BETTER COMMUNITY DEVELOPMENT, INC. ACCOUNTANT'S REPORT AND FINANCIAL STATEMENTS DECEMBER 31, 2017

Transcription

1 ACCOUNTANT'S REPORT AND FINANCIAL STATEMENTS DECEMBER 31, 2017 ALAN K. MINOR CERTIFIED PUBLIC ACCOUNTANT 106 MAIN ST. PINE BLUFF, ARKANSAS 71601

2 TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT 1-2 PAGE FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION 3 STATEMENT OF ACTNITIES 4 STATEMENT OF NET ASSETS 5 STATEMENT OF CASH FLOWS 6 NOTES TO FINANCIAL STATEMENTS 7-9 SUPPLEMENTARY I NFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 10 SCHEDULE OF EXPENDITURES OF STATE AWARDS 11 REPORT ON INTERNAL CONTROL AND COMPLIANCE (GOVERNMENT AUDITING STANDARDS) DETAIL SCHEDULE OF COST OF HOUSING SOLD 14 SUPPLEMENTAL DATA SHEET 15 REPORT ON COMPLIANCE AND INTERNAL CONTROL AND SCHEDULE OF FEDERAL AWARDS (OMB UNIFORM GUIDANCE) SCHEDULE OF FINDINGS AND QUESTIONED COSTS 19

3 Board of Directors Better Community Development, Inc. ALAN K. MINOR CERTIFIED PUBLIC ACCOUNTANT 106 MAIN ST. PINE BLUFF, ARKANSAS (501) Independent Auditor's Report Report on the Financial Statements I have audited the accompanying statement of financial position of the Better Community Development, Inc., as of December 31, 2017, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements, which collectively comprise Better Community Development, Inc.'s basic financial statements as listed in the table of contents. 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 My responsibility is to express opinions on these financial statements based on my audit. I conducted my 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 I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe 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, I 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a 1

4 basis for my audit opinions. Opinions In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Better Community Development, Inc. as of December 31, 2017, and the results of its operations and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Other Information My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Better Community Development, Inc.' s basic financial statements. The accompanying supplementary information, including the schedule of governmental assistance is presented for purposes of additional analysis and is not a required part of the basic financial statements. The accompanying supplemental information, including the schedule of expenditures of federal awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the accompanying supplemental information, including the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, I have also issued my report dated June 18, 2018 on my consideration of the Better Community Development, Inc.'s internal control over financial reporting and on my 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 my testing of internal control over financial reporting and compliance and the results of that testing, and not to provide and 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 Better Community Development, Inc.' s internal control over financial reporting and compliance. Alan K. Minor Alan K. Minor Certified Public Accountant June 18,

5 STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2017 ASSETS CURRENT ASSETS CASH IN BANK 12,275 HOUSING INVENTORY 436,000 TOTAL CURRENT ASSETS 448,275 FIXED ASSETS VEHICLES 34,341 FURNITURE & EQUIPMENT 87,449 BUILDINGS 4,862,377 4,984, 167 LESS ACCUMULATED DEPRECIATION -898,934 4,085,233 LAND 359,861 TOTAL FIXED ASSETS 4 445,094 TOTAL ASSETS $ 4,893,369 LIABILITIES AND NET ASSETS CURRENT LIABILITIES CURRENT PORTION OF LONG TERM DEBT 36,750 LINE OF CREDIT - BANK OF OZARKS 155,979 LINE OF CREDIT - SOUTHERN BANK 199,943 TOTAL CURRENT LIABILITIES 392,672 LONG TERM LIABILITIES NOTES PAYABLE - ADFA 816,446 NOTES PAYABLE - ARVEST BANK 158,025 NOTES PAYABLE - IBERIA BANK TOTAL LONG TERM LIABILITIES 1,068,968 NET ASSETS UNRESTRICTED 3,431,729 TOTAL NET ASSETS 3,431,729 TOTAL LIABILITIES AND NET ASSETS $ 4,893,369 SEE NOTES TO FINANCIAL STATEMENTS 3

6 STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2017 INCREASE IN UNRESTRICTED NET ASSETS REVENUES GRANTS - FEDERAL & STATE 1,369,322 HOUSING SALES 137,479 RENTAL INCOME 119,485 OTHER INCOME 225,424 TOTAL REVENUES $ 1,851,710 DECREASE IN UNRESTRICTED NET ASSETS EXPENSES PERSONNEL COSTS COST OF HOUSING SOLD 648, ,248 CONTRACT SERVICES 156,907 UTILITIES 63,940 TELEPHONE 42,220 REPAIRS & MAINTENANCE 32,019 INSURANCE 52,885 PRINTING & DUPLICATION 35, 156 PROGRAM SUPPLIES 26,501 OFFICE SUPPLIES 5,101 POSTAGE 1,812 STAFF TRAINING 18,133 FOOD COSTS 60,179 TRANSPORTATION 6,438 INCENTIVES 7,426 ADVERTI SING 4,846 TRAVEL 5,613 STIPEND 78,825 INTEREST 41,638 PROPERTY TAX 39,687 DEPRECIATION 127,634 BANK FEES 4,286 RENT EXPENSE 5,421 TECHNICAL SUPPORT 15,659 DUES & FEES 10,136 OTHER 10,304 REALTY COMMISSION 4,147 TOTAL EXPENSES $ 1,830,933 EXCESS REVENUES OVER EXPENSES $ 20,777 SEE NOTES TO FINANCIAL STATEMENTS 4

7 STATEMENT OF NET ASSETS YEAR ENDED DECEMBER 31, 2017 NET ASSETS - BEGINNING OF YEAR $ 3,410,952 CURRENT YEAR EXCESS REVENUES OVER EXPENSES NET ASSETS - END OF YEAR $ 3,431,729 SEE NOTES TO FINANCIAL STATEMENTS 5

8 STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2017 CASH FLOWS FROM OPERATING ACTIVITIES EXCESS REVENUES OVER EXPENSES $ 20,777 ADJUSTMENTS TO RECONCILE EXCESS REVENUES OVER EXPENSES TO NET CASH USED BY OPERATING ACTIVITIES: DEPRECIATION 127,634 INCREASE IN HOUSING INVENTORY -318, ,366 NET CASH USED BY OPERATING ACTIVITIES -169,589 CASH FLOWS FROM FINANCING ACTIVITIES INCREASE IN NOTES PAYABLE NET CASH PROVIDED BY FINANCING ACTIVITIES 65,195 NET DECREASE IN CASH CASH BEGINNING OF YEAR -104, ,669 CASH END OF YEAR $ SUPPLEMENTAL DISCLOSURE OF I NTEREST EXPENSE INTEREST EXPENSE FOR THE YEAR WAS $41,638. SEE NOTES TO FINANCIAL STATEMENTS 6

9 NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Better Community Development, Inc., is a non-profit corporation operating under the laws of the State of Arkansas. The organization assists in providing affordable housing to low income citizens, substance abuse prevention and treatment programs, and necessary social skills. The organization is exempt from income tax under section 50l(c)(3) of the Internal Revenue Code. Basis of Accounting and Presentation The accompanying financial statements were prepared on the accrual method of accounting with revenues being recognized when measurable and available and expenses being recognized when measurable and incurred. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fixed Assets Fixed assets are recorded at cost. Depreciation is computed using the straight line method with a 5 year useful life for equipment and 40 year useful life for buildings. Income Taxes The organization is exempt from income taxes under Internal Revenue Code Section 50l(c)(3). Any other of the organization's tax forms for the years ended December 31, 2015 to 2017 are subject to examination by federal authorities. Cash and Cash Equivalents The organization considers all time deposits and investments with original maturities of three months or less to be cash equivalents. At December 31, 2017 cash and cash equivalents consisted of demand deposits. Housing Inventory Housing inventory consists of construction costs incurred on houses either under construction or completed but unsold as of December 31,

10 NOTE 2: NOTES PAYABLE Bank of Ozarks line of credit loan for $155,579. Interest only is payable at $ per month. Southern Bank line of credit loan for $199,943 payable at interest only. Arvest Bank real estate loan for $165,375. Principal and interest payable at $1, per month. Interest rate is 6.5%. Arkansas Development Finance Authority real estate loan for $841,991. Principal and interest payable at $2, monthly beginning February Interest rate is 1%. Iberia Bank loan for $98,352 with interest rate of 6.5%. NOTE 3: 5 YEAR MATURITIES FOR LONG TERM DEBT 5 year maturities for long term debt are $36,750 for 2018, $37,963 for 2019, $39,426 for 2020, $41,139 for 2021, $42,926 for 2022, and $870,764 thereafter. NOTE 4: CONCENTRATIONS Generally accepted accounting principles require disclosure of current vulnerabilities due to certain concentrations. A substantial part of the organization's revenues are received from federal and state awards. At December 31, % of the organization's revenues came from these awards. NOTE 5: SUBSEQUENT EVENTS The organization has evaluated events and transactions for subsequent events that might impact the financial statements for the year ended December 31, There were no identified subsequent events that require recognition or disclosure in the financial statements. 8

11 NOTE 6: HOUSING PROGRAM The Housing Program is a program formed to renovate and build homes in targeted areas across Little Rock, Arkansas. The program focuses on seven targeted areas, including the 12th Street corridor, where the organization has already built more than 50 new homes since The program is a city and state certified Community Housing Development Organization. The program offers flexibility to meet the needs of those seeking services and is certified to offer homebuyer counseling on site. The organization is a certified HUD and Arkansas Development Finance Authority Homebuyer Counseling agency with a monthly scheduled eight hour course designed to provide an in-depth review of the entire homebuying process. 9

12 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED DECEMBER 31, 2017 FEDERAL ASSISTANCE FEDERAL GRANTOR/ PASS THROUGH GRANTOR/ PROGRAM NAME CFDA# FEDERAL REV. EXP. U.S. DEPT. OF HEALTH & HUMAN SERVICES RECOVERY CENTERS OF ARK. BLOCK GRANTS FOR PREVENTION AND TREATMENT OF SUBSTANCE ABUSE , ,516 U.S. DEPT. OF HOUSING AND URBAN DEVELOPMENT SUPPORTIVE HOUSING PROGRAM ,904 42,904 U.S. DEPT. OF HOUSING AND URBAN DEVELOPMENT ARK. DEPT. OF HUMAN SERVICES EMERGENCY SOLUTIONS GRANTS PROGRAM ,698 14,698 U.S DEPT. OF HOUSING AND URBAN DEVELOPMENT CITY OF LITTLE ROCK, ARKANSAS HOME PROGRAM , ,640 U.S. DEPT. OF HOUSING AND URBAN DEVELOPMENT ARKANSAS DEVELOPMENT FINANCE AUTHORITY HOME PROGRAM , ,000 U.S DEPT. OF VETERANS AFFAIRS VETERANS INFORMATION AND ASSISTANCE ,622 67,622 U.S. DEPT. OF ENERGY WEATHERIZATION ASSISTANCE FOR LOW INCOME PERSONS , ,104 TOTAL FEDERAL 1,295,484 1,295,484 10

13 SCHEDULE OF EXPENDITURES OF STATE AWARDS YEAR ENDED DECEMBER 31, 2017 STATE ASSISTANCE STATE GRANTOR/ PROGRAM TITLE/ ARK. DEPT. OF COMMUNITY CORRECTION RENT SUBSIDY OTHER ARK. DEPT. OF COMMUNITY PUNISHMENT STATE REV. 14,684 18,670 EXP. 14,684 18,670 40,484 40,484 TOTAL STATE 73,838 73,838 TOTAL GOVERNMENTAL AWARDS 1,369,322 1,369,322 11

14 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 Board of Directors Better Community Development, Inc. I 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 Better Community Development, Inc. as of and for the year ended December 31, 2017 and the related notes to the financial statements, which collectively comprise Better Community Development, Inc.'s basic financial statements, and have issued my report thereon dated June 18, Internal Control Over Financial Reporting In planning and performing my audit of the financial statements, I considered Better Community Development, 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 my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Better Community Development, Inc.'s internal control. Accordingly, I do not express an opinion on the effectiveness of Better Community Development, 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, suchthat 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 c0mbinati0n0f deficiencies, in internal-control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. My consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during my audit I did not identify any deficiencies in internal control that I consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 12

15 Compliance and Other Matters As part of obtaining reasonable assurance about whether Better Community Development, Inc.'s financial statements are free from material misstatement, I 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 my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of my testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity'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 entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Alan K. Minor Certified Public Accountant June 18,

16 DETAIL SCHEDULE OF COST OF HOUSING SOLD YEAR ENDED DECEMBER 31, 2017 HOUSING INVENTORY - BEGINMING OF YEAR 118,000 CURRENT YEAR HOUSING DEVELOPMENT COSTS 643,248 TOTAL HOUSING AVAILABLE FOR SALE 761,248 HOUSING INVENTORY - END OF YEAR -436,000 COST OF HOUSING SOLD $ 325,248 14

17 SUPPLEMENTAL DATA SHEET DECEMBER 31, 2017 Entity's Full Name: Better Community Development, Inc. Address: 3805 W. 12th St. Suite 203 Little Rock, Arkansas Employer Identification Number: Phone Number: Name of Contact Person: Rev. William H. Robinson, Jr. 15

18 Report on Compliance For Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Board of Directors Better Community Development, Inc. Report on Compliance for Each Major Federal Program I have audited Better Community Development, Inc. compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Better Community Development, Inc.'s major federal programs for the year ended December 31, Better Community Development, Inc.'s major federal programs are 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 the requirements of laws, regulations, contracts and grants applicable to its federal programs. Auditor's Responsibility My responsibility is to express an opinion on compliance for each of Better Community Development, Inc.'s major federal programs based on my audit of the types of compliance requirements referred to above. I conducted my 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 I 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 includes examining, on a test basis, evidence about Better Community Development, Inc.' s compliance with those requirements and performing such other procedures as I considered necessary in the circumstances. I believe that my audit provides a reasonable basis for my opinion on compliance for each major federal program. However, my audit does not provide a legal determination of Better Community Development, Inc.'s compliance. In my opinion, Better Community Development, 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 December 31,

19 Report on Internal Control Over Compliance Management of Better Community Development, 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 my audit of compliance, I considered Better Community Development, 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 OMB Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, I do not express an opinion on the effectiveness of Better Community Development, 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 than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. My consideration of the 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 weakness or significant deficiencies. I did not identify any deficiencies in internal control over compliance that I consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of my 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. 17

20 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance I have audited the financial statements of Better Community Development, Inc. as of and for the year ended December 31, 2017, and have issued my report thereon dated June 18, 2018, which contained an unmodified opinion on those financial statements. My 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 is presented for purposes of additional analysis as required by the Uniform Guidance 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 or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. Alan K. Minor Certified Public Accountant June 18,

21 SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2017 I. Summary of Independent Auditor's Results Financial Statements Type of auditor's report issued: unmodified Internal control over financial reporting: Material weakness identified? Significant deficiency (ies) identified that are not considered to be material weaknesses? Noncompliance material to financial statements noted? Federal Awards Internal control over major programs: Material weakness identified? Significant deficiency (ies) identified not considered to be material weaknesses _Yes x No _ Yes _x_ None Reported _Yes_x_ No _Yes x No Yes x No Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133? Yes _x_ No Identification of major programs: None Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk auditee? _x_ Yes No II. Findings Relating to the Financial Statement Audit as Required to be Reported in Accordance with Generally Accepted Government Auditing Standards None Reported III. Findings and Questioned Costs for Federal Awards None Reported 19