BIG BROTHERS/BIG SISTERS OF SOUTHWEST LOUISIANA, INC. FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT. Year Ended December 31,2006

Transcription

1 BIG BROTHERS/BIG SISTERS OF SOUTHWEST LOUISIANA, INC. FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT Year Ended December 31,2006 Under provisions of state law, this report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court. Release Date

2 Contents Page Independent Auditors' Report 2 Financial Statements: Statement of Financial Position 34 Statement of Activities 5 Statement of Functional Expenses 6 Statement of Cash Flows 7 Notes to Financial Statements 814 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 1516 Schedule of Findings and Questioned Costs 17 Schedule of Prior Year Findings 18 Management's Corrective Action Plan 19 Management Letter 2021

3 Jitouc uxxxmuvlorvto., (P.0. Bo* ^l^plu^a «X1* 5«lp&u*, ^oo^uwux # INDEPENDENT AUDITORS' REPORT Board of Directors Big Brothers/Big Sisters of Southwest Louisiana, Inc. Lake Charles, Louisiana We have audited the accompanying statement of financial position of Big Brothers/Big Sisters of Southwest Louisiana, Inc. (a nonprofit organization) as of December 31, 2006 and the related statements of activities, functional expenses, and cash flows for the year men ended These financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit The prior year summarized comparative information has been derived from the Organization's 2005 financial statements and, in our report dated April 5, 2006; we expressed an unqualified opinion on those financial statements. 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 of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Big Brothers/Big Sisters of Southwest Louisiana, Inc. as of December 31, 2006 and the changes in net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated April 11, 2007 on our consideration of Big Brothers/Big Sisters of Southwest Louisiana, tttc.'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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. McMullen and Mancuso, CPAs April 11, 2007 Cun&ucon Jn&h&ule, oj. Cedx t«3 IJuoUc G^ocietu, of Ce^tot«5 Jttbuc Ctccotwvtcuvts,

4 Big Brothers/Big Sisters of Southwest Louisiana. Inc. STATEMENT OF RNANCIAL POSITION December 31,2006 with comparative totals for 2005 ASSETS CURRENT ASSETS Cash and cash equivalents (Note K) Investments (Note L) Unconditional promises to give (Note I) Less allowance for uncollectible pledges Grants receivable Accrued interest receivable Accrued video revenue Prepaid expenses Total current assets , , ,478 (13,970) 12,983 5,080 3 f , ,161 1, ,739 24,117 4,541 20/ , ,546 PROPERTY AND EQUIPMENT (Note A5) Furniture and equipment Building Building improvements Less accumulated depreciation Land Net property and equipment OTHER ASSETS Long term unconditional promises to give (Note I) Total Assets 131, , , ,287 ( ) 506,359 20, ,685 $ 1, $ 118, , ,688 (198,810) 519,878 20, ,930 The accompanying notes are an integral part of these statements.

5 STATEMENT OF FINANCIAL POSITION December 31,2006 with comparative totals for 2005 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Income tax payable $ 5,735 $ 266 Accounts payabletrade 14,486 13,599 Grant funds payable 4,357 Accrued expenses 1,936 2,785 Defended support (Note F) 6,500 3,700 Current portion of longterm debt (Note H) 12,618 8,579 Total current liabilities 41,275 33,286 LONG TERM LIABILITIES, less current portion Notes payable (Note H) ,815 Total liabilities 115, ,101 NET ASSETS Unrestricted Operating 443, ,016 Fixed Assets 506, ,878 Total unrestricted net assets 950 f ,894 Temporarily restricted 176, ,481 Total Net Assets 1, ,375 Total Liabilities and Net Assets $ 1.242,830 $ 1,052,476 The accompanying notes are an integral part of these statements.

6 STATEMENT OF ACTIVITIES Year ended December 31,2006 with comparative totals for REVENUE, GAINS AND OTHER SUPPORT United Way of Southwest Louisiana Grants and service fees Contributions Investment earnings Unrealized gain (loss) on investments Other Bingo revenues Fundraising/special events Total revenues and gains Net assets released from restrictions UNRESTRICTED $ 649,275 36,710 18,031 1, , ,089 1,742, ,479 TEMPORARILY RESTRICTED 171,328 $ 750 4, ,525 (164,719) TOTAL 171,328 $ 649,275 37,460 18,031 1, , ,536 1,918, TOTAL 164, ,554 4,020 (1,742) , ,987 1,495, TOTAL REVENUES, GAINS AND OTHER SUPPORT 1,907,710 11,806 1,919,516 1,496,354 EXPENSES AND LOSSES Program servicecommunity services Management and general Fundraising/special events Bingo ,981 77, , , ,082 44,981 79, , ,815 61,686 62, ,362 TOTAL EXPENSES AND LOSSES 1,663,891 2,335 1,666,226 1,526,477 CHANGE IN NET ASSETS 243,819 9, ,290 (30,123) NET ASSETS AT BEGINNING OF YEAR, AS ORIGINALLY REPORTED 710, , , ,812 PRIOR PERIOD ADJUSTMENT (4,500). (4,500) 686 NET ASSETS AT BEGINNING OF YEAR, AS RESTATED , , ,498 NET ASSETS AT END OF YEAR $ 176,952 $ 1,127,165 $ 878,375 The accompanying notes are an integral part of these statements.

7 STATEMENT OF FUNCTIONAL EXPENSES For the year ended December 31,2006 with comparative totals for 2005 Activities Advertising Bad debt expense Bank fees Bingo awards & progressive Contract labor Dues FGP program Fundraising Hospftalization insurance Insurance Interest Meeting and training Miscellaneous Office supplies Other programs Payroll taxes Postage Printing Professional fees Rent & occupancy Rental & maintenance Retirement Salaries Security Supplies Taxes and licenses Telephone Travel and transportation Utilities Program Services 9,101 11, ,723 8, ,577 42,371 23,660 6,043 2,447 2,236 11,077 3,990 15,916 4, ,042 8,920 8,806 29, , ,749 13, ,927 Management and General $ , ,749 1, , ,881 22, Supporting Services Fund Raising 857 $ 1, , ,368 3,142 2, , ,149 8, Bingo $ 560,592 3, , ,987 9,225 50,262 15,190 Total Program and Supporting Service Expense ,708 $ 8,133 4,031 13, , ,127 63,913 9,647 7, , ,368 25,917 48,262 59,989 30,871 29,129 7,110 10,104 2, ,731 1,129 13,348 10,592 3,990 4,628 21,760 23,725 5,440 4,832 1, ,479 8,070 68,579 62,760 10,287 10,590 33,373 34, , ,005 9,909 9,417 60,834 52,516 15,190 10,166 14, ,359 28,649 7,906 7,120 Total before depreciation Depreciation 768,920 22,162 43,156 1,825 76,970 2, , ,640, ,825 26,118 25,652 TOTAL EXPENSES $ $ $ B^^E^^^^S ^ 751,107 $ 1,666,226 $ 1,526,477 The accompanying notes are an integral part of these statements.

8 STATEMENT OF CASH FLOWS Year ended December 31,2006, with comparative totals for 2005 CASH FLOWS FROM OPERATING ACTIVITIES Increase (decrease) in net assets Adjustments to reconcile change in net assets to net cash provided (used) by operating activities Depreciation Bad debt Net unrealized (gain) loss on investments (Increase) decrease in operating assets Grants receivable Accrued video revenue Accrued interest receivable Prepaid expenses Unconditional promises to give Pledges receivable Increase (decrease) in operating liabilities Accounts payabletrade Deferred support Accrued expenses Grant funds payable Income tax payable NET CASH FROM OPERATING ACTIVITIES $ 253,290 $ 26,118 13,971 6, (5,080) 1,013 (6,589) (69,835) 887 2,800 (849) (4,357) ,469 (30,123) 25,652 1,742 (5,149) (2,084) (727) (3,230) (3,546) 990 2,058 4,357 (2,153) (12,213) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of certificates of deposit Dividend reinvestments Redemption of securities Payments for property and equipment NET CASH FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Payments on longterm debt NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS BEGINNING CASH AND CASH EQUIVALENTS ENDING CASH AND CASH EQUIVALENTS Supplemental Disclosure: Income tax paid in the year ended December 31,2006 was $9,246. Interest paid in the year ended December 31,2006 was $7,110. (210,000) (1,128) 1,543 (12.600) (222,185) (62,386) (60,102) 297,161 $ 237,059 $ (1,778) 203,821 (355) 201,688 (10,568) 178, , ,161 The accompanying notes are an integral part of these statements.

9 NOTES TO THE FINANCIAL STATEMENTS December 31,2006 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of Big Brothers/Big Sisters of Southwest Louisiana, Inc. have been prepared on the accrual basis and in conformity with the standards promulgated by the American Institute of Certified Public Accountants in its audit guide for voluntary health and welfere organizations. 1. Organization and Purpose Big Brothers/Big Sisters of Southwest Louisiana, Inc. is a notforprofit organization whose main purpose is to provide children from singleparent homes with the confidence and desire to develop into loving and productive adults through the warmth and friendship of a caring adult volunteer. The Organization's purpose is carried out through three offices located throughout Southwest Louisiana. 2. Basis of Presentation Financial statement presentation follows the recommendations of the Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of NotforProfit Organizations. Under SFAS No. 117, 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. 3. Cash and Cash Equivalent For purposes of the Statements of Cash Flows, the Organization considers all unrestricted, highly liquid investments with an initial maturity of three months or less to be cash equivalents. 4. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. This will affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 5. Property and Eouipment The Organization follows the practice of capitalizing all furniture and fixtures acquired in excess of $250. Donated fixed assets are recorded as support at their estimated fair value at the date of donation; all other fixed assets are recorded at cost. Depreciation is provided over the estimated useful lives of the assets using the straightline method. Depreciation amounted to $26,118 for the year ended December 31, 2006, based on an estimated useful life of five years for equipment and forty years for buildings.

10 NOTES TO THE FINANCIAL STATEMENTS December 31,2006 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 6. Concentration of Revenue and Support A majority of the revenue for the Organization's programs is provided by bingo revenues (41%) and by various donors through contributions and fundraisers. If the Organization no longer held the bingo sessions, or there were significant reductions in amounts received by donors, the operations of the Organization could be adversely impacted. 7. Public Support and Revenue 8. Investments All contributions and grants are considered to be available for unrestricted use unless specifically restricted by the donor or the grantor. The Organization receives funding primarily from the United Way of Southwest Louisiana individual contributions, fundraisers, grants, bingo revenues, interest, and other income. Investments in marketable equity securities with readily determinable fair values are stated at fair market value. Donated investments are reflected as contributions at (heir market values at date of receipt Unrealized gains and losses are included in the change in net assets in the accompanying Statement of Activities. 9. Advertising Costs Advertising costs are charged to operations when incurred. For the year ended December 31, 2006, the Organization incurred no advertising costs. 10. Contributed Services During the year ended December 31, 2006, the value of contributed services meeting the requirements for recognition in the financial statements was not material and has not been recorded. In addition, many individuals volunteer their time and perform a variety of tasks that assists the Organization, but these services do not meet the criteria for recognition as contributed services. 11. Comparative Totals The financial statements include certain prioryear 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 the Organization's financial statements for the year ended December 31, 2005, from which the summarized information was derived

11 NOTES TO THE FINANCIAL STATEMENTS December 31,2006 NOTE B FAIR VALUES OF FINANCIAL INSTRUMENTS The following methods and assumptions were used by the Organization in estimating its fair value disclosures for financial instruments: Cash, cash equivalents, shortterm unconditional promises to give, and note payable: The carrying amounts reported in the statement of financial position approximate fair values because of the short maturities of those instruments. Shortterm investments; The fair value of investments is based on quoted market prices for those similar investments. Longterm unconditional promises to give: The fair value of promises to give that are due in more than one year is estimated by discounting me future cash flows using a current risk free rate of return based on the yield of a U.S. Treasury Security with a maturity date similar to the expected collection period. NOTE C FUNCTIONAL ALLOCATION OF EXPENSES Expenses were allocated in the accompanying financial statements to program and support services functional expense groups. The methods of allocation were based on the Organization's estimates of the relative proportion of various staff members' time and effort between program and support services as well as the Organization's estimates of the amount of each expense utilized for program or support service functions. NOTE D INCOME TAXES Big Brothers/Big Sisters of Southwest Louisiana, Inc. was incorporated under the laws of the state of Louisiana. The Organization is operated exclusively for charitable services and has qualified for the exemption from Federal income taxes under Section 501 (c) (3) of the Internal Revenue Code. In addition, the Organization has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509 (a) of the Code. The Organization is subject to income tax on unrelated business income which includes the net pull tab profit received from the bingo operations. Income tax amounted to $14,715 for the year ended December 31,2006. NOTE E RETIREMENT PLAN The Organization participated in a defined contribution retirement plan mat covers all fulltime employees fulfilling the eligibility requirements set by the plan underwriter (Mutual of America). Contributions to the plan were based on twelve percent of gross wages and amounted to $33,373 for the year ended December 31, In compliance with the requirements of the Tax Reform Act of 1986, the Board of Directors on September 17, 1997 voted to amend its retirement plan. On March 20, 1998, the Internal Revenue Service issued a favorable determination letter regarding this amendment NOTE F DEFERRED SUPPORT Deferred support in the unrestricted fund includes $6,500 received in the current year for contributions made to support the 2007 Bowl for Kids Sake. These receipts are reported as deferred items until the event takes place. 10

12 NOTES TO THE FINANCIAL STATEMENTS December 31,2006 NOTE G COMPENSATED ABSENCES Employees of Big Brothers/Big Sisters of Southwest Louisiana, Inc. are entitled to paid vacation, paid sick days, and personal days off depending on job classification, length of service and other factors. The value of these compensated absences was not recorded due to their immateriality. Hie Organization's policy is to recognize the costs of those compensated absences when actually paid to employees. NOTE H NOTE PAYABLE Bank One Promissory note dated May 9,2005 payable in fiftynine (59) regular payments of $1,477.61, including interest at 6.29% and a balloon payment due May 9,2010. Collateral is the office building on Common Street in Lake Charles, Louisiana, $ 87,008 Total notes payable 87,008 Less: Current maturities 12,618 Longterm portion of debt. $ 74,390 Maturities of longterm debt are as follows: 2008 $ 13, , and later 46,650 $ 74,390 11

13 NOTES TO THE FINANCIAL STATEMENTS December 31,2006 NOTE I ^CONDITIONAL PROMISES TO GIVE During the year ended December 31, 2006, the Organization received its United Way allocation of $171,328. This allocation is temporarily restricted as to time of receipt and is properly reflected in the accompanying Statement of Activities as an increase in temporarily restricted net assets. Uncollectible allocations are expected to be insignificant. In addition, the Organization held a fundraiser in 2006 of which donors pledged a total of $69,835 for the next five years. Hie amount of pledges receivable in less than one year is $27,150. An allowance for uncollectible pledges is provided based on management's evaluation of the potential uncollectible promises receivable at year end. The amount of uncollectible pledges at December 31,2006 is $13,970. Unconditional promises to give at December 31,2006 are as follows: Receivable in one to five years Total unconditional promises to give Less: discount to net present value Less: allowance for uncollectible promises receivable Net unconditional promises to give at December 31,2006 United Way $ 171, ,328 Fundraiser $ 69,835 69,835 (13,970) Total $ 241, ,163 (13,970) $ 171,328 $ 55,865 $ 227,193 NOTE JLEASES On September 1,2003, the Organization entered into a monthly lease agreement with the City of DeRidder for $150 per month. The lease is cancelable with ninety (90) days written notice. Lease expense was $1,800 in The Organization entered into a fair market value lease for its copier on September 24,2002. The minimum monthly lease payment is $157.74, exclusive of taxes, for a period of sixty (60) months. Lease expense for the copier was $1,893 for the year ended December 31, Future inrairnum payments by year as of December 31,2006 are as follows: Year ending: Copier Lease December 31,2007 $_ 1,420 12

14 NOTES TO THE FINANCIAL STATEMENTS December 31,2006 NOTE K CASH AND CASH EQUIVALENTS The Organization maintains the following cash accounts: Cash on Hand Gaming Petty Cash Accounts Operating Account Savings Account Merrill Lynch Money Market Account Wachovia Money Market Account * Bingo Account ** December 31,2005 4,000 1, ,025 3,422 68,769 33,945 $" 297,161 $ * The Organization is required to maintain a separate bank account for the gaming (Bingo) account December 31,2006 4,000 1,000 35, ,449 10,565 47, ** The Organization began offering progressive pulltabs in August The Organization acts as fiduciary for this account; however, it is not considered an asset of the Organization and is not reported on these financial statements. The balance at December 31,2005 was $1,621. The account was closed in NOTE L INVESTMENTS The Organization had the following investments at December 31,2005 and 2006: Market Value J.P. Morgan Chase Bank Certificate of Deposit Certificate of Deposit 100,000 51,128 Wachovia Securities Certificate of Deposit Merrill Lynch 63 Shares SBC Comm. $1 Par Total Investments 60,000 1,543 1,543 $ 211,128 13

15 NOTES TO THE FINANCIAL STATEMENTS December 31,2006 NOTE M CONCENTRATION OF RISK Financial instruments that potentially subject the Organization to concentrations of credit risk consist principally of promises to give receivable. Amounts receivable from promises to give at December 31, 2006 consists of $ 171,328 from the United Way of Southwest Louisiana and $69,835 in pledges receivable from a fundraiser held in The Organization also has exposure for risk as the bank balances of its operating account, savings account, and certificates of deposit at December 31, 2006 is $349,457, exceeding the $100,000 of federal deposit insurance. NOTE N PRIOR PERIOD ADJUSTMENT For the year ended December 31,2005, Big Brothers/Big Sisters of Southwest Louisiana, Inc. accrued a $4,500 receivable for the Office of Youth Services grant for the month of December 2005 and did not receive the payment. The reversal of this amount resulted in a decrease of $4,500 to unrestricted net assets at December 31,

16 Julutc * T0663 So* fesr) 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 Big Brothers/Big Sisters of Southwest Louisiana, Inc. Lake Charles, Louisiana We have audited the financial statements of Big Brothers/Big Sisters of Southwest Louisiana, Inc. (a nonprofit corporation) as of and for the year ended December 31, 2006, and have issued our report thereon dated April 1 1, 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. Internal Control over Financial Reporting In planning and performing our audit, we considered Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control over financial reporting. A control deficiency 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 misstatements on a timely basis. A significant deficiency 'is a control deficiency, or combination of control deficiencies, that adversely affects the organization's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles, such that there is more than a remote likelihood that a misstatement of the organization's financial statements that is more than inconsequential will not be prevented or detected by the organization's internal control. A material weakness is a significant deficiency, or a combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Onoftlutt ol C*tlia«3 uubuc Cf/ccoulank <Dock u o Cet!u««d Jtvcuc

17 Compliance As part of obtaining reasonable assurance about whether Big Brothers/Big Sisters of Southwest Louisiana, Inc.'s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on 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. We noted certain matters that we reported to management of Big Brothers/Big Sisters of Southwest Louisiana, Inc. in a separate letter dated April 1 1, This report is intended solely for the information and use of the board of directors, management, and the Legislative Auditor and is not intended to be and should not be used by anyone other than these specified parties. McMuIlen and Mancuso, CPAs, LLC April 11, 2007

18 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended December 31, 2006 We have audited the financial statements of Big Brothers/Big Sisters of Southwest Louisiana, Inc. for the year ended December 31, 2006, and have issued our report thereon dated April 11, 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. Our audit of the financial statements as of December 31, 2006 resulted in an unqualified opinion. Section I Summary of Auditor's Report a. Report on Internal Control and Compliance Material to the Financial Statements Internal Control Material Weaknesses [ Yes X No Other Conditions [ Yes X No Compliance Compliance Material to Financial Statements Yes X No Section IX Financial Statement Findings There were no current year financial statement audit findings. 17

19 SCHEDULE OF PRIOR YEAR FINDINGS Year Ended December 31,2006 SECTION I INTERNAL CONTROL AND COMPLIANCE MATERIAL TO THE FINANCIAL STATEMENTS There were no prior year findings related to internal control of and compliance material to the financial statements. SECTION n MANAGEMENT LETTER Additional procedures to prevent theft of bingo cash Require dual signatures on investments Progressive pull tab account disbursement Prepare minutes of executive session meetings Foster Grandparent Program Documentation Filing of LA OYProgram Invoices Resolved Resolved Resolved Unresolved Partially resolved Resolved This schedule has been prepared by management. 18

20 MANAGEMENT'S CORRECTIVE ACTION PLAN Year Ended December 31, 2006 SECTION I INTERNAL CONTROL AND COMPLIANCE MATERIAL TO THE FINANCIAL STATEMENTS There were no current year findings related to internal control of and compliance material to the financial statements. SECTION H MANAGEMENT LETTER ML Prepare Minutes of Executive Session Meetings The Agency's executive session meetings should be documented in written minutes. The Agency will begin documenting all future Agency executive sessions meetings. ML Foster Grandparent Program Documentation The timesheets submitted by FGP workers should be entered in the program software and thoroughly reviewed by Agency staff to ensure all timesheets are properly completed. The Agency staff has begun the process of entering FGP worker timesheets in the program software and will continue with a thorough review to eliminate errors on the timesheets. ML Account for Unconditional Promises to Give The Agency should monitor collections from pledges receivable generated from fundraiser events and record in financial statements accordingly. The Agency will record and monitor collections on the pledges receivable from fundraiser events. This schedule has been prepared by management. 19

21 vtubuc P.0. Boot LxJUx>a 2>«We &&pju»«. fes?) eeo* (S3?) April 11, 2007 To the Management and The Board of Directors of Big Brothers Big Sisters of Southwest Louisiana, Inc. In planning and performing our audit of the financial statements of Big Brothers Big Sisters of Southwest Louisiana, Inc. for the year ended December 31, 2006, we considered fee Organization's internal control in order to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on internal control. However, during our audit we became aware of several matters that are opportunities for strengthening internal controls and operating efficiency. This letter summarizes our comments and suggestions regarding these matters. This letter does not affect our report dated April 1 1, 2007 on the financial statements of Big Brothers Big Sisters of Southwest Louisiana, Inc. We will review the status of these comments during our next audit engagement. We will be pleased to discuss these comments in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations. Our comments are summarized as follows: Executive Board Session Minutes The Agency does not document executive session meetings. The Agency's executive session meetings and other important meetings should be documented in written minutes in order to provide verification of the actions and decisions relating to Agency's policies, procedures, intentions, or actions. Historical summarization of these decisions is critical, not only as a guide for the Agency but also as evidence in any legal proceedings or outside examinations. We recommend that the Agency update and maintain current Agency minutes. Foster Grandparent Program Documentation The persons who work for the Foster Grandparent Program at the Agency complete a timesheet for support of the number of hours worked each day and the number of miles driven each day. The timesheets are totaled and reviewed by Agency staff before they are processed for payment. The Agency now utilizes the program software to enter the number of hours and miles recorded per worker on each timesheet, and allows the software to calculate the totals, which has eliminated some errors noted in the past. There were still some errors noted on the timesheets, mainly due to errors in totaling the number of hours and/or mileage recorded by the worker. There were also missing required signatures on some of the timesheets. We recommend that the Agency staff thoroughly review the timesheets for propriety before processing for payment. Account for Unconditional Promises to Give The Agency held a fundraiser during the year in which some donors pledged to give the Agency a contribution over time, ranging from one to five years. This requires that these unconditional promises to give be accounted for and recognized in the financial statements. The Agency needs to continually monitor collections from these unconditional promises to give and account for them accordingly. dn&filule at CattuM^ c/u&tcc CCccautaafo. G>ocieta of Cattiuad Uu&tlc Cfccou<tvtcuvta.

22 We wish to thank the Director of Finance for her support and assistance during our audit The preceding comments and recommendations are intended solely for the information and use of the Board of Directors and management, and are not intended to be and should not be used by anyone other than the specified parties. McMullen and Mancuso, CPAs 21