Financial Statements LOWER NAUGATUCK VALLEY PARENT CHILD RESOURCE CENTER, INC. Years Ended June 30, 2016 and 2015

Transcription

1 Financial Statements LOWER NAUGATUCK VALLEY PARENT CHILD RESOURCE CENTER, INC.

2 CONTENTS Page Independent auditors report Financial statements: Statements of financial position... 3 Statements of activities... 4 Statements of functional expenses... 5 Statements of cash flows... 6 Notes to financial statements

3 Independent Auditors Report To the Board of Directors Lower Naugatuck Valley Parent Child Resource Center, Inc. Derby, Connecticut Report on the Financial Statements We have audited the accompanying financial statements of Lower Naugatuck Valley Parent Child Resource Center, Inc. (the Center), which comprise the statement of financial position as of June 30, 2016, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our 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 we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Center s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Center 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Center as of June 30, 2016, and the change in its net assets, and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 13 to the financial statements, the Center entered into an affiliation agreement with BH Care, Inc. effective July 1, The agreement appoints BH Care, Inc. as the sole member of the Center. The Center will continue to operate as a subsidiary of BH Care, Inc. Report on Summarized Comparative Information We have previously audited the Center s 2015 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated October 20, In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2015 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated October 19, 2016 on our consideration of the Center s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the 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 the Center s internal control over financial reporting and compliance. October 19, 2016 Shelton, Connecticut Dworken, Hillman, LaMorte & Sterczala, P.C. 2

5 STATEMENTS OF FINANCIAL POSITION June 30, Assets Cash and cash equivalents Restricted cash Patient fees receivable, net Grants and other receivables Prepaid expenses $ 14, ,504 26,318 14,164 $ 30,481 2, ,242 27,887 21,357 Total current assets 234, ,509 Property and equipment, net 362, ,625 Beneficial interest in assets held by others 13,963 15,192 Other assets 8,729 8,729 Total Assets $620,482 $756,055 Liabilities and Net Assets Current liabilities: Note payable, bank Accounts payable and accrued expenses Funds held on behalf of other agencies Deferred income $220, ,653 7,840 $338,558 8,893 36,889 Total current liabilities 533, ,340 Note payable, bank 206,916 Total Liabilities 533, ,256 Commitments and contingencies (Note 5) Net assets: Unrestricted Temporarily restricted Permanently restricted 40,924 34,886 11, ,321 46,982 11,496 Total Net Assets 87, ,799 Total Liabilities and Net Assets $620,482 $756,055 See notes to financial statements. 3

6 STATEMENTS OF ACTIVITIES Revenue and support: State of Connecticut: Department of Children and Families Services Social Services block grant Child First Program Early Childhood Consultation Program Patient service revenue, net of contractual allowances Other foundation and town grants Other income Unrealized gain (loss) on beneficial interest Net assets released from restriction Unrestricted $1,141,385 77,604 98,767 ( 628) Temporarily Restricted $ 723,555 6, ,019 76, ,197 Year Ended June 30, Permanently Restricted Total $ 723,555 6, ,019 76,311 1,141, ,801 98,767 ( 628) Summarized Total $ 748,165 9, ,958 1,125, , ,044 1,364,075 ( 1,364,075) Total revenue and support 2,681,203 ( 12,096) 2,669,107 2,707,970 Expenses: Child guidance clinic Intensive outpatient program Triple P In-Home CASSP ECCP Child First Program Mentor Development Administrative and general 1,086, , , , ,403 30, , ,052 1,086, , , , ,403 30, , ,052 1, , , ,289 24, , ,374 15, , ,693 Total expenses 2,746,600 2,746,600 2,637,677 Change in net assets ( 65,397) ( 12,096) ( 77,493) 70,293 Net assets, beginning 106,321 46,982 $11, ,799 94,506 Net assets, ending $ 40,924 $ 34,886 $11,496 $ 87,306 $ 164,799 See notes to financial statements. 4

7 STATEMENTS OF FUNCTIONAL EXPENSES Child Intensive Child Administrative 2015 Guidance Outpatient Triple P First and 2016 Summarized Clinic Program In-Home ECCP Program Mentor Development General Total Total Salaries $795,327 $300,285 $111,025 $159,827 $281,802 $19,021 $63,564 $87,240 $ 1,818,091 $ 1,762,594 Payroll taxes 64,172 24,248 8,765 12,784 20,656 1,572 4,393 7, , ,694 Fringe benefits 47,030 14,794 6,268 13,289 29,818 1,015 5,448 11, , ,696 Supplies and postage 5,301 2,490 6,201 3,252 4, ,335 19,685 Rent and common charges 17,857 33,396 11,475 11,707 30, ,174 2, , ,121 Utilities 11,202 4, ,014 1,883 19,314 20,112 Insurance 11,769 5,517 4,660 2,591 4, ,559 32,336 34,014 Depreciation 18,528 7,291 3,261 3,423 6, ,133 2,043 42,740 38,939 Repairs/maintenance 6,028 2,680 1,950 1,258 2, ,709 16,668 Telephone 8,063 3,452 3,819 2,584 4, ,834 25,760 26,473 Conference and training 2, ,567 5,375 Professional fees 52,188 77,524 2,292 2,406 4, , ,604 38,251 Consultants 6,000 6,000 12,000 24,000 78,225 Interest 8,160 3,189 1,380 1,495 2, ,693 16,702 Travel 604 5,309 9,868 4,408 2,441 1, ,088 20,204 Assistance/activities 1,784 4,126 1,844 4,459 12,213 17,588 Other 29,937 12,767 4,766 5,167 9,318 1,065 1,710 3,344 68,074 78,030 Bad debts 65,000 65,000 57,000 Fundraising 29,709 29,709 38,306 $1,086,622 $502,949 $171,331 $230,433 $418,403 $30,702 $117,108 $189,052 $2,746,600 $2,637,677 5 See notes to financial statements.

8 STATEMENTS OF CASH FLOWS Cash flows from operating activities: Change in net assets Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation and amortization Allowance for doubtful accounts Beneficial interest in assets held by others Unrealized (gain) loss on beneficial interest Changes in operating assets and liabilities: Patient fees receivables Grants and other receivables Prepaid expenses Accounts payable and accrued expenses Refundable advances Deferred income Year Ended June 30, ($ 77,493) 42,740 65, ( 262) 1,569 7,193 ( 33,905) ( 1,053) ( 36,889) $ 70,293 38,939 57, ( 1,255) ( 133,238) ( 5,567) 3,251 13,897 ( 23,499) 14,889 Net cash provided by (used in) operating activities ( 31,871) 35,272 Cash flows from investing activities: Restricted cash Capital expenditures 2,542 21,491 ( 68,264) Net cash provided by (used in) investing activities 2,542 ( 46,773) Cash flows from financing activities: Net borrowings (repayments) on note payable, bank 13,767 ( 7,814) Net cash provided by (used in) financing activities 13,767 ( 7,814) Net change in cash and cash equivalents ( 15,562) ( 19,315) Cash and cash equivalents, beginning 30,481 49,796 Cash and cash equivalents, ending $ 14,919 $ 30,481 See notes to financial statements. 6

9 NOTES TO FINANCIAL STATEMENTS 1. Description of the Center and summary of significant accounting policies: Description of the Center: The Lower Naugatuck Valley Parent Child Resource Center, Inc. (the Center) is a private, nonprofit social service agency providing mental health services to children and their families. The Center was established in May 1975 and primarily serves the communities of Shelton, Ansonia, Derby, and Seymour, Connecticut. The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Center s financial statements as of and for the year ended June 30, 2015, from which the summarized information was derived. Description of programs: Child Guidance Clinic Individual and group psychotherapy is provided by the Center s staff for children aged three through eighteen and their families. Intensive Outpatient Program Provides group psychotherapy for children aged five to sixteen who are having difficulty meeting expectations due to emotional, behavioral and social disturbances. Triple P In-Home Home and community-based parent support and assistance program providing assistance where there is a risk of abuse or neglect of children. CASSP Child and Adolescent Services System Program (CASSP) provides case management services for children who are at high risk for out-of-home placement. ECCP Early Childhood Consultation Partnership (ECCP) is a statewide program designed to offer Early Childhood Educators relationship-based consultation services. Child First A home-based, early childhood intervention program developed to work with children and families to decrease serious emotional disturbance, developmental and learning problems, and abuse and neglect. Mentor This program matches children with trained therapeutic mentors who work with the child towards goals based on the child s individual needs. 7

10 NOTES TO FINANCIAL STATEMENTS 1. Description of the Center and summary of significant accounting policies (continued): Description of programs (continued): Other Programs Various parenting classes and support groups are conducted with clients of the program. Basis of accounting: The financial statements of the Center have been presented on the accrual basis; accordingly, revenue and support is recognized when enforceable or when earned and expenses are recognized when incurred. State Bond Funds received for capital improvements which require that the State place a lien on property are reported as restricted support and classified as temporarily restricted net assets. Funding provided for acquisition of specific assets, which must be repaid if the program is terminated or the asset disposed of, is considered permanently restricted net assets. Use of estimates: The Center uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Cash and cash equivalents: Cash and cash equivalents consist of cash and money market funds. The Center maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Center has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Restricted cash: Restricted cash consists of funds received for programs in which the Center acts as an agent. 8

11 NOTES TO FINANCIAL STATEMENTS 1. Description of the Center and summary of significant accounting policies (continued): Property and equipment: Property and equipment are stated at cost or fair market value at date of donation. Depreciation is being provided by use of the straight-line method over the estimated useful lives of the related assets. Net assets: The Center reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor 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 statement of activities as net assets released from restriction. Revenue recognition: The Center recognizes patient service revenue associated with services provided to patients who have third party payor coverage on the basis of contractual rates for the services rendered. For uninsured patients, the Center recognizes revenue on the basis of its standard rates of services provided or discounted rates if the patient qualifies based on financial need. Patient service revenue, net of contractual allowances recognized in the period from these major payor sources, is as follows: Third-Party Payors Self-Pay Total Year Ended June 30, 2016 $1,138,456 $ 2,929 $1,141,385 Year Ended June 30, 2015 $1,098,047 $27,394 $1,125,441 Functional expenses: The Center allocates expenses on a functional basis among program and support services. Expenses that can be specifically identified are charged directly to the related program or support service. Other expenses that are common to several functions are allocated based on estimates made by management. 9

12 NOTES TO FINANCIAL STATEMENTS 2. Patient fees receivable: Patient fees receivable are reduced by an allowance for doubtful accounts. In evaluating the collectability of patient fees receivable, the Center analyzes its past history and identifies trends for each of its major payor sources of revenue to estimate the appropriate allowance for doubtful accounts. Management regularly reviews information about these major payor sources of revenue when evaluating the sufficiency of the allowance for doubtful accounts. For receivables associated with services provided to patients with third-party coverage, the Center analyzes contractually due amounts and provides an allowance, if necessary. For receivables associated with self pay patients, including patients with insurance and a deductible and copayment, the Center records a provision for bad debts in the period of service on the basis of past experience of patients unable or unwilling to pay the service fee they are financially responsible. The difference between the standard rates and the amounts actually collected after all reasonable collection efforts have been exhausted is charged against the allowance for doubtful accounts. Patient fees receivable are net of an allowance for uncollectible accounts of $190,000 and $125,000 at June 30, 2016 and 2015, respectively. 3. Property and equipment: Building and improvements Furniture and fixtures Less accumulated depreciation June 30, $600,362 $600, , , , ,424 ( 582,539) ( 539,799) $362,885 $405, Note payable, bank: The Center has a $225,000 line of credit agreement expiring in August Interest is payable monthly at the prime rate plus 2% (5.50% at June 30, 2016). The line of credit is collateralized by substantially all assets of the Center. Subsequent to year end, in connection with the affiliation agreement with BH Care, Inc., the line of credit was paid with proceeds from a mortgage obtained on the Center s building located at 30 Elizabeth Street, Derby, CT. 10

13 NOTES TO FINANCIAL STATEMENTS 5. Commitments and contingencies: The Center leases office space and equipment under operating leases which expire at various dates through In addition to monthly rental charges on the office space, the Center is obligated to pay insurance, utilities and a pro rata share of certain operating expenses, as defined. Aggregate minimum rentals follow: Year ending June 30: $60,923 29,840 $90,763 Rent expense was $75,477 and $71,951 in 2016 and 2015, respectively. Grant requirements: The Center is committed to repay grant awards received from state bond funds in event the grant purpose ceases within ten years after final payment of the grant awards. This commitment is secured by the Center and by liens on real property owned by the Center. Funds related to these grants are presented as temporarily restricted net assets. 6. Temporarily restricted net assets: As of June 30, 2016, the balance in temporarily restricted net assets is comprised of: Building capital campaign $34, Beneficial interest in assets held by others: In 2011, an endowment fund to benefit the Center was created with the Valley Community Foundation. Under the terms of the agreement, the Center receives a distribution equal to the investment return generated by the endowment fund for which its use is temporarily restricted. The Valley Community Foundation has been granted variance power which gives the Foundation the right to distribute the investment income to another not-for-profit organization similar to the Center if the Center ceases to exist. The assets have been valued at fair value using Level 1 inputs and the original donation of $11,496 has been recorded as permanently restricted net assets. 11

14 NOTES TO FINANCIAL STATEMENTS 7. Beneficial interest in assets held by others (continued): Estimated fair value is based on the criteria outlined in Financial Accounting Standards Board Accounting Standard Codification No. 820 (ASC 820) Fair Value Measurements and Disclosures. ASC 820 established a three-tier valuation hierarchy to prioritize the assumptions used in valuation techniques to measure fair value. The three levels of fair value hierarchy under ASC 820 are described below: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 Quoted prices in active markets for similar assets and liabilities or quoted prices in less active, dealer or broker markets; Level 3 Prices or valuations that require inputs that are both significant in the fair value measurements and are unobservable. 8. Pension plan: The Center has a qualified, contributory trusteed defined contribution pension plan covering substantially all employees meeting the minimum eligibility requirements, as defined. The Center previously contributed 6% of the participants compensation. As of 2009, management suspended all contributions to the Plan. 9. Major contributor: The Center received approximately 47% and 44% of its support in 2016 and 2015 from grants from the Federal government and the State of Connecticut. 10. Income tax: The Center is a nonprofit, nonstock, Connecticut corporation exempt from federal income taxes under Section 501(c)(3). It qualifies as a publicly supported organization and is, therefore, not a private foundation. Management of the Center has evaluated all significant tax positions as required by accounting principles generally accepted in the United States of America and is of the opinion that the Center has not taken any material tax positions that would require the recording of any tax liability by the Center. The Center s informational tax returns for the three years ended June 30, 2016 are subject to examination by the taxing authorities. 12

15 NOTES TO FINANCIAL STATEMENTS 11. Supplemental disclosure of cash flow information: Cash paid for interest during 2016 and 2015 was $18,693 and $16,704, respectively. 12. Contributed facilities and services: No contributed services met the requirements for recognition in the financial statements during the years ended June 30, 2016 and However, a substantial number of volunteers donated their time and resources to the Center. 13. Subsequent events: In June 2016, the Center entered into an affiliation agreement with BH Care, Inc. effective as of July 1, The agreement appoints BH Care, Inc. as the sole member of the Center. The Center will continue to operate as a subsidiary of BH Care, Inc. Management has evaluated subsequent events through October 19, 2016, the date which the financial statements were available for issue. 13

16 14