Central Arkansas Area Agency on Aging, Inc.

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION June 30, 2016 and 2015 (With Independent Auditor s Reports Thereon) Certified Public Accountants

2 TABLE OF CONTENTS Page INDEPENDENT AUDITOR S REPORT 1 2 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statements of Financial Position 4 Consolidated Statements of Activities 5 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 7 16 SUPPLEMENTARY SCHEDULES Schedules of Support, Revenue, Expenses and Units of Service Title III, Part B Grants for Supportive Services and Senior Centers 18 Title III, Part C 1 Congregate Nutrition Services 19 Title III, Part C 2 Home Delivered Nutrition Services 20 Title III, Part D Disease Prevention and Health Promotion 21 Title III, Part E National Family Caregiver Support 22 Title VII, Chapter II Long term Care Ombudsman 23 Nutrition Services Incentive Program 24 Social Services Block Grant 25 Corporation for National and Community Service Senior Companion Program 26 State Aging Services 27 Cigarette Tax 28 State Older Worker Program 29 State Senior Citizens Centers 30 Medicare Enrollment Assistance Program (MIPPA) 31 General Improvement Funds 32 OTHER REPORTS AND SUPPLEMENTAL INFORMATION Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Consolidated Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance Schedule of Expenditures of Federal Awards Schedule of State Assistance 40 Schedule of Findings and Questioned Costs 41

3 Thomas & Thomas LLP Certified Public Accountants Members American Institute Certified Public Accountants Center for Public Company Audit Firms and PCPS INDEPENDENT AUDITOR S REPORT The Board of Directors Central Arkansas Area Agency on Aging, Inc. North Little Rock, Arkansas Report on the Financial Statements We have audited the accompanying consolidated financial statements of Central Arkansas Area Agency on Aging, Inc. and its controlled affiliates (collectively, hereinafter referred to as CareLink ), which comprise the consolidated statements of financial position as of June 30, 2016 and 2015, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated financial statements based on our audits. We conducted our audits 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 audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1 Little Rock Office 201 E. Markham, Suite 500, Little Rock, Arkansas Telephone (501) FAX (501) Texarkana Office 2900 St. Michael Drive, Suite 302, Texarkana, Texas Telephone (903) FAX (903)

4 The Board of Directors Central Arkansas Area Agency on Aging, Inc. Page Two Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Central Arkansas Area Agency on Aging, Inc. and its controlled affiliates as of June 30, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Other Information Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. In addition, the schedule of state assistance and the supplementary schedules as listed in the accompanying table of contents, which are required by the Department of Human Services, are also presented for purposes of additional analysis and are not a required part of the consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated 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 October 26, 2016, on our consideration of CareLink 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 CareLink s internal control over financial reporting and compliance. Certified Public Accountants October 26, 2016 Little Rock, Arkansas 2

5 Consolidated Financial Statements 3

6 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION June 30, 2016 and ASSETS Cash and cash equivalents $ 4,485,203 $ 2,388,253 Certificates of deposit 2,752,375 2,707,347 Receivables, net 745,877 1,138,539 Prepaid expenses and other assets 549, ,585 Endowment assets 51,998 53,815 Real estate held for development 135,000 2,004,343 Property and equipment, net 5,297,872 5,391,126 TOTAL ASSETS $ 14,017,836 $ 14,034,008 LIABILITIES AND NET ASSETS Liabilities Accounts and contracts payable $ 336,448 $ 436,130 Accrued salaries and leave 313, ,451 Other accrued and withheld payroll liabilities 170, ,015 Refundable advances 136, ,635 Total liabilities 956,798 1,196,231 Net Assets Unrestricted: Designated by the Board for operating reserves (See Note 7) 2,700,000 2,700,000 Designated by the Board for "Building for the Future" (See Note 7) 1,725,000 81,355 Undesignated 7,711,452 9,185,240 Total Unrestricted Net Assets 12,136,452 11,966,595 Temporarily restricted 924, ,182 Total Net Assets 13,061,038 12,837,777 TOTAL LIABILITIES AND NET ASSETS $ 14,017,836 $ 14,034,008 See accompanying notes to financial statements. 4

7 CONSOLIDATED STATEMENTS OF ACTIVITIES Years Ended June 30, 2016 and CHANGES IN UNRESTRICTED NET ASSETS Support, Revenue, Gains and Reclassifications Medicaid $ 8,554,079 $ 8,773,794 Federal awards 3,332,784 2,978,552 State assistance 2,317,199 2,433,059 Private pay, contracts and insurance 624, ,315 Contributions 157, ,119 Donated services, facilities, equipment and materials 35,848 7,050 Other (expense) revenue (252,264) 110,783 Net assets released from restrictions 192, ,693 Total Unrestricted Support, Revenue, Gains and Reclassifications 14,962,745 15,315,365 Expenses Program services Homebound services 9,782,567 9,961,819 Services for active older people 1,570,312 1,649,655 Family caregiver services 505, ,500 Outreach and advocacy services 1,063,567 1,154,816 12,921,812 13,316,790 Supporting services General and administrative 1,582,323 1,770,269 Fundraising 288, ,087 1,871,076 2,016,356 Total Expenses 14,792,888 15,333,146 Increase (Decrease) in Unrestricted Net Assets 169,857 (17,781) CHANGES IN TEMPORARILY RESTRICTED NET ASSETS Contributions 248, ,579 Net depreciation in endowment assets (1,817) (284) Net assets released from restrictions (192,872) (258,693) Increase (Decrease) in Temporarily Restricted Net Assets 53,404 (95,398) INCREASE (DECREASE) IN TOTAL NET ASSETS 223,261 (113,179) NET ASSETS, BEGINNING OF YEAR 12,837,777 12,950,956 NET ASSETS, END OF YEAR $ 13,061,038 $ 12,837,777 See accompanying notes to financial statements. 5

8 CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended June 30, 2016 and CASH FLOWS FROM OPERATING ACTIVITIES Increase (Decrease) in Total Net Assets $ 223,261 $ (113,179) Adjustments to Reconcile Changes in Net Assets to Net Cash Provided by Operating Activities Provision for uncollectible receivables 143,665 9,283 Depreciation 396, ,516 Loss on disposal of equipment 141,068 18,746 Loss on sale of property held for investment 279,343 Net depreciation in endowment assets 1, Changes in operating assets and liabilities: Receivables, net 251, ,119 Prepaid expenses and other assets (198,926) (45,200) Accounts and contracts payable (102,548) 1,311 Accrued salaries and leave (26,842) 10 Other accrued and withheld payroll liabilities (29,388) (95,671) Refundable advances (83,521) 53,165 Net Cash Provided by Operating Activities 995, ,384 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (441,214) (220,493) Proceeds from sale of property and equipment 15,700 Purchases of certificates of deposit, net (45,028) (1,452,753) Purchases of property held for investment (135,000) Proceeds from sale of property held for investment 1,722,600 Net Cash Provided (Used) by Investing Activities 1,101,358 (1,657,546) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,096,950 (1,103,162) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 2,388,253 3,491,415 CASH AND CASH EQUIVALENTS, END OF YEAR $ 4,485,203 $ 2,388,253 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Additions to property and equipment included in accounts and contracts payable $ 2,866 $ See accompanying notes to financial statements. 6

9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 1: NATURE OF ACTIVITIES The Central Arkansas Area Agency on Aging, Inc., a nonprofit organization doing business as CareLink, connects older people and their families with resources to meet the opportunities and challenges of aging. CareLink programs fall into four broad categories: Services for Homebound Older People Services that help homebound older people live in their own homes as long as possible, avoiding more costly care. Services for Active Older People Services that help active older people stay fit, healthy and involved through senior centers, wellness programs and volunteer opportunities. Services for Family Caregivers Services that help family caregivers navigate the maze of available services and care for their aging family members. Outreach and Advocacy Program Information and guidance to help families match their needs with programs, services and resources. Some of the services described above are provided directly by CareLink while others are provided under contract with third party providers. In addition to services provided directly to individuals, CareLink works with various federal, state and local agencies on behalf of older individuals and their families to ensure that appropriate services are available to meet their needs. The CareLink service area covers Faulkner, Lonoke, Monroe, Prairie, Pulaski and Saline counties in Arkansas. These consolidated financial statements include the accounts of CareLink, CareChoices, LLC, of which CareLink is the sole member and Central Arkansas AAA, a nonprofit organization (collectively, CareLink ). All intercompany balances and transactions have been eliminated in consolidation. Effective November 30, 2014, all programs related to CareChoices, LLC were discontinued. On October 1, 2015, CareLink filed articles of organization to establish Central Arkansas AAA, a nonprofit organization to be used in future activities. The new organization was not utilized during the year ended June 30, NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Accounting The consolidated financial statements of CareLink have been prepared using the accrual basis of accounting in accordance with generally accepted accounting principles. 7

10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (b) Basis of Presentation CareLink is required to report information regarding its financial position and activities according to three classes of net assets unrestricted, temporarily restricted and permanently restricted, as applicable. (c) Cash, Cash Equivalents and Certificates of Deposit Cash and cash equivalents include demand deposit and managed time deposit accounts held at a financial institution, as well as money market mutual funds held in a brokerage account. For financial statement purposes, cash equivalents are defined as liquid securities with original maturities of three months or less. CareLink is party to a contract with the financial institution in which it maintains accounts whereby all funds on deposit at that financial institution were transferred on a daily basis into a managed time deposit account. Effective June 23, 2015, this contract was updated to transfer on a daily basis all funds on deposit at that financial institution into an investment fund managed by a third party financial institution. Balances held at the third party financial institution are neither collateralized nor insured. At times during the years ended June 30, 2016 and 2015, cash, cash equivalents and certificates of deposit balances exceeded amounts insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC) and were not collateralized. In the event of an institutional failure, the excess over FDIC or SIPC insurance limits may not be recoverable. For the years ended June 30, 2016 and 2015, CareLink s total bank balance maintained at multiple financial institutions were $7,337,770 and $5,113,323, respectively. Of these amounts, $4,100,770 and $2,157,848 were not insured or collateralized at June 30, 2016 and 2015, respectively. (d) Allowance for Uncollectible Receivables Allowances for uncollectible receivables are based upon management s analysis of specific accounts, anticipated collections and related historical trends for write offs of these receivables. Changes in the allowance for uncollectible Medicaid receivables are netted against Medicaid revenue for purposes of presentation in the financial statements. Changes in the allowance for grants and contracts receivables and other uncollectible receivables are included in the appropriate related expenses. Management does not anticipate material losses on receivables in excess of established allowances. (e) Endowment Assets During July 2001, CareLink entered into an agreement with the Arkansas Community Foundation (ACF) to create an endowment fund (the Fund) to aid and assist CareLink in carrying out its charitable purposes. Pursuant to the terms of the agreement, ACF is granted all rights, title and interest to assets accumulated in the Fund, which is held in ACF s pooled investment portfolio. Contributions to the Fund and net appreciation or depreciation in the fair market value of Fund assets are reported as changes in temporarily restricted net assets. Generally 5% of the average balance of the Fund is available for distribution on an annual basis in accordance with the current ACF spending policy. However, during the years ended June 30, 2016 and 2015, no funds were distributed. 8

11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (f) Property and Equipment, Net Property and equipment are reported at historical cost or, if donated, at the approximate fair value at the date of donation. Such donations are reported as increases in unrestricted net assets, unless the donor has restricted the donated asset to a specific purpose. Major renewals and betterments are capitalized, while normal maintenance and repairs are expensed in the period incurred. Depreciation is computed using the straight line method over the estimated useful lives of the respective assets, which range from three to forty years. (g) Grants and Contracts Federal awards and state assistance are recognized as revenue on a reimbursement of expense basis. Contractual fees for services are recognized as revenue when the related service is provided. Receivables from federal and state agencies represent amounts requested for reimbursement for allowable expenses incurred in excess of grant funds received or for contractual services that have been provided but for which CareLink has not received compensation. Grant awards are classified as refundable advances to the extent that funds are received before they are expended for their intended purpose or before the required service is provided. (h) Contributions Contributions, including unconditional promises to give, are recognized as support in the period received or when CareLink becomes aware that an unconditional promise to give has been made, whichever occurs first. Conditional promises to give are not recognized until they become unconditional, that is when the conditions specified by the donor are substantially met. Contributions that are restricted by the donor are recorded as increases in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor restricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statements of activities as net assets released from restrictions. (i) Contributions of Investments The value of investment securities contributed by donors is determined based on the average of the high and low market prices on the date received. CareLink generally liquidates the investment on the same day it is received or as soon as reasonably possible thereafter. The difference between the value of the investment when received and the proceeds when sold is included as a gain or a loss in the consolidated statements of activities. 9

12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (j) Donated Services, Facilities, Equipment and Materials Various organizations contribute the use of facilities and materials toward the fulfillment of projects initiated by CareLink. These contributions are reflected as support and expense in the accompanying financial statements based upon their estimated fair value during the period of use. Donated facilities and equipment used by CareLink in providing meals and socialization activities for senior citizens totaled approximately $7,000 for the year ended June 30, There were no facilities or equipment contributed to CareLink in providing meals and socialization activities for senior citizens for the year ended June 30, Donated services are recognized as contributions only if the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills and would otherwise be purchased by CareLink. Other volunteers provide services throughout the year that are not recognized as contributions in the financial statements since the recognition criteria was not met. (k) Functional Expenses CareLink allocates its expenses on a functional basis among its various programs and supporting services. Expenses that can be identified with a specific program or supporting service are charged directly to the related program or supporting service according to their natural expenditure classification. Other expenses that are common to several functions are allocated to various programs and supporting services based on various statistical bases. (l) Advertising Expense CareLink uses advertising to promote its programs throughout the areas it serves. The production costs of advertising are expensed the first time the advertising takes place. Advertising expense was approximately $195,000 and $175,000 during the years ended June 30, 2016 and 2015, respectively. (m) Income Taxes Central Arkansas Area Agency on Aging, Inc. and Central Arkansas AAA are tax exempt organizations under Section 501(c)(3) of the Internal Revenue Code and are not private foundations within the meaning of Section 509(a) of the Code. CareChoices, LLC is a disregarded entity for tax purposes, and the activities and balances attributable to CareChoices, LLC are included with those of Central Arkansas Area Agency on Aging, Inc. for tax reporting purposes. Accounting standards require CareLink to evaluate tax positions and recognize a tax liability (or asset) if CareLink has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service (IRS). CareLink has analyzed the tax positions taken and has concluded that as of June 30, 2016 and 2015, there are no uncertain positions taken or expected to be taken that would require the recognition of a liability (or asset) or disclosure in the consolidated financial statements. CareLink may be subject to audit by the IRS; however, there are currently no audits for any tax periods in progress. 10

13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (n) Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts disclosed in the consolidated financial statements. Accordingly, actual results could differ from those estimates. (o) Recently Issued Accounting Standards In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No , Presentation of Financial Statements of Not for Profit Entities. The purpose of ASU No is to amend existing financial reporting standards applicable to not for profit entities to improve the usefulness, relevance and clarity of information presented in financial statements and to enhance the information presented in the notes thereto. This new standard, which becomes effective for fiscal years beginning after December 15, 2017, requires the following: Presentation of two classes of net assets net assets with donor restrictions and net assets without donor restrictions. Elimination of the requirement to present a reconciliation of cash flows using the indirect method if the organization elects to use the direct method for purposes of preparing the statement of cash flows. Enhanced disclosures about governing board designations and other self imposed limits on the use of resources, as well as the composition of net assets with donor restrictions at the end of the period and how those restrictions affect the use of resources. New disclosures containing qualitative information communicating how liquid resources are managed to meet cash needs for general expenditures within one year of the financial reporting date and quantitative information communicating the availability of resources to meet cash needs for general expenditures within one year of the financial reporting date. Presentation of expenses by natural and functional classification, either on the statement of activities, in a separate statement or in the notes to the financial statements. Reporting of underwater amounts of donor restricted endowment funds in net assets with donor restrictions and enhanced disclosures about underwater endowments. Enhanced disclosures about the method(s) used to allocate costs among program and support functions. Reporting of investment return net of external and direct internal investment expenses. While this new standard will significantly impact the presentation of the consolidated financial statements and the content of disclosures in the notes to the consolidated financial statements, it is not expected to have a material impact on the recording or measurement of amounts presented therein. 11

14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 3: RECEIVABLES AND REFUNDABLE ADVANCES Receivables at June 30 include the following: Medicaid $ 574,200 $ 472,872 Federal awards and state assistance 19, ,257 Private pay, contracts and insurance 162, ,950 Contributions 9,798 90, ,877 1,151,296 Less allowance for doubtful accounts: Contributions (3,411) Medicaid (5,000) (9,000) Private pay, contracts and insurance (15,000) Less unamortized discount on contributions receivable (346) $ 745,877 $ 1,138,539 Contributions receivable are expected to be collected in full during the year ended June 30, Refundable advances at June 30 are categorized as follows: Federal awards $ 121,522 $ 213,463 State assistance 776 Other 13,816 6,172 $ 136,114 $ 219,635 NOTE 4: REAL ESTATE HELD FOR DEVELOPMENT As of June 30, 2015, real estate held for development consisted of 3.57 acres of land and an 111,300 square foot warehouse located in Little Rock, Arkansas. On May 31, 2016, CareLink sold this investment property for a sales price of $1,725,000. Until the time of sale, the existing building was used as incomeproducing rental property under the management of a third party management agent. Approximately $72,500 and $69,000 of rental income related to the property is included in other revenue in the consolidated statements of activities for the years ended June 30, 2016 and 2015, respectively. On June 21, 2016, CareLink purchased a 5,360 square foot building in North Little Rock, Arkansas adjacent to one of its current facilities for $135,000. The new property will be used in support of CareLink operations at that location. 12

15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 5: PROPERTY AND EQUIPMENT, NET A summary of property and equipment at June 30 is as follows: Buildings and improvements $ 4,672,054 $ 4,589,946 Furniture and equipment 2,050,743 2,172,523 Vehicles 600, ,721 7,323,010 7,333,190 Less accumulated depreciation (2,509,222) (2,426,148) 4,813,788 4,907,042 Land 484, ,084 $ 5,297,872 $ 5,391,126 Vehicles with a total cost of approximately $219,400 and $216,700 at June 30, 2016 and 2015, respectively, were purchased with federal grant funds. The total net book value of these assets at June 30, 2016 and 2015 was approximately $157,000 and $161,000, respectively. The awarding agencies have liens on these vehicles, and they cannot be sold or otherwise disposed without the approval of the awarding agencies during a specified time period. During the year ended June 30, 2013, CareLink completed construction of an existing building to convert it to a commercial kitchen and respite center with a total cost of approximately $4,800,000. The land and the building, including a portion of remodeling costs, were funded using federal awards obtained under Title III of the Older Americans Act. This property must be utilized for its intended purpose for not less than twenty years after the property is placed in service. NOTE 6: LINE OF CREDIT CareLink is party to a $250,000 revolving line of credit agreement with a financial institution. This line of credit is secured by all of CareLink s accounts receivable. Advances on the revolving line of credit are payable on demand and subject to a variable interest rate of prime plus one half percent at June 30, 2016 and During the years ended June 30, 2016 and 2015, there were no transactions or balances due related to this line of credit. 13

16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 7: NET ASSETS Temporarily restricted net assets are available for the following purposes at June 30: Meals on Wheels $ 208,193 $ 167,586 Urgent Needs 17,539 Building for the Future 646, ,417 Endowment assets (see Note 2(e)) 51,998 53,815 Other 439 3,364 $ 924,586 $ 871,182 The Building for the Future campaign was a capital campaign, the goal of which was to raise funds necessary to convert an existing building into a commercial kitchen and respite center. This project was completed during the year ended June 30, Temporarily restricted net assets attributable to the Building for the Future campaign consist of $646,417 in federal awards received under Title III of the Older Americans Act, which will be released from restriction twenty years after the facility was placed into service, as required under the terms of the grant award. In addition to donor restricted funds, CareLink s Board of Directors has designated $1,725,000 of unrestricted net assets to be used for Building for the Future and $2,700,000, or the equivalent of two months of operating expenses, of unrestricted net assets to be held in reserve to protect against interruptions in funding and possible unanticipated increases in operating costs. NOTE 8: EMPLOYEE BENEFIT PLANS CareLink maintains a 401(k) defined contribution matching and profit sharing plan to provide retirement benefits to employees of CareLink who have met eligibility requirements specified in the plan agreement. Employer matching and profit sharing contributions may be made, the amounts of which are at the discretion of the Board of Directors. Employees are allowed to make salary deferrals into the plan. Employee deferrals, employer matching and profit sharing contributions are subject to limitations imposed by the IRS. Total expense related to employer matching and profit sharing contributions was approximately $188,000 and $291,000 for the years ended June 30, 2016 and 2015, respectively. NOTE 9: SERVICE PROVIDERS CareLink contracts with various organizations (the Service Providers) to provide services to the elderly. Contract expenses for services provided totaled approximately $1,796,000 and $1,775,000 for the years ended June 30, 2016 and 2015, respectively. Such amounts include approximately $1,255,000 and $1,162,000 of federal awards. At June 30, 2016 and 2015, amounts owed to the Service Providers totaling approximately $115,000 and $118,000, respectively, are included in accounts payable. 14

17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 10: CONTINGENCIES CareLink receives federal and state assistance designated for specific purposes that is subject to subsequent review and audit by federal and state funding sources. Such audits could result in a request for reimbursement by the funding sources for expenditures disallowed under the terms and conditions of the related contracts or grants. In the opinion of CareLink s management, such disallowances, if any, would not be significant to CareLink s consolidated financial statements. NOTE 11: EXPENSES The following is a summary of expenses by natural category for the years ended June 30: Personnel and fringe benefits $ 9,117,368 $ 9,468,747 Equipment 79,470 20,200 Supplies 126, ,286 Travel 496, ,665 Rent and utilities 106, ,508 Communications 414, ,937 Service provider contracts 1,796,007 1,774,923 Meetings and activities 14,827 15,481 Education and training 6,974 11,580 Maintenance 167, ,769 Computer services 85,431 74,778 Software license and maintenance 131,022 87,445 Senior companion stipends 63,772 73,371 Personal emergency response contract 45,823 44,888 Direct mail campaign 69,506 85,475 Telephony contract 58,026 82,976 Professional and other service fees 434, ,787 Meal service contract 855, ,681 Insurance 136, ,708 Depreciation 396, ,516 Provision for uncollectible receivables 143,665 9,283 Consumer self direction 161,167 Special events 19, Other 25,151 22,925 $ 14,792,888 $ 15,333,146 15

18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2016 and 2015 NOTE 12: RELATED PARTY TRANSACTIONS On October 14, 2014, the tax exempt organization Complete Health with PACE (PACE) was incorporated in the State of Arkansas under 501(c)(3) of the Internal Revenue Code. CareLink is designated in PACE as the Class B Member with 40% of the membership interests and voting power of the Corporation. The remaining 60% of the membership interests and voting power are held by an entity designated as the Class A Member. As part of the formation of this organization, both Members made contributions to PACE in order for PACE to have the necessary assets to begin operations. Contributions made by CareLink are included in prepaid expenses and other assets in the consolidated statements of financial position. Total contributions provided to PACE are $192,298 and $9,566 as of June 30, 2016 and NOTE 13: SUBSEQUENT EVENTS Management has evaluated subsequent events through October 26, 2016, the date the financial statements were available to be issued. 16

19 Supplementary Schedules 17

20 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Title III, Part B Grants for Supportive Services and Senior Centers Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Special programs for the aging $ 1,046,121 $ 1,136,491 Program Income 21,918 In kind match (providers) 48, ,497 Total support and revenue 1,116,757 1,353,988 EXPENSES AND ALLOCATIONS Salaries and wages 210, ,782 Fringe benefits 41,598 75,182 Equipment 19,785 83,569 Supplies 4,127 4,418 Travel 11,629 22,898 Rent and utilities 4,422 4,189 Communications 15,558 25,249 Provider contracts and contract waiver 395, ,951 Expenditure of provider public support 70,636 Indirect cost allocations 72, ,659 Other* 270, ,091 Total expenses and allocations 1,116,757 1,353,988 $ $ UNITS OF SERVICE Adult day health care (hours) 4,256 Client representation (hours) 2,884 Information and assistance (contacts) 2,180 Legal services (hours) 549 Socialization (sessions) 115,115 Telephone reassurance (calls) 21,059 Transportation (one way trips) 32,423 *Includes $219,067 of expenditures related to PACE. See Independent Auditor s Report. 18

21 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Title III, Part C 1 Congregate Nutrition Services Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Special programs for the aging $ 471,316 $ 591,825 Program Income 239,590 In kind match (providers) 25, ,261 Total support and revenue 736, ,086 EXPENSES AND ALLOCATIONS Salaries and wages 2,091 Fringe benefits 526 Equipment 92, ,434 Supplies 38 Travel 21 Rent and utilities 22 Communications 82 Provider contracts and contract waiver 336, ,653 Expenditure of provider public support 265,003 Indirect cost allocations 39,400 66,999 Other 178 Total expenses and allocations 736, ,086 $ $ UNITS OF SERVICE Congregate (meals) 126,074 See Independent Auditor s Report. 19

22 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Title III, Part C 2 Home Delivered Nutrition Services Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Special programs for the aging $ 447,417 $ 447,417 Program Income 108,118 In kind match (providers) 27,637 85,625 Total support and revenue 583, ,042 EXPENSES AND ALLOCATIONS Salaries and wages 1,042 Fringe benefits 229 Provider contracts and contract waiver 404, ,391 Expenditure of provider public support 135,755 Indirect cost allocations 41,592 50,651 Total expenses and allocations 583, ,042 $ $ UNITS OF SERVICE Home delivered (meals) 187,962 See Independent Auditor s Report. 20

23 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Title III, Part D Disease Prevention and Health Promotion Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Special programs for the aging $ 36,630 $ 36,630 EXPENSES AND ALLOCATIONS Salaries and wages 3,429 5,038 Fringe benefits Equipment 40 Supplies 260 Travel 355 Rent and utilities 82 Communications 463 Contracts and contract waiver 30,600 30,600 Indirect cost allocations 4,452 Other 3,731 Total expenses and allocations 44,228 36,630 (7,598) OPERATING TRANSFERS 7,598 $ $ UNITS OF SERVICE Health promotion (sessions) 828 See Independent Auditor s Report. 21

24 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Title III, Part E National Family Caregiver Support Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Special programs for the aging $ 247,837 $ 247,837 In kind match (providers) 82,612 82,613 Total support and revenue 330, ,450 EXPENSES AND ALLOCATIONS Salaries and wages 24,006 30,717 Fringe benefits 5,000 7,412 Equipment Supplies Travel 1,322 2,036 Rent and utilities Communications 36,686 8,064 Contracts and contract waiver 157, ,115 Expenditure of provider public support 82,612 Indirect cost allocations 23,486 31,400 Other 3,373 4,656 Total expenses and allocations 334, ,450 (4,091) OPERATING TRANSFERS 4,091 $ $ UNITS OF SERVICE Family Caregiver Counseling (sessions) 738 Family Caregiver Respite grants (consumers) 285 See Independent Auditor s Report. 22

25 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Title VII, Chapter II Long term Care Ombudsman Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Special programs for the aging $ 15,000 $ 15,000 EXPENSES AND ALLOCATIONS Salaries and wages 8,803 8,478 Fringe benefits 1,557 2,043 Equipment 7 26 Supplies Travel 944 1,506 Rent and utilities Communications Indirect cost allocations 1,398 1,425 Other 1, Total expenses and allocations 15,000 15,000 $ $ UNITS OF SERVICE Not Applicable See Independent Auditor s Report. 23

26 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Nutrition Services Incentive Program Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Other federal sources $ 406,611 $ 731,317 Total support and revenue 406, ,317 EXPENSES AND ALLOCATIONS Contracts and contract waiver 406, ,317 Indirect cost allocations 41,803 Total expenses and allocations 448, ,317 (41,803) OPERATING TRANSFERS 41,803 $ $ UNITS OF SERVICE Congregate (meals) 161,569 Home delivered (meals) 419,304 See Independent Auditor s Report. 24

27 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Social Services Block Grant Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Other federal sources $ 335,615 $ 336,273 EXPENSES AND ALLOCATIONS Contracts and contract waiver 304, ,319 Indirect cost allocations 31,288 31,954 Total expenses and allocations 335, ,273 $ $ UNITS OF SERVICE Congregate (meals) 8,701 Home delivered (meals) 52,159 Socialization (sessions) 1,758 Transportation (one way trips) 2,350 See Independent Auditor s Report. 25

28 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Corporation for National and Community Service Senior Companion Program Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Other Federal Sources $ 106,599 $ 116,632 EXPENSES AND ALLOCATIONS Salaries and wages 22,443 18,739 Fringe benefits 2,967 3,249 Equipment 45 Supplies Travel 4,919 1,984 Rent and utilities 315 Communications 1,796 Indirect cost allocations 10,563 3,240 Other 69,523 88,878 Total expenses and allocations 113, ,632 (6,700) OPERATING TRANSFERS 6,700 $ $ UNITS OF SERVICE Client service (hours) 24,700 See Independent Auditor s Report. 26

29 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE State Aging Services Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE State awards State aging services $ 886,426 $ 886,426 EXPENSES AND ALLOCATIONS Salary and wages 539, ,938 Fringe benefits 106, ,311 Equipment 1,117 2,237 Supplies 7,472 7,536 Travel 47,829 62,816 Rent and utilities 5,423 5,804 Communications 23,466 22,494 Indirect cost allocations 83,340 84,230 Other 71,677 66,060 Total expenses and allocations 886, ,426 $ $ UNITS OF SERVICE Adult companion (hours) 656 Adult day health care (hours) 1,135 Attendant care (hours) 1,436 Chore (hours) 569 Client representation (hours) 5,355 Homemaker (hours) 232 Information and assistance (contacts) 12,351 Personal care (hours) 3,822 See Independent Auditor s Report. 27

30 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Cigarette Tax Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE State awards Cigarette tax $ 388,249 $ 389,025 EXPENSES AND ALLOCATIONS Contracts and contract waiver 352, ,059 Indirect cost allocations 36,194 36,966 Total expenses and allocations 388, ,025 $ $ UNITS OF SERVICE Home delivered (meals) 54,344 Transportation (one way trips) 12,839 See Independent Auditor s Report. 28

31 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE State Older Worker Program Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE State awards State older worker $ 195,006 $ 195,006 EXPENSES AND ALLOCATIONS Salaries and wages 137, ,213 Fringe benefits 17,572 16,753 Equipment Supplies Travel Rent and utilities Communications 10,025 1,575 Indirect cost allocations 18,331 18,530 Other 11,093 7,136 Total expenses and allocations 196, ,006 (1,625) OPERATING TRANSFERS 1,625 $ $ UNITS OF SERVICE Employment (clients) 21 See Independent Auditor s Report. 29

32 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE State Senior Citizens Centers Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE State awards State senior citizens centers $ 740,999 $ 740,999 EXPENSES AND ALLOCATIONS Salary and wages 17,983 29,402 Fringe benefits 3,713 7,083 Equipment Supplies Travel Rent and utilities Communications 1,318 1,871 Contracts and contract waiver 638, ,555 Indirect cost allocations 73,378 70,412 Other 4,024 3,774 Total expenses and allocations 740, ,999 $ $ UNITS OF SERVICE Congregate (meals) 21,369 Home delivered (meals) 80,087 Socialization (sessions) 54,195 Telephone reassurance (calls) 10,446 Transportation (one way trips) 5,198 See Independent Auditor s Report. 30

33 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE Medicare Enrollment Assistance Program (MIPPA) Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE Federal awards Other federal sources $ 45,499 $ 45,499 EXPENSES AND ALLOCATIONS Salaries and wages 27,382 27,058 Fringe benefits 5,629 5,892 Equipment Supplies Travel 1,509 1,499 Rent and utilities Communications 1,679 1,966 Indirect cost allocations 4,487 4,324 Other 3,918 3,800 Total expenses and allocations 45,499 45,499 $ $ UNITS OF SERVICE Not Applicable See Independent Auditor s Report. 31

34 SCHEDULE OF SUPPORT, REVENUE, EXPENSES AND UNITS OF SERVICE General Improvement Funds Year Ended June 30, 2016 Actual Budget SUPPORT AND REVENUE State awards General improvement funds $ 85,330 $ 85,330 EXPENSES AND ALLOCATIONS Meals service contract 85,330 85,330 Total expenses and allocations 85,330 85,330 $ $ UNITS OF SERVICE Home delivered (meals) 18,002 See Independent Auditor s Report. 32

35 Other Reports and Supplemental Information 33

36 Thomas & Thomas LLP Certified Public Accountants Members American Institute Certified Public Accountants Center for Public Company Audit Firms and PCPS INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Directors Central Arkansas Area Agency on Aging, Inc. North Little Rock, Arkansas 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 consolidated financial statements of Central Arkansas Area Agency on Aging, Inc. (CareLink), which comprise the consolidated statement of financial position as of June 30, 2016, and the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated October 26, Internal Control over Financial Reporting In planning and performing our audit of the consolidated financial statements, we considered CareLink 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 consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of CareLink s internal control. Accordingly, we do not express an opinion on the effectiveness of CareLink 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 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 our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified Little Rock Office 201 E. Markham, Suite 500, Little Rock, Arkansas Telephone (501) FAX (501) Texarkana Office 2900 St. Michael Drive, Suite 302, Texarkana, Texas Telephone (903) FAX (903)

37 The Board of Directors Central Arkansas Area Agency on Aging, Inc. Page Two Compliance and Other Matters As part of obtaining reasonable assurance about whether CareLink s consolidated 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. 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 CareLink s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering CareLink s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Certified Public Accountants October 26, 2016 Little Rock, Arkansas 35