A ssociation for R etarded C itizens - B aton R ouge B aton R ouge,l ouisiana June 30,1999. Jnoer provisions of slate I.tw,trll.~

Transcription

1 l~ecr-. tveo LEGISLA] I?~AUDITOR OrrlCl~[ e1~ 1999DEC30 PH l:47 co~/f~f,from ~his Co;:~:'n,~ r'[_ac[ [',A('~;;riiI[F) A ssociation for R etarded C itizens - B aton R ouge B aton R ouge,l ouisiana June 30,1999 Jnoer provisions of slate I.tw,trll.~ report is a ~:~ubt{c docqm ~!t, f', copy ofthe repo:ti~.~s bc~*;~r.'..,+.m itted to ~te a,-:i~~d,o:,.,-.,:;,v.~d, entity ant;(;th,-~r1.p,~r(~',:.;b~';,[,l.'biic Of icials. Th.'-"~ep~:,rtis :w /=i;,;,;:ir,for l)ub!ic in.'-,peclion r~t ti;,.:, Da[ol;,~,i+, 'rx~ t " + ~OtJ~.~z(}f[iC~ ~.:+';-['+ +-."":".+~UV.:,~L.d: to[ ale(j,w ~i(~i~:r-ppro!,dats, at tho 9f i,~e ofthe p~dsh ctci'k ~,fcourt Date _] i~ - -.,~z~ :~

2 A ssociation for R etarded C itizens -Baton R ouge B aton R ouge,l ouisiana T able of C ontents IndependentA uditor'sr eport FinancialStatem ents Sta tem entsof FinancialPosition Statem entsof A ctivities Stalem ents of FunctionalExpenses Statem ents of C ash Flow s N otes to FinancialSta tem ents Schedule of Expendituresof Federaland State A w ards Reporton Com pliance w ith Requirem entsa pplicable to Each M ajorprogram and on InternalControlOverCompliance in A ccordance w ith G overnm enta uditin~ Standards Reporton C om pliance an d on InternalControlO verfinan cial Reporting Based on an A uditof FinancialStatem entsperform ed in A ccordance w ith G overnm enta uditin~ Standards Page 3 Page 5 Page 6 Page 8 Page 9 Page 10 Page 16 Page 17 Page 19 Schedule on AuditFindingsand Questioned CostsApplicable to Each M ajorprogram in Accordancewith OM B CircularA-133 Page 21

3 HAW THO RN,W AYMO UTH ~t CARRO LL, L.L.P. II bm ~ll (:m ~noll c:~a J (:IIAHI[~;PAf~KH ~ e:r A IOLII~;C M ~KN IOHI. I [:I!A ANIlI[INy J [liltiina I [;[~A [:HAR[i~;R P[VtY,dH (:F~A [IAV [J,I UH[IH!;!;AH[L [:P A C:Lt(IIFI[D PLJE~LI[;lkC:C:()LIN'IA I'4"I~; 8555 UNIqED PLAZA BLVD BATON ROUGE,LOUISIANA (225) *FAX (225)923 30f)S D ecem ber7,1999 {c1[~1111[~ IIAW THLIHN C HA [1~1~-I[;1EI//J d~fin [ W AYM CILIlll C:R A [1!l~)P 3EI[I/J HFIW AFf)V [:Afl[ID[[.E;F~A [1EIClEI1LI[I:4) W AfIFlN c EliFt c R A H~rlrlE[l ~l[)li[h I,J Z[~}N[}II 1;[~A illill[h CAHI I IIANr:OC;K.c H A [1[ilrl[[i IndependentA uditor's R eport The O fi cers and Board of D irectors A ssociation forretarded Citizens-Baton Rouge B aton R ouge,louisiana M em bersof the Board W e have audited the accom panying statem entsof financialposition of the A ssociation for R etarded C itizens -B aton R ouge B aton R ouge,l ouisiana asof June 30,1999 an d June 30,1998,and the related statem entsof activities,functionalexpenses and cash flow sforthe yearsthen ended. These financialstatem entsare the responsibility of the A ssociation's m anagem ent.o urresponsibility is to express an opinion on these financialstatem ents based on ouraudits. W e conducted our audits in accordance w ith generally accepted auditing standardsand the standards applicable to finan cialauditscontained in G overnm enta uditing Standards,issued by the C om ptroller G eneralof the U nited States. Those standards require thatw e plan and perform the auditto obtain reasonable assurance aboutw hetherthe financialstatem entsare free of m aterial m isstatem ent.a n auditincludesexam ining,on a testbasis,evidence supporting the am ountsan d disclosures in the financialstatem ents. A n auditalso includes assessing the accounting principles used and significantestim ates m ade by m anagem ent,asw ellasevaluating the overallfinancial statem entpresentation. W e believe thatourauditsprovide a reasonable basisforouropinion. In ouropinion,the financialstatem entsreferred to above presentfairly,in allm aterialrespects, the financialposition of the A ssociation forr etarded Citizens -B aton R ouge as of June 30,1999 and June 30,1998,and the changesin itsnetassetsand itscash flow sforthe yearsthen ended,in conform ity w ith generally accepted accounting principles.

4 The A ssociation forretarded Citizens-Baton Rouge hasnotpresented the disclosuresrequired by G overnm entala ccounting StmadardsB oard TechnicalBulletin 98-1,D isclosures aboutyear 2000 Issues,asam ended by G overnm entala ccounting StandardsB oard TechnicalBulletin 99-1, tlm tthe G overnm entala ccounting StandardsB oard hasdetennined arc necessary to supplem ent, although notbe a partof,the basic financialstatem ents. In addition,w e do notprovide assurance thatthe A ssociation forr etarded C itizens -B aton R ouge isorw illbecom e year2000 com pliant,that the A ssociation for Retarded Citizens - Baton Rouge's year 2000 rem ediation efforts w illbe successfulin w hole orin part,orthe parties w ith w hich the A ssociation forretarded Citizens - B aton R ouge does business are or w illbecom e year 2000 com pliant. In accordance w ith G overnm enta uditing Standards,w e have also issued ourreportdated D ecem ber7,1999 on ourconsideration of the A ssociation forretarded Citizens-Baton Rouge's internalcontroloverfinancialreporting and ourtestsof itscom pliance w ith certain provisionsof law s,regulations,contracts and grants. O urauditw asperform ed forthe purpose of form ing an opinion on the basic financialstatem ents of the A ssociation forretarded Citizens -Baton Rouge taken as a w hole. The accom panying schedule of expenditures of federaland state aw ardsis presented forpurposesof additionalanalysis as required by U.S.O ffice of M anagem entand B udgetc irculara -133,"A udits of States,Local G overnm ents,and N on-profit O rganizations," and is nota required partof the basic financial statements.such information hasbeen subjected to theauditing proceduresapplied in theauditof the basic financialstatem entsand in ouropinion,isfairly stated,in allm aterialrespects,in relation to the basic financialstatem entstaken asa w hole. Yourstruly

5 L ia b ilitie s a n d N et A ssets L iabilities Bank overdraft A ccounts payable $6,929 $146,018 37,664 Totalliabilities N eta ssets U nrestricted Tem porarily restricted _ 6,929 2,803,727 33, ,682 2,601,016 29,420 Totalnetassets 2,837,137 2,630,436 Totalliabilitiesand netassets

6 A ssociation for R etarded C itizens -B aton R ouge Statem entsof A ctivities Y earsended June 30,1999 and June 30,1998 C hangesin U nrestricted N eta ssets R evenue CapitalA rea U nited W ay C ontributions M em bcrship Totalrevenue $248,454 25,153 _ 4,124 $245,062 46,096 10, , ,485 Program revenue O ffice of M entalretardation M edicaid Louisiana R ehabilitation Services R esidentialfacilities D epartm entof Education O ffice of C itizens w ith D isability D evelopm ent O ffice of Com m unity Services Job Training Partnership A ct Louisiana Rehabilitation ServicesGrant Program service feesand otherrevenue 1,339,535 1,140, , , ,366 74,000 35,716 32, ,309 ~ _ 47,124 1,365, , , , ,253 55,836 46, Totalr~ro~ram revenue 3,913,109 3,215,492 O therrevenue Salesand contractincom e Interestincom e M iscellaneousincom e Com m unity and ResidentialServicesA ssociation 738,558 47,772 34, ,515 68,215 6,411 12,599 Totalotherrevenue U nrestricted R evenue and Support N etassetsreleased from restrictions U nrestricted R evenue and Support 820, ,740 5,011,728 4,261, ,894 5,011,728 4,658,611 (Continued) The accom panying notesare an integralpartof these statem ents.

7 A ssociation of R etarded C itizens -B aton R ouge Statem entsof A ctivities Y ears E nded June 30,1999 and June 30,1998 E xpenses Program services M etro Enterprises-Business M etro Enterprises-Rehabilitation Early Intervention Program s Respite Care Program s V ocation Services -Job Placem ent Louisiana CareerD evelopm entcenter O ther Totalprogram services $719, ,915 1,036,293 1,233, , , ,695 $674, , ,291 1,030, , , ,713,659 4,142,795 Supporting services M anagem ent,generaland otherexpenses D ecrease in m arketvalue of investm ents Totalsuoortine serv ices Totalexpenses Increase (Decrease)in Unrestricted NetAssets C hangesin T em porarily R estricted N eta ssets Interestincom e N etassetsreleased from restrictions O ther ncrease (decrease)in tem porarily restricted netassets Increase in N eta ssets N eta ssets,beginning of year N eta ssets,end of year 92,989 2,36 _ 9 95,358 4,809, ,71! 758 3,23 _ 2 _ 3, ,701 2,630,43 _ 6 2,837,137 90,535 8, ,919 4,241, ,846 (396,894) (396,894) 19,952 2,610,484 2,630,436 The accom panying notes are an integralpartof these statem ents 7

8 v~ 0o ~J o ~ v~ d ~

9 A ssociation of R etarded C itizens -B aton R ouge Statem entsof C ash Flow s Y earsended June 30,1999 and June 30,1998 C ash Flow s From O perating A ctivities Increase in netassets Adjustmentsto reconcilechangein netassetsto net cash provided by operating activities D epreciation Changesin operating assetsand liabilities (Increase)decreasein accountsreceivable (Increase)decrease in accrued interestreceivable (Increase)in deposit (Increase)decrease in inventory (Increase)decreasein prepaid expenses Increase (decrease)in accountspayable Increase (decrease)in accrued expenses D ecrease in m arketvalue of investm ents etcash Provided fused)by oneraline activ 1999 $206, $19,952 92,680 85,021 77, (124,929) 63,671 (26,841) (3,894) (214,281) 1,525 6,093 (37,170) 14,035 (88,549) _8 A _ 4~%S _ 28~7836_6 (204,938) (371,614) 230g,~ 53 3 (19,484) 70,000 (140,76~ _ 50,516 C as (146,018) 1,29 146, (14471!~ 14!_4~7205 NetIncrease (Decrease)in Cash and Cash Equivalents C ash and C ash E quivalents,beginning of year C ash and C ash E quivalents,end of year 2,356 (7,217) 90 _ 4, ~ 27.97,644 92,783 _. 90,427 Supplem entald isclosure of C ash Flow Inform ation C ash paid during the year for Interest The accom panying notesare an integralpartof lhese statem ents

10 A ssociation for R etarded C itizens -B aton R ouge N otes to FinancialStatem ents June 30,1999 N ote l-n ature of O rganization The Association for Retarded Citizens - Baton Rouge (Association) is a not-for-profit organization w hich prom otes,develops,m onitors,supportsand directly providesservicesto im prove the w ellbeing of people w ith disabilitiesan d theirfam iliesfrom EastBaton Rouge an d surrounding parishes.m ajorprogramsincludeinfanthabitation Servicesto assistfamilieswith children agesbirth through three yearsof age w ho have orwho are atrisk of developm ental disabilities,providing support/training/servicesto adultsw ith developm entaldisabilitiesthatare needed to achieve self-identified em ploym entand habilitative outcom es,and provide,in the ITSN 's N atural Environm ent and Center settings, special instruction, speech therapy, occupationaltherapy,physicaltherapy,nursing services,traveland transportation,related m aterialand supplies,fam ily counseling and hom e visitsand Child Specific Property for}nfants and Toddlers w ith SpecialN eeds,forw hom insurance,m edicaid and O CD D funds are not available. Funding to provide these servicesmad program sare from the CapitalA rea U nited W ay A gency and variousfederaland state contractsand grants. N ote 2-SignificantA ccounting Policies A. Cash and Cash Eouivalents Forthe purpose of statem entof financialposition presentation,cash equivalentsare considered to be highly liquid investm ents w ith m aturities of three m onths orless.a tvarioustim es during the year cash and cash equivalents on depositw ith one banking institution exceeded the $100,000 insured by the FederalDepositInsurance Corporation.M anagem en(m onitorsthe financialcondition of the financialinstitution on a regularbasis,along w ith theirbalancesin cash and cash equivalents to m inim ize thispotentialrisk. B. Investm ents Investm entsin equity securitiesw ith readily determ inable fairvaluesand allinvestm entsin debt securitiesare m easured atfairvalue in the statem entof financialposition. C. Support and Expenses Contributionsreceived and unconditionalprom isesto give are m easured attheirfairvaluesand are reported as an increase in netassets.the A ssociation reportsgifts of cash and otherassets asrestricted supportif they are received w ith donorstipulationsthatlim itthe use of the donated assets,orif they are designated assupport forfuture periods.w hen a donorrestriction expires, that is, w hen a stipulated tim e restriction ends or purpose restriction is accom plished, tem porarily restricted netassetsare reclassified to unrestricted netassetsand reported in the statem entof activity asnetassetsreleased from restrictions. D onor-restricted contributions w hose restrictionsare m etin the sam e reporting period are reported asunrestricted support.

11 A ssociation for R etarded C itizens-b aton R ouge N otes to FinancialStatem ents June 30,1999 Note2-SignificantAccounting Policies(Continued) C. Supportand Expenses(Continued) The A ssociation reportsgiftsof goodsand equipm entasunrestricted supportunlessexplicit donorstipulationsspecify how the donated assetsm ustbe used.g ifts& long-lived assetsw ith explicitrestrictionsthatspecify how the assetsare to be used and giftsof cash orotherassets thatm ustbe used to acquire long-lived assetsare reported asrestricted support.a bsentexplicit donorstipulationsabouthow long those long-lived assetsm ustbe m aintained,the A ssociation reports expirations of donor restrictions w hen the donated oracquired long-lived assets are placed in service. Expenses are recorded w hen incurred in accordance w ith the accrualbasis of accounting D. U ncollectible Revenue The A ssociation considers accounts receivable to be fully collectible;accordingly,no allow ance fordoubtfulaccounts is required. If am ounts becom e uncollectible,they w illbe charged to operationsw hen thatdeterm ination ism ade. E. Concentration of CreditR isk Creditreceivables have significantconcentrations of creditrisk in the govem nr entalsectorin the Baton Rouge,Louisiana area. A tjune 30,1999 and June 30,1998,the portion of these receivablesrelated to thissectorw asapproxim ately 87% and 89% respectively. F. Inventory Inventory isstated atthe low erof costorm arketusing the first-in,first-outm ethod G. _ D epreciation Fixed assets are recorded at costand depreciated using the straight-line m ethod over their estim ated usefullives. I1. R etirem entplan The relirenr entplan is a defined benefitplan w hich covers substantially allfull-tim e em ployees I. Incom e Taxes TheAssociation isexemptfrom incometaxesundersection 501(c)(3)of theinternalrevenue C ode and isnotclassified as a private foundation.

12 A ssociation for R etarded C itizens -B aton R ouge N otesto FinancialStatem ents June 30,1999 Note 2-SignificantAccounting Policies(Continued) J. G rantcontracts The A ssociation dependssignificantly on grantcontractreim bursem entsto carry outitsprogram activities.thisrevenue isdisclosed asprogram revenue on the statem entof support,revenue and expenses. G rantrevenue is recorded as related expenses are incurred,and reim bursem entrequests are subm itted to the grantoragency. K. FunctionalExpenses The A ssociation allocatesfunctionalexpensesprim arily by specific identification of program expensesw hich include salariesof personnelassigned to specific program s,h ow ever,certain adm inistrative salaries and related expenses and othergeneralexpenses ar e allocated using percentageswhich are adjusted annualy.thesepercentagescoincidewith grantagreementsand budgets. L. U se of Estim ates The preparation of financialstatem ents in conform ity w ith generally accepted accounting principles requiresm anagem entto m ake estim atesand assum ptionsthataffectthe reported am ountsof assetsand liabilitiesand disclosure of contingentassetsand liabilitiesatthe date of the financialstatem entsand the reported am ountsof revenue and expensesduring the reporting period. A ctualresultscould differfrom those estim ates. M. Reclassifications Certain reclassificationshave been m ade to the 1998 financialstatem entsto conform w ith the 1999 financialstatem entpresentation. N ote 3-Pension Plan Pension expense forthe yearsended June 30,1999 and 1998 was$220,581and $100,985, respectfully.

13 A ssociation for R etarded C itizens-b aton R ouge N otesto FinancialStatem ents June 30,1999 Note3-Pension Plan (Continued) The follow ing setsforth the plan 'sfunding statusand the am ountsrecognized in the Com pany's statem entof financialposition atjune 30,1999 and June 30,1998 as prepared by M utualof A m erica in accordance w ith FA SB Statem entn o.132. Funded Status Benefitobligation atjune 30 Fairvalue of plan assetsatjune 30 Funded status $2,170,269 2,059, ,382 $1,809,205 1,733,936 75,269 Prepaid benefitcostrecognized in the Statem entof FinancialPosition $280,229 $346,752 A ssum ptionsasof June 30 D iscountrate Expected long-term rate of return on plan assets R ate of com pensation increase pcryear O ther D ata B enefitcost Em ployercontribution Em ployee contribution B enefitspaid N ote d-investm ents 6.5% 7.5% 5.0% $220,581 $154,058 N one $38, % 7.0% 5.5% $100,945 $139,241 N one $12,448 hw estm ents in certificates of deposits are stated at costand other investm ents are stated at m arketvalue asquoted by nationalpublications.a tjune 30,1999 an d 1998,investm entsare asfollow s: U nrestricted Investm ents in certificates of deposit w ith m aturities from six m onths to four years and interestratesfrom 5.5% to 6.5%. FederalH om e I.oan M ortgage Corp w ith a yield of 7% ~432 22

14 A ssociation for R etarded C itizens -B aton R ouge N otes to FinancialStatem ents June 30,1999 Note4-Investm ents(continued) Investm entincom e from cash equivalentsand investm entsiscom prised of the follow ing forthe yearended June 30,1999. T em porarily Ụ nrestricted R estricted N ote 5-N ote R eceivable D ividendsand interest Netunrealized gains(loss) Total $47,772 (2,369) 45,403 $ _~8 The A ssociation sold facilitiesatw ayne Drive for$57,000 in 1995 and isfinancing the sale Term sare m onthly installm entsof $500,plus9% interestperannum m aturing January,2016 M aturitiesof note receivable forthe five yearsfollow ing June 30,1999 are asfollow s $1,420 1,553 1,699 1,858 2,032 N ote 6-Property and E quipm ent A sum m ary ofprope~y and equipm ent~ June 30,1999 and June 30,1998,isasfollow s Buildings Furniture and equipm ent V ehicles D rapery and carpets Leasehold im provem ents Lessdepreciation to date C onstruction-in-progress Pronertv and eouinm ent,ne $1,355, , ,813 13,599 7,031 1,895,235 1,263, , , , ,997 $1,355, ,172 87,288 13,599 7,031 1,883,707 1,226, , , ,770 14

15 A ssociation for R etarded C itizens-b aton R ouge N otes to FinancialStatem ents June 30,1999 N ote 7-T em porarily R estricted N eta ssets Tem porarily restricted netassets are available for the follow ing specific program services Building fund $33,410 $29,420 N ote 8-D eposit The A ssociation received a grantforthe acquisition and renovation of a building to expand rehabilitation and placem entservicesforthe deaf and deaf-blind statew ide. Thisgrantrequired thatthe Association provide $142,134 of localm atching fundsforlouisiana Rehabilitation Services(LRS)to provide $525,162 of federalfimds.the $142,134 wasdeposited with LRS. A tjune 30,1999,The A ssociation had received $275,000 reim bursem entforthe purchase of the building,which isshown asrevenue and $17,205 forotherconstruction costwhich was recorded asreturn of deposit. D eposit R eim bursem entof construction costs $142,134 ~17,205 ) O,199 N ote 9-Letter of C redita greem ent The A ssociation hasentered into a standby letterof creditagreem entw ith a financialinstitution for$150,000 atan interestrate of 7.5%.A sof June 30,1999,no fundsw ere due on the letter of credit. N ote 10-SubsequentE vents On July 23,1999,the A ssociation entered into a contractfor$275,000 forrenovation of a building to expand rehabilitation and placem entservicesforthe deaf and deaf-blind statcw ide. Fundsw illbe provided from the grantm entioned in N ote 8 above. Subsequentto the end of fiscal1999,the A ssociation w asnam ed asdefendantin a w rongful death of a client. M anagem entis review ing the suitand believesthatthe com plaintis w ithout m erit. N o assurance can be given,how ever, thism atterw illbe resolved in the A ssociation's favor. 15

16 A ssociation for R etarded C itizens -B aton R ouge Schedule of Expendituresof Federaland State A w ards Y ear E nded June 30,1999 Program s C.F.D.A.# C FM S N um ber D isbursem ents/ E xpenditures Individualw ith D isabilities Education A ct-parttl O ffice of Em ploym entand Training -JTPA O ffice of Em ploym entand Training -JTPA A cquisition and renovation of a building to expand rehabilitation and placem ent services for the deaf and deaf-blind statew ide A $354,166 10,092 20, , ,18A

17 H AW THO RN, W AYM O UTH ~'~"CARRO LL, L.L.P. H [IANI[t (;AP,[,()[I ~:[~A rt(~[,[~41 [ W ALt(.; C R A.I [;,IAtIII[;PAHK[I~ C F:A If,LIE;(: M (KNI(4H I. I {:[!A AN ]II(INY.J (:~I~H IgA. I {:i!a f:fiaf~[[~;[i HIVtY..Jl? (:I{A [,AVID,J [,[I(I[IFF;A[~[) (1[A CtI-llIfI[[~f,tI[:11I[;A(;[;{I[IN 'IA N -I 8555 UNITED PLAZA BLVD BAJEqN ROUGE.LOUISIANA 708Q9 (22b)923 3ODQ ~FAX (2P[il D ecem ber7,1999,[)[{rfl] B HAW IHf3~,N.(;H,~ llbd[{/[~77] J[IFIN F W AYM CILIqII C t~a 11~lE]P /D[w ] FIEIW AFI[)V [:API~I(]IL {:HA [1flfl~]1~l!f~) W AF~H[N c [~[ii,c r~a HIIIH[[I [1[1[1[[I] J Z[[,NH ]i.[1[ A F~[IIFI[D f:a[~l I IIAN~:OCK. E R A HEIIF?[H R eporton C om pliance V~ith R equirem ents Applicable to Each M ajor Program and on InternalControl O ver C om pliance in A ccordance W ith O M B C ircular A -133 B oard of D irectors A ssociation forretarded Citizens-Baton Rouge B aton Rouge,I.ouisian a M em bers of the B oard C om pliance W e have audited the com pliance of the A ssociation for R etarded C itizens -B aton R ouge B aton R ouge,l ouisiana w ith the typesof com pliance requirem entsdescribed in the "U.S.O fi ce of M anagem entand B udget (OM B)CircularA-133ComplianceSupplement"thatare applicableto each ofitsmajorfederal programsfortheyearended June30,1999.TheAssociation forretarded Citizan s'smajorfederal program sare identified in the sum m ary of auditor'sresultssection of the accom panying schedule of findings and questioned costs. Com pliance w ith law s, regulations, contracts, and grants applicable to the A ssociation for Retarded Citizens - B aton Rouge is the responsibility of the A ssociation's m anagem ent.o ur responsibility is to express an opinion on the A ssociation's com pliance based on ouraudit. W e conducted ourauditof com pliance in accordan ce w ith generally accepted auditing standards and the standardsapplicable to financialauditscontained in G overnm entauditing Standards,issued by the Com ptrollerg eneralof the U nited States;and OM B CircularA -133,"A udits& States,Local G overnm elts,and N on-l'rofitorganizations." Those standardsand OM B CircularA -133 require thatw e plan and perform the auditto obtain reasonable assurance aboutw hetherthe types of compliance requirem entsreferred to above thatcould have a directand m aterialeffecton a m ajor federalprogram occurred. A n audit includes exam ining,on a testbasis,evidence aboutthe

18 A ssociation's com pliance w ith those requirem ents and perform ing such otherprocedures as w e considered necessary in the circum stances. W e believe thatourauditprovidesa reasonable basis of ouropinion.o urauditdoesnotprovide a legaldeterm ination of The A ssociation'scom pliance w ith those requirem ents. I1ouropinion,The A ssociation com plied,in allm aterialrespects,w ith the requirem ents referred to abovethatareapplicableto each ofitsmajorfederalprogramsfortheyearended June30,1999. nternalcontrolo vercom nliance The m anagem entof the A ssociated forr etarded Citizens -B aton Rouge is responsible for establishing and m aintaining effective internalcontrolovercom pliance w ith the requirem entsof law s,regulations,contracts,and grantsapplicable to federalprogram s.in planning mad perform ing our audit, w e considered The A ssociation's internal control structure over com pliance w ith requirementsthatcould havea directand materialeffecton amajorfederalprogram in orderto determine ourauditing proceduresforthe purpose of expressing ouropinion on com pliance and to testand reporton internalcontrolovercom pliance in accordance w ith O M B CircularA O urconsideration of the intern alcontrolovercom pliance w ould notnecessarily disclose all m atters in the im ernalcontrolthatm ightbe m aterialw eaknesses.a m aterialw eakness isa condition in w hich the design oroperation of one orm ore of the internalcontrolcom ponentsdoesnotreducc to a relatively low level the risk that noncom pliance w ith applicable requirem ents of law s, regulations,contracts,and grantsthatwould be materialin relation to a majorfederalprogram being audited m ay occurand notbe detected w ithin a tim ely period by em ployeesin the norm alcourse of perform ing their assigned functions. W e noted no m atters involving the internalcontrolover com pliance and its operation thatw e considerto be m aterialw eaknesses. Thisreportisintended forthe use of m anagem ent,federalaw arding agenciesand pass-through entitiesand isnotintended to be and should notbe used by anyone otherthan these specified parties. Y ourstruly,

19 H AW THO RN,W AYM O UTf ~ C ARRO LL, k.k.p. HOHIIII(~ IIAVV'IHDRN (:[~A [1[{9G 1~1771 JCJIIN [ ttvaym LILJH I L;U A [ls~op 19~w l IKIW AR[IV CARFIEIL[ fl[~a C[[(IllIIb I'LIF;!IC A(:C(RIN]AN I 8555 UNITED PLATA BLVD BA]ON HOUGE,LOUISIANA [225) D *FAX (22D] B D ecem ber7,1999 W A[I[I[N C Iltl [:[~A R[IIF~[D ROll[H I.I 7~HN[)Ii (1#~A CAH[ I HANCflf:K C HA ilrill[[i B.eporton C om pliance and on InternalC ontrolo ver Financial R eporting Based on an A uditof FinancialStatem entsperform ed in A ccordance w ith G overnm enta uditina Standar B oard of D irectors A ssociation forretarded Citizens-Baton Rouge B aton R ouge,louisiana M em bers of tim B oard W e have audited the financialstatem entsof the A ssociation for R etarded C itizens-b aton R ouge B aton R ouge,louisiana as of and forthe yearended June 30,1999,and have issued ourreportthereon dated D ecem ber7, 1999.W e conducted ourauditin accordance w ith generally accepted auditing standardsand the standardsapplicable to financialauditscontained in G overnm entauditing Standards,issued by lhc C om ptrollerg eneralof the U nited States. C om pliance A spartof obtaining reasonable assurance aboutw hethera ssociation forr etarded Citizens- B aton R ougc's financialstatem ents are free of m aterialm isstatem ent,w e perform ed tests of its com pliance w ith certain provisionsof law s,regulations,contracts,and grants,noncom pliance w ith w hich could have a directand m aterialeffecton the determ ination of financialstatem entam ounts. IIowevcr,providing an opinion on compliancewith thoseprovisionswasnotan objectiveof our audit,and accordingly,w e do notexpress such an opinion. The results of ourtests disclosed no instancesof noncom pliance thatare required to be reported underg overnm enta uditing Standards. InternalControlO verfinancialrenortine In planning and perform ing ouraudit,w e considered the A ssociation'sintern alcontrolover financialreporting in orderto determ ine ourauditing proceduresforthe purpose of expressing our opinion on the financialstatem ents and notto provide assurance on the internalcontroloverfinancial

20 reporting.o urconsideration of the internalcontroloverfinancialreporting w ould notnecessarily disclose allm attersin the internalcontroloverfinancialreporting thatm ightbe m aterialw eaknesses. A m aterialw eakness is a condition in w hich the design oroperation of one orm ore of the internal controlcom ponentsdoesnotreduce to a relatively low levelthe risk thatm isstatem entsin am ounts thatw ould be m aterialin relation to the financialstatem entsbeing audited m ay occurand notbe detected w ithin a tim ely period by em ployeesin the norm alcourse of perform ing theirassigned functions. W e noted no m atters involving the internalcontrolover financialreporting and its operation thatw e consider to be m aterialw eaknesses. Thisreportisintended forthe use ofm anagem ent,federalaw arding agenciesand pass-through entitiesand isnotintended to be and should notbe used by anyone otherthan these specified parties.,~ t,~ d/pt,t/ Y ours truly, 20

21 HAW THO RN,W AYMO UTH ~ CARRO LL, L.L.P. H [IANI~EL(AFfllULI U f!a r~cle~h n t W AH l; {:f~a d [:HAlllf~ PAFtKIIL C RA IHLJI:;[; M tkrxic4h I i C}R A AN H ~LINY ~1 (;lflf;llna IlL C RA [;flafil[{;f{ I'[VLY Jll C [!A [)AVID J [fldtle;[4aii[i {:[!A C:[R1IFIFD PUBLIC ACCOLIN IAN1S 8555 UNITED PLAZA BLVD BATON ROUGE,LOUISIANA 7080R (225) ~FAX (PP5) R D ecem ber7,1999 noe~~rn B tlaw IH[IRN (:I~A IIE~9111EI77) JCIFIN [ W AYM fllih f:[~a [1~lflp 1ElflT} IIUW AII[~v CAFII~{1[t c [~A [ISlfl~l1SlSl3) W AF~[~[N [; ll{[l c:f!a IlLIll[~I ;~u~ lh J 7H ~NUll u ra FieI1[1[11 C:AHt L ~IANL:UL;K t:i~a fielilleii Schedule on AuditFindingsand Q uestioned CostsApplicableto Each M ajorprogram in A ccordance w ith O M B C ircular A -133 B oard of D irectors A ssociation forretarded Citizens-Baton Rouge Baton R ouge,louisiana M em bers of the B oard W e have audited the financialstatem ents of the A ssociation forretarded Citizens -Baton Rouge,as of and forthe year ended June 30,1999,and have issued ourreportthereon dated D ecem ber 7, W e conducted our audit in accordance w ith generally accepted auditing standards and the standards applicable to financialaudits contained in Governm enta uditing Standards,issued by the C om ptroller G eneralof the U nited States. Schedule on A uditfindines and O uestioned C osts asr cauired bv C irculara -133 Subnart ~505(a)(4)(b)D epartm entof 1lealth and H um an Services C.F.D.A.# (1) The above mentioned auditreportcontained an unqualified opinion (2)Ourauditreportdid notdiscloseany materialweaknessesorotherconditionsin internalcontrolw hich are required to be reported undero M B CircularA (3) W e issued an unqualified reporton compliance formajorprograms (4)Ourauditreportdid notdiscloseany materialweaknessesorotherconditionsin internalcontrolovermajorprogramswhich arerequired to bereported by OM B C irculara (5)Ourauditreportdid notdiscloseany materialnoncompliancein majorprograms, asdescribed in ~.510(a)(2). (6) Ourauditdid notdisclose any questioned costs,asdescribed in ~.510(a)(3)

22 (7)Themajorprogramstested asmajorprogramsinclude P rogram s C.F.D.A.# Individualsw ith D isabilitieseducation A ct-parth (8) The auditee'sabove m entioned program wasclassified astype A using $300,000 of totalfederalaw ards expended as the thresbold. (9)Theauditeedoesnotqualify asa low risk auditeeunder~.530 This reportin intended forthe inform ation of the B oard of D irectors,m anagem ent,federal aw arding agenciesand pass-through entitiesand is notintended to be and should notbe used by anyone otherthan these specified parties. 22