ADVOCATE PROGRAM, INC.

Transcription

1 ADVOCATE PROGRAM, INC. FINANCIAL STATEMENTS, INDEPENDENT AUDITORS' REPORT THEREON, AND INDEPENDENT AUDITOR S REPORT ON COMPLIANCE, AND INTERNAL CONTROL BASED ON AN AUDIT PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND THE UNIFORM GUIDANCE. Year ended December 31, 2016

2 C O N T E N T S INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION 3 STATEMENT OF ACTIVITIES 4 STATEMENT OF CASH FLOWS 5 NOTES TO FINANCIAL STATEMENTS 6 SUPPLEMENTARY INFORMATION SCHEDULE OF ACTIVITIES 15 SCHEDULE OF GRANT REVENUES AND EXPENSES 18 COMPLIANCE AND INTERNAL CONTROLS 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 19 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE 21 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 23 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 24 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 25

3 Kantor, Palmetto, Zeigler, Chamberlain & Perrella, PL a division of Palmetto, Mollo, Molinaro & Passarello, LLP Certified Public Accountants 1000 NW 65 Street, Suite 201 Fort Lauderdale, FL (954) (954) Fax INDEPENDENT AUDITORS' REPORT Board of Directors Advocate Program, Inc. Miami, Florida Report on the Financial Statements We have audited the accompanying financial statements of Advocate Program, Inc., which comprise the statement of financial position modified cash basis as of December 31, 2016 and the related statement of activities modified cash basis and cash flows modified cash basis 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 the modified cash basis of accounting as described in Note B; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible 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. Auditor s 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 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 the entity 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 entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Advocate Program, Inc. as of December 31, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with the modified cash basis of accounting as described in Note B. Basis of Accounting We draw attention to Note B of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to that matter. Supplementary Information Other Information Our audit was 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 (Uniform Guidance), 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 June 12, 2016, on our consideration of Advocate Program s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Advocate Program s internal control over financial reporting and compliance. Fort Lauderdale, Florida June 20, 2017 Kantor, Palmetto, Zeigler, Chamberlain & Perrella, PL

5 STATEMENT OF FINANCIAL POSITION MODIFIED CASH BASIS December 31, 2016 ASSETS CURRENT ASSETS Cash and cash equivalents $ 704,693 Investments available for sale 701,994 Accounts receivable, net of allowance 110,925 Accounts receivable, other 26,449 Grant receivable 115,669 Prepaid expenses 114,707 1,774,437 PROPERTY AND EQUIPMENT (Net) 1,682,119 RESTRICTED ESCROW FUNDS FOR RESTITUTION 249,943 OTHER ASSETS Deposits 62,373 $ 3,768,872 CURRENT LIABILITIES Current portion of long-term debt $ 34,078 Accounts payable 45,055 Accrued expenses 125,199 Deferred grant revenue 1, ,613 RESTITUTION ESCROW LIABILITY 434,085 LONG-TERM LIABILTIES Debt less current portion 872,632 Obligation under interest rate swap (42,028) 830,604 DEPOSITS 3,498 NET ASSETS Unrestricted 2,253,044 Temporarily restricted - TOTAL NET ASSETS 2,253,044 Accumulated other comprehensive gain 42,028 TOTAL LIABILITIES AND NET ASSETS $ 3,768,872 See accompanying notes to the financial statements. LIABILITIES AND NET ASSETS -3-

6 STATEMENT OF ACTIVITIES MODIFIED CASH BASIS For the year ended December 31, 2016 Unrestricted Temporarily Restricted Total REVENUES Advocate program revenue $ 3,230,725 $ - $ 3,230,725 DUI revenue 561, ,247 Grant revenue - 2,384,819 2,384,819 Other income 178, ,629 Net realized gain and unrealized gains/losses 41,262-41,262 Net assets released from restrictions: Restrictions satisfied by payments 2,384,819 (2,384,819) - 6,396,682-6,396,682 EXPENSES Professional fees 219, ,678 Depreciation 29,279-29,279 Rent 327, ,336 Bad debt expense 62,011-62,011 Payroll, taxes, and related expenses 4,343,947-4,343,947 Other expenses 1,541,227-1,541, building 185, ,278 6,708,756-6,708,756 CHANGE IN NET ASSETS (312,074) - (312,074) NET ASSETS, beginning of year 2,565,118-2,565,118 NET ASSETS, end of year $ 2,253,044 $ - $ 2,253,044 See accompanying notes to the financial statements. -4-

7 STATEMENT OF CASH FLOWS MODIFIED CASH BASIS For the year ended December 31, 2016 NET CASH FROM OPERATING ACTIVITIES Change in net assets $ (312,074) Adjustments to reconcile change in net assets to net cash used by operating activities: Depreciation 71,132 Change in net unrealized gains (42,555) (Increase) decrease in: Accounts receivable (20,049) Accounts receivable - other 11,777 Grant receivable 6,138 Prepaid expenses 19,391 Decrease in: Accounts payable (21,338) Accrued expenses (2,104) Deferred grant revenue (48,714) Net cash used by operating activities (338,396) NET CASH FROM INVESTING ACTIVITIES Net sale and purchase of securities 53,078 Redemption of certificates of deposit 100,000 Purchase (improvements) of property and equipment 1,304 Net cash provided by investing activities 154,382 NET CASH FROM FINANCING ACTIVITIES Restitution escrow liability 20,165 Payments on loan (32,451) Net cash used by financing activities (12,286) NET DECREASE IN CASH (196,300) CASH, beginning of year 1,150,936 CASH, end of year $ 954,636 Restricted cash $ 249,943 Unrestricted cash $ 704, ,636 See accompanying notes to the financial statements. -5-

8 NOTE A - GENERAL Advocate Program, Inc. NOTES TO FINANCIAL STATEMENTS December 31, 2016 Advocate Program, Inc. (Advocate) is a nonprofit organization established in 1971 and incorporated in The purpose of Advocate is to provide various services for offenders who have been charged with committing a violation of the law or on order of the court and for victims of those and other offenders. On July 24, 1995, Advocate established a DUI School. The DUI School receives fees from DUI program clients required to pay program fees for participation and completion of evaluation and educational requirements regarding substance abuse and risks of driving under the influence. Advocate Program, Inc. is also the recipient of several grants (see Note P) some of which provide services to children and families in need. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements were prepared on the modified cash basis which is a comprehensive basis of accounting other than generally accepted accounting principles. The modified cash basis of accounting recognizes revenues when collected and expenses when incurred. The deferred revenue and accounts receivable for the Advocate programs were unable to be determined which could have a possible material effect on the financial statements. Grant revenues are recognized on the accrual basis and reported at gross amounts. Receivables from grantors are recognized to the extent services have been performed and costs incurred but not reimbursed. Final expenses are accrued at the end of the grant period. Property and Equipment Property and equipment are carried at cost for items over $1,000. Depreciation is computed using the straight-line method over the estimated useful life of the related assets. When assets are disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in operations for the period. The cost of maintenance and repairs is charged to operations as incurred; significant renewals and betterments are capitalized. Intangible Assets Intangible assets are carried at cost. Amortization is computed using the straight-line method over the estimated useful life of the related asset. The intangible assets were fully amortized in Income Taxes The Advocate Program, Inc. qualifies as a tax-exempt organization under Section 501(c) (3) of the Internal Revenue Code. Accordingly, no provision for federal income tax is required for revenues derived from its tax-exempt function. The Organization's Forms 990, Return of Organization Exempt from Income Tax, for the years ending 2013 through 2016 are subject to examination by the IRS, generally for three years after they were filed. Estimates The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement. Actual results could differ from those estimates. -6-

9 NOTES TO FINANCIAL STATEMENTS December 31, 2016 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Financial Statement Presentation The Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets depending on the existence or nature of any donor restrictions. However, the Organization only uses the two classes: unrestricted net assets and temporarily restricted net assets as they had no permanently restricted net assets in Date of Management s Review Subsequent events have been evaluated by management through June 20, 2017 which is the date the financial statements were available to be issued. NOTE C - CONCENTRATION OF CREDIT RISK Advocate Program, Inc. maintains its cash balances at several insured financial institutions which, at times, may exceed federally-insured limits. All accounts are insured by the Federal Deposit Insurance Company (FDIC) for up to $250,000 per institution. Advocate Program, Inc. has not experienced any losses on such accounts and believes it is not exposed to any significant risk on cash. Accounts with the financial services company consisted of interest-bearing cash management accounts, insured savings accounts, money funds and certificates of deposit. Certificates of deposit and insured savings accounts are insured by the FDIC up to $250,000 at each issuing bank. The accounts with the financial services company are protected by the Securities Investor Protection Corporation ( SIPC ) up to $500,000 for fraud. Cash is insured up to $100,000 under SIPC for fraud. Advocate Program, Inc. s total revenue of $6,396,682 includes approximately 37% of revenues from grants. NOTE D - CASH AND CASH EQUIVALENTS The Advocate Program has cash and cash equivalents invested in checking, insured deposits, and money market accounts for the period ending December 31, For purposes of the statement of cash flows, the organization considers all highly liquid investments available for current use with an original maturity of three months or less to be cash equivalents. NOTE E ACCOUNTS RECEIVABLE Accounts receivable for the DUI program at December 31, 2016 is as follows: Accounts receivable - DUI $ 380,836 Allowance (269,911) Net accounts receivable - DUI $ 110,925 Allowance for bad debt is based on management s estimates, historical collection data, and cases that are closed at the end of the year. -7-

10 NOTES TO FINANCIAL STATEMENTS December 31, 2016 NOTE E ACCOUNTS RECEIVABLE -- CONTINUED The DUI School bad debt expense of $62,011 in 2016 includes the write offs of client fees, which relates to clients who did not complete the educational program and did not receive a certificate of completion. Many clients that register make partial payments and never complete the course. NOTE F INVESTMENTS AND FAIR VALUE MEASUREMENTS Investments Advocate Program, Inc. invests operating funds in various marketable securities classified as available for sale. These securities along with $100,000 of certificates of deposit are collateral for the mortgage (see Note Q). Investments in marketable securities with readily determinable fair market 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. At December 31, 2016, net unrealized gain was $34,032. The cumulative change in unrealized holding gains/losses of $42,556 was recognized. Fair Value Cost Mutual funds $ 701,994 $ 667,962 Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. In determining the appropriate levels, Advocate Program, Inc., performs an analysis of the assets that are measured and reported on a fair value basis. The fair value measurement of the investments available for sale of $701,994 is equal to the quoted prices in active markets for identical assets (Level 1). NOTE G GRANTS RECEIVABLE AND DEFERRED GRANT REVENUE Miami Dade County Advocate Program, Inc. obtained several grants from Miami Dade County totaling $55,432 which has an initial distribution of 25% and a percentage of the balance each month thereafter. -8-

11 NOTES TO FINANCIAL STATEMENTS December 31, 2016 NOTE G GRANTS RECEIVABLE AND DEFERRED GRANT REVENUE CONTINUED The Children s Trust ( Bridging Families and Communities ) Advocate Program, Inc. obtained a grant from The Children s Trust ( Bridging Families and Communities ) in which cost reimbursements totaled $601,038 in The contract payments are cost reimbursements based on the monthly billings. At December 31, 2016, funds expended for the Bridging Families and Communities were $594,661 (see supplementary schedule). The amount due from The Children s Trust at December 31, 2016 is $58,550. Supportive Services for Veteran Families Program A grant was obtained from US Department of Veterans Affairs (SSVF) in which cost reimbursements totaled $1,711,350 in The amount due from SSVF at December 31, 2016 is $37,312. Total grants receivable at December 31, 2016 are $115,669 which includes the above and other small grants. Deferred grant revenue of $1,281 is the grant revenue not recognized in the current year. NOTE H - PROPERTY AND EQUIPMENT As of December 31, 2016 the cost and related accumulated depreciation of property and equipment were as follows: Total Computer Equipment $ 236,961 Office Equipment and Furniture 256,044 Leasehold Improvements 106, NW 17 th Avenue 1,714,809 Less: Accumulated depreciation (632,664) $ 1,682,118 Depreciation expense at December 31, 2016 was $71,132. NOTE I INTANGIBLE ASSETS As of December 31, 2016 the cost and related accumulated amortization of the computer software program were as follows: Total Computer Software $ 362,905 Less: Accumulated amortization (362,905) $ - There was no amortization expense at December 31,

12 NOTE J - DEPOSITS Advocate Program, Inc. NOTES TO FINANCIAL STATEMENTS December 31, 2016 As of December 31, 2016, the Advocate Program had $62,373 in deposits as follows: Cutler Ridge $ 10, Partners 5,000 Cutler Ridge Venture 2,080 Zerep Towers 33, SW 1 st Avenue 6,850 Town Square Mall 500 Utilities 4,521 $ 62,373 NOTE K - DEFERRED COMPENSATION PLANS Effective January 1, 1999, the Advocate Program adopted a 401(k) Plan. The employees may voluntarily contribute a portion of their compensation. Advocate Program may match $.50 for every dollar up to 6% of the employees contribution to a maximum of $3,000 per year. The company contributions in 2016 were $46,958 less forfeitures of $9,535 for a total of $37,423. NOTE L - RESTITUTION The Advocate Program, Inc. collects from criminal offenders restitution money to be given to the victims. The amount is determined by the court. The court is to supply Advocate with victim information such as name and address in order to pay the victim when restitution is collected. In many cases, the victim information is not available at the time restitution is paid by the offender. As of December 31, 2016, the restitution liability is $434,085. Restitution funds are restricted and held in a separate bank account and are not used for operating purposes. The operating fund owed the restitution account $178,756 for restitution, court costs, and contribution funds collected during December 31, The restitution account will be fully funded subsequent to year end. NOTE M - ALLOCATION OF SHARED EXPENSES FROM ADVOCATE The Advocate-Program, Inc. shares expenses and employees with the Advocate DUI Program. Accordingly, all costs, which are shared, have been allocated between divisions. All expenses were allocated based on revenues, which is a suggested method, by the State of Florida Division of Highway Safety and Motor Vehicles. This method is based on a fair and equitable allocation to the program. The amount of expenses reimbursed at December 31, 2016 was $135,153. NOTE N OPERATING LEASES Advocate Program leases certain real estate for several locations that expire in various years through June 30, The following schedule reflects the future minimum lease payments as of December 31, 2016 of operating leases that have initial or remaining non-cancelable lease terms in excess of one year: -10-

13 NOTES TO FINANCIAL STATEMENTS December 31, 2016 NOTE N OPERATING LEASES - CONTINUED Year End December 31 Amount 2017 $ 302, , , , , and future years 608,613 $ 1,883,912 Rent expense at December 31, 2016 was $327,336. NOTE O CONTRACTS Probation Advocate Program is contracted with the Department of Procurement Management of Miami-Dade County, Florida to provide Misdemeanor Probation Services. Advocate will provide to the court and the county capable and qualified management and supervision of persons on probation. The contract ended September 30, 2016 and was not renewed. NOTE P GRANT REVENUE AND EXPENSES Grant revenue and expenses are compiled of the following grants. (See supplementary schedule) Criminal Justice Capacity Building Program The National Demonstration Project of the JAC [The Project] partners researchers and operational staff to reform the local juvenile justice system in Miami Dade. It allowed Miami Dade County to develop the foundation needed to effectively plan and strategically apply specialized, research-proven interventions and programs based on the real needs of the children in the system. This Project has provided invaluable information regarding the local needs of children involved with the juvenile justice system and evidenced based interventions most likely to be successful. This grant is designed to provide that training. The grant revenue and expenses are included in other grants on the Schedule of Grant Revenues and Expenses. Bridging Families and Communities Grant The purpose of the Partnership is to address the unmet needs of children of high conflict families and children exposed to domestic violence by developing a system of care that identifies children in need of services when they come in contact with domestic violence shelters, law enforcement, and the Court system. A portion of the grant funds provide Supervised Visitation/Monitored Exchange Court Ordered Services in the community to parents from Family Court, Domestic Violence Court, and Unified Family Court, at no cost to parents. -11-

14 NOTES TO FINANCIAL STATEMENTS December 31, 2016 NOTE P GRANT REVENUE AND EXPENSES CONTINUED Supportive Services for Veteran Families Program The program s purpose is to provide supportive services grants to selected grantees who will coordinate or provide supportive services to very low-income Veteran families who are residing in permanent housing, are homeless and scheduled to become residents of permanent housing within 90 days, and after exiting permanent housing within a specified time period, are seeking other housing that is responsive to such very low-income Veteran family s needs and preferences. Other Grants Other grants are comprised of several small grants that were received throughout the year by Advocate Program. NOTE Q MORTGAGE A building was purchased in May 2014 with a mortgage of $990,000. The mortgage is 10 years with a 20 year amortization. The mortgage note is payable in monthly principal installments of $2,492 beginning in 2014 and increasing to $3,870 by 2024 plus interest calculated at the fluctuating LIBOR rate plus 2% adjusted annually through April At this time the remaining principal balance of approximately $617,542 and accrued interest is due. This mortgage note is secured by marketable securities. Future debt principal payments are approximately as follows: Year End December 31 Amount 2017 $ 34, , , , , and future years 718,365 $ 906,710 In conjunction with the mortgage note payable the Company entered into an interest rate swap agreement with the lender that expires April This agreement effectively converts the variable rate debt to fixed rate debt to the extent of the notional amount. For the outstanding notional amount of $906,710 as of December 31, 2016, the fixed rate being paid to the bank is 4.74%, while the payment received from the bank is 2.150% (fluctuating one-month LIBOR rate plus 2.00% basis points). The interest differential is reflected as an adjustment to interest expense as incurred. The fair market value obligation of the interest rate swap is based on a quote obtained from the lender, which was quoted at $42,028 as of December 31, 2016, and is included in long-term liabilities as obligation under interest rate swap on the accompanying balance sheet. If the mortgage is held to maturity, the interest rate swap will have no effect on the balance -12-

15 NOTES TO FINANCIAL STATEMENTS December 31, 2016 NOTE R STATEMENT OF FUNCTIONAL EXPENSES Functional expenses are allocated based upon the revenue from grants to revenue from Advocate Program service fees. The following schedule reflects the functional expenses at December 31, 2016: Expenses Program Services Supporting Services Total Professional fees $ 219,678 $ - $ 219,678 Depreciation 24,416 4,863 29,279 Rent 272,965 54, ,336 Bad debt expense 62,011-62,011 Payroll, taxes and related expenses 3,343,736 1,000,211 4,343,947 Other operating expenses 1,499, ,240 1,726,505 $ 5,422,071 $ 1,286,685 $ 6,708,

16 SUPPLEMENTARY INFORMATION

17 SCHEDULE OF ACTIVITIES MODIFIED CASH BASIS For the year ended December 31, 2016 Advocate DUI Program Grants Program Total REVENUES Fees $ 3,063,916 $ - $ 561,322 $ 3,625,238 Federal probation revenue 56, ,627 DOC revenue 113, ,443 Interest income 18, ,443 Grant revenue - 2,384,819-2,384,819 Refunds (3,261) - (75) (3,336) Building rent 84, ,527 Miscellaneous income 4,725-70,179 74,904 Vending income Net unrealized gain and realized gains 41, ,262 Total revenues 3,380,437 2,384, ,426 6,396,682 EXPENSES Professional fees Accounting 14,000-8,000 22,000 Professional services 53,546 68, ,095 Board meetings ,058 Legal 24, ,525 Lobbyist 50, , ,341 68,549 8, ,678 Depreciation 28, ,279 Rent 186,766 88,524 52, ,336 Bad debt expense ,011 62,011 Payroll, taxes, and related expenses Payroll - General 622, ,580-1,619,506 Payroll - Administrative 802, ,829 1,127,575 Payroll - Domestic violence 173, ,381 Payroll - Evaluations ACTT 258, ,084 Payroll - Operations 253, ,828 Payroll - Overtime 10, ,528 Part Time Labor - Teaching 43,599-62, ,291 Benefits and taxes 465, ,495 61, , k match 23,449 9,828 4,146 37,423 2,654,410 1,235, ,634 4,343,947 See independent auditors' report. -15-

18 SCHEDULE OF ACTIVITIES - CONTINUED MODIFIED CASH BASIS For the year ended December 31, 2016 Advocate DUI EXPENSES - CONTINUED Program Grants Program Total Other expenses Auto, local transportation & parking $ 12,197 $ - $ 552 $ 12,749 Administrative expenses - 239, ,319 Cash over/short (2,870) - - (2,870) Computer services 18,847-9,578 28,425 Courier services 25, ,310 Credit card fees 25,732-7,484 33,216 Donations Dues and subscriptions 4,738-4,261 8,999 Equipment - 32,390-32,390 Equipment rental 6,521-3,399 9,920 Flex funding - 15,133-15,133 Insurance - general 48,010-10,799 58,809 Investment advisory fees 6, ,665 Licenses and fees 10, ,395 Meals and entertainment 4, ,129 Office 29,826 37,323 1,558 68,707 Other expense 13, ,000 Parking 7, ,389 Payroll processing fees 13,087-5,280 18,367 Prescription expense - ACTT 5, ,830 Postage and delivery 7,198-1,972 9,170 Program expenses - 28,356-28,356 Recruiting 2, ,235 Repairs & maintenance 2,826-16,738 19,564 Security 28,274-6,431 34,705 Armored service 10, ,081 Stationary & printing 8,399-4,923 13,322 Supplies 71,665-1,862 73,527 Telephone 68,254-19,898 88,152 Temporary financial assistance - 542, ,708 Travel 6,449 35,648 1,824 43,921 See independent auditors' report. -16-

19 SCHEDULE OF ACTIVITIES - CONTINUED MODIFIED CASH BASIS For the year ended December 31, 2016 EXPENSES - CONTINUED Other expenses Training and conferences 11,172 Advocate DUI Program Grants Program Total $ $ - $ 1,306 $ 12,478 Training and assessment tools - 29,925-29,925 Utilities 7,648 26,905 2,248 36,801 Total other expenses 453, , ,113 1,541,227 Building Depreciation 41, ,853 Insurance 16, ,435 Licenses and permits Loan interest 44, ,686 Office Payroll 31, ,986 Payroll benefits 7, ,413 Repairs and maintenance (10,250) - - (10,250) Supplies 2, ,185 Taxes 10, ,486 Utilities 39, ,399 Total building 185, ,278 Total expenses 3,650,939 2,380, ,134 6,708,756 Total revenue and expenses $ (270,502) $ 4,136 $ (45,708) $ (312,074) See independent auditors' report. -17-

20 SCHEDULE OF GRANT REVENUES AND EXPENSES MODIFIED CASH BASIS For the year ended December 31, 2016 Supportive Bridging Services for Families Other Veteran and Grants Families Communities Total REVENUE Grant revenue $ 72,431 $ 1,711,350 $ 601,038 $ 2,384,819 EXPENSES Salaries 32, , , ,580 Benefits and taxes 6, ,072 81, ,323 Administrative expenses 4, ,590 57, ,319 Cell phones - 14,676-14,676 Equipment - 32,390-32,390 Flex funding ,133 15,133 Office - 22,647-22,647 Professional services ,871 22,720 61,549 Program expenses 25, ,403 28,356 Program specific audit - - 7,000 7,000 Rent - 73,768 14,756 88,524 Temporary financial assistance - 542, ,708 Training and assessments 5,334 24,591-29,925 Travel 33 13,478 22,137 35,648 Utilities - 11,964 14,941 26,905 Total expense 74,672 1,711, ,661 2,380,683 $ (2,241) $ - $ 6,377 $ 4,136 See independent auditors' report. -18-

21 Kantor, Palmetto, Zeigler, Chamberlain & Perrella, PL a division of Palmetto, Mollo, Molinaro & Passarello, LLP Certified Public Accountants 1000 NW 65 Street, Suite 201 Fort Lauderdale, FL (954) (954) Fax 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 Board of Directors Advocate Program, Inc. Miami, Florida 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 Advocate Program, Inc., which comprise the statement of financial position as of December 31, 2016, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated June 20, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Advocate Program, 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 Advocate Program, Inc. s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. -19-

22 Compliance and Other Matters As part of obtaining reasonable assurance about whether Advocate Program, Inc. s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the organization s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Fort Lauderdale, Florida June 20, 2017 Kantor, Palmetto, Zeigler, Chamberlain & Perrella, PL -20-

23 Kantor, Palmetto, Zeigler, Chamberlain & Perrella, PL a division of Palmetto, Mollo, Molinaro & Passarello, LLP Certified Public Accountants 1000 NW 65 Street, Suite 201 Fort Lauderdale, FL (954) (954) Fax INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Board of Directors Advocate Program, Inc. Miami, Florida Report on Compliance for Each Major Federal Program We have audited Advocate Program, 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 Advocate Program, Inc. s major federal programs for the year ended December 31, Advocate Program, 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 the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of Advocate Program, Inc. s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 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 audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Advocate Program, Inc. s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Advocate Program, Inc. s compliance. Opinion on Each Major Federal Program In our opinion, Advocate Program, 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 year ended December 31,

24 Report on Internal Control Over Compliance Management of Advocate Program, 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 Advocate Program, 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 Advocate Program, 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. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of 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. Fort Lauderdale, Florida June 20, 2017 Kantor, Palmetto, Zeigler, Chamberlain & Perrella, PL -22-

25 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended December 31, 2016 Pass-through Federal Entity Federal Federal Grantor/Program/Pass-through CFDA Number Identifying Number Expenditures Direct Programs: US Department of Veterans Affairs Supportive Services for Veterans Families (SSVF) /VA n/a $ 1,711,350 Total expenditures of federal awards $ 1,711,350 See accompanying notes to the Schedule of Expenditures of Federal Awards. -23-

26 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Section I Summary of Auditor s Results Basic Financial Statements December 31, 2016 Type of auditor's report issued on the basic financial statements: Unqualified Internal control over financial reporting: Material weakness identified? Yes X No Significant deficiencies identified that are not considered to be a material weakness? Yes X No Non-compliance material to the basic financial statements noted? Yes X No Federal Awards Type of auditor's report issued for major federal award programs : Unqualified Internal control over program: Material weakness identified? Yes X No Significant deficiencies identified that are not considered to be a material weakness? Yes X No Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? Yes X No Major Programs: US Department of Justice Office of Violence Against Women Dollar threshold used to distinguish between type A and type B programs: $ 750,000 Auditee qualified as low-risk auditee? X Yes No Section II Findings Financial Statement Audit None None Section III Findings and Questioned Costs Major Federal Programs None None -24-

27 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS December 31, 2016 NOTE A BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of Advocate Program, Inc. under programs of the federal government for the year ended December 31, The information in this Schedule is presented in accordance with the requirements of the Uniform Guidance. Because the Schedule presents only a selected portion of the operations of Advocate Program, Inc., it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Final expenses are accrued at the end of the grant period. Such expenditures are recognized following the Cost Principles for Non-Profit Organizations contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. -25-