LOUISIANA CENTER AGAINST POVERTY, INC. BIENNIAL AUDIT FINANCIAL STATEMENTS JUNE 30, 2004 AND JUNE 30, 2005

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1 BIENNIAL AUDIT FINANCIAL STATEMENTS JUNE 30, 2004 AND JUNE 30, 2005 Under provisions of state law, this report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court. Release Date 2~ / ^~ O & Terry R. Hall, LLC Certified Public Accountant

2 LOUISIANA CENTER AGAINST POVERTY, INC, FINANCIAL STATEMENTS JUNE 30, 2004 AND JUNE 30, 2005 TABLE OF CONTENTS Financial Statements Independent Auditor's Report 1 Statement of Financial Position 2 Statement of Activities 3 Statement of Functional Expenses - June 30, Statement of Functional Expenses - June 30, Statement of Cash Flows 6 Notes to Financial statements 7-10 Supplemental Information Report on Compliance and on Internal Control in Accordance with Government auditing Standards Report on Compliance with Requirements in Accordance with OMB Circular A Schedule of Expenditures of Federal Awards - June 30, Schedule of Expenditures of Federal Awards - June 30, Findings and Recommendations 18

3 Post Office Box / Baton Rouge, Louisiana (Certified Jrublic Accountant Independent Auditor's Report To the Board of Directors and Management of Louisiana Center Against Poverty, Inc. Lake Providence, Louisiana I have audited the accompanying statements of financial position of Louisiana Center Against Poverty, Inc. (a nonprofit organization), as of June 30,2004 and June 30,2005, and the related statements of activities, functional expenses, and cash flows for the years then ended. These financial statements are the responsibility of the Oganization's management. My responsibility is to express an opinion 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Louisiana Center Against Poverty, Inc, as of June 30,2004 and June 30,2005, and the changes in its net assets and its cash flows for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, 1 have also issued my report dated December 21,2005, on my consideration of Louisiana Center Against Poverty, Inc. internal control over financial reporting and my tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of my audit. December 21,2005 Baton Rouge, Louisiana Terrt R. Hall, LLC Certified\Public Accountant

4 STATEMENT OF FINANCIAL POSITION AS OF JUNE 30, 2004 AND JUNE 30, 2005 Assets Current Assets: Cash $ 27,388 $ 42,640 Contract and grant receivables 98, ,965 Prepaid insurance 1,602 2,784 Other assets - 24,238 Total current assets 127, ,627 Fixed assets, net of accumulated depreciation 56,256 49,145 Total Assets 183, ,772 Liabilities and Net Assets Current Liabilities: Accrued consultant fees and contract labor 42,288 31,351 Accounts payable and accrued expenses 13,046 20,575 Accrued Payroll 19,938 26,373 Payroll taxes payable 6,379 6,431 Total 81,651 84,730 Net Assets Unrestricted 101, ,042 Total Liabilities and Net Assets $ 183,599 $ 224,772 The accompanying notes are an integral part of these financial statements 2

5 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2004 AND JUNE 30, Support and Revenue Contracts and grants, State of Louisiana: Department of Education $ 633,173 $ 589,964 Department of Treasury 396, ,000 Govenor"s Office of Urban Affairs & Development 294, ,000 Total 1.324, ,964 Expenditures Program services Counseling, instruction, mentoring and tutoring 874, ,574 Food Distribution 48,554 45, , ,543 Grants disbursed to other organizations 73,000 52,000 Support services Management and general 276, ,327 Total 1, ,870 Change in unrestricted net assets, increase (decrease) 52,328 38,094 Net assets, beginning of year 49, ,948 Net assets, end of year $ 101,948 $ 140,042 The accompanying notes are an integral part of these financial statements 3

6 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2004 Program Services Counseling Instruction Mentoring Food Tutoring Distribution Management and General Total Salaries Payroll taxes Consulting fees ant Teacher and teat Coordinators anc Program director Counselors, spe After school food and snacks Food costs Instructional mater Program operating costs Insurance Maintenance and repairs Material handlers 2 Office expenses at Printing Rent expense, faci Rent expense, equipment ontract labor: 3r assistants lonitors ;rs, and others and supplies packers supplies!s and office lent Telephone Travel and transporationon Utilities Depreciation $ 47,521 $ 12, , ,729 19,800 68,784 48,298 25,173 41,575 3,560 5,032 22,700 9,977 51,319 4,125 6,962 37,729 6,152 7,988 40,255 8,299 $ 214,020 21, ,186 1,677-7,567-9,056 1,375 2,321 12,576 2,050 2,662 $ 261,541 34, , ,729 19,800 68,784 48,298 40,255 25,173 41,575 4,746 6,709 8,299 30,267 9,977 60,375 5,500 9,283 50,305 8,202 10,650 Total $ 874,640 $ 48,554 $ 276,069 $1,199,263 The accompanying notes are an integral part of these financial statements 4

7 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2005 Program Services Counseling Instruction Mentoring Food Tutoring Distribution Management and General Total Salaries Payroll taxes Consulting fees am ontract labor: Teacher and teat sr assistants Coordinators and lonitors Program director Counselors, spec ;rs, and others After school food and snacks Food costs Instructional mater and supplies Program operating costs Insurance Maintenance and repairs Material handlers and packers Office expenses and supplies iupplies Printing Rent expense, faci s and office Rent expense, equipment lent Telephone Travel and transporationon Utilities Depreciation $ 46,230 $ 9, , ,473 36, ,049 35,213 37,779 31,003 4,935 7,008 40,349 5,010 38,843 1,399 7,319 37,203 6,680 9,858 36,307 9,662 $ 175,114 20, ,645 2,336-13,450-6, ,439 12,401 2,226 3,286 $ 221,344 29, , ,473 36, ,049 35,213 36,307 37,779 31,003 6,580 9,344 9,662 53,798 5,010 45,698 1,865 9,758 49,604 8,906 13,144 Total $ 933,574 $ 45,969 $ 240,327 $1,219,869 The accompanying notes are an integral part of these financial statements 5

8 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2004 AND JUNE 30, 2005 Cash flows from operating activities Increase in net assets Adjustments to reconcile increase in net assets to net cash provided by operating activities Depreciation (Increase) Decrease in Operating Assets Receivables Prepaid expense and other assets $ 52,328 $ 38,094 10,650 (4,071) (190) 13,144 (7,612) (25,420) Increase (Decrease) in Operating Liabilities Cash overdraft Accrued consultant fees and contract labor Accounts payable and accrued expenses Accrued payroll Payroll taxes payable Net cash provided (used) by operating activities Cash flows from investing activities Purchases of fixed assets (33,500) 5,486 4,626 9,081 4,794 49,204 (31,629) (10,937) 7,529 6, ,285 (6,033) Cash flows from financing activities Net increase (decrease) in cash 17,575 15,252 Cash as of beginning of year Cash as of end of year 9,813 27,388 $ 27,388 $ 42,640 The accompanying notes are an integral part of these financial ststements 6

9 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2004 AND JUNE 30, 2005 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities Louisiana Center Against Poverty, Inc. is a nonprofit corporation, organized to implement comprehensive programs addressing economic, educational, and health, problems in the parishes of Concordia, East Carroll, Madison, Ouachita, and Tensas. The organization's primary focus is counseling, mentoring and tutoring youth, in the area, concerning alcohol and drug abuse prevention, clothing and feeding, healthcare planning and prevention, j ob creation and economic development, and introduction and exposure to new and existing technologies. Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Basis of Presentation Financial statement presentation follows recommendations of the Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117 Financial statement of Not-for-Profit Organizations. Under SFAS No. 117, the organization is required to report information regarding its financial position and activities according to its classification of net assets as unrestricted, temporarily restricted, and permanently restricted. Estimates The preparation of financial statements in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefitted. Support and Revenue The organization is funded substantially through state contracts and grants on an annual basis. The organization recognizes revenue, from contracts and grants, on pro-rata basis as predetermined by the funding agencies. Contract and grant support are recognized as unrestricted since expenditure for purpose occurs during the contract and grant period. Contributions All Contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted depending on the existence and nature of any donor restrictions. The organization has not received any contributions with donor imposed restrictions that would result in temporarily or permanently restricted funds.

10 NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 AND JUNE 30, 2005 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued) Contributed Services The organization receives significant services donated by members from the various communities it serves in conducting its programs. No amounts have been reflected in the financial statements for those services since they do not meet the criteria for recognition under SFAS No. 116, Accounting for Contributions Received and Contributions Made. Cash Cash and cash equivalents consists of monies in bank, and highly liquid investments with maturity dates of less than three months. Carrying values approximates fair value because of short term maturities of the financial instruments. Fixed Assets The organization records, at cost, purchases of property and equipment in excess of $500 as fixed assets. Donations of property and equipment are recorded at fair market value at the time of donation. Depreciation is calculated on the straight line method over the useful lives of its respective assets. Automobiles 5 years Computer equipment 5 years Equipment 8 years Office furniture 8 years Income Taxes The organization is a non-profit corporation, exempt under section 501(c)(3) of the internal revenue code and did not conduct unrelated business activities. Therefore, no provision for corporate income taxes have been included in the financial statements. NOTE 2 - CONTRACT / GRANT AWARDS Louisiana Center Against Poverty, Inc. was funded through the following agencies by contracts and grant awards for June 30, 2004 as follows: Approximate Contract Revenues Approximate Grant & Support Funding Period Amount Recognized Funding Department State of Louisiana: Department of Education Department of Education Department of Treasury Governor's Office of Urban Affairs and Development Total contracts and grants 10/01/ /30/2004 $ 404,600 $ 420,001 10/01/ /30/ , ,172 07/01/ /30/ , ,918 10/01/ /30/ , ,500

11 NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 AND JUNE 30, 2005 The organization was funded through the following agencies by contracts and grant awards for June 30,2005 as follows: Approximate Contract Revenues Approximate Grant & Support Funding Department State of Louisiana: Department of Education Department of Education Department of Treasury Governor's Office of Urban Affairs and Development Funding Period 10/01/ /30/ /01/ /30/ /01/ /30/ /01/ /30/2004 Amount $ 404, , , ,000 Recognized $ 421, , , ,000 Total contracts and grants Included in the grants from the Governor's Office of Urban Affairs & Development, were funds for sub-recipient grant awards to other local government and non-profit organizations. For fiscal years ended June 30,2004 and June 30,2005, grant funds were disbursed to various agencies and organizations in the amount of $73,000, and $52,000, respectively. Louisiana Center Against Poverty, Inc. did not receive grant awards from the State of Louisiana, Governor's Office of Urban Affairs & Envelopment and the Department of Treasury, for its fiscal year ending June 30,2006. The lack of grant funding is directly related to Hurricanes Katrina and Rita that impacted the state during August and September of NOTE 3 - CONTRACT / GRANT RECEIVABLES Department of Education (PT) Department of Education (TPP) 2004 $ 71, $ $ 69, NOTE 4 - FIXED ASSETS Fixed assets consist of: Automobiles Computer equipment Furniture Equipment Less accumulated depreciation Net total $ 40,009 22,651 2, ,187 (17.931) $ $ 40,009 23,987 2, , ) $49.145

12 NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2004 AND JUNE 30, 2005 NOTE 5 - RELATED PARTY TRANSACTIONS Louisiana Center Against Poverty, Inc. and Northeast Economic Development District, Inc. have members that are common to their board of directors and management. Louisiana Center Against Poverty, Inc's Executive Director advances the organization funds through out the year, as needed, interest free, to supplement its cash flow. The organization has an outstanding balance, owed to the Executive Director, at June 30, 2004 of $3,000 and at June 30, 2005 of $3,000. NOTE 6 - CONCENTRATION OF RISKS Louisiana Center Against Poverty, Inc maintain several bank accounts at one bank. During the year, the organization's bank account balances exceeds federally insured limits, individually and in the aggregate, for limited or short periods of time. 10

13 SUPPLEMENTAL INFORMATION Terry R. Hall, LLC Certified Public Accountant

14 . Hall, LLC postomceboxsoisi Baton Rouge, Louisiana (Certified Public Accountant Report On Compliance And On Internal Control Over Financial Reporting Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards To the Board of Directors and Management of Louisiana Center Against Poverty, Inc. Lake Providence, Louisiana I have audited the financial statements of Louisiana Center Against Poverty, Inc. (a nonprofit organization) as of and for the year ended June 30, 2004 and June 30, 2005, and have issued my report thereon dated December 21, I conducted my audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether Louisiana Center Against Poverty Inc.'s financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants 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 instance of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing my audit, I considered Louisiana Center Against Poverty, Inc.' s internal control over financial reporting in order to determine my auditing procedures for the purpose of.expressing my opinion on the financial statements and not to provide assurance on the internal control over financial reporting. My consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be a material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components do not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. I noted no matters involving the internal control over financial reporting and its operation that I consider to be material weaknesses. 12

15 Terry R. Hall, LLC Certified Public Accountant This report is intended solely for the information and use of the audit committee, management, others within the organization and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone_other than these specified parties. Baton Rouge, Louisiana December 21,2005 TeraMR. Hall, LLC CertifiedPublic Accountant 13

16 C TTdll T T 1^ Post Office Box Aiallj J-<J-rfV> Baton Rouge, Louisiana ^-r- j P ui- A * * [225] ertified Xublic Accountant Report On Compliance With Requirements Applicable To Each Major Program And On Internal Control Over Compliance In Accordance With OMB Circular A-133 To the Board of Directors and Management of Louisiana Center Against Poverty, Inc. Lake Providence, Louisiana Compliance I have audited the compliance of Louisiana Center Against Poverty, Inc. (a nonprofit organization) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the years ended June 30,2004 and June 30,2005. Louisiana Center Against Poverty, Inc. 's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of Louisiana Center Against Poverty, Inc. 's management. My responsibility is to express an opinion on Louisiana Center Against Poverty, Inc.'s compliance based on my audit. 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 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 Louisiana Center Against Poverty, 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. My audit does not provide a legal determination of Louisiana Center Against Poverty, Inc.'s compliance with those requirements. In my opinion, Louisiana Center Against Poverty, Inc. complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the years ended June 30,2004 and June 30, Internal Control Over Compliance The management of Louisiana Center Against Poverty, Inc. is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing my audit, I considered Louisiana Center Against Poverty, Inc.'s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine my auditing procedures for the purpose of expressing my opinion on compliance and to test and report on the internal control over compliance in accordance with OMB Circular A-133. My consideration of the internal control over compliance would not necessarily disclose all matters in the internal 14

17 Terry R. Hall, LLC Certified Public Accountant control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components do not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants caused by error or fraud that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. I noted no matters involving the internal control over compliance and its operation that I consider to be material weaknesses. This report is intended solely for the information and use of the audit committee, management, Board of Trustees, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Baton Rouge, Louisiana December 21,2005 TerrVi?.. Hall, LLC Certified^ublic Accountant 15

18 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2004 Pass-through Federal Entity CFDA Identifying Federal Grantor/ Pass-through Grantor Number Number Total U. S. Department of Health and Human Services: Temporary Assistance For Needy Families Pass-through the State of Louisiana Department of Education None $ 393,321 Pass-through the State of Louisiana Department of Education Department of Social Services - Office of Family Support None 217,289 Total expenditures of federal awards $ LOUISIANA CENTER AGAINST POVERTY, INC. NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2004 Note A - Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of Louisiana Center Against Poverty, Inc. and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with requirements of OMB Circular A-133, "Audits of State, Local Governments, and Non-Profit Organizations". Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. The accompanying notes are an integral part of these financial statements 16

19 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2005 Pass-through Federal Entity CFDA Identifying Federal Grantor/Pass-through Grantor Number Number Total U. S. Department of Health and Human Services: Temporary Assistance For Needy Families Pass-through the State of Louisiana Department of Education None $ 392,587 Pass-through the State of Louisiana Department of Education Department of Social Services - Office of Family Support None 159,034 Total expenditures of federal awards $ 551,621 LOUISIANA CENTER AGAINST POVERTY, INC. NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2005 Note A - Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of Louisiana Center Against Poverty, Inc. and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with requirements of OMB Circular A-133, "Audits of State, Local Governments, and Non-Profit Organizations". Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. The accompanying notes are an integral part of these financial statements 17

20 FINDINGS AND RECOMMENDATIONS FOR THE YEAR ENDED JUNE 30, 2004 AND JUNE 30, 2005 SUMMARY OF AUDIT RESULTS 1. The auditor's report expresses an unqualified opinion on the financial statements of Louisiana Center Against Poverty, Inc. 2. Reportable conditions disclosed during the audit of the financial statements are reported in the Report On Compliance And On Internal Control Over Financial Reporting Based On An Audit Of financial Statements Performed In Accordance With Government Auditing Standards. There were none. 3. No instances of noncompliance material to the financial statements of Louisiana Center Against Poverty, Inc. were disclosed during the audit. 4. Reportable conditions disclosed during the audit of internal control over major federal award programs is reported in the Report On Compliance with Requirements Applicable to Each Major Program and On Internal Control Over Compliance In Accordance With OMB Circular A-133. There were none. 5. The auditor's report on compliance for major federal award programs for Louisiana Center Against Poverty, Inc. expresses an unqualified opinion on all major federal programs. 6. The Audit findings relative to the major federal award programs for Louisiana Center Against Poverty, Inc. are reported in this schedule. There were none. 7. The programs tested as major programs included: Temporary Assistance For Needy Families - CFDA No The threshold for distinguishing Types a and B programs was $300, Louisiana Center Against Poverty, Inc. was determined to be a low-risk auditee. 1. There were no new comments CURRENT YEAR COMMENTS 18