~~ ~.> LL,.4 TREM E CO M M UNITY EDUCATIO N PRO G RA M NEW O RLEANS,LA 70119

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1 ~~ ~.> LL,.4 TREM E CO M M UNITY EDUCATIO N PRO G RA M NEW O RLEANS,LA INDEPEND ENT A UDIT O F THE A NNUA L FINANCIAL STATEM ENTS INC LUDING REPO RTS O N THE BASIC FINA NCIAL STATEM ENTS AND RELATED SING LE AUDIT REPO RTS FO R THE YEAR ENDED JUNE 30,1999 uncler provisions ofstate law,tills report is a public docum ent. A copy ofthe reporthas been subm itted to the audited, Qz reviewed, entity and other appropriate public ~fticials.~he "reporti~ ave'lab~e for ;~ublic inspection at the Baton P,c~uge ofice ofthe Legislative Audi. tor and,where appropriate,at the office ofthe parish clerk of+court. Release Date I)~. C _~,~ :.

2 T R EM E C O M M UN ITY ED UC ATIO N PRO G RA M TA BLE O F CO NTENTS Page ndependenta uditor's R eport 1 FINA N C IA L STAT EM ENTS Statem entoffinancialposition Statem entofa ctivities Statem entofc ash Flow Statem entofaw ards and Expenses Notes to FinancialStatem ents C O M PLIA NC E A N D INT ER NA L C O NTRO L R EPO RTS IndependentA uditor's R eporton Com pliance and on Interna ControlO verfinancialreporting Based O n A n A uditof FinancialStatem ents Perform ed in A ccordance w ith G overnm enta uditing Standards 10 SU PPLEM ENTA RY IN FO R M ATIO N Schedule offindings and Q uestioned C ost Update ofpriory earfindings M A NA G EM ENT LETTERS

3 C A R L R.JO H N S O N 2642 Tulane Ave. Suite B New O rleans,la CertifiedPublicAccountant (504) (504) ,Pager aol.com NDEPENDENT A U DITO R'S REPO RT To the Board ofdirectors Trem e C om m unity Education Program 3233 St.Bernard Avenue New O rleans,i-a I have audited the accom panying statem ent of financial position of Trem e C om m unity Education Program as ofjune 30,1999,and the related statem ents ofactivities and cash flow s forthe yearthen ended. These financialstatem ents are the responsibility of Trem e C om m unity Education Program 's m anagem ent. M y responsibility is to express an opinion on these financialstatem ents based on m y audit. Iconducted m y auditin accordance w ith genera ly accepted auditing standards and G overnm enta uditing Standards issued by the C om ptroller G eneralof the U nited States. Those standards required that Iplan and perform the audit to obtain reasonable assurance aboutw hether the financialstatem ents are free of m aterialm isstatem ent. A n audit includes exam ining,on a testbasis,evidence supporting the am ounts and disclosures in the financialstatem ents. A n audit also includes assessing the accounting principles used and significantestim ates m ade by m anagem ent, as w e l as evaluating the overallfinancial statem ent presentation. Ibelieve m y auditprovides a reasonable basis form y opinion. In m y opinion,the financialstatem ents referred to above presentfairly, in all m aterialrespects,the financialposition oftrem e Com m unity Education Program as of June 30, 1999 and the results of operations and cash flow s forthe year then ended in conform ity w ith genera ly accepted accounting principles. In accordance w ith G overnm enta uditing Standards, Ihave issued a reported dated Decem ber21,1999 on my consideration oftrem e Com m unity Education Program 's internalcontrol structure and report dated D ecem ber 15, 1999 on com pliance w ith law s and regulation. M y auditw as m ade for the purpose of form ing an opinion on the basic financial statem ent of Trem e Com m unity Education Program taken as a w hole. The acco m panying Schedule ofaw ards and Expenses for the year ended June 30, 1999 is presented for purposes of additionalanalysis and is nota required part ofthe basic financialstatem ents.

4 The information in thatschedule has been subjected to the auditing procedures applied in the auditof the basic financialstatem entand,in m y opinion,is fairly stated in a lm aterialrespects in relation to the basic financialstatem ents taken as a w hole. C arlr.johnson C ertified Public A ccountant Decem ber

5 Trem e Com m unity Education Program Statem entoffinancialposition June A ssets C urrenta ssets Cash on Hand C hecking A ccounts G rants Receivable PayrollC hecking A ccounts TotalC urrenta ssets Property and Equipm ent Equipm ent Less accum ulated depreciation TotalProperty and Equipm ent $ 94 1,536 38, ,108 (5,812) TotalA ssets Liabilities & NetA ssets CurrentLiabilities Accounts payable W ithheld and accrued payrolltaxes TotalC urrentliabilities N eta ssets Beg.Fund Balance NetC hange in Fund Balance TotalN eta ssets $ 12, , TotalLiabilities & NetA ssets See accom panying notes and auditor's report.

6 Trem e C om m unity Education Program Statem entofa ctivities Y earended June R evenue C ontributions Received G rants O therincom e Program Services C ontractlabor Em plm edicare Tax Expens Em ployerfica Tax Expen Em ployersuta Expense Fringe Benefits Salaries & W ages Supplies O perating Expenses A dvertising and Prom otion A uto Expenses Bank C harges Depreciation Expense Equipm entr ental Insurance -G eneral Legal& A ccounting M aintenance & Repair O fice Supplies Postage (And Deliveries) Rent-Office (Bldg) Staf D evelopm ent Telephone Utilities O perating Incom e O therincom e and Expense Interestexpense $ 4, , ,500 3,158 13,504 3,190 3, , , , , ,084 20,441 3,500 6,663 3, , , (848) (848) Change in netassets See accom panying notes and auditor's report.

7 Trem e Com m unity Education Program Statem entofcash Flow s Forthe Y earended June 30,1999 C ash Flow s from O perating A ctivities: Netincom e(loss) Adjustm ents to reconcile netincom e to net cash provided by operating activities: Depreciation expense C hange in accounts receivable Change in accounts payable C hange in accrued expenses NetCash Provided by (Used by) O perating A ctivities C ash Flow s from Investm enta ctivities Investm entin property & equipm ent NetCash Provided by (Used by) investing A ctivities C ash Flow s from Financing A ctivities Beginning R etained Earnings NetCash Provided by (Used by) Financing A ctivities NetIncrease(Decrease)in Cash Cash atbeginning ofperiod $ ,422 (13,259) (5,172) (26,273) (10,009) (6,033) (6,033) (10,885) Cash atend ofperiod See accom panying notes and auditor's report

8 "t'rem E CO M M UNtTY EDUCATIO N PRO GRAM SCHEDULE O F AW A RD A ND EXPENSES FO R THE YEAR ENDED JUNE 30,1999 O UAD DSS TOTALS GrantNumber GrantRevenue OtherContributions $208,139 $201,450 $62,500 $5, ,089 5,304 TotalRevenue $208,139 $201,450 $62,500 $5,304 $477,383 Sataries PayrolTaxes Fringe Benefits 127,276 11, ,523 8,13~ 't7,799 19,851 3,463 TotalEm ployee Costs 140, , ,113 Equipm entrental Building Rental Utilities Telephone ContractLabor Ofice Supplies Supplies Insurance Postage Accounting and Auditing Staf Developm ent Repairs and M aintenance Advertising Auto and Truck Bank Service Charges InterestExpense Depreciation 35,446 3,000 1,042 2,332 1,000 2,158 3,687 4, , ,o ,800 4,0CO 2,901 1, ,443 4,499 4,816 22O , , , ,084 12,000 5,632 6,079 4,500 3,741 14,589 20, , , , ,422 TotalExpenses 218, ,454 85,420 4, ,120 Change In NetAssets (10,134) = = = = = = = = = = 43,996 (2,020) = = = = = = = = = ,273 = = = = = = = = = = See Accompany notes and accountant's report G

9 TR EM E C O M M U N ITY ED UCA TIO N PRO G RA M NO T ES TO TH E FINA NC IA L STA TEM ENTS JU N E 30,1999 NO TE A -SU M M A RY O F SIG N IFICA NT A C CO UNTING PO LIC IES O rganization TremeCommunity Education Program (TCEP)isaNon-ProfitOrganization established to provide social services to residents of N ew Orleans, LA. It w as established and in cm porated on M ay 31, 1996,to prom ote and efectuate the planning and delivery of com m unity services and socialservice program s w ithin the com m unity. The corporation is organized to m obilize such hum an and financialresources as m ay be available to correct the socio-econom ic deprivations afecting the area and to avail itself to the com m unity. Tile sourcesof revenue com e from the Office of U rban A fairs,d epartm ent of SocialServicesand N ew O rleanscouncilon A gin g. TCEP hastwo majorprograms. Thefn'stisHarmony House,which isaseniorcitizen recreation centerthatprovidesavariety of essentiallife supportand culturalenrichm ent th th th lh serv icesto sem orsw ho reside m partsof the 5,6,7 and 8 w ards of N ew O rleans. The second program istrem e Y outh D evelopm entcenter. A sthe youth servicesarm of file facility,itprovides after schoolm onitoring services for at-risk youths betw een tile agesof six to sixteen years,w ho reside oratend schoolin D istrict96 of O rlean sparish. 2. Presentation of Fin ancialstatem ents The accom panying financialstatem entshave been presented in accordance wi th generally accepted accom ~ting principles. They are presented on the accrualbasisof accounting. 3. B asisof R eporting The A gency hasadopted SFA S N o.117 w hich establishesstandardsforexternalfm ancial reporting by not-for-profit organizations and requires that resources be classified for accounting and reporting purposesinto three netassetscategories(i.e.unrestricted net assets,temporarily restricted netassetsand permanently restricted netassets)accordingly to exlem aldonor-im posed restrictions. A description of thethree(3)netassetscategoriesisasfollows: Unrestricted N eta ssetsinclude the follow ing Unrestricted Netassetsincludefundsnotsubjectto donor-imposed stipulations. The reveuues received and expenses incurred hiconductin g the m ission of the A gency isin cluded in thiscategory. The A gency hasdeterm ined thatany donor im posed restrictionsforcurentordevelopin g program sand activitiesare

10 generally m et w ithin the operating cycle of the A gency, and therefore, the A gency's policy is to record these assets asunrestricted. T em porarily restricted netassets include realized gains and losses,investm ent incom e and gifts,appropriationsand contributionsforw hich donorim posed restrictionshave notbeen m et. Permanently restricted netassetsare contributionsw hich are required by the donor-im posed restriction to be invested in perpetuity and only the incom e is m ade available forprogram operationsin accordance w ith the donorrestrictions Such incom e isreflected in tem porarily restricted assetsuntilutilized fordonor im posed restrictions. A tjune 30,1999,the A gency did nothave any perm anently restricted or tem porarily restricted netassets. 4. Cash and Cash Eouivalents For lm rposesoffice statem entof cash flow s,the A gency considers allhighly liquid investm entspurchased w ith a m aturity of three m onths or less to be cash equivalents. 5. l~'onertv.plantand Eouinm e Property,Plantand Equipm entisstated atcost,if purchased,oratfah"m arket value atthe date of gift,if donated. 6. R evenue R ecogafition For financialreporting purp osed,the A gency recognized revenues w hen earn ed. N O T E B -EX EM PT STA T U S The corporation is tax exempt under provision of Section 501(o)(3) of the R evenue C ode. The corp oration m eets allof the applicable provision of the law. NOTE C - PROPERTY AND EQUIPM ENT Fixed assetsare stated atcost. D onated property and equipm entare st ated atfairm arket value atthe date of donation. D epreciation is com puted using the straight-line m ethod overthe estim ated usefullivesof the assets.

11 Property and equiplnentconsistof the follow ing asof. ' Com puter Equipm ent A ccum ulated D epreciation $ 17,108 ( 5812) N etc om puter Equipm ent $ N O TE E -C O M PEN SA TIO N TO D IR EC TO R S N O TE F -EC O N O M IC D EPEN D EN C Y NOTE G - EQUIPM ENT LEASE TCEP also m aintains an operathlg lease for an ofi ce copier and accessories w ith G ulf CoastProductsfor$ perm onth. A llother equipm ent rentalcosts w ere from m iscellaneous short - term leasing of m inor equipm ent.

12 C A R L R.JO H N SO N 2642 Tulane Ave. Suite B New O rleans,la CertifiedPublicAccountant (504) (504) ,Pager IN D EPEN D EN T A U D ITO R 'S R EPO RT O N CO M PLIA N CE A N D O N IN TERN A L C O N TR O L O V ER FIN A N C IA L R EPO RTIN G BA SED O N A N A U D IT O F FIN A N C IA L STA TEM EN TS PER FO R M ED IN A C C O R DA N C E W IT H G O V ER N M EN T A U D IT IN G STA N D A R D S To the B oard of D irectors Trem e Com m uni ty Education Program 3233 St.B ern ard Avenue N ew Orleans,LA ]have audited the financialstatem en ts of Trem e Com m unity Education Program as of and for the year ended June 30,1999,and have issued m y reportthereon dated D ecem ber 15, conducted m y auditin accordance w ith generally accepted auditing standards and the standards applicable to financial audits contained in G overnm ent Auditing Standards,issued by file C om ptroller G eneralof the U nited States. C om pliance A s part of obtaining reasonable assurance about w hether the Trem e Com m unity Education Program 'sfin ancialstatem entsare free of m aterialm isstatem ent,1perfolm ed testsof Trem e Com m unity Education Progr am 's com pliance wi th certain provisions of law s,regul ations,contracts and grants,noncom pliance wi th w hich could have a direct and m aterial efect on the determ ination of fm ancial statem ent am ounts. H ow ever, providing an opinion on compliance with thoseprovisionswasnotan objective of my auditand accordin gly,ido notexpress such an opinion. The results of m y test s disclosed instancesof noncom pliance thatare required to be reported underg overnm enta uditing Standards,w hich are described in the accom panyin g schedule of fin dingsand questioned costs. em alc ontrolover FinancialR en ortina In planning and perform ing m y audit, 1 considered N ew O rleans Educational Talent Search Program In c.'sintern alcontroloverfinancialreporting in orderto determ ine our auditing procedures for the purpose of expressing m y opin ion on the fm ancialstatem ents and notto provide assurance on th e intern alcontrolover financialreporting. H ow ever, w e noted certain m attersinvolvin g the in tern alcontrolover fm ancialsreportin g and its operation that w e consider to be reportable conditions.reportable conditions involve m atters com ing to our atention relatin g to significant deficiencies in the design or 10

13 operation o1tileinternalcontroloverfinancialreporting that,in ourjudgement,could adversely affect the organization's ability to record, process, sum m arize and repo l fin ancialdata consistentw ith the assertions of m anagem entin the fm ancials statem ents. R eportable conditions are described in the accom panying schedule of findings and questioned costs. A m aterialw ealolessisacondition in w hich the design oroperation of one orm ore of the inten~al control elem ents does not reduce to a relatively low level the risk flin t m isstatem ents ilam om lts that w ould be m aterialin relation to the financial statem ents being audited m ay occurand notbe detected wi thin a tim ely period by em ployeesin file normalcourse of perf orm in g theirassigned functions. O urconsideration ofim ernalcontrolw ould notnecessarily disclose allm attersin intenm l control flint m ight be reportable conditions and, acco rdin gly, w ould not necessarily disclose allreportable conditions thatare also considered to be m aterialw ealo)esses as defined above. H ow ever,w e believe thatnone of the reportable conditions described above isa m aterialw eakness. This report is intended for the in formation of m anagem ent, and others w ithin the organization and the appropriate state and federalagencies. H ow ever,this report is a m atterof public record,and itsdistribution isnotlim ited. (_/.Lq/'--'J \,~ CarlR.Johnson Certified Public A ccountant D ecem ber21,

14 T R EM E C O M M U N ITY ED UC ATIO N PRO G RA M SC H ED U LE O F FIN D ING S A N D Q U ESTIO N ED C O ST FO R TH E Y EA R EN D ED JU N E 30,1999 C ondition D uring ourreview ofthe entity's internalcontrolsystem,w e noted a lack of segregation ofduties in the cash receipts process. A llprogram cance led checks,check registers and generalledgers are m aintained by the bookkeeper (However,checksare received and reviewed by the executive directorpriorto reconciling and issuance) Efectof Condition W ithoutproperinternalcontrols in place,the organization puts the assets ofthe granting agencies as w ellas theirow n atrisk. C riteria The grantagreem ents require thatproperprocedures be in place to em ploy good recordkeeping and safeguarding ofassets. Recom m endation W e recom m ends thatthe clientim plem ents an additionallayerof m aintenance in the cash receipts process. 12

15 T R EM E C O M M U N ITY EDUC ATIO N PRO G RA M U PDAT E O F PRIO R Y EA R FIN D ING S FO R TH E Y EA R EN D ED JU N E 30,1999 Finding #1:Bank Reconciliations NotPrepared Finding #2:C om m ingling offunds Finding #3 :Fixed A ssetschedule NotM aintained Finding #4:A ccruala ccounting NotIm plem ented Finding #5:C ash Flow Statem entnotprepared Finding #6:U ncategorized M iscellaneous Revenue Finding #7:Lack ofsegregation ofduties X Finding #8:Inaccurate Recording ofpayro lexpenses Finding #9:Form 941's N otfiled Finding #10:Lack ofsupporting Docum entation X X X ]3

16 M A N A G EM EN T LETT ER S 1/4

17 T REM I~ C O M M U N ITY E D UCATIO N 3233 ST.BERNARD AVE.~ NEW O RLEANS.LA ~ (504 P RO G RA M,INC ~ FAX (504) N ORMAN R.SMITH,EXECUTIVE D IRECTOR Decem ber C arljohnson,c PA 2642 Tulane Ave. New O rleans.la D earm r. Johnson Concerning yourauditofourfinancialstatem ents forfiscalyearjuly 1,1998 to June 30,1999 forthe purpose ofexpressing an opinion on w hetherthe financialstatem ents presentfairly,in allm aterialrespects,the financialposition,results ofoperations and cash flow s oftrem 6 C om m unity Education Program s,inc. in conform ity w ith genera ly accepted accounting principles,w e have taken the fo low ing corrective actions in response to your"schedule of Findings and Q uestioned C ost": ~ W e have amended the dutiesofthe administrative personnel(executive Director Adm inistrative Assistantand Bookkeeper)to include the folowing procedures for processing the dispersion ofpetty cash: The Adm inistrative A ssistantw iloversee and review the reconciliation ofa checking accounts. Petty cash requests w illstartatthe Adm inistrative Assistantw ho w ilcritique all requests before recom m ending action to the Executive Director,w ho w ilcritique and dispose ofthe action. Ifapproved,the A dm inistrative A ssistantw illpresentit to the bookkeeperto dispense the funds. W hen Ireceive the m onthly bank statem ents,from the U. S. PostalService,Iw il peruse them and give the statem ents to the bookkeeperforreconciliation and then she w ilgive them to the Adm inistrative Assistantw ho w illreview and critique allfinancialaccounts. These actions representan amendmentto the job descriptionsand duties ofalofthe staf m em bers m entioned above. Executive D irector BOARD OFD]RECTORS PAULT.W EST,PRESIDENt~ DON DAVIDSON,VICEPRESIDENT~ GREGORY BRIANT,TREASURER ~ LOUVINIA W ALLACE,SECRETARY CLARENCELEWIS ~ SHIRLAINEGEORGE~ BRUCEDAVENPORT~ ANTHONY ROMAN ~ DON BOUCREE~ ROBERTMCFARLAND SPECIAL ADVISOR TO THE BOARD OFDIRECTORS REP EDW IN R M URRAy,ESQ PROUD SPONSORS OFHARMONY HOUSE SENIOR CENTER & TREM~YOUTH DEVELOPMENT CENTER

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