St. Louis Office for Developmental Disability Resources. Report To Governance And Data Analysis

Transcription

1 St. Louis Office for Developmental Disability Resources Report To Governance And Data Analysis for the year ended June 30, 2016

2 Table Of Contents Page Auditor Communications 1-6 Financial Results 7-9 Disbursements For Programs During FY Benford s Law And Cash Disbursement Analysis Independent Auditors Report On Additional Information 17 19

3 Auditor Communications Finance Committee St. Louis, Missouri We have audited the basic financial statements of (the Organization) for the year ended June 30, Our audit was performed in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement and presented in accordance with accounting principles generally accepted in the United States of America. Our audit involved performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. We also evaluated the appropriateness of accounting policies used by the Organization and the reasonableness of significant accounting estimates made by the Organization s management, as well as evaluated the overall presentation of the financial statements. Auditing standards require the auditor to ensure that those charged with corporate governance receive additional information regarding the scope and results of the audit that may assist the governing body in overseeing the financial reporting and disclosure process for which management is responsible. The following section describes matters which are required to be reported to you. This information is intended solely for the use of management, the Finance Committee and Board of Directors of the Organization and is not intended to be and should not be used by anyone other than these specified parties. April 5,

4 Auditor Communications (Continued) AREA Auditors Responsibility Under U.S. Generally Accepted Auditing Standards and Scope of Services Our responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with our oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles (GAAP). Our audit of the financial statements does not relieve you or management of responsibility for the accuracy of the financial statements. COMMENTS We issued an unmodified opinion on the Organization s financial statements for the year ended June 30, Professional standards also require that we obtain an understanding of the Organization s internal control. However, such understanding is required for the purpose of assessing the risks of material misstatement of the financial statements and to design the nature, timing, and extent of our audit procedures and not to provide any assurance concerning such internal control. Accordingly, we express no such assurance. Other Information In Documents Containing Audited Financial Statements To our knowledge, the 2016 audited financial statements are not included within any other document. 2

5 Auditor Communications (Continued) AREA Planned Scope And Timing Of The Audit Qualitative Aspects Of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about appropriateness of accounting policies and their application. COMMENTS We performed the audit according to the planned scope and timing previously communicated to you in our engagement letter dated October 25, 2016 regarding the nature, timing and extent of our audit procedures. Significant accounting policies are described in Note 1 to the financial statements. During 2016, the Organization implemented governmental GAAP as prescribed by Governmental Accounting Standards Board. In conjunction with this implementation, the Organization adopted the following significant provisions: GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. GASB Statement No. 40, Deposit and Investment Risk Disclosures an amendment of GASB Statement No. 3 GASB Statement No. 72, Fair Value Measurement and Application GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments 3

6 Auditor Communications (Continued) AREA Qualitative Aspects Of Accounting Practices (continued) COMMENTS We noted no transactions entered into during the year for which there was a lack of authoritative guidance or consensus. No significant transactions have been recognized in a different period than when the transactions occurred. Management Judgments And Accounting Estimates The preparation of the financial statements requires the use of accounting estimates. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that future events may differ significantly from management s expectations. Significant accounting estimates affecting the financial statements are: Management s estimate of the depreciable lives used to calculate depreciation for capital assets is based on the assets estimated useful lives. Management s estimates of the allowance for uncollectibility of certain revenues is based on previous collection history. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole. 4

7 Auditor Communications (Continued) AREA Financial Statement Disclosures The disclosures are neutral, consistent and clear. Certain disclosures are particularly sensitive because of their significance to the financial statements users. Difficulties Encountered In Performing The Audit COMMENTS The most sensitive disclosures affecting the financial statements are: Note 2 Deposits and investments Note 8 Retirement plans Note 10 Commitments and contingencies Adequate and timely access to supporting documentation and inquiries of management and accounting personnel who were employed by the Organization during the year ended June 30, 2016 were limited during the audit. This was primarily due to transitions and vacancies in positions that are key to the performance of the audit. 5

8 Auditor Communications (Continued) AREA Corrected And Uncorrected Misstatements Professional standards require us to accumulate all factual, judgmental and projected misstatements identified during the audit, other than those that are trivial, communicate them to the appropriate level of management, and request their correction. Disagreements With Management COMMENTS Management has corrected all audit adjustments considered to be material, either individually or in the aggregate. Adjusting journal entries increased fund balance and net position by approximately $27,000. In addition, the audited financial statements reflect audit adjustments required in order for the Organization s financial statements to meet the financial statement reporting requirements of Governmental Accounting Standards Board, as further described in detail in the reconciliation sections of the audited financial statements. There were no uncorrected misstatements. None Management Representations Management representation letter received dated April 5, Management Consultations With Other Independent Accountants To our knowledge, there were no such consultations with other accountants. Other Audit Findings Or Issues Please refer to the separately issued Management Letter. During our audit, it was noted that the Organization has had annual operating deficits since the fiscal year ended June 30, 2013, as a result of expenditures exceeding revenues on an annual basis. The Organization s $7.5 million fund balance as of June 30, 2016 decreased from fund balance of $19 million as of June 30, Management and the Board should continue to evaluate the Organization s operations and conservatively manage the Organization s financial activities and budget to avoid future deficits. Plans to reduce the Organization s spending have been made subsequent to June 30, Such reductions in expenditures are required for the year ending June 30, 2017 and future years in order for the Organization to regain its financial health. 6

9 Overall Results Of Operations (In Thousands) $16,000 14,488 $14,000 $12,000 $10,000 10,257 10,245 13,047 12,289 10,617 10,066 9,970 10,074 9,799 $8,000 Revenues ($) Expenses ($) $6,000 $4,000 $2,000 $

10 Ending Fund Balance/Net Assets (In Thousands) $25,000 $20,000 19,158 18,607 16,288 $15,000 13,315 Amount ($) $10,000 7,540 $5,000 $ * *In 2016, the Organization implemented Governmental GAAP which requires the use of the term Fund Balance in lieu of Net Assets. In addition, $1.2 million of capital assets are excluded from 2016 Fund Balance, in accordance with Governmental GAAP. 8

11 Disbursements for Programs(In Thousands) $14,000 13,319 $12,000 11,299 11,874 $10,000 9,259 9,615 $8,000 Amount ($) $6,000 $4,000 $2,000 $

12 Disbursements For Programs During FY16 AGENCY NAME Amount Disbursed ARTIST FIRST $97,003 ASSOCIATION ON AGING WITH DEVELOPMENTAL DISABILITIES (AADD) 964,560 BRIDGES SUPPORT 377,888 BROADWAY TRANSPORTATION 46,870 CANTERBURY ENTERPRISES 98,737 CENTER STAGE 15,013 CHAPEL FOR EXCEPTIONAL 19,946 CHILDREN'S HOME SOCIETY 26,412 GITCO 174,312 EASTER SEALS MIDWEST 525,309 EPILEPSY FOUNDATION 58,157 EPWORTH 65,029 GATEWAY REGION YMCA 51,043 HEARTLAND INDUSTRIES 34,654 HORIZON HOUSING DEVELOPMENT COMPANY 670,109 HORIZON NORTH INC. 285,827 10

13 Disbursements For Programs During FY16 (Continued) AGENCY NAME Amount Disbursed HOUSE OF PAIS 226,147 INDUSTRIAL AID 118,103 JAZZ TRANSPORTATION 131,415 JUDEVINE CENTER FOR AUTISM 96,173 LIFEBRIDGE PARTNERSHIP 174,773 MERS/MO GOODWILL 616,482 THE OASIS INSTITUTE 31,371 OPTIONS FOR JUSTICE 125,784 PARAQUAD 112,586 PATHWAYS TO INDEPENDENCE 18,660 PREFERRED FAMILY HEALTHCARE 137,218 PROJECT INC 356,264 RECREATION COUNCIL 67,198 SOUTHSIDE WELLNESS 273,719 ST. LOUIS ARC 310,947 ST. LOUIS PROJECT CLUB 527,427 ST. LOUIS PUBLIC SCHOOLS 11,165 11

14 Disbursements For Programs During FY16 (Continued) AGENCY NAME Amount Disbursed SUNNYHILL INC. 199,700 SUNNYHILL ADVENTURE 37,340 THE CENTER FOR HEAD INJURY 594,048 UCP HEARTLAND 83,923 UNIVERSITY OF MISSOURI 20,000 UNLIMITED PLAY 345,000 WORTH 124,924 YWCA 43,308 DMH (Mental Health Trust Fund) 176,559 TOTAL DISBURSEMENTS TO AGENCIES $8,471,103 EXPENDITURES FOR DDR ADMINISTERED PROGRAMS DDR HABILITATION 572,540 DDR PROJECT CASEFIND 177,760 DDR 202 N 23RD 12,717 DDR EDUCATIONAL ADVOCACY 114,540 DDR HORIZON CLUB 1,017,115 DDR TARGETED CASE MANAGEMENT 2,953,275 TOTAL DDR ADMINISTERED PROGRAMS 4,847,947 TOTAL ALL PROGRAMS $13,319,051 12

15 Benford s Law Benford s Law was established by Frank Benford in the 1930s. The law expects 30.1% of numbers in a list of financial transactions to begin with 1. Each successive digit should represent a progressively smaller proportion. When digits stray from the pattern, fraud may be to blame. As volumes of data continue to grow, it has become a valuable tool in analyzing data sets for potential irregular activity. 13

16 Data Analysis: Summary Of Procedures As a part of the 2016 audit, RubinBrown worked with management to obtain the information necessary to perform additional data analysis. This analysis was beyond the scope of the audit and did not impact the audit opinion. RubinBrown s analysis included the following: Benford s Law analysis on fiscal year disbursements to see if the pattern of disbursements was as expected - refer to page 15 Top payees based on payments made to those payees during the fiscal year - refer to page 16 Identification of potential duplicate amounts to a single vendor - nothing unusual noted Identification of gaps in sequence - none noted 14

17 Benford s Law DD Resources FY 2016 Disbursements (7,664 Disbursements Totaling $13.5M) Proportion Proportion Benford Proportion Digit Investigated two digit deviations for digit 1 and digit 9. Deviations relate to recurring payments primarily for recurring payroll disbursements / reimbursements to employees and payments for habilitation services. RubinBrown concluded that activity was reasonable after further inquiry and analysis. 15

18 FY16 Top Ten Payees Payee Total # of Disbursements ASSOCIATION ON AGING WITH DD $ 992, HORIZON HOUSING DEVELOPMENT CO 651, METRO EMPLOY. & REHAB SERVICE (MERS) 614, THE CENTER FOR HEAD INJURY 611, EASTER SEALS MIDWEST 565, ST. LOUIS PROJECT CLUB 558, UNITEDHEALTHCARE INSURANCE CO. 504, BRIDGES COMM. SUPPORT SERVICES 379, PROJECT, INC. 371, UNLIMITED PLAY 333,

19 Independent Auditors Report On Additional Information Finance Committee St. Louis, Missouri Our report on our audit of the financial statements of the for June 30, 2016 appears in the financial statements of the Organization. The audit was conducted for the purpose of forminganopiniononthefinancialstatementstakenasawhole. The additional information presented on pages 7 through 16 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. April 5,

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