Eugene J. Miller CERTIFIED PUBLIC ACCOUNTANT, LLC

Transcription

1 Eugene J. Miller CERTIFIED PUBLIC ACCOUNTANT, LLC LIFESPAN FAMILY SERVICES OF PA, INC. AUDITED FINANCIAL STATEMENTS AND SINGLE AUDIT REPORTS FOR THE YEAR ENDED JUNE 30, W. MAHONING ST., STE PUNXSUTAWNEY, PA EJMCPA@GMAIL.COM

2 TABLE OF CONTENTS Auditor s Opinion Letter Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 7 REPORTS REQUIRED BY GOVERNMENT AUDITING STANDARDS AND OMB CIRCULAR A-133 Schedule of Expenditures of Federal Awards 11 Notes to Schedule of Expenditures of Federal Awards 12 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 13 Independent Auditor s Report on the Schedule of Expenditures Of Federal Awards 15 Schedule of Findings and Questioned Costs 17 Summary Schedule of Prior Audit Findings 18

3 Eugene J. Miller CERTIFIED PUBLIC ACCOUNTANT, LLC INDEPENDENT AUDITOR S REPORT To the Board of Directors Of Lifespan Family Services of PA, Inc. Report on the Financial Statements We have audited the accompanying financial statements of Lifespan Family Services of PA, Inc. (a nonprofit corporation), 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 the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 104 W. MAHONING ST., STE PUNXSUTAWNEY, PA EJMCPA@GMAIL.COM

4 To the Board of Directors of Lifespan Family Services of PA, Inc. September 26, 2016 Page 2 of 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lifespan Family Services of PA, Inc. 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. Other Matters 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 Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presented for purposes of additional analysis and is 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 information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 26, 2016, on our consideration of Lifespan Family Services of PA, 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 Standards in considering Lifespan Family Services of PA, Inc. s internal control over financial reporting and compliance. Eugene J. Miller, CPA, LLC Punxsutawney, PA September 26, 2016

5 LIFESPAN FAMILY SERVICES OF PA, INC. STATEMENT OF FINANCIAL POSITION AS OF JUNE 30, ASSETS Current Assets Cash $ 51,794 Employee Receivable 332 Accounts Receivable 152,306 Prepaid Expenditures 3,250 Prepaid Insurance 2,248 Total Current Assets 209,930 Property and Equipment 17,466 (Net of Accumulated Depreciations) Other Assets Deposit on Rental Space 500 TOTAL ASSETS $ 227,896 LIABILITIES AND NET ASSETS Current Liabilities Accounts Payable $ 81,054 Accrued Expenses 15,600 Accrued Salaries and wages 5,394 Loans from Officer 7,270 Line of Credit 8,200 Total Current Liabilities $ 117,518 NET ASSETS Unrestricted Net Assets 110,378 Temorarily Restricted Net Assets - Permanently Restricted Net Assets - Total Net Assets 110,378 TOTAL LIABILITIES AND NET ASSETS $ 227,896 See accompanying notes and Independent Auditor's Report

6 LIFESPAN FAMILY SERVICES OF PA, INC. STATEMENT OF ACTIVITIES FOR YEAR ENDED JUNE 30, 2016 UNRESTRICTED NET ASSETS Adoption Services $ 111,375 Foster Care Services 1,220,349 Donations 1,500 TOTAL UNRESTRICTED REVENUES 1,333,224 EXPENSES Program Services Adoption 85,178 Foster Care 1,065,067 Supporting Services Management and General 154,880 Fundraising - TOTAL EXPENSES 1,305,125 INCRESE IN UNRESTRICTED NET ASSETS BEFOR EXTRAORDINARY ITMES 28,099 Proceeds from Insurance Claim 7,570 OJT Reimbursement 10,350 TOTAL OF UNRESTRICTED NET ASSETS 46,019 AFTER EXTRAORDINARY ITEMS TOTAL OF UNRESTRICTED NET ASSETS 64,359 AT BEGINNING OF YEAR TOTAL OF UNRESTRICTED NET ASSETS $ 110,378 AT END OF YEAR See accompanying notes and Independent Auditor's Report

7 LIFESPAN FAMILY SERVICES OF PA, INC. STATEMENT OF FUNCTIONAL EXPENSES FOR YEAR ENDED JUNE 30, 2016 PROGRAM SERVICES SUPPORTING SERVICES Foster Care Adoption Management and General Fundraising TOTAL Accounting & Auditing $ - $ - $ 9,725 $ - $ 9,725 Adoption Expense 3,539 3,539 Adoption - Permanacy - Advertising 63,969 63,969 Auto Maintenance 2,064 2,064 Bank Fees Communications 22, ,630 Data Collection & Reportin 4,106 4,106 Depreciation 5,812 5,812 Dues and licenses 2,433 2,433 Employee Benefits 13,304 2,790 5,364 21,458 Employee Expenses 2, ,793 Employee Retirement 1, ,797 Employee Training 8,534 8,534 Employee Travel 39,505 39,505 Foster Child Misc. Exp. 6,265 6,265 Foster Parent Recruitment 6,329 6,329 Foster Parent Reimb. 45,551 45,551 Foster Parent Stipend 561, ,362 Foster Parent Training 3,362 3,362 Insurance 25, ,635 Interest (101) (101) Maintenance & Repairs 27,799 27,799 Minor Office Equipment 2, ,331 Legal Fees 6,123 6,123 Office Supplies 13, ,240 Payroll Processing 2,359 2,359 Payroll Tax Expense 9,449 7,071 5,507 22,027 Printing and Publication 2,223 2,223 Salaries and Wages 195,310 64,058 86, ,824 Swan Service Expense 5,209 5,209 Postage and Shipping 3,141 3,141 Rent 22, ,210 24,200 Utilities 9, ,827 TOTALS $ 1,065,067 $ 85,178 $ 154,880 $ - $ 1,305,143 See accompanying notes and Independent Auditor's Report

8 LIFESPAN FAMILY SERVICES OF PA, INC. STATEMENT OF CASH FLOWS FOR YEAR ENDED JUNE 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Increase in Net Assets $ 46,019 Adjustments to Reconcile Increase in Net Assets to Net Cash Provided by Operating Activities: Depreciation 5,812 (Increase) Decrease in Operating Assets Accounts Receivable (55,081) Prepaid Expenses (3,479) Increase (Decrease) in Operating Liabilities Accrued Expenses (18,008) Accrued Salaries and Wages (2,955) Accounts Payable 78,674 Net Cash Provided by Operating Activities 50,982 CASH FLOWS FROM FINANCING ACTIVITIES Repayments to Line of Credit (950) Payments on Loan (3,840) Net Cash Provided by Financing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents Beginning of Year Cash and Cash Equivalents End of Year $ (4,790) 46,192 5,602 51,794 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash Paid During the Year for Interest $ 607 See accompanying notes and Independent Auditor's Report

9 LIFESPAN FAMILY SERVICES OF PA, INC. NOTES TO FINANCIAL STATEMENTS FOR YEAR ENDED JUNE 30, 2016 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The organization is a non-profit corporation (non-stock) organized under the laws of the Commonwealth of Pennsylvania. It provides foster care services to children and adolescents ranging in age from birth to age 21 as approved by the various children and youth agencies throughout the 67 counties of the Commonwealth. The organization recruits, trains and supervises foster parents. Programs are offered for regular foster care, the behaviorally challenged, and the medically needy. The organization currently has contracts with thirteen counties. The organization also provides adoption services on a fee for service basis. Services offered include evaluation and approval processing, family profile, and after approval and certification. Cash and Cash Equivalents For the purpose of the statements of cash flows, the organization considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents. Trade Accounts Receivable Trade Accounts Receivable are stated at the amount management expects to collect as per contractual terms with the various counties. Billings are due in the county offices by the 7 th calendar day of the month immediately following the provision of services. The counties shall issue payment no later than 60 calendar days from the date the invoice was received. Advertising The organization expenses advertising costs as they are incurred. Advertising expenses for the year ended June 30, 2016 were $63,969. Date of Managements Review Management has evaluated subsequent events through September 26, 2016, the date on which the financial statements were available to be issued.

10 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Property and Equipment The organization capitalizes property and equipment over $500; lesser amounts are expensed. Purchased property and equipment are capitalized at cost. Property and equipment are depreciated using the straight-line method over estimated useful lives ranging from five to thirty years. 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. Accordingly, actual results could differ from those estimates. Income Taxes In previous years, the organization was not tax exempt and filed Form 1120, Income Tax Return for a Corporation. In July 2013, the organization filed Form 1023, Application for Tax Exempt Status. This application was later approved and the organization s status was changed to be tax-exempt under Section 501(c)(3) of the Internal Revenue Code and classified by the Internal Revenue Service as Other than a Private Foundation. The organization s Form 990, Return of Organization Exempt from Income Tax, for the Years ending 2014, 2015 and 2016 are subject to examination by the Internal Revenue Service, generally for three years after they were filed. NOTE B PROPERTY AND EQUIPMENT Property and equipment consist of the following: Furniture and Equipment $25,683 Vehicle 9,794 35,477 Accumulated Depreciation (18,011) $ 17,466 NOTE C RELATED PARTY TRANSACTIONS The organization moved its offices in the fall to a new location owned by Patrick Shea, Executive Director of Lifespan Family Services of PA, Inc. A lease was signed and rent is $1,400 per month for the lease period beginning November 1, 2014 and ending October 31, 2017.

11 NOTE D LINE OF CREDIT The organization has a line of credit agreement with a bank for $10,000. There was $8,200 borrowed against the line and remains outstanding at June 30, The line bears a variable interest rate based on the prime rate as published in the Wall Street Journal, plus 3.5 points. The line is reviewed annually and is due on demand. NOTE E CONCENTRATIONS OF RISK For the year ended June 30, 2016, 59% of foster care revenue was derived from two counties that are served out of a total of thirteen counties that have contracts with the organization. Receivables from these two counties were 75% of the total amounts due at year end.

12 REPORTS REQUIRED BY GOVERNMENT AUDITING STANDARDS AND UNIFORM COMPLIANCE

13 Eugene J. Miller CERTIFIED PUBLIC ACCOUNTANT, LLC INDEPENDENT AUDITOR S REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS To The Board of Directors of Lifespan Family Services of PA, Inc. Report on the Schedule of Expenditures of Federal Awards We have audited the accompanying schedule of expenditures of federal awards of Lifespan Family Services of PA, Inc. for the year ended June 30, 2016, and the related notes (the financial statement). Management s Responsibility Management is responsible for the preparation and fair presentation of this financial statement 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 a financial statement that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit 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). These standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statement, 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 statement 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 104 W. MAHONING ST., STE PUNXSUTAWNEY, PA EJMCPA@GMAIL.COM

14 To The Board of Directors of Lifespan Family Services of PA, Inc. September 26, 2016 Page 2 of 2 accounting estimates made by management, as well as evaluating the overall presentation of the financial statement. 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 statement referred to above presents fairly, in all material respects, the expenditures of federal awards of Lifespan Family Services of PA, Inc. for the year ended June 30, 2016, in accordance with accounting principles generally accepted in the United States of America. EUGENE J. MILLER, CPA,LLC Punxsutawney, PA September 26, 2016

15 LIFESPAN FAMILY SERVICES OF PA, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR YEAR ENDED JUNE 30, 2016 FEDERAL GRANTOR/PASS-THROUGH GRANTOR/PROGRAM OR CLUSTER TIER Pass-through programs from: Pennsylavania Department of Human Services: FEDERAL PASS-THROUGH CFDA ENTITY IDENTIFYING FEDERAL NUMBER NUMBER EXPENDITURES Foster Care - Title IV-E $1,065,067 Total Expenditure of Federal Awards See accompanying notes and Independent Auditor's Report

16 LIFESPAN FAMILY SERVICES OF PA, INC. NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR YEAR ENDED JUNE 30, 2016 NOTE A BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of Lifespan Family Services of PA, Inc. under programs of the federal government for the year ended June 30, The information in this Schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations. Because the Schedule presents only a selected portion of the operations of Lifespan Family Services of Pa, Inc., it is not intended to and does not present the financial position, changes in net assets, functional expenses or cash flows of Lifespan Family Services of PA, Inc. NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (1) Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. (2) Pass-through entity identifying numbers is presented. As per the Schedule, the number represents a certificate of compliance number assigned by the Pennsylvania Department of Human Services. (3) The pass-through entity is unable to identify the federal portion of contracts. Therefore, as a sub-recipient the organization has reported the entire amount as federal funds.

17 Eugene J. Miller CERTIFIED PUBLIC ACCOUNTANT, LLC 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 Lifespan Family Services of PA, Inc. 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 Lifespan Family Services of PA, Inc. (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 the financial statements, and have issued our report thereon dated September 26, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Lifespan Family Services of PA, 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 Lifespan Family Services of PA, Inc. s internal control. Accordingly, we do not express an opinion on the effectiveness of Lifespan Family Services of PA, Inc. s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the 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, material weaknesses may exist that have not been identified. 104 W. MAHONING ST., STE PUNXSUTAWNEY, PA EJMCPA@GMAIL.COM

18 To the Board of Directors of Lifespan Family Services of PA, Inc. September 26, 2016 Page 2 of 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether Lifespan Family Services of PA, Inc. s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. ABC Organization s Response to Findings Lifespan Family Services of PA, Inc. s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. ABC Organization s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the 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 internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Eugene J. Miller, CPA, LLC Punxsutawney, PA September 26, 2016

19 Eugene J. Miller CERTIFIED PUBLIC ACCOUNTANT, LLC INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Directors of Lifespan Family Services of PA, Inc. Report on Compliance for Each Major Federal Program We have audited Lifespan Family Services of PA, Inc. s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Lifespan Family Services of PA, Inc. s major federal programs for the year ended June 30, Lifespan Family Services of PA, Inc. s major federal program is identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of Lifespan Family Services of PA, Inc. s major federal program based on our audit on the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and the audit 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). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit included examining, on a test basis, evidence about Lifespan Family Services of PA, Inc. s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Lifespan Family Services of PA, Inc. s compliance. 104 W. MAHONING ST., STE PUNXSUTAWNEY, PA EJMCPA@GMAIL.COM

20 To the Board of Directors of Lifespan Family Services of PA, Inc. Page 2 of 3 Opinion on Each Major Federal Program In our opinion, Lifespan Family Services of PA, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Report on Internal Control over compliance Management of Lifespan Family Services of PA, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Lifespan Family Services of PA, Inc. s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Lifespan Family Services of PA, Inc. s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe that a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

21 To the Board of Directors of Lifespan Family Services of PA, Inc. Page 3 of 3 The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Eugene J. Miller, CPA, LLC Punxsutawney, PA September 26, 2016

22 Summary of Auditor s Results LIFESPAN FAMILY SERVICES OF PA, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS FISCAL YEAR ENDED JUNE 30, 2016 Financial Statements Type of auditor s report issued Unmodified opinion on basic financial Statements of Lifespan Family Services of PA, Inc. Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X No Noncompliance material to financial Statements noted? Yes X No Federal Awards Internal control over major programs: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X No Type of auditor s report issued on Compliance for major programs: unmodified opinion for major programs Any audit findings disclosed that are required To be reported in accordance with section 510(a) Of OMB Circular A-133? Yes X No Identification of major programs: CFDA Number Name of Federal Program or Cluster Pass-through Entity Identifying Number Foster Care - Title IV-E Dollar threshold used to distinguish between Type A and Type B Programs: $750,000 Auditee qualified as low-risk auditee? Yes X No

23 Eugene J. Miller CERTIFIED PUBLIC ACCOUNTANT, LLC LIFESPAN FAMILY SERVICES OF PA, INC. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FISCAL YEAR ENDED JUNE 30, 2016 FINDING: : Foster Care CFDA No Condition: When reviewing Board minutes we noted that there had been only two (2) meetings held for the whole year. The minutes reflect no discussion of the financial statements. Recommendation: Eugene J. Miller, CPA, LLC recommends that there should be more board meetings held throughout the year and a presentation of financial statements be included as an agenda item. Any notable items coming out of the review should be duly noted in the minutes. Current Status: The recommendation was adopted in August of No similar findings were noted in the 2016 audit. FINDING: Foster Care CFDA No Condition: During our audit we found no formal closing of the period. Accounts were not reconciled timely. Errors were not fund and fixed to correct the financial information. Recommendation: Eugene J. Miller, CPA, LLC recommends that a month-end closing procedure be established to follow so that financial statements can be generated that are correctly accounts are reconciled timely. Current Status: The recommended procedure was adopted in August No similar findings were noted in the 2016 audit. FINDING: Foster Care CFDA No Condition: During an inquiry of the information technology of the organization, it was found that there is no procedures in backing up employee s laptops other than the fiscal and Executive Director s laptops. Furthermore, s are not saved or backed up on a secondary server and could be deleted. Recommendation: Our firm recommends that the organization outsource a backup service either in the cloud or offered locally to backup all information to prevent any kind of data loss for whatever reason. Current Status: The recommendation was acted upon in September The finding does not warrant any further action. 104 W. MAHONING ST., STE PUNXSUTAWNEY, PA EJMCPA@GMAIL.COM

24 FINDING: Foster Care CFDA No Condition: During our audit we found that the fiscal manager performed all the duties related to cash and other aspects of internal control. Little or no segregation of duties are currently in place. Recommendation: Our firm believes that there should be some oversight even though a complete segregation of duties can be established. For instance, bank statements should be opened or obtained by the Executive Director and reviewed for any odd-looking amounts of disbursement or deposits or transfers taking place at the end of the month. The mail should be opened by the Receptionist and given to the Executive Director for review and distribution to related areas and personnel. Current Status: The recommendation was adopted in August of Oversight and control procedures have been established sufficiently to correct this finding. This finding does not warrant any further action.