TH E ARC O F ST.M ARTIN. St.M artinvillc,louisiana FINANCIAL REPO RT. Year Ended June 30,2003. ~,e~oo~,es "~/"~ /

Transcription

1 5qjCl 03 DfC,? t TH E ARC O F ST.M ARTIN St.M artinvillc,louisiana FINANCIAL REPO RT Year Ended June 30,2003 ~,e~oo~,es "~/"~ /

2 TH E AR C OF ST.M ARTIN,INC. St.M artinville,louisiava FinancialStatem entsand Auditor'sReport ForThe YearEnded Juno IndependentAuditor'sReport Page N o. 3-4 FinancialStatem ents: Com parative Statementof FinancialPosition-June 30, Com parative Statementof Activities-Forthe YearEnded June 30, Com parative Statementof Cash Flows-Forth e YearEnded June 30, Com parative Statementof FunctionalExpenses-Forthe Year Ended Jun e 30,2003 Notes to th e Financial Statem ents Intern alcontrol,com phan ce and Oth ergrantinformation: Reporton Compliance and on InternalControlOver Finan cialreporting Based on an Auditof Financial Statem ents Perform ed in Accordance with Governm ent A uditing Standards Reporton Com pliance with Requirem entsapplicable to Each M ajorprogram an d InternalCo ntrolover Compliance in Accordan ce with OM B Circular A-133 Schedule of Expendialresof FederalAwards Scheduleof Findings,Questioned Co sts an d M anagem ent'sco rrective Action Plan Sum mary Schedule of PriorAuditFindin gs

3 CHARLES M.MARAIST,CPA * REGINA B.MARAIST,CPA * ~A PROFESSIONAL ACCOUNTING CORPORATION M ARAIST & M ARAIST CERTIFIED PUBLIC ACCOUNTANTS (A PARTNERSHIP OF PROFESSIONALACCOUNTING CORPORATIONS) 1411N,MAIN STREET ST.MARTINVILLE,LOUISIANA TELEPHONE:(337) ~ FAX:(337) MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS IN D EPEN DENT AUD ITOR 'S REPORT To the Board of D irectorsof The Arc of St.M artin,inc St.M artinville,louisiana W e have audited the accom panying statem entof financialposition of The ARC of St. M artin,inc.(a nonprofitorganization)asofjune30,2003,and therelated statementsof activities,cash flow s,and functionalexpensesforthe yearthen ended.these basic financialstatem entsare the responsibility of the organization'sm anagem ent.o ur responsibility isto expressan opinion on these basic financialstatem entsbased on our audit. W e conducted ourauditin accordance w ith generally accepted auditing standardsand the standardsapplicable to financialauditscontained in Governm entauditing Standards, issued by the Com ptrollergeneralof the U nited States.Those standardsrequire thatw e plan and perform the auditto obtain reasonable assurance aboutw hetherthe financial statem entsare free of m aterialm isstatem ent.a n auditincludesexam ining,on a testbasis, evidence supporting the am ountsand disclosuresin the financialstatem ents.an audit also includesassessing the accounting principlesused and significantestim atesm ade by m anagem ent,asw ellasevaluating the overallfinancialstatem entpresentation.w e believe thatourauditprovidesa reasonable basisforouropinion. In ouropinion,the basic financialstatem entsreferred to above presentfairly,in all m aterialrespects,the financialposition of The ARC of St.M artin,inc.asof June 30,2003,and the changesin itsnetassetsand itscash flow sforthe yearthen ended in conform ity w ith generally accepted accounting principles. In accordance w ith G overnm entauditing Standards,w e have also issued ourreport dated D ecem ber29,2003 on ourconsideration of The AR C of St.M artin'sinternalcontrol overfinancialreporting and ourtestof itscom pliance w ith certain provisionsof law s, regulations,contractsand grants. O urauditw asperform ed forthe purpose of form ing an opinion on the basic financial statem entsof The AR C of St.M artin,inc.taken asa w hole.the accom panying schedule of expenditures of federalaw ardsasrequired by U.S.Office of M anagem entand Budget Circular A-133,Audits of States LocalG overnm ents.and N on-profitorganizations,is presented forpurposesof additionalanalysis,and isnota required part of the basic

4 To the Board of D irectorsof The AR C of St.M artin,inc financialstatements.such information hasbeen subjected to the auditing procedures applied in the auditof the basic financialstatem entsand,in ouropinion,isfairly presented in allm aterialrespectsin relation to the basic financialstatem entstaken asa w hole. The financialinform ation forthe preceding yearw hich isincluded forcom parative purposesw astaken from the financialreportforthatyearin w hich w e expressed an unqualified opinion on the basic financialstatem entsof The AR C of St.M artin,inc M araist& M araist Certified Public A ccountants D ecem ber29,2003

5 TH E ARC OF ST.M A RTIN,IN C. St.M artinville,louisiana STA TEM ENT O F FINAN CIA L PO SITIO N June 30,2003 (with comparativeamountsforjune30,2002) ASSETS CurrentAssets: Cash and cash equivalents Investm ents A ccounts Receivable: Grants/Contracts M edicaid Oth er Totalcurrentassets Fixed as sets Land Buildingsand improvements Furniture and eq uipm ent Vehicles Less: accum ulated depreciation TotalfLxed as sets 6/30/03 135,014 17,473 93,866 13, $ 49, ,016 58, ,168 $ 819, ,230 $ 497,615 ExhibitA 6/30/ ,960 79,2!8 16, , ,865 61, , $ 432,052 TOTAL ASSETS $ $ CurrentLiabilities: Accountspayable and accrued expenses Accrued Salaries D ue to clients-trustfund balance Ctm ~ntportion of notespayable Totalcurrentliabilities Notespayable,tesscurentpo rtion Totalliabilities N etassets: Unrestricted: Operations Fixed Assets Permanently restricted Totalnetasse ts 3,809 23,440 9,215 24,319 $ 60, $ 223, , ,863 $ 670,863 19,147 21,528 21,823 9,503 $ 72, $ $ 261, , ,164 $ 650,164 TOTAL LIABILITIES AND NET ASSETS $ $ The accom panying notesare an integralpartof th ese financialstatem ents.

6 TH E ARC OF ST.M ARTIN,INC. St.M artinville,louisiana STATEM ENT O F ACTIVITIES Year Ended June 30,2003 (with comparativeamoun tsforjune 30,2002) Operations Unrestricted Fixed Asse ts SUPPORT AND REVENUE : Support: Grants and Contracts Contributions Totalsupport Revenue Clientfees M edicaid/m edicare W ork contracts lnteresl/dividend inco m e Other Totalrevenue TOTAL SUPPORT AND REVENUE $ 215,559 18,343 $ 233,902 $ 64,926 1,122,245 33,156 4,849 97,728 $ 1,322,904 $ 1,556,806 $ EXPEN SES: Program services: Adulthabilitation Residentialhom es Totalprogram services 699, ,239,439 29, Supportservices: Generaland admilfistrative $ 249,806 TOTAL EXPENSES $ 1,489,245 CHANGE IN NET ASSETS $ 67,561 $ 1,240 $ 46,862 $ (46,862) REDESIGNATION OF NET ASSETS NET A SSETS,BEGINN IN G OF YEAR NET ASSETS,END OF YEAR (105,423) _ , ,670 The accom panying notesar e an integralparlof these finan cialstatem ents.

7 Year End Totals 6/30/02 $ 215,559 18,343 $ 233,902 $ 222,085 22,198 $ 244,283 $ 64,926 1,122,245 33,156 4,849 97,728 $ 1,322,904 $ 51,953 1,067,099 33,007 6,174 5,415 $ 1,163,648 $ 1,556,806 $ 1,407, , ,285, , _621 1,199,522 $ 251, $ 1,536,107 $ 1,444,696 20,699 (36,765) $ 670, _

8 TIlE ARC O F ST.M A RTIN,IN C. St.M artinville,louisiana STATEM ENT OF CASH FLOW S Year Ended June 30,2003 (with comparativeamoun tsforjune30,2002) ExhibitC CASH FLOW S FROM OPERATIN G ACTIVITIES Change in netassets Adjustments to reconcile changein netassetsto netcash used for operating activities: D epreciation (Increase)/decreasein accountsreceivable Increase/(decrease)in accounlspayable and accrued expenses Increase/(decrease)in accrued salaries Increase/(decrease)in clienttrustfunds owed Year End Tolals 6/30/03 6/30/02 20,699 (36,765) 46,862 (8,190) (15,338) 1,912 42,347 (28,184) 16,598 7,463 (12,608) 9,392 Netcash provided by operating activities $ 33, CASH FLOW S FROM INV ESTING ACTIVITIE S Purchaseofland,building & equipment $ (112,425) $ (59,626) Netcash used forinvesting activities $ (112,425) $ (59,626) CASH FL O W S FROM FINANCING ACTIVITIE S Pro ceeds from bank loan Paym ents on notespayable Paym ents on m ortgage payable 15,005 (8,003) $ 47,003 (3,621) (24,006) N etcash used forfinancin g activities $ 19,376 NET EQUIVALENTS IN CASH AND CASH (72,086) (29,399) CASH AND CASH EQUI VALENT S-Beginning ofyear CASH AND CASH EQUI VALENT S-End of Year The accompan ying notesar e an integralpartof these financialstatements.

9 TH E AR C OF ST.M ARTIN,INC. St.M artinville,louisiana STATEM ENT OF FUNCTIONAL IgXPENSES YearEnded June 30,2003 (with comparative totalsfrom Jane 30,2002) Ad~ t Habilita tion Residential H om es Total Program Services Salariesand wages Em ployee benefits Payrolltaxes 454,499 $ 27,586 35, ,652 31, ,151 58, Totalsalariesand related expenses 517,319 $ 344, ,868 Rentalof property M ahltenance & Repairs ProfessionalFees Supplies Insurance Intere st U'd~,tles & ~t~ptx~ae Dues& publications Autom otive Providerfees& licenses Ofice expenses Personalclientneeds Travel,se m inars,etc. Consultantfees Educational Reer~ otud Dietary Food M edical& nursing Training Association re sponsibility H ouseke ping Laundry and linen Other 3,600 6,606 6,840 5,391 53, ,366 3,306 11, , , ,162 4, ,192 17,152 3,801 31,557 1,677 11, ,085 52, , ,827 8,555 3,307 4,721 26,287 7,700 3, ,600 23,758 6,840 9,192 85,489 1,677 24, ,451 56,228 12,079 5,663 11,385 12,827 8,630 3,307 5,220 31,229 8, ,162 7, ,192 Totalexpensesbefore depreciation 699,408 $ 540,031 1,239,439 Depreciation Totalexpenses 555_831 The accom panying notesare an integralpartof th ese financialstatements.

10 General And Administrative 199,981 7, , , , , , , $ Y earend Totals 6/30/03 943,132 $ 66, ,085,197 3,600 24,543 12,980 9,275 94,512 1,677 26, ,610 56,742 14,196 5,719 14,200 12,827 8,630 3,307 5,220 31,653 8,703 1,817 2,162 7, ExhibitD 6/30/02 903,421 80, ,056,595 4,485 15,801 11,738 5,516 49,882 1,893 25,441 3,550 60,896 49,435 19,815 5,755 12,873 12,629 5, ,431 34,700 9, ,856 6, ,489,245 $ ,402,

11 TH E ARC OF ST.M A RTIN,INC. St.M artinville,louisiana NOTES TO FINANCIA L STATEM ENTS June 30,2002 (1) SUM MARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities The ARC of St.M artin,inc.isa non-profitcom munity organization which operatesan adult habilitafion centerand two residentialcom mun ity homesserving the needsof the m entally retarded citizensof St.M artin Parish,Louisiana. etassetsthatare notsubjectto donor-imposed stipulations. Terapo mrily restricted netassets-netassetssubjectto donor-impo sed stipulations that m ay orwillbe m et,eitherby actions of the Associatiun and/orth e passage of tim e. W hen restriction expires,tem po rarily restricted netassetsare re classified to unrestricted net assetsand re ported in the statementof activitiesasnetasse tsre leased from restrictions. P~romnentlv restricted netassets-net assets subjectto donorimposed stipulationsthat riley be lnaintained permanently by the Association. Generally,the donors of these as sets permitth e Association to use allorpartof the inco m e earned on an y related investm ents forgeneralorspecific purpose s. Th e financialstatem ents include certain prior-year summ arized financialinformation in totalbut notby netas setclas s.such infonnatiun doesnotinclude sufficientdetailto constilute a presentation in accordance with generally accepted accounting principles. Accordingly,such information should be read in conjunctionwith theorganization'sfinancialstatementsfortheyear ended June 30,2002,from which th e summ arized information wasderived. Contributions Contributions, including unconditionalprom isesto give, are recorded as made.allcontributions ar e available forunrestricted use unlessspecifically restricted by th e donor. Conditionalprom ises to give are recognized when the co nditionson which they depend are substantialy met. Unco ndi tionalpromise sto give due in th e nextyearar e recorded attheir netrealizable value. Unco nditionalpromi se sto give due in subsequentyearsar e reported atthe presentvalue of th eir netrealiza ble val ue,usin g risk-free interestratesapplicab le to the yearsin which the pronrisesare received.

12 TH E ARC OF ST.M ARTIN,IN C. NOTES TO FINANCIA L STATEM ENTS (Continued ) (1) SUM M ARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued) Cash Equivalents Cash equivalentsconsistof short-term,highly liquid investments which are readily co nvertible into cash within ninety (90)daysof purchase. Investm entsin marketable securitiesw ith readily detem tinable fairmarketvaluesar e reported at their fair valuesin th e statem entof financialposition.any unrealized gainsand lossesar e in cluded in th e change in netassets. Incom e TheARC of St.M artin,inc.qualifiesasa tax-exemptorganization undersection 501(c)(3)of the Inte rnalrevenue Ced e and,th erefore,has no provision forfed eralincom e taxesin the accom panying financialstatements.there wasno unrelated businessin come forth e fiscalyear ended June , Support and Revenue The ARC of St.M artin,in c.receivesits grantan d co ntractsuppo rtprim arily from the State Departm entof Health and Hospitalsand otherstate agencies.support received from th ose grants and contracts isrecognized on a "netfunded" basiswhereby State Departm entof Health and Hospitalsfundi ng isrecognized on a last-dollar-in basis. Related expensesinctured are "netted " firstby clientfeesand M edicaid in come in determining grantfundsto be rec ognized. Th e O rganization receives clientfees and M ed icaid incom e for billable clientsen,ices and recognizes th ese fees and incom e when earned. Fixed Assets Fixed asse tsacquired by The ARC nf St.M artin,inc. are considered to be owa~ed by the Organization.However,State fundi ng sourcesmay maintain equitable interestin th e properly purchased with grantmotlesas wellasfile rightto determine file use of any proceedsfrom th e sale of th ese assets. The Organization followsthe practice of capitalizing, atcost,allexpe ndituresfor fixed as se ts in excessof $100.Depreciation isco mputed on a straigh t-line basisoverthe usefullivesof the assets generally asfollows: Buildings Im provem ents Furniture and Equipm ent Vehicles 25 years 10 years 7 years 5 years Th e netfixed assetbalance has be en recorded asa se parate com ponentin unrestricted netassets.

13 TH E ARC OF ST.M A RTIN,IN C. NO TES TO FINANCIAL STATEM ENTS (Continued) (1) SUM M ARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued) Tile costs of providing the various program sand otheractivities have been surnm anzed on a functionalbasis in th e statem entof activities.accordingly,certain co sts ha ve be en allocated am ong the program sand suppo rting servicesbenefiled. The preparation of financial statementsin co nformity with generally accepted accounting principlesrequiresmanagementto make estimatesan d assum ptionsthatafectce rtain reported am ounts and disclosures.accordingly,actualresultscould di ferfrom those estim ates. (2) FAIR VALUE OF FINANCIAL STATEM ENT S Th e following m eth odsan d assum ptionswere used to estim ate th e fairvalue of each classof financialin strum ents: Fairvalue approximatescarrying value due to the initial nmturitiesof the instrmnents being three m onth sorless. Investm ents-fairvalue of investm entsare based on am ortized carrying value,if the stated rate is com parable to ra tescurrently available on U.S.Treasury investm entsof com para ble maturities. (3) ACCOUNTS RECEIV, NTRACTS Asof June 30,2003,accountsreceivable from gr an ts an d co ntracts was composed of the follow ing: Louisiana Departm entof Health an d Hospitals-Ofice forcitizenswith Developm entald isabilities W ork Contracts Receivable 17, (4) PLANT ASSETS AND DEPRECIATION D epre ciation of plantas sets iscalculated on th e straight-line bas isoverthe estim ated usefullives of th e as sets.the costof such assets atjan e isas follow s: Lan d an d buildin gs Furn iture,fixtures,& equipm ent Vehicles $478,030 58, Subtotal $819,845 Less:Accum ulated D epreciation 322~230 Total $497,615 13

14 TH E ARC OF ST.M ARTIN,INC. NOTES TO FINANCIA L STATEM ENTS (Continued) (5) NOTES PAYABLE The notespayable consistof installmentnoteswith a carrying value of $35,379 payable to First Louisiana NationalBank,in monthly instalhuea ts of $ thsu January,2007 including interest at4.0%,secured by a chattelmortgage on the vehiclesowned and operated by the Organization, and a pled ge of certifica tesof depositw ith FirstLouisiana N ationalbank.a dditionally,a short term (60 day)loan with interestpa yable at4% isowed to FirstLouisiana NationalBank asof June 30,2003,in the aggregate principa laraountof $15,005 The annualrequi rem entsto am ortize al lnotesoutstanding atjune 30,2003,including in terestof $2,511are asfollows: FiscalYear End 6/2004 6/2005 6/2006 6/2007 Tom l $ 25,665 10,560 10, Toml $ 47,873 Allemployeesof The ARC of St.M arlin, Inc.ar e m embersof file Social Soc urity Retirem ent System.No supplementalconlributory retirementorpension plansar e maintained orprovided by th e Organization. (7) COM PENSATED ABSENCES Employeesof The ARC of St.M artin, Inc.ar e entitled to paid vacation, paid sick leave,an d persu na lda ysof,depending on job classification,length of service,and otherfactors.itis im practicable to estim ate the am ountof compensation forfuture absences,an d accordingly,no liability hasbeen re corded in th e accom pan ying financialstatem ents.the Organization'spo licy is to recogldze th e costs of com pe nsated absences w hen actually pa id to em ploye s. (8) CONCENTRATIONS OF REVENUE/CASH BALANCES The AR C of St.M artin isprimarily dependentforsupporton annualgrantfunding obtained through th e Louisiana Depam nentof Health an d Hospitalsan d th e Lo uisiana Departm entof Social Service s.revenuesderived from grantfunding have historically been relatively stable. However,the State of Lo ui siana iscurrently contemplating budgetcuts to combatan an ticipated statewide re venue shortfallforrite com ing fiscalyear.such funding cutsmay afectth e expected revenuesof th e Or ganization,an d such revenue declinesma y be lua terial.

15 TH E ARC O F ST.M ARTIN,INC. NOTES TO FINAN CIA L STATEM ENTS (Continued) (8) CONCENTRATIONS OF REVENUE/CASH BALANCES(Continued) The Organization maintainssubstantially allof its demand depositcash accounts atst.m artin Bank and Trust,Teche Bank and Trust, and FirstLouisiana NationalBank.Cash acco untsat banksare insured by the FDIC forup to $100,000.No accountbalance am ounts in excessof insured lim itswere maintained atany bank atjan e 30,2003. (9) COM M ITM ENTS AND CONTINGENCIES Amounts received orreceivable from gran toragenciesaresubjectto auditan d adjustmentby grantoragencies.any disallowed claims,including am ountsalready collected,m ay constitute a liability of the applicable funds.the am ount,if any,of expenditureswhicli may be disallowed by th e gr an torcannotbe determ ined at th istime,although th e Organization expects such am ounts,if an y,to be im m aterial. (10) RISK M AN AGEM ENT The Organization isexposed to risksof lossin the areasof general an d auto liability and workers compensation.th ose risksare handled by purchas ing com mercialinsurance.th ere ha ve be en no significantreductionsin insuran ce coverage during th e currentfiscalyear. (11) SCHEDULE OF FINDINGS AND QUESTIONED COSTS Th e Organization haselected to absorb allnon-qualifying costin curred underfederalprogram sas an organization responsibility,chargea ble againstth e unrestricted netassets derived from nongrantorprovided revenuesof the Organization.Sam ple transactionsselected in the conductof th e auditforfiscalyearended June 30,2003disclosed no findingsorquestioned costswhich were not,or w illnotbe absorbed by the Organiza tion.

16 CHARLES M.MARAIST,CPA * REGINA B.MARAIST,CPA * ~A PROFESSIONAL ACCOUNTING CORPORATION M ARAIST & M ARAIST CERTIFIED PUBLIC ACCOUNTANTS (A PARTNERSHIP OF PROFESSIONAL ACCOUNTING CORPORATIONS) 1411N.MAIN STREET ST.MARTINVILLE,LOUISIANA TELEPHONE:(337) ~ FAX:(337) MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SOQ E]'f OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS IN D EPEN DEN T AUD ITOR 'S REPORT ON COM PLIAN CE AN D ON IN TERN AL CON TROL OVER FIN AN CIAL RE PORTIN G BA SED ON AN AU D IT OF FIN AN CIAL STATEM EN TS PERFORM ED IN ACCORD AN CE W ITH GO VE RNM EN T AUD ITIN G STAN D ARD S To the B oard of D irectorsof The AR C of St.M artin,inc St.M artinville,louisiana W e have audited the financialstatem entsof The ARC of St.M artin,inc.,asof June 30,2003 and forthe yearthen ended,and have issued ourreporttheron dated D ecem ber 29,2003.W e conducted ourauditin accordance w ith generally accepted auditing standardsand the standardsapplicable to financialauditscontained in G overnm entauditing Stand~ d~s,issued by the Com ptrollerg eneralof the U nited States Com pliance A spartof obtaining reasonable assurance aboutw hetherthe AR C of St.M artin's financialstatem entsare free of m aterialm isstatem ent.w e perform ed testsof its com pliance w ith certain provisionsof law s,regulations,contractsand grants, noncom pliance w ith w hich could have a directand m aterialeffecton the determ ination of financialstatem entam ounts.h ow ever,providing an opinion on com pliance w ith those provisionswasnotan objectiveof ourauditand,accordingly,wedo notexpresssuch an opinion.the resultsof ourtestsdisclosed no instancesof non-com pliance thatare required to be reported underg overnm entauditing Standards ntern alc ontrolo verfinancialstatem ents In planning ouraudit,w e considered The AR C of St.M artin'sinternalcontrol overfinancialreporting in orderto determ ine ourauditing proceduresforthe purpose of expressing ouropinion on the financialstatem entsand notto provide assurance on the internalcontroloverfinancialreporting.h ow ever,w e noted a certain m atterinvolving the internalcontroloverfinancialreporting and itsoperation thatw e considerto be a reportable condition.reportable conditionsinvolve m atterscom ing to ourattention relating to significantdeficiencies in the design or operation of the internalcontrolover financialreporting that,in ourjudgment,could adversely affectthearc of St.M artin's ability to record,process,sum m arize and report financialdata consistentw ith the assertionsof m anagem entin the financialstatem ents.the reportable condition is described in the accom panying schedule of findings,questioned costsand m anagem ent's corrective action plan asitem

17 To the Board of D irectorsof The ARC of St.M artin,inc A m aterialw eaknessisa condition in w hich the design oroperation of one or m ore of the internalcontrolcom ponentsdoesnotreduce to a relatively low levelthe risk thatm isstatem entsin am ountsthatw ould be m aterialin relation to the financial statem entsbeing audited m ay occurand notbe detected w ithin a tim ely period by em ployeesin the norm alcourse of perform ing theirassigned functions.o urconsideration of the internalcontroloverfinancialreporting w ould notnecessarily disclose allm atters in the internalcontrolthatm ightbe reportable conditionsand,accordingly,w ould not necessarily disclose allreportable conditionsthatare also considered to be m aterial w eaknesses.h ow ever, w e believe thatnone of the reportable conditionsdescribed above isa m aterialw eakness. Thisreport isintended solely forthe inform ation and use of m anagem ent,others w ithin the organization, B oard M em bers,and federalaw arding agenciesand pass-through entitiesand isnotintended to be and should notbe used by anyone otherthan these specified parties. D ecem ber29,2003 M AR AIST & M ARAIST CERTIFIED PUBLIC ACCO UN TANT S 17

18 CHARLES M.MARAIST,CPA" REGINA B.M ARAIST,CPA * ~A PROFESSIONAL ACCOUNTING CORPORATION M ARAIST & M ARAIST CERTIFIED Fq.IBLIC ACCOUNTANTS (A PARTNERSHIP OF PROFESSIONALACCOUNTING COI:IPORATIONS) 1411N.MAIN STREET S'~MARTINV~LLE,LOUISIANA TELEPHONE:(337)394"5571 " FAX:(337) MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS SOCIETY OF LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS IN D EPEN D EN T AUD ITOR 'S REPORT ON COM PLIAN CE W ITH REQUIREM ENTS APPLICABLE TO EACH M AJOR PROGRAM To the Board of D irectorsof The ARC of St.M artin,inc St.M artinville,louisiana Com pliance AND IN TERN AL CON TROL O VER COMP LIAN CE IN ACCORD AN CE W ITH OM B CIRCULAR A -133 W ehaveaudited thecompliance of TheAR C of St.M artin,inc.(a non-profit organization)with thetypesof compliancerequirementsdescribed in theu.s Ofi ceof M anagem entand Budget(OM B 'ICircular A-133 Com oliance Supplem entthatare applicableto itsmajorfederalprogram fortheyearended June 30,2003.TheARC of St.M artin'smajorfederalprogram isidentified in thesummary of auditor'sresults section of the accom panying schedule of findingsand questioned costs.com pliance w ith the requirementsof laws,regulations,contractsand grantsapplicable to itsmajorfederal program isthe responsibility of The AR C of St.M artin'sm anagem ent.o urresponsibility isto expressan opinion on The AR C of St.M artin'scom pliance based on ouraudit. W e conducted ourauditof com pliance in accordance w ith generally accepted auditing standards;the standardsapplicable to financialauditscontained in G overnm ent Auditing Standards,issued by the Com ptrollerg eneralof the United States;and the provisionsof O fi ce of M anagem entand BudgetCircularA-133 require thatw e plan and perform the auditto obtain reasonable assurance aboutw hethernoncom pliance w ith the typesof com pliance requirem entsreferred to above thatcould have a directand m aterial effecton a majorfederalprogram occurred.an auditincludesexamining,on a testbasis, evidence aboutthe AR C of St.M artin'scom pliance w ith those requirem entsand perform ing such otherproceduresasw e considered necessary in the circum stances. W e believe thatourauditprovidesa reasonable basisforouropinion.o urauditdoesnot provide a legaldeterm ination of The AR C of St.M artin'scom pliance w ith those requirem ents. In ouropinion,the ARC of St.M artin,inc.com plied,in allm aterialrespects with the requirementsreferred to abovethatareapplicableto itsmajorfederalprogram forthe yearended June 30,

19 To the B oard of D irectorsof The AR C of St.M artin,inc nternalcontrolovercom vliance The m anagem entof The ARC of St.M artin,inc,isresponsible forestablishing and m aintaining efective internalcontrolovercom pliance w ith requirem ents of law s, regulations,contractsand grantsapplicable to federalprogram s.in planning and perform ing ouraudit,w e considered The ARC of St.M artin'sinternalcontrolover compliancewith requirementsthatco uld have a directand materialeffecton a major federalprogram in orderto determ ine ourauditing proceduresforthe purpose of expressing ouropinion on com pliance and to testand report on internalcontrolover com pliance in accordance w ith OM B CircularA-133. O urconsideration of the internalcontrolovercom pliance w ould notnecessarily disclose allm attersin the intern alcontrolthatm ightbe m aterialw eaknesses.a m aterial weaknessisa condition in w hich the design oroperation of one orm ore of the internal controlcom ponentsdoesnotreduce to relatively low levelthe risk thatnoncom pliance w ith applicable requirem entsof law s,regulations,contractsand grantsthatw ould be materialin relation to a majorfederalprogram being audited may occurand notbe detect ed w ithin a tim ely period by em ployeesin the norm alcourse of perform ing their assigned functions.w e noted no m attersinvolving the internalcontrolovercom pliance and itsoperation thatw e co nsiderto be m aterialw eaknesses. Thisreportisintended solely forthe inform ation and use of m anagem ent,others w ithin the organization,board M em bers,and federalaw arding agenciesand pass-through entitiesand isnotintended to be and should notbe used by anyone otherthan these specified parties. D ecem ber29,2003 M AR AIST & M AR AIST CERTIFIE D PUBLIC ACCOU N TAN TS 19

20 TH E ARC OF ST.M ARTIN,INC. St.M ar tinville,louisimm Schedule of Expo ndituresof Fed eralawards Forthe Year Ended June 30,2003 FEDERAL GRANTOR/PASS-THROUGH United StatesDept.of Health & Hum an Services- Louisiana D ept.of H ealth and Hospitals-Ofi ce forcitizens with Developm entald isabilities United StatesDept.of Health & Human Services- Louisiana Dept.of Health and Hospitals-Ofi ce forcitizenswith Developm entald isabilities United StatesDept.of Education-Louisiana Dept.of Social Services FEDERAL CFDA NUM BER SocialAdultHabilitafion Services forfile M entally Retarded *M edicaid Title XIX-M edicai Assistance Program -Residential Hom esforth e M entally Retarded/HCB W aiver/supported IndependentLiving/PCA an d Respite Vocationa lrelm bilitation Services Basic SupportProgrmn /Supported Em ploym entserv icesfor Individuals wi th Severe D isabilities FederalEm ergency M anagem entagency / Louisiana Ofi ce of H om eland Security and Em ergency Preparedness Public Assistance Gran ts Uni ted StatesDepartm entof Tran sportation- Elderly and Disabled Public Tran sit Lo ui siana Dept.of Transpo rtation Program an d D evelopm ent *Denotesmajorfed eralprogram.

21 REVENUE EXPEND ITURES ,122,245 1,122,245 5,564 5,564 12,299 12,299 76,406 76,406 $ 1,426~509 21

22 PartI: Sum m ary of Auditor'sResults: TH E ARC OF ST.M AR TIN,INC. St.I~L3rt.inville,Louisiana Schedule of Findings,Qucstioned Costsand M anagem ent'scorrective Action Plan Year Ended June 30, An unqualified reportw as issue on the financialsta tem ents. 2. A repo rtable condition in in ternalconlrolwas disclosed by th e audi tof the filmncial statem ent, how ever,itw asnotconsidered to be a m aterial weakness. 3. M aterialnoncom pliance was notdisclosed. 4. No reportableco nditions in internalcontroloverthemajorprogram weredisclosed by fileauditof the financialstatem ents. 5. An unqualified opinion was issued on co mplian ce fortile luajorprogram (M edicaid Title XIX M edical AssistanceProgram ). 6. The auditdisc losed no auditfindingsrequired to berepo rted undersection 510 (a)of CircularA Th e majorprogram was United StatesDepam nentof Health & Human Services/Louisian a Departmentof H ealth & H ospitals-d ivision of M ental Retardation:M edicaid Title XIX M edical Assistance Program. 8. Th e dollar threshold used to di stinguish be tw een Type A and Type B program s,as describe d in Section 520(b)ofCircularA-133was$300, Th e auditee did qualify asa low-risk an ditee undersection 530 of CircularA-133

23 TH E ARC O F ST.M ARTIN,IN C. St.M artinville,louisiana Schedule offindings,questioned Costsand M an agement'scorrectiveaction Plan (Continued) YearEnded Jun e 30,2003 partii Findingswhich are required to be reported in accordan ce with generally accepted govern m entaudi ting standards: 03-1 Findin g:due to the limited num berof adm inistrative employees,the ARC of St.M arlin did nothave a com pletely adequate segregation of functions within th e accounting system. M anagem ent'scorrective Action Plan:The m anagem entof Tlm AR C of St.M artin,inc. hasdeterm ined thatitisnotcostefec tive to com pletely segregate accounting functions. No plan isconsidered necessary. Findingsan d questioned costs forfederalawardswhich include auditfin dingsasdefined in Section 510 (a)of CircularA-133: Th ere are no findingsatjun e 30,2003 which ar e required to be reported underthe above guidance. PartIV : M anagem entle teritem s: Th ere are no m anagem entleteritem s atjune 30,2003

24 TH E ARC O F ST.M ARTIN,INC. St.M artinville,louisiana Summ ary Schedule of PriorAuditFindings Year Ended June PartI Findingswhich are required to be reported in accordance with generally accepted governm ent auditing standards. Section I: InternalControlan d Compliance M aterialto file FinancialStatements Finding: Status: Section II: The ARC of St.M artin,inc.did nothave a com pletely adequate segregation of functionsw ithin the acco unting system. Unresolved (See Item 03-1). InternalControland Com plian ce M aterial to FederalAw ards Th ere were no findings m entioned underthis section atjune 30,2002. Section III: M anagem entletter Th ere were no m anagem entleteritem satjun e 30,2002