the years ended June 30, 2017 and 2016, respectively. The related in-kind expenses included in occupancy in-kind on the statements of activities is $479,548 and $479,593 for the years ended June 30, 2017 and 2016, respectively, and $58,520 capitalized to leasehold improvements as of June 30,2016. Note 6-0perating Leases The Organization leases a portion of the facilities that it receives in-kind from the Department of Education to various other entities under separate, one-year, noncancelable operating leases. As of June 30, 2017, all leases were on a month-to-month basis. Note 7-Board of Directors Compensation The Board of Directors is a voluntary board; therefore, no compensation or per diem has been paid to any director. Note 8-Contingencies The Organization participates in state grant programs, which are governed by various rules and regulations. Costs charged to the grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the Organization has not complied with the rules and regulations governing the grants, refunds of any money received and the collectability of any related receivable at year-end may be impaired. In management's opinion, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the grants; therefore, no provision has been recorded in the accompanying fmancial statements for such contingencies. Any costs disallowed would be recognized in the period agreed upon by the grantor agency and the Organization. Note 9-Concentrations The Organization receives revenue through grants and contracts administered by the State of Louisiana. The grant and contract amounts are appropriated each year by the state government. lf significant budget cuts are made at the state level, the amount of funds received by the Organization could be reduced significantly by an amount that could adversely impact its operations. Management is not aware of any actions that will adversely affect the amount of grants and contracts the Organization will receive in the next fiscal year. At various times during the year, cash on deposit with one banking institution exceeded the amount insured by the Federal Deposit Insurance Corporation. Management monitors the fmancial condition of the fmancial institution on a regular basis, along with their cash and cash equivalent balances to minimize this potential risk. 13

14 Notes to Financial Statements June 30, 2017 Note 10-Prior Period Adjustment The accompanying 2016 fmancial statements have been restated to correct an error in accounts payable. The effect of the restatement was to decrease unrestricted net assets and the change in unrestricted net assets for 2016 by $11,939. Note 11-Subsequent Events The Organization evaluated all subsequent events through December 14, 2017, the date the financial statements were available to be issued. As a result, the Organization noted no subsequent events that required adjustment to, or disclosure in, these fmancial statements. 14

15 Supplementary Information 15

16 Schedule of Compensation, Benefits, and Other Payments to Agency Head or Chief Executive Officer Year Ended June 30, 2017 Agency Head Name:.Jennie Ponder, Executive Director Salary Benefits - insurance Benefits -retirement Benefits - cell phone Car allowance Vehicle provided by agency Per diem Reimbursements Travel Registration fees Conference travel Continuing professional education fees Housing Unvouchered expenses $ 85,

17 HAWTHORN WAYMOUTH & CARROLL,L.L.P. 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 To the Board of Directors East Baton Rouge Truancy Assessment, Inc. Baton Rouge, Louisiana 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 East Baton Rouge Truancy Assessment, Inc. (a nonprofit organization), which comprise the statement of financial position as of June 30, 2017 and 2016, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements, and have issued our report thereon dated December 14, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered East Baton Rouge Truancy Assessment, Inc.'s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of East Baton Rouge Truancy Assessment, Inc.'s internal control. Accordingly, we do not express an opinion on the effectiveness of East Baton Rouge Truancy Assessment, Inc.'s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and responses, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule offmdings and responses to be material weaknesses ( and ). A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying schedule of findings and responses to be significant deficiencies ( , , , , and ) United Plaza Blvd., Suite 200 Baton Rouge, LA Tel: Fax:

18 Compliance and Other Matters As part of obtaining reasonable assurance about whether East Baton Rouge Truancy Assessment, Inc.'s fmancial 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 fmancial 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. East Baton Rouge Truancy Assessment, Inc.'s Response to Findings East Baton Rouge Truancy Assessment, Inc.'s responses to the findings identified in our audit are described in the accompanying schedule of findings and responses. East Baton Rouge Truancy Assessment, Inc.'s responses were not subjected to the auditing procedures applied in the audit of the fmancial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of intemal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization's intemal control and compliance. Accordingly, this communication is not suitable for any other purpose. ~~~W?, ~f!j,4 1f2rtt, /KI" December 14, J 18

19 Schedule of Findings and Responses Year Ended June 30, 2017 Findings - Financial Statement Audit Significant Deficiencies : Segregation of Duties Condition: Due to the relatively small size of the Organization, ideal segregation of duties cannot be achieved. This is a repeat finding from the prior year. Criteria: The Organization should separate responsibilities for authorizing transactions, recording those transactions, and the custody of assets. Cause: The size of the Organization does not permit proper segregation of duties. Effect: The lack of segregation of duties increases the risk of fraud related to misappropriation of assets, financial statement misstatements, or both. Auditor's Recommendation: While we recognize it may not be cost effective to justify implementing a full segregation of duties for an extensive system of internal control in all areas, we believe it is important that management and those charged with governance are aware that some weaknesses exist and that they should continue to apply diligent oversight and monitoring activities. Management's Response: The organization has implemented all suggested safeguards. Debit card purchases are approved by the Director and a Board member and all require receipts along with a description of the item/s purchased as well as where/how each are used. Bank reconciliations are performed by a CPA on a monthly basis, and the reports are provided to Board members at each regular monthly board meeting. Checks in excess of $500 require dual signatures. The check book along with the ledger is kept separate and locked in a drawer in the Director's office. Management will continue to work more efficiently and diligently with the Board in providing documents to assist in improving oversight and monitoring of all activities : Untimely Bank Reconciliations Condition: The bank transactions for July 2016 through March 2017 were included in the April 2017 bank reconciliation, which was performed in June 2017, and the May 2017 and June 2017 bank statements were reconciled in November Criteria: Monthly bank reconciliations lead to more accurate records and quicker detection of errors in account balances, thus making them a vital part of the internal control process and essential to the Organization's financial system. 19

20 Schedule of Findings and Responses Year Ended June 30, 2017 Findings -Financial Statement Audit (Continued) Significant Deficiencies (Continued) : Untimely Bank Reconciliations (Continued) Cause: Management is not reviewing the bank reconciliations on a monthly basis. Effect: Failure to conduct timely bank reconciliations can result in inaccurate general ledger cash balance amounts not being detected and can contribute to erroneous cash flow and budgetary information. Bank errors may also go undetected. Auditor's Recommendation: We recommend that bank reconciliations be performed on all bank accounts on a monthly basis and should be reviewed and approved by management. Management's Response: Bank reconciliations will be done on a monthly basis. Management will monitor, review, and approve the completed reconciliations monthly : Duplicate Payment of Payroll Condition: Upon review of accrued payroll, we noted there was an overlap of pay periods. Employees were paid for the period of June 24 to July 7, 2017 and for the period of June 30 to July 15, Criteria: Employees should not be paid for the same day twice. Cause: Management switched the pay frequency from bi-weekly to bi-monthly at the end of the fiscal year for budgetary purposes. Upon doing so, they began the first pay period of fiscal year 2018 at June 30, which overlapped the previous pay period by I week Effect: Employees are being overpaid. Auditor's Recommendation: We recommend that management review payroll to determine that all parameters are proper before disbursing funds. Management's Response: Management will review payroll information prior to disbursement of funds to ensure that payroll is correct and proper. 20

21 Schedule of Findings and Responses Year Ended June 30, 2017 Findings -Financial Statement Audit (Continued) Significant Deficiencies (Continued) : Duplicate Payment of Invoices Condition: Criteria: Cause: Effect: An invoice for professional fees was paid twice. Internal controls should be in place to ensure that invoices are only paid once. Management is not checking the cash disbursements ledger to determine if invoices had already Invoices are being overpaid. Auditor's Recommendation: We recommend that management review the cash disbursements ledger and check the invoice number from the paper copy to the accounting system to determine if an invoice has already been paid before disbursing funds. Management's Response: Management will review the cash disbursements ledger and check the invoice number from the paper copy of each invoice against the documentation within the accounting system prior to paying an invoice. All hard copies of invoices from each vendor will be filed in a numerical order based upon the invoice number. These will be reviewed monthly to ensure that any outstanding and/or missing invoices are addressed in a timely fashion to avoid receiving duplicate invoices : Inaccurate Accounting Records Condition: Criteria: Cause: Effect: The payee field for certain payroll transactions did not match the payee name posted to the general ledger. Accurate accounting records should be maintained. Disbursements were not consistently monitored. The entity's accounting records are inaccurate. Auditor's Recommendation: We recommend that accounting records be reconciled to disbursements and supporting documentation to ensure the general ledger is complete and accurate. 21

22 Schedule of Findings and Responses Year Ended June 30, 2017 Findings -Financial Statement Audit (Continued) Significant Deficiencies (Continued) : Inaccurate Accounting Records (Continued) Management's Response: Management will reconcile all accounting actions on a monthly basis to ensure that the general ledger is complete and accurate and that all disbursements are reconciled and that supporting documentation for the disbursements are also complete and accurate. Material Weaknesses : Recognition of Accounts Receivable Condition: The grant receivable account is not being reviewed, and the appropriate transactions are not being made to the general ledger account balance. Criteria: To ensure the grant receivable account is properly reflected on the financial statements, management should review the general ledger to determine if transactions are being properly posted to the account. Cause: Management is not reviewing the grant receivable general ledger account. Effect: Material adjustments to the bridge loan payable account were required. Auditor's Recommendation: We recommend that management periodically review the grant receivable account to ensure that transactions are being properly classified to the general ledger account balance. Management's Response: Management will review the grant receivable account on a monthly basis along with other accounting oversight monitoring to ensure that all transactions are being properly classified : Recognition of Loan Payable Condition: Upon review of the bridge loan payable account and inquiry of management, we noted that the payable account is not being reviewed and the appropriate transactions are not being posted to the general ledger. Criteria: To ensure the bridge loan payable account is properly reflected on the financial statements, the general ledger should be reviewed to determine that transactions are being properly recorded. 22

23 Schedule of Findings and Responses Year Ended June 30, 2017 Findings -Financial Statement Audit (Continued) Material Weakness (Continued) : Recognition of Loan Payable (Continued) Cause: Management is not reviewing the bridge loan payable general ledger account. Effect: Material adjustments to the bridge loan payable account were required. Auditor's Recommendation: We recommend that the bridge loan payable account be received and reconciled to ensure that transactions are being properly recorded in the general ledger. Management's Response: Management will review and reconcile any loan payable accounts to ensure that the transactions are properly recorded in the general ledger 23

24 Schedule of Prior Year Findings and Responses Year Ended June 30,2017 Findings- Financial Statement Audit Significant Deficiency I: Segregation of Duties Condition: Criteria: Cause: Effect: Due to the small size of the Organization, ideal segregation of duties cannot be achieved. This is a repeat finding from the prior year. The Organization should separate responsibilities for authorizing transactions, recording those transactions, and the custody of assets. The size of the Organization does not permit proper segregation of duties. The lack of segregation of duties increases the risk of fraud related to misappropriation of assets, financial statement misstatements, or both. Auditor's Recommendation: While we recognize it may not be cost effective to justify implementing a full segregation of duties for an extensive system of internal control in all areas, we believe it is important that management and those charged with governance are aware that some weaknesses exist and that they should continue to apply diligent oversight and monitoring activities. Management's Corrective Action Plan: The Organization has implemented all suggested safeguards. Debit card purchases are approved by the director and a Board member. Bank reconciliations are performed by a bookkeeper on a monthly basis, and the reports are provided to Board members at each monthly Board meeting. Checks in excess of $500 require dual signatures. Management will continue to work more efficiently and diligently with the Board in providing information and documents to assist in improving oversight and monitoring of all activities. Status: Finding repeats as I. 24

25 Schedule of Prior Year Findings and Responses Year Ended June 30,2017 Findings - Financial Statement Audit (Continued) Material Weakness 20!6-002: Grant Income Condition: Criteria: Cause: Effect: The Organization did not properly bill grant income or record that grant income to the general ledger. Management should submit timely grant reimbursement requests, record grant revenue, and match revenue with the related grant expenditures. Improper internal control over grant income. The Organization's financial statements did not properly reflect income prior to a material audit adjustment. Since the Organization did not submit timely reimbursement requests to the State, cash flow for the Organization was affected. Auditor's Recommendation: Management should submit grant reimbursement requests in a timely manner and record related grant income in the period earned. Management's Corrective Action Plan: There has been difficulty related to personnel changes having a major impact on the reporting and filing for reimbursement for the BRAVE grant. This has now been addressed, and the Organization has submitted the request for reimbursement for the grant and has a set criteria to submit future reimbursement requests in a timely manner. Status: Finding cleared to our satisfaction. 25

26 HAWTHORN WAYMOUTH & CARROLL,t.t.P. Certified Public Accountants Independent A<;countant's Report on Applying Agreed-upon Procedures To the Board of Directors of East Baton Rouge Truancy Assessment, Inc. and the Louisiana Legislative Auditor: We have performed the procedures enumerated below, which were agreed to by East Baton Rouge Truancy Assessment, Inc. (Entity) and the Louisiana Legislative Auditor (LLA) on the control and compliance areas identified in the LLA's Statewide Agreed-Upon Procedures (SAUPs) for the fiscal period July 1, 2016 through June 30, The Entity's management is responsible for those control and compliance areas identified in the SAUPs. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and applicable standards of Government Auditing Standards. The sufficiency of these procedures is solely the responsibility of the specified users of this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures and associated findings are as follows: Written Policies and Procedures 1. Obtain the Entity's written policies and procedures and report whether those written policies and procedures address each of the following financial/business functions (or rep01t that the Entity does not have any written policies and procedures), as applicable: a) Budgeting, including preparing, adopting, monitoring, and amending the budget. b) Purchasing, including (1) how purchases are initiated; (2) how vendors are added to the vendor list; (3) the preparation and approval process of purchase requisitions and purchase orders; ( 4) controls to ensure compliance with the public bid law; and (5) documentation required to be maintained for all bids and price quotes. c) Disbursements, including processing, reviewing, and approving. d) Receipts, including receiving, recording, and preparing deposits. e) PayrolVPersonnel, including (1) payroll processing, and (2) reviewing and approving time and attendance records, including leave and overtime worked. f) Contracting, including (1) types of services requiring written contracts, (2) standard terms and conditions, (3) legal review, (4) approval process, and (5) monitoring process. g) Credit Cards (and debit cards, fuel cards, P-Cards, if applicable), including (I) how cards are to be controlled, (2) allowable business uses, (3) documentation requirements, (4) required approvers, and (5) monitoring card usage. h) Travel and expense reimbursement, including (1) allowable expenses, (2) dollar thresholds by category of expense, (3) documentation requirements, and ( 4) required approvers. i) Ethics, including (1) the prohibitions as defined in Louisiana Revised Statute 42: , (2) actions to be taken if an ethics violation takes place, (3) system to monitor possible ethics 8545 United Plaza Blvd., Suite 200 Baton Rouge, LA Tel: Fax:

27 violations, and (4) requirement that all employees, including elected officials, annually attest through signature verification that they have read the Entity's ethics policy. Note: Ethics requirements are not applicable to non profits. j) Debt Service, including (I) debt issuance approval, (2) EMMA reporting requirements, (3) debt reserve requirements, and (4) debt service requirements. Management was unable to provide the requested infonnation. Board (or Finance Committee, if applicable) 2. Obtain and review the board/committee minutes for the fiscal period, and: a) Report whether the managing board met (with a quorum) at least monthly, or on a frequency in accordance with the board's enabling legislation, charter, or other equivalent document. Management provided the requested information. We found that the Board of Directors met in accordance with its planned schedule of meetings. b) Report whether the minutes referenced or included monthly budget-to-actual comparisons on the General Fund and any additional funds identified as major funds in the Entity's prior audit (GAAP-basis). ~ If the budget-to-actual comparisons show that management was deficit spending during the fiscal period, report whether there is a formal/written plan to eliminate the deficit spending for those Entities with a fund balance deficit. If there is a formal/written plan, report whether the meeting minutes for at least one board meeting during the fiscal period reflect that the board is monitoring the plan. We found that the minutes referenced monthly budget-to-actual comparisons. The budget-toactual comparisons did not indicate that management was deficit spending during the fiscal period. c) Report whether the minutes referenced or included non-budgetary financial information (e.g. approval of contracts and disbursements) for at least one meeting during the fiscal period. We found that the minutes included non-budgetary financial information for at least one meeting during the fiscal period. Bank Reconciliations 3. Obtain a listing of client bank accounts from management and management's representation that the listing is complete. Management provided the requested information. 4. Using the listing provided by management, select a minimum of five of the Entity's bank accounts or one-third of the bank accounts on a three year rotating basis if more than 15 accounts. For each of the bank accounts selected, obtain bank statements and reconciliations for all months in the fiscal period and report whether: a) Bank reconciliations have been prepared; b) Bank reconciliations include evidence that a member of management or a board member (with no involvement in the transactions associated with the bank account) has reviewed each bank reconciliation; and

28 c) If applicable, management has documentation reflecting that it has researched reconciling items that have been outstanding for more than 6 months as of the end of the fiscal period. We found that reconciliations were not prepared on a monthly basis, had no evidence of management or board approval, and had no documentation of research regarding outstanding items older than 6 months. Collections 5. Obtain a listing of cash/check/money order (cash) collection locations and management's representation that the listing is complete. Management provided the requested information. 6. Using the listing provided by management, select a minimum of five of the Entity's cash collection locations or one-third of the collection locations on a three year rotating basis if more than 15 locations. For each cash collection location selected: a) Obtain existing written documentation (e.g. insurance policy, policy manual, job description) and rep011 whether each person responsible for collecting cash is (I) bonded, (2) not responsible for depositing the cash in the bank, recording the related transaction, or reconciling the related bank account (report if there are compensating controls performed by an outside party), and (3) not required to share the same cash register or drawer with another employee. Management was unable to provide the requested information. b) Obtain existing written documentation (e.g. sequentially numbered receipts, system report, reconciliation worksheets, policy manual) and report whether the Entity has a formal process to reconcile cash collections to the general ledger and/or subsidiary ledgers, by revenue source and/or agency fund additions, by a person who is not responsible for cash collections in the cash collection location selected. Management was unable to provide the requested information. c) Select the highest (dollar) week of cash collections from the general ledger or other accounting records during the fiscal period and: )> Using Entity collection documentation, deposit slips, and bank statements, trace daily collections to the deposit date on the corresponding bank statement and report whether the deposits were made within one day of collection. If deposits were not made within one day of collection, report the number of days from receipt to deposit for each day at each collection location. We found that deposits were made within one day of collection. )> Using sequentially numbered receipts, system reports, or other related collection documentation, verity that daily cash collections are completely supported by documentation and report any exceptions. We found that daily cash collections are completely supported by documentation. 7. Obtain existing written documentation (e.g. policy manual, written procedure) and report whether the Entity has a process specifically defined (identified as such by the Entity) to determine completeness

29 of all collections, including electronic transfers, for each revenue source and agency fund additions (e.g. periodic confirmation with outside patiies, reconciliation to utility billing after cutoff procedures, reconciliation of traffic ticket number sequences, agency fund forfeiture monies confirmation) by a person who is not responsible for collections. Management was unable to provide the requested information. Disbursements- General (excluding card purchases or payments) 8. Obtain a listing of Entity disbursements from management or, alternately, obtain the general ledger and sotilfilter for Entity disbursements. Obtain management's representation that the listing or general ledger population is complete. Management provided the requested information. 9. Using the disbursement population from #8 above, randomly select 25 disbursements (or randomly select disbursements constituting at least one-third of the dollar disbursement population if the Entity had less than 25 transactions during the fiscal period), excluding credit card/debit card/fuel cm d/pcard purchases or payments. Obtain supporting documentation (e.g. purchase requisitions, system screens/logs) for each transaction and repoti whether the suppotiing documentation for each transaction demonstrated that: a) Purchases were initiated using a requisition/purchase order system or an equivalent electronic system that separates initiation from approval functions in the same manner as a requisition/purchase order system. b) Purchase orders, or an electronic equivalent, were approved by a person who did not initiate the purchase. c) Payments for purchases were not processed without (I) an approved requisition and/or purchase order, or electronic equivalent; (2) a receiving repoti showing receipt of goods purchased, or electronic equivalent; and (3) an approved invoice. We found that the Entity does not use a requisition/purchase order system or an equivalent electronic system that separates initiation from the approval functions in the same manner as a requisition/purchase order system. Of the 25 disbursements tested, two were not suppotied by invoices, and none of the disbursements had evidence of approval. 10. Using Entity documentation (e.g. electronic system control documentation, policy manual, written procedure), report whether the person responsible for processing payments is prohibited from adding vendors to the Entity's purchasing/disbursement system. Management was unable to provide the requested information. II. Using Entity documentation (e.g. electronic system control documentation, policy manual, written procedure), repoti whether the persons with signatory authority or who make the final authorization for disbursements have no responsibility for initiating or recording purchases. Management was unable to provide the requested information. 12. Inquire of management and observe whether the supply of unused checks is maintained in a locked location, with access restricted to those persons that do not have signatory authority, and repoti any exceptions. Alternately, if the checks are electronically printed on blank check stock, review Entity