CENTER FOR INDEPENDENT LIVING, INC. (A NOT-FOR-PROFIT CORPORATION) ALAMEDA, CALIFORNIA REPORT ON AUDITED FINANCIAL STATEMENTS AND

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1 REPORT ON AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2017 (WITH SUMMARIZED INFORMATION FOR THE YEAR ENDED JUNE 30, 2016)

2 TABLE OF CONTENTS Page INDEPENDENT AUDITOR'S REPORT 1-3 FINANCIAL STATEMENTS: Statements of Financial Position 4 Statements of Activities 5 Statements of Cash Flows 6 Statements of Functional Expenses 7 Notes to Financial Statements 8-17 SUPPLEMENTARY INFORMATION: SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 18 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 19 INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE SUMMARY OF FINDINGS AND QUESTIONED COSTS 25 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 26 CORRECTIVE ACTION PLAN 27

3 INDEPENDENT AUDITOR'S REPORT To: Board of Directors Center for Independent Living, Inc. Alameda, California Page 1 of 3 Report on the Financial Statements We have audited the accompanying Financial Statements of Center for Independent Living (CIL), Inc. (a not-for-profit corporation), which comprise the Statements of Financial Position as of June 30, 2017 and 2016, and the related Statements of Activities, Functional Expenses, and Cash Flows for the years 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. Auditor s Responsibility Our responsibility is to express an opinion on these 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to CIL, Inc. 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 internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the 1

4 INDEPENDENT AUDITOR'S REPORT Page 2 of 3 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 obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CIL, Inc. as of June 30, 2017 and 2016, 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 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 financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the 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 August 10, 2017 on our consideration of CIL, Inc. 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 2

5 INDEPENDENT AUDITOR'S REPORT Page 3 of 3 over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering CIL, Inc. s internal control over financial reporting or compliance. Report on Summarized Comparative Information We have previously audited CIL, Inc. s 2016 financial statements and we expressed an unmodified audit opinion on those audited financial statements in our report dated October 13, In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2016, is consistent, in all material respects, with the audited financial statements from which it has been derived. DENNIS L. LORETTE ACCOUNTANCY CORPORATION Pinole, California August 10,

6 STATEMENTS OF FINANCIAL POSITION JUNE 30, 2017 (WITH SUMMARIZED INFORMATION FOR THE YEAR ENDED JUNE 30, 2016) ASSETS CURRENT ASSETS: Cash $ 257,178 $ 658,461 Investments 93,741 77,969 Accounts receivable (Note 3) 19,740 14,310 Grants receivable (Note 4) 329, ,106 Promises to give (Note 4) 491, ,769 Prepaid expenses and deposits 66,265 37,954 TOTAL CURRENT ASSETS 1,257,887 1,933,569 Fixed assets (Note 5) 208,396 60,296 Rent reserve (Note 14) 134, ,457 TOTAL ASSETS $ 1,600,740 $ 2,128,322 LIABILITIES AND NET ASSETS LIABILITIES: Accounts payable - operations Accrued expenses $ 86,138 55,939 $ 49, ,249 TOTAL LIABILITIES 142, ,214 NET ASSETS: Unrestricted: Operations Plant and equipment 773, , ,542 60,296 Total unrestricted net assets 982, ,838 Temporarily restricted net assets grants and contracts 476, ,270 TOTAL NET ASSETS 1,458,663 1,972,108 TOTAL LIABILITIES AND NET ASSETS $ 1,600,740 $ 2,128,322 See accompanying notes. 4

7 STATEMENTS OF ACTIVITIES YEAR ENDED JUNE 30, 2017 (WITH SUMMARIZED INFORMATION FOR THE YEAR ENDED JUNE 30, 2016) TEMPORARILY SUPPORT AND REVENUE: UNRESTRICTED RESTRICTED Government grants $ - $ 1,420,021 $ 1,420,021 $ 2,035,944 Foundations and funds - 235, , ,241 Contributions 140, , ,797 Services and sales 27,560-27,560 25,313 Interest and dividends Other revenue (7,824) 22, (7,824) 22,667 3,270 2,741,510 Subtotals 182,779 1,655,575 1,838,354 5,160,075 Net assets released from restrictions: Government grants Foundations and funds 1,855, ,821 (1,855,514) (315,821) TOTAL SUPPORT AND REVENUE 2,354,114 (515,760) 1,838,354 5,160,075 EXPENSES: Program Services 1,656,995-1,656,995 1,437,062 General and administration 660, ,690 3,031,729 Fundraising 34,114-34,114 66,084 TOTAL EXPENSES 2,351,799-2,351,799 4,534,875 CHANGE IN NET ASSETS 2,315 (515,760) (513,445) 625,200 NET ASSETS, BEGINNING OF YEAR 979, ,270 1,972,108 1,346,908 NET ASSETS, END OF YEAR $ 982,153 $ 476,510 $ 1,458,663 $ 1,972,108 See accompanying notes.

8 STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 2017 (WITH SUMMARIZED INFORMATION FOR THE YEAR ENDED JUNE 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $(513,445) $ 625,200 Adjustments to reconcile changes in net assets to net cash provided by operating activities: Depreciation 32,319 32,390 Disposition of fixed assets 11,634 9,931 Receivable write off/other - (3,021) Unrealized (gains)/losses investments (7,823) (5,002) (Increase) decrease in operating assets: Investments (7,949) (11,749) Accounts receivable (5,427) 76,030 Grants receivable (132,182) 95,779 Promises to give 456,094 (432,834) Inventory Prepaid expenses and deposits (28,311) (5,509) Increase (decrease) in operating liabilities: Accounts payable 36,173 (91,618) Accrued expenses (50,310) 21,682 NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES (209,227) 311,814 CASH FLOWS FROM INVESTING ACTIVITIES: Capital assets purchases (192,056) 171,261 NET CASH PROVIDED BY INVESTING ACTIVITIES (192,056) 171,261 CASH FLOWS FROM FINANCING ACTIVITIES: - - NET CASH USED BY FINANCING ACTIVITIES - - NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (401,283) 483,075 CASH, BEGINNING OF YEAR 658, ,386 CASH, END OF YEAR $ 257,178 $ 658,461 Supplementary disclosures of cash flow information Cash paid during the year for: Interest (net amount of capitalization Taxes See accompanying notes. 6

9 CENTER FOR INDEPENDENT LIVING, INC STATEMENTS OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2017 (WITH SUMMARIZED INFORMATION FOR THE YEAR ENDED JUNE 30, 2016 REASONABLE CORE SERVICES IL OTHER TRAINING SERVICES TOTAL PROGRAM ADMIN- ISTRATION ACCOMO- DATIONS FUND- RAISING TOTALS Salaries $ 596,242 $ 184,436 $ 7,846 $ 788,524 $ 367,344 $ 1,449 $ - $ 1,157,317 $ 1,077,116 Payroll taxes and employee benefits 130,680 37,060 1, ,956 30, , ,867 Subtotals 726, ,496 9, , ,093 1,674-1,357,247 1,364,983 Consultants and outside services 217, ,896 1, , ,892-8, , ,048 Subrecipients ,466 Supplies 13,614 3,751 2,932 20,297 16,365-6,701 43,363 17,732 Equipment purchases 18,675-4,891 23, ,585 42,881 Parts and materials 8, , ,092 4,081 Travel and transportation 2,014 8, ,729 6, ,435 6,957 Hosting Rents ,254 8,323 32,928 3,681 1,705 12, ,887 6,253 46, ,372 2,600 33, ,258 9, ,381 Staff training 5,795 3,186-8,981 4, ,043 12,769 Utilities ,310 Repairs and maintenance ,390 Telephone 12,989 3,038-16,027 5, ,016 19,564 Postage 2, ,760 1, ,374 5,056 Printing and copying Reasonable accommodations (Note 15) 7,411 3,559 3,704 1, ,115 4,783 1,674 1,779 - (1,674) 1, ,029 5,218 10,489 (24) Dues and memberships 1, , ,323 2,444 Insurance 12,150 4,531-16, ,790 26,501 Payroll processing , ,161 10,329 Interest and service charges , ,466 2,200 Cost of sales Depreciation , ,319 32,390 Miscellaneous and other 3, ,416 1, ,029 2,312,555 TOTAL EXPENSES 436, ,208 15, , ,597 (1,674) 34, ,552 3,169,892 TOTALS $ 1,163,858 $ 468,704 $ 24,433 $ 1,656,995 $ 660,690 $ - $ 34,114 $ 2,351,799 $ 4,534,875 See accompanying notes.

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11 NOTES TO FINANCIAL STATEMENTS Page 1 of 10 NOTE 1 ORGANIZATION AND NATURE OF ACTIVITIES Center for Independent Living (CIL), Inc., a not-for-profit California Corporation was established in March CIL, Inc. has adopted the following Mission, Values and Vision statements: o Mission CIL, Inc. s mission is to support and assist people with disabilities to live self-determined lives. We do this through intervention, involvement, support and services, strengthening the rights of consumers to live an enhanced quality of life. o Guiding Principles The strongest and most vibrant communities are those that include and embrace all people. A community-centric approach that creates targeted programming based on the needs of individual communities. With self-determination, advocacy and support, all those who strive can lead the life they choose. Individuals can be their own best advocates. o Vision CIL, Inc. s every effort, big and small, will focus attention and resources toward the goal of ending the marginalization of persons with disabilities, fortifying disability rights locally and nationally, and educating communities to be fully inclusive. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES o Accounting System CIL, Inc. separates all funds into cost centers. All income and expenses are coded by cost center and account numbers. Common costs and services are allocated to cost centers. An indirect cost rate for all programs is determined by the U.S. Department of Health and Human Services. o Cash and Cash Equivalents For the purposes of the Statement of Cash Flows, CIL, Inc. considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents. 8

12 NOTES TO FINANCIAL STATEMENTS Page 2 of 10 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) o Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position. Unrealized gains and losses are included in the change in net assets. Investment income and gains restricted by a donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or by use) in the reporting period in which the income and gains are recognized. Short-term investments consist of debt securities with original maturities of twelve months or less. Long-term investments consist of debt securities with original maturities greater than twelve months. o Bad Debts Bad debts are provided for by the direct write-off method of accounting, which approximates the same result that would be achieved under a generally accepted accounting method. o Recognition of Revenue and Expense The financial statements have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables and other liabilities. CIL, Inc. is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted assets, temporarily restricted assets and permanently restricted assets. - Unrestricted Net Assets Unrestricted assets represent resources over which the Board of Directors has discretionary control and are used to carry out the operations of CIL, Inc. in accordance with its bylaws. Such net assets are not subject to donor-imposed stipulations. - Temporarily Restricted Net Assets Temporarily restricted assets represent resources currently available for use, but expendable only for operating purposes specified by the donor. Resources of such assets generally originate for gifts, grants, bequests, and contracts. 9

13 (A NON-PROFIT CORPORATION) NOTES TO FINANCIAL STATEMENTS Page 3 of 10 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) o Recognition of Revenue and Expense (cont d) Donor-imposed stipulations may or will be met either by actions of CIL, Inc. and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. - Permanently Restricted Assets Assets in this category are permanently restricted as to their use and cannot be used for any other purpose. Generally, the donors of these assets permit CIL, Inc. to use all or part of the income earned on any related investments for general or specific purposes. o Promises to Give (Contingent Service Provision) Promises to give are recognized as revenues of gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give, which are a contingent service provision are recognized when the conditions on which they depend are substantially met. o Fixed Assets A capital asset, valued at $ 5,000 or more if purchased, is recorded at cost, or if donated, at fair market value at the time of receipt. CIL, Inc. s improvements are depreciated over seven to ten years, and furniture and equipment over three to five years on the straight-line basis. o Donations In accordance with generally accepted accounting principles, no provision has been made in these financial statements for donated services of a general nature. CIL, Inc. is receiving contributed services from one entity for which specific expertise is required. Without these contributed services, CIL, Inc. would need to pay for the service. CIL, Inc. has not recognized the contribution and the corresponding consultant expense. 10

14 NOTES TO FINANCIAL STATEMENTS Page 4 of 10 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTANT POLICIES (CONT D) o Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the Statement of Activities and in the Statement of Functional Expenses. Certain costs have been allocated among the programs and supporting services benefited based on direct paid hours. o 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. o Income Taxes CIL, Inc. is exempt from income taxes under Internal Revenue Code (IRC) 501(c)(3) and related California code sections. The FASB interpretation No. 48, Accounting for Uncertainty in Income Taxes, (FIN 48) which was subsequently included in the FASB Codification as ASC 740, prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated its uncertain tax positions and related income tax contingencies. Management does not believe that any material uncertain tax positions exist. CIL, Inc. s tax returns are subject to examination by Federal taxing authorities for a period of three years from the date they are filed and a period of four years for California taxing authorities. o Concentration of Credit Risk Arising from Cash Deposits in Excess of Insured Limits CIL, Inc. maintains $ 257,178 of its cash balances in one financial institution and petty cash, and $ 228,198 in two investment accounts with separate brokerages. The balances in the financial institution are insured by the Federal Deposit Insurance Corporation up to $ 250,000 and the balances in the brokerage accounts are insured by the Securities Investor Protection Corporation. At June 30, 2017, CIL, Inc. had $ 6,587 uninsured cash balances. o Concentration of Credit Risk For FY 2017 CIL, Inc. received over 77% percent of its revenue from government grants. 11

15 NOTES TO FINANCIAL STATEMENTS Page 5 of 10 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTANT POLICIES (CONT D) o Comparative Information 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 generally accepted accounting principles. Accordingly, such information should be read in conjunction with CIL, Inc. s financial statements for the year ended June 30, 2016 from which the summarized information was derived. NOTE 3 ACCOUNTS RECEIVABLE Accounts receivable consists of: Employees $ 387 $ - HAAS Foundation 5,252 - Moving On Training - 1,951 Other ,659 Private Pay Seneca - 13, $ 19,740 $ 14,310 NOTE 4 GRANTS RECEIVABLE AND UNCONDITIONAL PROMISES TO GIVE Grants Receivable and Unconditional Promises to Give consist of: Grants Unconditional Receivable Promises to Give Behavioral Health $ 3,805 $ - COCO Grant 231, ,017 Department of Education 12, ,427 Department of Rehabilitation 66, ,777 Living Well - 18,454 National Center for Independent Living, Inc. 15,223 - $ 329,288 $ 491,675 12

16 NOTES TO FINANCIAL STATEMENTS Page 6 of 10 NOTE 5 FIXED ASSETS Fixed assets consist of: Leasehold improvements $ 173,312 $ - Furniture and equipment 122, ,159 Total Cost 295, ,159 Less: Accumulated depreciation (86,933) (187,863) Net Fixed Assets $ 208,396 $ 60,296 Depreciation expenses for years ended June 30, 2017 and 2016 were $ 32,319 and $ 32,390, respectively. The additions and deletions to fixed assets for the year ended June 30, 2017 and 2016 were $ 192,056 and $ 149,886 respectively. NOTE 6 OTHER ASSETS Trademark Notice of Use: The cost of the Trademark Notice of Use is being amortized over the four-year period beginning February 1, 2010 to February 1, 2020, at $ 212 per year. The next formal application is due before February 1, NOTE 7 - INVESTMENTS Investments at June 30, 2017 consist of: Cash $ 68,173 $ 53,045 Bond fund 8,571 8,463 Stocks 16,997 16,461 $ 93,741 $ 77,969 NOTE 8 FAIR VALUE MEASUREMENTS Investments are the only assets measured at fair value on a recurring basis. Valuation techniques used to measure fair value are prioritized into the following hierarchy: Level 1 - Quoted prices in active markets for identical assets. 13

17 NOTES TO FINANCIAL STATEMENTS Page 7 of 10 NOTE 8 FAIR VALUE MEASUREMENTS (CONT D) Level 2 - Level 3 - Quoted prices for similar assets in active or inactive markets, or inputs derived from observable market data by correlation such as appraisals or other means such as calculations based on contractual rates and published tables. Unobservable inputs that reflect management s assumptions and best estimates based on available data. The fair value measurements and levels within the fair value hierarchy of those measurements for the assets reported at fair value on a recurring basis at June 30, 2017 and 2016 are a follows: Significant Observable 2017 Description Fair Value Inputs (Level 1) Investments: Bond fund $ 8,571 $ 8,571 Stocks 16,997 16,997 Total $ 25,258 $ 25,258 Significant Observable 2016 Description Fair Value Inputs (Level 1) Investments: Bond fund $ 8,463 $ 8,463 Stocks 16,461 16,461 Total $ 24,924 $ 24,924 NOTE 9 ENDOWMENT FUND During the fiscal year, CIL, Inc. and the UC Berkeley Haas School of Business formed a nonprofit supporting organization (the CIL/Haas Supporting Foundation). The mission of the Foundation is to support the charitable and educational work of CIL, Inc. and the Haas School of Business at the University of California Berkeley by holding and stewarding investments valued at approximately $ 4,135,969 and using these assets to fund charitable and education activities at CIL, Inc. with the participation of faculty, alumni, and students of the Haas School as part of their educational and public service activities. In particular, the Haas School of Business Center for Nonprofit and Public Leadership students will receive hands-on fieldwork 14

18 NOTE 9 ENDOWMENT FUND (CONT D) NOTES TO FINANCIAL STATEMENTS Page 8 of 10 opportunities so that they can come to understand and grapple with the issues facing the non-profit and public sectors. CIL, Inc. contributed $ 2,866,662 of its investments previously categorized by the Board and donors of CIL, Inc. as the Endowment Fund to the CIL/Haas Supporting Foundation on June 29, Because neither CIL, Inc. nor the Haas School of Business has a controlling interest in the Foundation, the activities of the Foundation are not consolidated in either CIL, Inc. s or Haas financial statements, in accordance with consolidation rules contained in Accounting Research Bulletin (ARB) No. 51 and amended by Financial Accounting Standards Board (FASB) Statement No. 94. The financial data of the CIL/Haas Supporting Foundation at June 30, 2017 is as follows: ASSETS Investments $ 5,851,579 TOTAL ASSETS 5,851,579 LIABILITIES Accounts Payable 5,252 NET ASSETS $ 5,846,327 REVENUES Interest and Dividends Unrealized Gain/(Loss) $ 135, ,510 TOTAL REVENUES 438,821 EXPENSES Reasonable Accommodations 560 Meetings/Hosting 487 Insurance 5,011 Accounting Fees 3,445 Donations to CIL Filing Fees 224, TOTAL EXPENSES 233,898 EXCESS OF REVENUES OVER EXPENSES $ 204,923 The controlling board of the CIL/Haas Supporting Foundation consists of three members appointed by CIL, Inc. and three members appointed by the Dean of the Haas School of Business. Neither CIL, Inc., the Haas School of Business, nor the CIL/Haas Supporting Foundation are related parties. NOTE 10 ACCRUED VACATIONS It is CIL, Inc. s policy to encourage employees to take vacations during the year earned. When this is not possible, employees may accumulate time up to limits according to their length of service. Because of this policy, liability for accrued vacation exists. 15

19 NOTES TO FINANCIAL STATEMENTS Page 9 of 10 NOTE 11 OTHER REVENUE Settlement with retailer $ 30,000 Sublease 4,300 Loss on assets disposed (11,633) $ 22,667 NOTE 12 ALAMEDA COUNTY PROGRAMS The County of Alameda requires contractors who receive funding through the County to identify all County programs in accordance with County audit requirements. The following is a list of programs in which funding was received through the County for fiscal year ended June 30, Contract Exhibit Contract Contract Program Name Number Number Period Amount Mentally Disabled Homeless N/A 7/1/16-6/30/17 $ 52,423 Alameda County Transportation Commission A N/A 7/1/16-9/30/17 $ 189,000 NOTE 13 ED ROBERTS CAMPUS LEASE AGREEMENT On June 30, 2009, the Lease Agreement between the Ed Roberts Campus, a California non-profit corporation, and CIL, Inc. for approximately 7,951 rentable square feet at the Ed Roberts Campus, 3075 Adeline Avenue, Berkeley, California, 94703, was signed. The length of term is for 20 years with a commencement date of November 15, The lease is for 7,951 rentable square feet starting at $ 1.00 per square foot plus $.90 per square foot for common area expenses, for a starting monthly rent expense of $ 14,853. In addition there were costs associated with the tenant improvements. The lease required a security deposit of the rental square footage of $ 8,487 and a rental reserve of $ 134,457 which is the increase in rental costs on an annual basis for CIL, Inc. The rent will increase annually in accordance with the CPI. After the 20-year initial term, there are three optional five-year renewals with the landlord determining the base rent. The rent increased to $ per square foot plus $.8899 per square foot for common area expenses on November 15, 2014 for a total monthly rent expense of $ 15,941. On September 1, 2016 the Ed Roberts campus modified the lease to cover 3,597 square feet over the same 20-year term with a new lease amount of $ 4,

20 NOTES TO FINANCIAL STATEMENTS Page 10 of 10 NOTE 13 ED ROBERTS CAMPUS LEASE AGREEMENT (CONT D) Fair market value of the rented space has been determined to be $2.77 per square foot. CIL, Inc. has recorded an in-kind contribution of $ 32,000 in the accompanying financial statements. Future minimum lease payments based on current lease terms are: 2017/ /2030 $ 580, ,232 Total $ 612,408 NOTE 14 RENT RESERVE Certain financial assets are encumbered by Wells Fargo Bank as a condition of a lien from Wells Fargo Bank to the Ed Roberts Campus from which CIL, Inc. leases its office space in Berkeley. The assets must be held with an institution that will not release the funds encumbered without the approval of the Ed Roberts Campus and Wells Fargo Bank and that provides regular reports (monthly statements) to the Ed Roberts Campus and Wells Fargo Bank. The assets must be in a form that will allow the Ed Roberts Campus to draw the amount of CIL, Inc. s rent in the event that CIL, Inc. does not make rent payments in accordance with lease requirements. NOTE 15 REASONABLE ACCOMMODATIONS This account represents the allocation of expenses to separate cost centers. 17

21 SUPPLEMENTARY INFORMATION

22 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS JUNE 30, 2017 FEDERAL GRANTOR/ Federal Contract or PASS-THROUGH GRANTOR CFDA Pass-Through Federal PROGRAM TITLE Number Number Expenditures U.S. Department of HHS Title VII C CAILCL $ 142,241 Title VII C CAILCL 150,422 Title VII C CAILCL 231,453 Subtotal, Title VII C ,116 Social Security Administration Passed through State of California ,586 Department of Rehabilitation U.S. Federal Transit Administration Passed through Metropolitan CA-57-X050 33,937 Transportation Commission 3Cities AM AM , , ,717 U.S. Department of Housing and Urban Development Community Development Block Grant: Passed Through City of ALAMEDA A 140,219 TOTAL FEDERAL AVAILABLE AND EXPENDED $ 1,545,638 18

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24 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2017 NOTE A BASIS OF PRESENTATION This accompanying schedule of expenditures of federal awards (the Schedule)includes the federal award activity of the Center for Independent Living, Inc. under programs of the federal government for the year ended June 30, The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Center for Independent Living, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of Center for Independent Living Resources, Inc. NOTE B SUBRECIPIENTS The Center for Independent Living, Inc. provided federal awards to subrecipients: Travel Training Program, (US Dept of Transportation, passed through Alameda County Transportation Commission Caltrans DOT Through the Looking Glass 7/1/16 6/30/17 $ 2,285 Travel Training Program, (US Dept of Transportation, passed through Metropolitan Transportation Commission MTC DOT Bay Area Outreach Recreation Program 7/1/16 6/30/17 4,948 MTC DOT Community Resources for Independent Living 7/1/16 6/30/17 9,760 MTC DOT Independent private contractor 7/1/16 6/30/17 14,125 MTC DOT Lighthouse for the Blind 7/1/15 6/30/16 9,741 TOTAL FEDERAL SUBRECIPIENTS $ 40,859 NOTE C SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (1) Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. (2) Pass-through entity identifying numbers are presented where available. NOTE D INDIRECT COST RATE Center for Independent Living, Inc. has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.

25 INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Page 1 of 2 Board of Directors Center for Independent Living, Inc. Alameda, California 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 financial statements of Center for Independent Living (CIL), Inc. (a not-for-profit corporation), which comprise the Statements of Financial Position as of June 30, 2017 and 2016, and the related Statements of Activities and Cash Flows for the years then ended, and the related notes to the financial statements and have issued our report thereon dated August 10, Internal Control Over Financial Reporting In planning and performing our audits of the financial statements, we considered CIL, Inc.'s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of CIL, Inc. s internal control. Accordingly, we do not express an opinion of the effectiveness of CIL, Inc. s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of CIL, Inc. 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 weakness or significant deficiencies. Given these limitations, during our audits 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. 20

26 INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Page 2 of 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether CIL, Inc.'s financial statements are free from material misstatements, 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 audits 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 on internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of CIL, Inc. s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering CIL, Inc. s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. DENNIS L. LORETTE ACCOUNTANCY CORPORATION Pinole, California August 10,

27 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Page 1 of 3 Board of Directors Center for Independent Living, Inc. Alameda, California Report on Compliance for Each Major Federal Program We have audited Center for Independent Living (CIL), Inc. s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of CIL, Inc. s major federal programs for the years ended June 30, 2017 and CIL, Inc.'s major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings And Questioned Costs. Management s Responsibility Management is responsible for compliance with federal statues, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of CIL, Inc. s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audits of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audits 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 CIL, Inc. s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinion on compliance for each major federal program. However, our audits do not provide a legal determination of CIL, Inc. s compliance. 22

28 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Page 2 of 3 Opinion on Each Major Program In our opinion, CIL, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the years ended June 30, 2017 and Report on Internal Control over Compliance Management of CIL, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered CIL, Inc. s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of CIL, Inc. s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 23

29 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Page 3 of 3 The purpose of this report on internal control over compliance is solely to describe the scope of our testing on internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. ` DENNIS L. LORETTE ACCOUNTANCY CORPORATION Pinole, California August 10,

30 SUMMARY OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2017 SUMMARY OF AUDITOR S RESULTS 1. The auditor's report expresses an unmodified opinion on whether the financial statements of the Center for Independent Living, Inc. were prepared in accordance with GAAP. 2. No deficiency disclosed during the audit of the financial statements. No material weaknesses are reported. 3. No instances of noncompliance material to the financial statements of the Center for Independent Living, Inc. were disclosed during the audit. 4. No significant deficiency in the internal major federal award program was disclosed during the audit. No material weaknesses are reported. 5. The auditor's report on compliance for the major federal award program for the Center for Independent Living, Inc. expresses an unmodified opinion on all major Federal programs. 6. There were no audit findings that are required to be reported in accordance with 2CFR section (a). 7. The program tested as major program included U.S. Dept. of Education Title VII C, The threshold for distinguishing Types A and B programs was $ 750, The Center for Independent Living, Inc. was determined to be a low-risk auditee. FINDINGS-FINANCIAL STATEMENTS AUDIT NONE FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARDS PROGRAMS AUDIT NONE 25

31 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2016 NONE 26

32 CORRECTIVE ACTION PLAN JUNE 30, 2017 I. FINDINGS FINANCIAL STATEMENT AUDIT There were no reportable findings or questioned costs in this area for the year ended June 30, II. FINDINGS FEDERAL AWARD PROGRAM AUDITS There were no reportable findings or questioned costs in this area for the year ended June 30,

33 Center for Independent Living, Inc Mariner Square Loop Suite 210 Alameda, CA August 10, 2017 Dennis L. Lorette Accountancy Corporation 2131 San Pablo Ave. Pinole, CA Dear Dennis: This representation letter is provided in connection with your audit of the financial statements of Center for Independent Living, Inc, which comprise the Statements of Financial Position as of June 30, 2017, and the related statements of activities, cash flows, and functional expenses for the year then ended, and the related notes to the financial statements, for the purpose of expressing an opinion as to whether the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States (U.S. GAAP). Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. An omission or misstatement that is monetarily small in amount could be considered material as a result of qualitative factors. We confirm, to the best of our knowledge and belief, as of August 11, 2017, the following representations made to you during your audit. Financial Statements 1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated June 30, 2017 including our responsibility for the preparation and fair presentation of the financial statements in accordance with U.S. GAAP. 2. The financial statements referred to above are fairly presented in conformity with U.S. GAAP. 3. We acknowledge our responsibility for 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.

34 August 10, 2017 Center for Independent Living, Inc. Representation Letter Page 2 4. We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud. 5. Significant assumptions we used in making accounting estimates, including those measured at fair value, are reasonable. 6. Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with U.S. GAAP. 7. All events subsequent to the date of the financial statements and for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed. 8. Adjustments or disclosures have been made for all events, including instances of noncompliance, subsequent to the date of the financial statements that would require adjustment to or disclosure in the financial statements or in the schedule of findings and questioned costs. 9. The effects of uncorrected misstatements are immaterial, both individually and in the aggregate to the financial statements as a whole. No representation about uncorrected misstatement is necessary. 10. The effects of all known actual or possible litigation, claims, and assessments have been accounted for and disclosed in accordance with U.S. GAAP. 11. Material concentrations have been appropriately disclosed in accordance with U.S. GAAP. 12. Guarantees, whether written or oral, under which the Organization is contingently liable, have been properly recorded or disclosed in accordance with U.S. GAAP. Information Provided 13. We have provided you with: a. Access to all information, of which we are aware, that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters. b. Additional information that you have requested from us for the purpose of the audit. c. Unrestricted access to persons within the Organization from whom you determined it necessary to obtain audit evidence. d. Minutes of the meetings of the governing board or summaries of actions of recent meetings for which minutes have not yet been prepared.

35 August 10, 2017 Center for Independent Living, Inc. Representation Letter Page All material transactions have been recorded in the accounting records and are reflected in the financial statements. 15. We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. 16. We have no knowledge of any fraud or suspected fraud that affects the Organization and involves: a. Management; b. Employees who have significant roles in internal control; or c. Others where the fraud could have a material effect on the financial statements. 17. We have no knowledge of any allegations of fraud or suspected fraud affecting the Organization s financial statements communicated by employees, former employees, grantors, regulators or others. 18. We have no knowledge of any instances of noncompliance or suspected noncompliance with laws and regulations whose effects should be considered when preparing financial statements. 19. We have disclosed to you all known actual or possible litigation, claims, and assessment whose effects should be considered when preparing the financial statements. 20. We have disclosed to you the identity of the Organization s related parties and all the related party relationships and transactions of which we are aware. 21. The Organization has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral. 22. We are responsible for compliance with the laws, regulations, and provisions of contracts and grant agreements applicable to us. 23. Center for Independent Living, Inc. is an exempt organization under Section 501 (c)(3) of the Internal Revenue Code. Any activities of which we are aware that would jeopardize the Organization s tax-exempt status, and all activities subject to tax on unrelated business income or excise or other tax, have been disclosed to you. All required filings with tax authorities are up-to-date 24. We acknowledge our responsibility for presenting the supplementary information in accordance with U.S. GAAP, and we believe the supplementary information, including its form and content, is fairly presented in accordance with U.S. GAAP. The methods of