CATHOLIC COMMUNITY SERVICE FINANCIAL STATEMENTS. For the Year Ended June 30, 2016 with summarized totals for the year ended June 30, 2015

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1 FINANCIAL STATEMENTS For the Year Ended June 30, 2016 with summarized totals for the year ended June 30, 2015 TOGETHER WITH INDEPENDENT AUDITOR S REPORT

2 TABLE OF CONTENTS June 30, 2016 Independent Auditor s Report 1-2 Financial Statements Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 7-13 Supplemental Schedules of Revenue and Expenses I. Department of Health and Social Services Nutrition, Transportation and Support Services 14 II. Department of Health and Social Services Nutrition Services Incentive Program (NSIP) 15 III. Department of Health and Social Services Health Promotion and Disease Prevention 16 IV. Department of Health and Social Services National Family Caregiver Support 17 V. Department of Health and Social Services Child Care Assistance 18 VI. Department of Health and Social Services Adult Day Services 19 VII. Department of Health and Social Services Senior In-Home Services 20 VIII. Department of Health and Social Services Comprehensive Behavioral Health Treatment and Recovery 21 IX. Department of Health and Social Services Children s Advocacy Centers 22 X. Department of Health and Social Services Mental Health Essential Program Equipment 23 XI. Department of Health and Social Services Community Initiative Matching Grants 24 Compliance - Federal Awards and State Financial Assistance Page Schedule of Expenditures of Federal Awards 25 Notes to Schedule of Expenditures of Federal Awards 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 Federal Program and Report on Internal Control over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs Federal Summary Schedule of Prior Year Audit Findings Federal 42

3 TABLE OF CONTENTS June 30, 2016 Schedule of State Financial Assistance 43 Notes to Schedule of State Financial Assistance 44 Independent Auditor s Report on Compliance for Each Major State Program and Report on Internal Control over Compliance Required by the State of Alaska Audit Guide and Compliance Supplement for State Single Audits Schedule of Findings and Questioned Costs State Summary Schedule of Prior Year Audit Findings State 51 Corrective Action Plan 52

4 Financial Statements

5 ELGEE REHFELD MERTZ, LLC CERTIFIED PUBLIC ACCOUNTANTS 9309 Glacier Highway, Suite B-200 Juneau, Alaska FAX INDEPENDENT AUDITOR S REPORT To the Board of Directors of Catholic Community Service Report on the Financial Statements We have audited the accompanying financial statements of Catholic Community Service (a nonprofit organization), which comprise the statement of financial position as of June 30, 2016, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Catholic Community Service as of June 30, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1

6 Report on Summarized Comparative Information We have previously audited Catholic Community Service s fiscal year 2015 financial statements, and we expressed an unmodified audit opinion on the respective financial statements in our report dated November 16, In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2015 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), the accompanying schedule of state financial assistance, as required by the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, and the accompanying supplemental schedules of revenue and expenses I XI, as required by the State of Alaska Department of Health and Social Services, are presented for purposes of additional analysis and are not a required part 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 schedule of expenditures of federal awards, the schedule of state financial assistance and the supplemental schedules of revenue and expenses are 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 December 1, 2016, on our consideration of Catholic Community Service's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the 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 Catholic Community Service's internal control over financial reporting and compliance. December 1,

7 STATEMENT OF FINANCIAL POSITION June 30, 2016 with summarized financial information for the year ended June 30, 2015 Property and Operating Equipment ASSETS CURRENT ASSETS Cash and cash equivalents $ 391,029 $ - $ 391,029 $ 329,547 Short-term investments - board designated 68,517-68,517 14,663 Accounts receivable, net: Community accounts receivable 254, ,973 77,675 Grants 290, , ,276 SESS - Medicaid 133, , ,576 Behavioral Health - Medicaid 76,845-76, ,089 Hospice 205, , ,588 Other 25,873-25,873 90,049 Total accounts receivable, net 987, ,190 1,207,253 Other assets 12,876-12,876 44,735 Total current assets 1,459,612-1,459,612 1,596,198 PROPERTY AND EQUIPMENT, net - 1,269,636 1,269,636 1,484,092 LONG-TERM INVESTMENTS - board designated 112, , ,419 Total assets $ 1,571,708 $ 1,269,636 $ 2,841,344 $ 3,255,709 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 143,707 $ - $ 143,707 $ 162,350 Accrued payroll and related liabilities 439, , ,054 Accrued leave 287, , ,452 Deferred revenue 250, , ,914 Total current liabilities 1,120,962-1,120,962 1,120,770 NET ASSETS Unrestricted: Unrestricted - operating 167, , ,677 Unrestricted - board designated 180, , ,082 Unrestricted - property and equipment - 1,269,636 1,269,636 1,484,092 Total unrestricted 348,532 1,269,636 1,618,168 2,055,851 Temporarily restricted 102, ,214 79,088 Total net assets 450,746 1,269,636 1,720,382 2,134,939 Total liabilities and net assets $ 1,571,708 $ 1,269,636 $ 2,841,344 $ 3,255,709 The accompanying notes to financial statements are an integral part of these statements. 3

8 STATEMENT OF ACTIVITIES Year ended June 30, 2016 with summarized financial information for the year ended June 30, 2015 Property and Operating Equipment Changes in unrestricted net assets from operating activities: PUBLIC SUPPORT Contributions $ 263,721 $ - $ 263,721 $ 321,048 Use of contributed facilities 406, , ,812 Special events 147, , ,163 Total public support 817, , ,023 REVENUE Program service fees 1,938,758-1,938,758 2,393,594 Government grants 3,371,840 9,000 3,380,840 3,721,330 Contracts 1,956,557-1,956,557 1,906,708 Investment income 1,540-1, Rental income 19,364-19,364 29,393 Miscellaneous 22,509-22,509 57,028 Total revenue 7,310,568 9,000 7,319,568 8,109,022 Total public support and revenue 8,128,218 9,000 8,137,218 9,102,045 EXPENSES PROGRAM SERVICES Southeast Senior Services 5,233,834-5,233,834 4,705,207 Children and Family Services 1,585,005-1,585,005 1,906,938 Hospice and Home Care of Juneau 1,307,097-1,307,097 1,032,474 Total program services 8,125,936-8,125,936 7,644,619 SUPPORTING SERVICES Management and general 152, ,163 1,579,328 Property management 7,651-7,651 10,408 Fundraising 65,695-65,695 26,095 Total supporting services 225, ,509 1,615,831 Total program and supporting services expenses 8,351,445-8,351,445 9,260,450 Change in unrestricted net assets from operating activities (223,227) 9,000 (214,227) (158,405) Change in unrestricted net assets from non-operating activities: Depreciation expense - (223,456) (223,456) (248,746) Change in unrestricted net assets (223,227) (214,456) (437,683) (407,151) Change in temporarily restricted net assets: Contributions 23,126-23,126 - Change in net assets (200,101) (214,456) (414,557) (407,151) Net assets at beginning of year 650,847 1,484,092 2,134,939 2,542,090 Net assets at end of year $ 450,746 $ 1,269,636 $ 1,720,382 $ 2,134,939 The accompanying notes to financial statements are an integral part of these statements. 4

9 STATEMENT OF FUNCTIONAL EXPENSES Year ended June 30, 2016 with summarized financial information for the year ended June 30, 2015 Program Services Southeast Children Hospice and Total Program and Supporting Senior and Family Home Care Supporting Services Expenses Services Services of Juneau Total Services DIRECT EXPENSES Salaries $ 2,500,022 $ 796,499 $ 529,722 $ 3,826,243 $ 606,089 $ 4,432,332 $ 4,732,769 Payroll taxes and benefits 708, , ,026 1,028, ,238 1,151,599 1,484,000 Total salaries and related expenses 3,208, , ,748 4,854, ,327 5,583,931 6,216,769 Occupancy 358, ,843 28, , , , ,929 Supplies and equipment 630,556 41,200 25, ,022 12, , ,352 Professional fees 43,012 28, , , , , ,150 Bad debt expense 23,186 61, , ,644 33, , ,353 Rental and maintenance of equipment 138,190 16,670 12, ,948 14, , ,266 Travel and transportation 67,951 41,317 14, ,245 17, , ,595 Telephone 36,121 19,410 8,616 64,147 11,894 76,041 83,227 Fundraising ,720 68,720 26,095 Other expenses 6,417 1,851 8,356 16,624 35,347 51,971 16,056 Dues and subscriptions 5,428 9,910 8,788 24,126 20,972 45,098 67,152 Insurance ,694 35,390 43,541 Postage and shipping 9,167 3, ,595 2,274 14,869 18,629 Printing and publications 545-3,102 3, ,359 2,336 Total direct expenses 4,528,381 1,334,683 1,125,045 6,988,109 1,363,336 8,351,445 9,260,450 ADMINISTRATIVE ASSESSMENT 705, , ,052 1,137,827 (1,137,827) - - Total expenses $ 5,233,834 $ 1,585,005 $ 1,307,097 $ 8,125,936 $ 225,509 $ 8,351,445 $ 9,260,450 The accompanying notes to financial statements are an integral part of these statements. 5

10 STATEMENT OF CASH FLOWS Year ended June 30, 2016 with summarized totals for the year ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (414,557) $ (407,151) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 223, ,746 Bad debt expense 307, ,353 (Increase) decrease in: Accounts receivable (87,761) (270,973) Other assets 31,859 (21,353) Increase (decrease) in: Accounts payable (18,643) (79,089) Accrued payroll and related liabilities 66,880 64,696 Accrued leave 39,632 (43,117) Deferred revenue (87,677) 167,539 Net cash provided by operating activities 61,013 7,651 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale (purchase) of investments, net 9,469 (969) Cash paid for new equipment (9,000) (66,371) Net cash provided by (used for) investing activities 469 (67,340) Change in cash and cash equivalents 61,482 (59,689) Cash and cash equivalents at beginning of year 329, ,236 Cash and cash equivalents at end of year $ 391,029 $ 329,547 The accompanying notes to financial statements are an integral part of these statements. 6

11 1. Description of Organization CATHOLIC COMMUNITY SERVICE NOTES TO FINANCIAL STATEMENTS Year ended June 30, 2016 Catholic Community Service (CCS) is a comprehensive, mission-driven social service agency dedicated to reaching out to persons and families in need throughout Southeast Alaska. Our desire to serve others is at the heart of our mission and is rooted in Catholic Social Teachings. CCS provides an array of quality services ranging from children and families, to seniors and adults with disabilities, and people who need in-home care and/or end-of-life palliative care. Southeast Senior Services (SESS) works with local, state and national partners to offer home and community-based services such as hot, nutritious meals, door-to-door transportation, adult day services, care coordination, senior and caregiver counseling, and a regional senior information and caregiver resource center. Senior Centers: Through its network of senior centers located in Angoon, Craig/Klawock, Haines/Klukwan, Hoonah, Juneau/Douglas, Kake, Ketchikan/Saxman, Sitka, Skagway, Wrangell, and Yakutat, SESS provides congregate and home delivered meals (Meals On Wheels), classes, and health promotion activities to over 2,000 seniors annually. Care-A-Van and Transportation Services: Door-to-door transportation is also provided in these communities, helping seniors and people with disabilities access medical care, shopping, church, community events, and any other place they wish to go. Senior and Caregiver Resource Center: Advocating for seniors and helping the friends and family members who care for them get the information, support, and training they need to be successful on their caregiving journey. Senior and Caregiver Counseling: Providing professional and/or group counseling services to seniors and/or family caregivers. Services are provided in the privacy of their own home or location of their choosing and focus on the unique situation of each client and their struggles. Case Management and Service Coordination: Throughout Southeast Alaska, the Case Management and Service Coordination programs provide information and referral services to senior citizens and family caregivers. Coordinators conduct comprehensive client assessments and link seniors with services that support their desire to live independently, and maintain their health and quality of life for as long as possible. The Bridge Adult Day Program: Providing therapeutic activities in a safe, nurturing environment for frail and/or cognitively impaired seniors so loved ones can continue to work, run errands, or take a well-deserved break in Juneau. Children and Family Services (CFS) provides leadership in developing, maintaining and advocating for services that keep children safe and strengthen and enhance the health, harmony and self-sufficiency of families. Most services are provided in a "wall-less agency," not in a traditional office setting. Services are provided in the home and community, wherever families are. S.A.F.E. Child Advocacy Center: Providing child abuse response services throughout Southeast Alaska focused on the needs of the child from initial investigation through prosecution with support, crisis intervention, assessment, and help accessing needed services. Child Care Assistance Program: Assisting families all across Southeast Alaska qualify for childcare assistance to help pay for preschool, afterschool, and infant care by determining eligibility and offering outreach. 7

12 NOTES TO FINANCIAL STATEMENTS Hospice and Home Care of Juneau (HHCJ) provides skilled nursing to home bound individuals who are recovering and end-of-life care to patients in the comfort of their own homes. Home Care: Providing health care to people 18 years of age and older in their own home who need skilled nursing care, speech therapy, occupational therapy, or physical therapy. Hospice: Providing compassionate care and support to the terminally ill and their families with patient-directed, team-oriented, holistic services. Registered Nurse on-call 24/7 Physical, Occupational, and Speech Therapists, Home Health Aids, Social Worker, Chaplain Medical Equipment Loan Closet In-Home Volunteer Support Two 8-week Grief Support Groups 2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of CCS have been prepared on the accrual basis. Under this basis of accounting the financial effects of the transactions and other events and circumstances that have economic consequences for CCS are recorded in the period in which those transactions, events and circumstances occur, rather than only in the periods in which cash is received or paid by the entity. Basis of Presentation Financial statement presentation follows the recommendations of the Financial Accounting Standards Board (FASB) in its Accounting Standards Codification (ASC) Presentation of Financial Statements and Other Presentation Matters. Under FASB ASC , CCS is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Unrestricted net assets are net assets that are not subject to donor-imposed stipulations or restrictions. Temporarily restricted net assets represent resources whose use is limited by donor-imposed restrictions that will be met either by actions of the organization or by the passage of time. Permanently restricted net assets represent resources whose use is limited by donor-imposed restrictions that require the net assets to be maintained permanently. Temporarily restricted net assets are described in Note 3. There were no permanently restricted net assets at June 30, Revenue Recognition Revenue consists of grants and contracts to provide services, Medicaid and third party fees for services, other administrative fees, investment income and contributions. CCS follows the guidance of FASB ASC , Revenue Recognition, to determine whether its federal, state or other grant programs are contributions or exchange transactions for purposes of presentation in the accompanying financial statements. Exchange transactions with a donor, grantor, or other outside party for a particular purpose are deemed to be earned and reported as revenues when CCS has incurred expenditures in compliance with the specific restrictions. Such amounts received but not yet earned are reported as deferred revenue. Medicaid fees for services are deemed to be earned and reported as revenue based on the dates when services were provided, in the amounts determined at the time billed. Cash and Cash Equivalents For purposes of the statement of cash flows, CCS considers all cash on hand, in checking and savings accounts, and interest-bearing investments due on demand, excluding those classified as investments, to be cash and cash equivalents. 8

13 NOTES TO FINANCIAL STATEMENTS Investments Investments consist of short-term investments intended to be held more than 90 days, but less than a year, and long-term investments intended to be held for more than a year. Both types of investments are interest-bearing certificates of deposit in financial institutions, savings or money market accounts. The investments are valued at cost plus reinvested interest, which approximates fair value. Interest income for CCS s investments is included in the statement of activities. Accounts Receivable Accounts receivable consists of grant and contract receivables, that are stated at the amount CCS expects to collect from outstanding balances at year-end. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to a valuation allowance based on its assessment of the current status of individual accounts. The allowance for uncollectible accounts has a balance of $41,514 at June 30, Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Summarized Comparative Information The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a representation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the entity s financial statements for the year ended June 30, 2015, from which the summarized information was derived. Fixed Assets and Depreciation Uses of operating funds for fixed asset acquisitions are accounted for as transfers to the Property and Equipment Fund. Purchased fixed assets are carried at cost. Donated assets are capitalized at their fair value at the date of the gift as a contribution to the Property and Equipment Fund. Proceeds from the sale of fixed assets, if unrestricted, are transferred to operating net assets, or, if restricted, to deferred amounts restricted for fixed asset acquisitions. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to expense as incurred; significant renewals and betterments are capitalized. CCS capitalizes all expenditures for land, buildings and equipment in excess of $5,000. The fair value of donated fixed assets is similarly capitalized. Depreciation of property and equipment is provided on a straight-line basis over the estimated useful lives of the assets. The useful lives adopted for the purposes of computing depreciation are: Buildings Land and Building Improvements Office Furniture and Equipment Vehicles 25 years 15 years 5 years 5 years Donations Donor-restricted funds are used to differentiate the resources whose use is restricted by donors from the resources on which donors have placed no restrictions, and from the resources that arise as a result of the operations of the entity for its stated purpose. Resources restricted by donors for fixed asset replacement and expansion are added to the Property and Equipment Fund s net assets to the extent expended within the period. Resources restricted by donors for specific operating purposes are reported in other revenue to 9

14 NOTES TO FINANCIAL STATEMENTS Donations, continued the extent used within the period. All contributions, including those of long-lived assets, are considered to be available for unrestricted use, unless specifically restricted by the donor. Charity Care CCS provides care to clients who meet certain criteria either without charge or at amounts less than its established rates. The amounts classed as charity care are not reported as revenue or receivables. Matching Contributions Various programs require grantees to match the award with local contributions. The match can generally be either cash or in-kind contributions. Management s Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Free Use of Facilities, Donated Materials and Volunteer Services Free use of facilities, donated materials and donated professional services, useful in fulfilling the purpose of CCS are recorded as support and expense in the period in which the premises or materials are used, based on the estimated fair value at the time of use. These donations amounted to $406,799, which includes the Corporation of the Catholic Bishop of Juneau subsidy as reported in Note 8, for the year ended June 30, No amounts have been reflected in the statements for certain volunteered services inasmuch as no objective basis is available to measure the value of such services, and there is an absence of control over these services. However, a substantial number of volunteers have donated significant amounts of their time in CCS's program services and in its fundraising campaigns, totaling approximately 6,847 hours for fiscal year Taxes CCS is exempt from income tax under Section 501(c)(3) of the U.S. Internal Revenue Code (Code) and comparable state law, and contributions to it are tax deductible within the limitations prescribed by the Code. CCS has been classified as a publicly supported organization that is not a private foundation under Section 509(a) of the Code. CCS follows the provisions of FASB ASC 740 Income Taxes, and management believes that it has appropriate support for any tax positions taken. CCS s federal income tax returns (Form 990) are subject to possible examination by the Internal Revenue Service until the expiration of the related statute of limitations on those tax returns, which, in general, have a three year statute of limitations. Management has evaluated its tax positions for the years ended June 30, 2014 through 2016 in conformity with accounting principles generally accepted in the United States of America and has determined it has no uncertain tax positions required to be disclosed. Functional Allocation of Expenses The costs of providing CCS s various programs and other activities have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Functional expenses have been allocated between program service and supporting service based on an analysis of personnel time and space utilized for the related activities. Expenses for program services are segregated from management and general expenses. 10

15 NOTES TO FINANCIAL STATEMENTS Administrative Program Costs Indirect administrative costs are reported as direct program expenses on federal and state grant financial reports based on level of efforts. CCS pools administrative costs and charges them to its programs using an allocation methodology promulgated under the Uniform Guidance. Fair Value Measurements Catholic Community Service follows the guidance of FASB ASC 820 Fair Value Measurement and Disclosure. FASB ASC 820 provides a framework for measuring fair value and requires that an entity determine fair value based on exit price from the principal market for the asset or liability being measured. Reclassification Certain amounts presented for the prior year have been reclassified to conform to the current year presentation. 3. Temporarily Restricted Net Assets Cash and cash equivalents reported on the statement of financial position include $102,214 in temporarily restricted net assets. Temporarily restricted net assets are available for the following purposes at June 30, 2016: 4. Designated Net Assets SAFE Child Advocacy Center $ 75,000 Southeast Senior Services 18,126 Southeast Senior Services Vehicle Gas and Maintenance 5,000 Juneau CARES Romania Fund 4,088 $ 102,214 Net assets designated by the Board of Directors for an Emergency Operational Reserve Fund consist of amounts held in investment accounts in the amount of $180,613 as of June 30, Funds may not be moved out of these accounts without specific authority by the Board of Directors. 5. Property, Equipment and Depreciation A summary of property and equipment at June 30, 2016 follows: Land $ 238,223 Buildings 754,154 Land and Building Improvements 1,423,418 Office Furniture and Equipment 300,565 Vehicles 1,626,070 Total Property and Equipment 4,342,430 Less: Accumulated Depreciation (3,072,794) Property and Equipment, Net $ 1,269,636 11

16 NOTES TO FINANCIAL STATEMENTS Titles to vehicles purchased by grants under the Federal Transit Authority and owned by CCS carry liens held by the State of Alaska. The liens are subject to certain restrictions set forth by agreement limiting the use and disposal of the equipment. Depreciation expense was $223,456 for fiscal year Employee Benefits and Retirement Plan Employee benefits expense consists principally of payroll taxes and health care benefits. Eligible employees of CCS participate in a 403(b) Thrift Plan. Employees may elect to contribute a percentage of their wages, with maximum contributions determined on a case-by-case basis in accordance with Internal Revenue Code Section 403(b). CCS contributes 3% as a minimum and matches employee contributions up to an additional 3%. CCS s required contribution was $185,533 for fiscal year Leased Facilities Most of the buildings used by CCS for its community service programs are leased on a year-to-year basis. Rent expense for the year ended June 30, 2016 was $354, Related Party Transactions One of the members of the Board of Directors of CCS is also the operating director of the Corporation of the Catholic Bishop of Juneau. CCS and the Corporation of the Catholic Bishop of Juneau have ongoing operating transactions. CCS paid (received) the following amounts to (from) the Corporation of the Catholic Bishop of Juneau during the year ended June 30, 2016: Health/Life Insurance $ 698,083 Rent 363,743 Workers Compensation Insurance 118,676 Subsidy (140,217) Vehicle Insurance 21,513 Property Insurance 13,142 Total $ 1,074,940 CCS leases the majority of its office and program space from the Corporation of the Catholic Bishop of Juneau. A portion of the rent for this space is subsidized by the Corporation of the Catholic Bishop of Juneau. From time to time CCS has transactions with Board members or their companies. 9. Contingent Liabilities and Concentrations Grant and Medicaid Revenue CCS receives a substantial amount of its support from federal and state grants and billings under the State of Alaska Medicaid program, and has a significant amount of accounts receivable from these grants and billings. If a significant reduction in the level of this support were to occur, or if the accounts receivable become uncollectible by CCS, it may have an adverse effect on CCS s programs and activities. 12

17 NOTES TO FINANCIAL STATEMENTS Expenditures made pursuant to grants and contracts may be subject to additional audits by governmental agencies or their representatives. Although subject to federal and state single audit requirements, certain amounts reflected in the financial statements have not been audited by the grantor agencies. Accordingly, adjustments of amounts received, or receivable from the grants and contracts could result if the grants and contracts are audited by such agencies. Depository Concentration CCS has concentrated its credit risk for cash by maintaining deposits in financial institutions, which may at times exceed amounts covered by insurance provided by the United States Federal Deposit Insurance Corporation (FDIC). At June 30, 2016, CCS has cash of $121,943 in excess of FDIC insurance. CCS has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to cash. Litigation In the normal course of business CCS is subject to litigation from time to time but defends its rights vigorously and obtains insurance coverage for potential claims arising as a result of litigation. 10. Subsequent Events CCS has evaluated subsequent events through the date of the Independent Auditor s Report, which is commensurate with the date the financial statements were available to be issued. 13

18 Supplemental Schedules of Revenue and Expenses

19 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule I Department of Health and Social Services Nutrition, Transportation and Support Services Budget Actual Variance Grant Support: Federal $ 629,470 $ 629,470 $ - State of Alaska 359, ,404 - Total Grant Support 988, ,874 - Expenses: Personal Services 740, ,523 28,440 Travel 6,643 6, Facility Expenses 82,680 70,570 12,110 Supplies 131, ,427 (42,858) Equipment 12,155 11, Other 14,864 13,284 1,580 Indirect Expenses Total Expenses $ 988,874 $ 988,874 $ - See independent auditor's report. 14

20 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule II Department of Health and Social Services Nutrition Services Incentive Program (NSIP) Budget Actual Variance Grant Support: Federal $ 43,355 $ 43,355 $ - Total Grant Support 43,355 43,355 - Expenses: Personal Services Travel Facility Expenses Supplies 43,355 43,355 - Equipment Other Indirect Expenses Total Expenses $ 43,355 $ 43,355 $ - See independent auditor's report. 15

21 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule III Department of Health and Social Services Health Promotion and Disease Prevention Budget Actual Variance Grant Support: Federal $ 9,756 $ 9,756 $ - State of Alaska 4,450 4,450 - Total Grant Support 14,206 14,206 - Expenses: Personal Services 8,997 10,339 (1,342) Travel 1, Facility Expenses Supplies Equipment Other 3,000 3,141 (141) Indirect Expenses Total Expenses $ 14,206 $ 14,206 $ - See independent auditor's report. 16

22 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule IV Department of Health and Social Services National Family Caregiver Support Budget Actual Variance Grant Support: Federal $ 121,466 $ 121,466 $ - State of Alaska 46,863 46,863 - Total Grant Support 168, ,329 - Expenses: Personal Services 107, ,693 2,075 Travel 3,943 1,971 1,972 Facility Expenses 8,250 10,564 (2,314) Supplies 3,280 1,417 1,863 Equipment 1, Other 44,088 47,720 (3,632) Indirect Expenses Total Expenses $ 168,329 $ 168,329 $ - See independent auditor's report. 17

23 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule V Department of Health and Social Services Child Care Assistance Budget Actual Variance Grant Support: Federal $ 324,891 $ 308,344 $ (16,547) Total Grant Support 324, ,344 (16,547) Expenses: Personal Services 262, ,422 13,968 Travel 9,501 7,307 2,194 Facility Expenses 23,400 23, Supplies 10,000 9, Equipment 10,000 11,478 (1,478) Other 9,600 8,484 1,116 Indirect Expenses Total Expenses $ 324,891 $ 308,344 $ 16,547 See independent auditor's report. 18

24 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule VI Department of Health and Social Services Adult Day Services Budget Actual Variance Grant Support: State of Alaska $ 124,206 $ 124,206 $ - Total Grant Support 124, ,206 - Expenses: Personal Services 111, ,137 (3,315) Travel Facility Expenses Supplies 9,784 6,709 3,075 Equipment 1, Other 1,500 1,746 (246) Indirect Expenses Total Expenses $ 124,206 $ 124,206 $ - See independent auditor's report. 19

25 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule VII Department of Health and Social Services Senior In-Home Services Budget Actual Variance Grant Support: State of Alaska $ 97,758 $ 97,758 $ - Total Grant Support 97,758 97,758 - Expenses: Personal Services 84,485 85,204 (719) Travel Facility Expenses 7,119 9,671 (2,552) Supplies 3,454 1,166 2,288 Equipment 2,000 1, Other Indirect Expenses Total Expenses $ 97,758 $ 97,758 $ - See independent auditor's report. 20

26 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule VIII Department of Health and Social Services Comprehensive Behavioral Health Treatment and Recovery Budget Actual Variance Grant Support: State of Alaska $ 125,279 $ 125,279 $ - Total Grant Support 125, ,279 - Expenses: Personal Services 99,939 99, Travel 8,835 8, Facility Expenses 11,159 12,152 (993) Supplies 2,929 2,930 (1) Equipment Other 1,668 1, Indirect Expenses Total Expenses $ 125,279 $ 125,279 $ - See independent auditor's report. 21

27 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule IX Department of Health and Social Services Children's Advocacy Centers Budget Actual Variance Grant Support: Federal $ 280,704 $ 278,579 $ (2,125) Total Grant Support 280, ,579 (2,125) Expenses: Personal Services 230, ,651 2,791 Travel 7,324 7, Facility Expenses 22,007 20,517 1,490 Supplies 6,269 6,520 (251) Equipment Other 14,662 16,626 (1,964) Indirect Expenses Total Expenses $ 280,704 $ 278,579 $ 2,125 See independent auditor's report. 22

28 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule X Department of Health and Social Services Mental Health Essential Program Equipment Budget Actual Variance Grant Support: State of Alaska $ 19,069 $ 19,069 $ - Total Grant Support 19,069 19,069 - Expenses: Personal Services Travel Facility Expenses Supplies Equipment 19,069 19,069 - Other Indirect Expenses Total Expenses $ 19,069 $ 19,069 $ - See independent auditor's report. 23

29 Schedule of Revenue and Expenses Budget to Actual Year ended June 30, 2016 Schedule XI Department of Health and Social Services Community Initiative Matching Grants Budget Actual Variance Grant Support: State of Alaska $ 35,282 $ 35,282 $ - Total Grant Support 35,282 35,282 - Expenses: Personal Services 23,079 23,180 (101) Travel Facility Expenses 10,000 10,176 (176) Supplies Equipment Other 1,558 1, Indirect Expenses Total Expenses $ 35,282 $ 35,282 $ - See independent auditor's report. 24

30 Compliance Federal Awards and State Financial Assistance

31 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year ended June 30, 2016 Federal Grantor's CFDA Passed Through Federal Federal Agency/Pass-through Agency/Grant Title Number Number to Subrecipients Expenditures U.S. Department of Health and Human Services Aging Cluster Passed-through: State of Alaska Department of Health and Social Services Nutrition, Transportation and Support Services $ - $ 360,057 Nutrition, Transportation and Support Services ,413 Nutrition Services Incentive Program (NSIP) 607-PA ,355 Passed-through: Various tribal entities* Title VI - Older Americans Act Section Nutrition Services Incentive Program FY16 various* ,689 Title VI - Older Americans Act Section Nutrition Services Incentive Program FY17 various* ,057 Total Aging Cluster - 687,571 Passed-through: Various tribal entities* Older Americans Act Title VI, Part A - Grants for Native Americans FY16 various* ,390 Older Americans Act Title VI, Part A - Grants for Native Americans FY17 various* ,508 Total CFDA ,898 Older Americans Act Title VI, Part C - Native American Caregiver Support Program FY16 various* ,577 Older Americans Act Title VI, Part C - Native American Caregiver Support Program FY17 various* ,560 Total CFDA ,137 Medicare Improvements for Patients and Providers Act (MIPPA) various* ,546 Passed-through: State of Alaska Department of Health and Social Services CCDF Cluster Child Care Assistance ,344 Total CCDF Cluster - 308,344 TANF Cluster Children's Advocacy Centers ,579 Total TANF Cluster - 278,579 Health Promotion and Disease Prevention ,756 National Family Caregiver Support ,466 Total U.S. Department of Health and Human Services - 2,211,297 U.S. Department of Housing and Urban Development Passed-through: Tlingit-Haida Regional Housing Authority Resident Opportunity and Self-Sufficiency (ROSS) Service Coordinators Program - Yakutat Elder Saxman Senior Program Agreement 86 13/ ,787 Alaska Housing Finance Corporation Alaska Housing Finance Corporation RSC-13-CCS-1-Y ,000 Total U.S. Department of Housing and Urban Development - 134,787 U.S. Department of Justice Passed-through: National Children's Alliance through Alaska Children's Alliance Victims of Child Abuse (VOCA) Children's Advocacy Centers National Subgrants Program JUNE-AK-SA ,000 Total U.S. Department of Justice - 9,000 Total Expenditures of Federal Awards $ - $ 2,355,084 * See notes to schedule of expenditures of federal awards for information on individual awards. See accompanying notes to schedule of expenditures of federal awards. 25

32 Notes to Schedule of Expenditures of Federal Awards Year ended June 30, General The accompanying schedule of expenditures of federal awards (SEFA) presents the activity of all federal award programs of Catholic Community Service (CCS). The information in the SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through other entities is included on the SEFA. CCS s reporting entity is defined in Note 1 to the Organization s financial statements. 2. Basis of Accounting The accompanying SEFA is presented using the accrual basis of accounting, described in Note 2 of CCS s financial statements. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-122, Cost Principles for Non-Profit Organizations, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. CCS has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. 3. Grants Passed-through Tribal Entities The schedule of expenditures of federal awards summarizes by CFDA number certain grants passed through tribal entities to CCS. The grant number and expenditures for each grant are listed below. Older Americans Act Title VI, Part A - Grants for Native Americans CFDA # FY16 (grants ended 3/31/16) FY17 (grants ending 3/31/17) Grant Number Expenditures Grant Number Expenditures Hoonah Indian Assoc. 1407AKT6NS $ 63, AKT6NS $ 15,679 Klawock Cooperative Assoc. 1424AKT6NS 48, AKT6NS 13,445 Kootznoowoo Inc. 1425AKT6NS 54, AKT6NS 17,493 Organized Village of Kake 1441AKT6NS 61, AKT6NS 13,783 Sitka Tribe of Alaska 1430AKT6NS 76, AKT6NS 23,947 Wrangell Cooperative Assoc. 1437AKT6NS 63, AKT6NS 20,441 Yakutat Tlingit Tribe 1449AKT6NS 47, AKT6NS 16,652 Chilkoot Indian Assoc. 1447AKT6NS 48, AKT6NS 11,654 Craig Tribal Association and Skagway Traditional Council 1450AKT6NS 47, AKT6NS 11,414 $ 510,390 $ 144,508 26

33 Notes to Schedule of Expenditures of Federal Awards Year ended June 30, 2016 Older Americans Act Title VI, Part C - Native American Caregiver Support Program CFDA # FY16 (grants ended 3/31/16) FY17 (grants ending 3/31/17) Grant Number Expenditures Grant Number Expenditures Hoonah Indian Assoc. 1407AKT6CG $ 12, AKT6CG $ 5,103 Klawock Cooperative Assoc. 1424AKT6CG 5, AKT6CG 1,499 Kootznoowoo Inc. 1425AKT6CG 10, AKT6CG 2,622 Organized Village of Kake 1441AKT6CG 7, AKT6CG 1,036 Sitka Tribe of Alaska 1430AKT6CG 27, AKT6CG 6,953 Wrangell Cooperative Assoc. 1437AKT6CG 14, AKT6CG 3,197 Yakutat Tlingit Tribe 1449AKT6CG 10, AKT6CG 4,512 Chilkoot Indian Assoc. 1447AKT6CG 11, AKT6CG 5,457 Craig Tribal Association and Skagway Traditional Council 1450AKT6CG 9, AKT6CG 2,181 $ 109,577 $ 32,560 Title VI - Older Americans Act Section Nutrition Services Incentive Program CFDA # FY16 (grants ended 3/31/16) FY17 (grants ending 3/31/17) Grant Number Expenditures Grant Number Expenditures Hoonah Indian Assoc. 1407AKNSIT $ 1, AKNSIT $ - Klawock Cooperative Assoc. 1424AKNSIT AKNSIT 142 Kootznoowoo Inc. 1425AKNSIT AKNSIT 363 Organized Village of Kake 1441AKNSIT 1, AKNSIT - Sitka Tribe of Alaska 1430AKNSIT 2, AKNSIT 123 Wrangell Cooperative Assoc. 1437AKNSIT AKNSIT 1,429 Yakutat Tlingit Tribe 1449AKNSIT 1, AKNSIT - Chilkoot Indian Assoc. 1447AKNSIT 1, AKNSIT - Craig Tribal Association and Skagway Traditional Council 1450AKNSIT 1, AKNSIT - $ 12,689 $ 2,057 27

34 Notes to Schedule of Expenditures of Federal Awards Year ended June 30, 2016 Medicare Improvements for Patients and Providers Act (MIPPA) CFDA # FY15 (grants ended 9/29/15) Grant Number Expenditures Kootznoowoo Inc. 1425AKMTRB $ 1,247 Hoonah Indian Assoc. 1407AKMTRB 1,358 Sitka Tribe of Alaska 1430AKMTRB 654 Organized Village of Kake 1441AKMTRB 1,910 Chilkoot Indian Association 1447AKMTRB 500 Yakutat Tlingit Tribe 1449AKMTRB 1,910 Klawock Cooperative Assoc. 1424AKMTRB 967 $ 8, Reconciliation of Expenditures of Federal Awards to Financial Statements The following is a reconciliation of grant revenue reported in the financial statements to expenditures reported in the schedule of expenditures of federal awards: Total government grants $ 3,380,840 Less: Local grants (109,945) Less: State assistance programs (915,811) Total expenditures per schedule of expenditures of federal awards $ 2,355,084 28

35 ELGEE REHFELD MERTZ, LLC CERTIFIED PUBLIC ACCOUNTANTS 9309 Glacier Highway, Suite B-200 Juneau, Alaska FAX 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 of Catholic Community Service We have audited 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, the financial statements of Catholic Community Service, which comprise the statement of financial position as of June 30, 2016, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements and have issued our report thereon dated December 1, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Catholic Community Service 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 Catholic Community Service s internal control. Accordingly, we do not express an opinion on the effectiveness of Catholic Community Service s internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting 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 questioned costs, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be significant deficiencies ( and ). 29