Covenant House Florida, Inc.

Transcription

1 Financial Statements and Uniform Guidance Schedules Together With Independent Auditors' Report June 30, 2016 and 2015

2 Financial Statements and Uniform Guidance Schedules Together With Independent Auditors' Report June 30, 2016 and 2015 TABLE OF CONTENTS Independent Auditors' Report FINANCIAL STATEMENTS Statements of Financial Position Statements of Activities Statements of Functional Expenses Statements of Cash Flows Notes to Financial Statements SUPPLEMENTARY INFORMATION Schedules of State Actual Expenses and Revenues Schedule of Expenditures of Local Awards Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards 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 Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs 28

3 rts) PKr V aconnor DAVIES ACCOUNTANTS AND ADVISORS Independent Auditors' Report Board of Directors Covenant House Florida, Inc. Report on the Financial Statements We have audited the accompanying financial statements of Covenant House Florida, Inc., (the "Organization"), which comprise the statement of financial position as of June 30, 2016 and 2015 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. Auditors' 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 audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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. PKF O'CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Harrison, NY I Tel : I Fax: I PKF O'Connor Davies, LL P is a member firm of the PKF International Limited network of legally independent fi rms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member fi rm or firms.

4 Board of Directors Covenant House Florida, Inc. Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Covenant House Florida, Inc., Inc. as of June 30, 2016 and 2015 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 Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying Schedules of State Actual Expenses and Revenues and the Schedule of Expenditures of Local Awards are required by the State of Florida and are presented for purposes of additional analysis and are not a required part of the financial statements. The schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals 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 January 3, 2017, on our consideration of Covenant House Florida, lnc.'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 Covenant House Florida, lnc.'s internal control over financial reporting and compliance. PJ<F tfj'~ /xu;w, LLfJ Harrison, New York January 3, 2017

5 Statements of Financial Position ASSETS Cash and cash equivalents Grants receivable Bequests and other receivables Promise of contributed use of building Prepaid expenses and other assets Investments Property and equipment, net 2016 $ 556, ,077 27,420 49, ,196 1,482,990 June 30, 2015 $ 962, , , , , ,280 1,595,871 $ 2,958,280 $ 4,096,151 LIABILITIES AND NET ASSETS Liabilities Accounts payable Accrued expenses Capital leases Due to Parent Total Liabilities Net Assets Unrestricted Undesignated Investment in property and equipment Total Unrestricted Temporarily restricted Total Net Assets $ 90, ,865 51,440 42, , ,025 1,431,550 2,391,575 28,596 2,420,171 $ 2,958,280 $ 197, ,627 68, , ,877 1,420,931 1,527,727 2,948, ,616 3,349,274 $ 4,096,151 See notes to financial statements 3

6 Statements of Activities Year Ended June 30, 2016 Year Ended June 30, 2015 Temporarily Temporarily Unrestricted Restricted Total Un restricted Restricted Total SUPPORT AND REVENUE Contributions $ 1,744,439 $ - $ 1,744,439 $ 2,013,009 $ 12,219 $ 2,025,228 Contributed services and merchandise 130, , , ,772 Government grants 2,763,692-2,763,692 2,717,959-2,717,959 Branding dollars from Parent 2,441,000-2,441,000 2,421,000-2,421,000 Special event revenue, net of direct benefits to donors of $240,590 and $201, , , , ,561 Net assets released from restrictions 372,020 {372,020) - 388,310 {388,310) Total Contributions, Revenue and Other Support 7,905,532-7,533,512 7,969,611 12,219 7,593,520 INVESTMENT AND OTHER INCOME Interest and dividends 5,056-5,056 5,694-5,694 Total Support and Revenue and Investment and Other Income 7,910,588 (372,020) 7,538,568 7,975,305 _(376,091) 7,599,214 EXPENSES Program services 7,415,490-7,415,490 7,256, 121-7,256,121 Supporting Services Management and general 569, , , , 108 Fund raising 483, , , ,653 Total Expenses 8,467,671-8,467,671 8,398,882-8,398,882 Change in Net Assets (557,083) (372,020) (929, 103) (423,577) (376,091) (799,668) NET ASSETS Beginning of year 2,948, ,616 3,349,274 3,372, ,707 4,148,942 End of year $ 2,391,575 $ 28,596 $ 2,420, 171 $ 2,948,658 $ 400,616 $ 3,349,274 See notes to financial statements 4

7 Statement of Functional Expenses Year Ended June 30, 2016 Pr29ram Services Sueeorting Services Community Total Total Cost of Direct Shelter and Mother/ Service Public Rights of Program Management Supporting Benefits to Total Crisis Care Outreach Child Medical Centers Education Passage Services and General Fundraising Services Donors ~nses Salaries and wages $ 2,437,220 $147,123 $ 607,333 $ 114,658 $ 114,334 $ 52,827 $ 471,098 $ 3,944,593 $ 306,095 $ 274,698 $ 580,793 $ - $ 4,525,386 Payroll taxes 179,686 10,847 44,776 8,453 8,429 3,895 34, ,818 22,567 20,252 42, ,637 Employee benefits 339,260 21,445 88,528 16,713 16,666 7,700 68, ,981 60,618 40, , ,640 Total Salaries and Related Expenses 2,956, , , , ,429 64, ,499 4,794, , , ,271 5,518,663 Professional fees ,400 26,745 41,810 68, , ,455 Supplies 77,916 1,275 9,074 2,704 4, , ,307 4,841 1,472 6, ,620 Telephone and fax charges 16,760 2,784 2, , ,567 27,962 3,731 2,836 6,567 34,529 Printing, postage and mailing 8,263 1,258 1, , , ,919 8,176 20,785 42,771 Occupancy Fuel and utilities 129,849 2,306 13,920 7,823 9, , ,585 7,759 2,854 10, ,198 Repairs and maintenance 29, ,869 1,057 2, ,903 42,216 1, ,997 44,213 Contributed facilities 182,471 3,589 30,899 7,167 1,466 24, ,992 17,222 4,807 22, ,021 Rent and other 18, , ,472 24,880 1, ,474 26,354 Rent to Parent 45, ,657 1, ,047 61,951 4,268 1, 191 5,459 67,410 Equipment, maintenance and rental 27, , , ,400 37,842 7, , ,345 Travel and transportation 26,244 1,964 4, , ,762 44,340 21,946 1,677 23,623 4,840 72,803 Conferences, conventions and meetings 9, , ,573 14,340 2, , ,394 Specific assistance to individuals 402, ,411 39,616 1, , , ,948 Temporary help 256,115 66, , ,856 Other purchased services 96,232 2,290 10,887 4, 111 5, , ,228 11,634 43,971 55, , ,647 Dues, licenses and permits 8, , ,502 13,338 6,734 4,475 11, ,772 Subscriptions and publications Staff recruitment 9, , ,194 11,936 Insurance 106,241 2,089 17,968 4, , ,958 10,922 2,797 13, ,677 In-kind services 24,644 3, , ,606 41,606 Other expenses 9, ,395 14, , ,249 Bank charges and fees 24,778 24,778 24,778 Interest 3,635 3,635 3,635 Depreciation 106,361 1,892 11,510 4,057 7, , ,209 6,415 2,346 8, ,970 Total Functional Expenses 4,546, ,088 1,039, , , ,395 1, 120,514 7,415, , ,059 1,052, ,590 8,708,261 Less cost of direct benefits to donors (240,590) (240,590) Total Expenses Reported by Function on the Statement of Activities $ 4,546,795 $206,088 $1,039,424 $ 230,141 $ 175,133 $ 97,395 $1,120,514 $ 7,415,490 $ 569,122 $ 483,059 $1,052, 181 $ - $ 8,467,671 See notes to financial statements 5

8 Statement of Functional Expenses Year Ended June 30, 2015 Program Services Sueeorting Services Community Total Total Cost of Direct Shelter and Mother/ Service Public Rights of Program Management Supporting Benefits Crisis Care Outreach Child Medical Center Education Passage Services and General Fundraising Services to Donors Total Salaries and wages $ 2,273,576 $138,688 $ 623,972 $ 99,260 $ 75,346 $ 30, 168 $ 566,682 $ 3,807,692 $ 290,410 $ 281,300 $ 571,710 $ - $ 4,379,402 Payroll taxes 195,595 11,931 53,679 8,539 6,482 2,595 48, ,573 24,984 24,200 49, ,757 Employee benefits 351,712 21,454 96,526 15,355 11,656 4,667 87, ,033 44,926 43,516 88, ,475 Total Salaries and Related Expenses 2,820, , , ,154 93,484 37, ,097 4,724, , , ,336 5,433,634 Professional fees 1,064 30,800-31,864 63,736 65, , ,700 Supplies 76,229 1,342 9,237 1,703 4, , ,658 4,979 1,676 6,655 2, ,386 Telephone and fax charges 17,700 2,426 2, , ,677 29,003 4,013 2,384 6,397 35,400 Printing, postage and mailing 7,188 2,163 1, ,725 1,594 7,864 9,458 11,716 32,899 Occupancy Fuel and utilities 133,038 2,408 15,761 7,316 7, , , 197 8,785 3,030 11, ,012 Repairs and maintenance 41, ,192 1,546 3, ,521 60,634 2, ,128 63,762 Contributed facilities 182,472 3,589 30,899 7,167 1,466 24, ,993 17,222 4,807 22, ,022 Rent and other 15, , ,520 21,375 1, ,365 22,740 Rent to Parent 37, ,381 1, ,039 51,628 14, ,785 67,413 Equipment, maintenance and rental 23, , , ,105 32,916 6, ,151 40,067 Travel and transportation 26,513 5,754 4, , ,093 46,242 20,072 1,751 21, ,207 Conferences, conventions and meetings 5, , ,489 2, , ,099 Special assistance to individuals 376, ,190 38,346 1, , ,362 1,303 1,303 5, ,675 Temporary help 239,249 76, , ,169 Other purchased services 97,242 1,742 9,873 3,813 5, , ,276 11,659 43,364 55, , ,338 Dues, licenses and permits 8, , ,454 12,497 8,657 8,193 16,850 29,347 Subscriptions and publications Staff recruitment 4, , ,924 Insurance 67,667 1,331 11,458 2, ,740 93,398 43,229 1,782 45, ,409 In-kind services 9,228 2,761 7,896 19,885 8,636 8,636 28,521 Other expenses 8, ,811 12,998 6,748 25,204 31,952 8,667 53,617 Bank charges and fees 22,922 22,922 22,922 Interest 4,605 4,605 4,605 Depreciation 112,591 2,014 12,565 4,302 7, , ,744 7,004 2,510 9, ,258 Total Functional Expenses 4,311, ,506 1,087, , ,037 73,281 1,246,660 7,256, , ,653 1, 142, ,012 8,599,894 Less cost of direct benefits to donors (201,012) (201,012) Total Expenses Reported by Function on Statement of Activities $ 4,311,021 $201,506 $ 1,087,280 $ 204,336 $ 132,037 $ 73,281 $ 1,246,660 $ 7,256, 121 $ 614, 108 $ 528,653 $1,142,761 $ $ 8,398,882 See notes to financial statements 6

9 Statements of Cash Flows Year Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (929, 103) $ (799,668) Adjustments to reconcile change in net assets to net cash from operating activities Depreciation 159, ,258 Provision for bad debts 23,319 Net unrealized (gain) on investments (196) (43) In-kind contribution use of building 272, ,022 Net change in operating assets and liabilities Grants receivable (124,664) (47,380) Bequests and other receivables 158, ,299 Prepaid expenses and other assets 72,874 75,416 Accounts payable and accrued expenses (207,981) 94,758 Due to Parent 15,917 {67,609) Net Cash from Operating Activities (582,360) 14,372 CASH FLOWS FROM INVESTING ACTIVITIES Sales and maturities of investments 480, ,256 Purchases of investments (240,000) {1,207,543) Purchase of property and equipment {47,089) {95,800) Net Cash from Investing Activities 193,191 (336,087) CASH FLOWS FROM FINANCING ACTIVITIES Payments on capital leases {16,704) {15,736) Change in Cash and Cash Equivalents (405,873) (337,451) CASH AND CASH EQUIVALENTS Beginning of year 962,267 1,299,718 End of year $ 556,394 $ 962,267 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest $ 3,635 $ 4,605 See notes to financial statements 7

10 Notes to Financial Statements June 30, 2016 and Organization and Nature of Activities Covenant House Florida, Inc. (the "Organization"), a not-for-profit organization, is an operating affiliate of Covenant House (the "Parent"), a New York-based organization. The Organization provides shelter, residential services, community services, and outreach services to youth in the Fort Lauderdale and Orlando metropolitan area. The Parent is the sole member of the Organization and is itself a private not-for-profit organization which, through its affiliates, provided shelter, food, clothing, counseling, medical attention, crisis intervention, public education, and other services to over 46,991 (unaudited) and 51, 173 (unaudited) runaway and homeless youths during the years ended June 30, 2016 and The Organization is affiliated with the following not-for-profit organizations through common control. Covenant House Alaska Covenant House California Covenant House Chicago Covenant House Connecticut Covenant House Georgia Covenant House Michigan Covenant House Missouri Covenant House New Jersey Covenant House New Orleans Covenant House Pennsylvania/Under 21 Covenant House Texas Covenant House Washington D.C. Under 21 Boston, Inc. Covenant House Western Avenue Covenant House Testamentum Covenant House New York/Under 21 Covenant International Foundation Covenant House Holdings, LLC Covenant House Toronto Covenant House Vancouver Asociacion La Alianza (Guatemala) Casa Alianza de Honduras Casa Alianza Nicaragua Casa Alianza Internacional Rights of Passage, Inc. 268 West 44th Corporation Fundacion Casa Alianza Mexico, I.AP. The Organization has been determined to be a non-profit organization exempt from federal and state income taxes under Section 501 (c)(3) of the United States Internal Revenue Code. Components of Program and Supporting Services Program Services Shelter and Crisis Care The Organization provides a safe haven for runaway and homeless teens under the age of 21 by providing shelter 24 hours a day, 7 days a week. Youth are provided nourishing meals, clean clothes, and a safe place to sleep. The youth are offered comprehensive services - from health services, substance abuse treatment and counseling to education and job readiness assistance. 8

11 Notes to Financial Statements June 30, 2016 and Organization and Nature of Activities Components of Program and Supporting Services (continued) Program Services (continued) Outreach Trained outreach counselors travel by foot and van to areas where street kids congregate offering: an introduction to Covenant House Florida through informal dialogue that affirms each youth, non-perishable food, clean clothing, hygiene supplies, and first aid, counseling about issues that affect the youth's current situation, referrals to safe shelter, medical care, or other services. If requested by the youth, the team will provide transportation to the Crisis Shelter. Mother/Child Program This program provides emergency shelter, food and counseling to runaway and homeless youth with infants or toddlers, as well as parenting education and pre and post natal care. Medical Services This program provides an on-site health program which recognizes and responds to the actual and potential health and medical problems of the homeless youth residing at its Crisis Shelter. The nurses, supported by a volunteer Medical Director, work closely with CHF Case Management and Clinical staff to help improve and ensure the health, welfare and safety of each youth, their babies/children. Community Service Centers The Community Services Program provides an array of services to homeless youth ages 18 to 21 living on the streets, who feel they are not ready to accept the structure of a residential shelter or for youth who have achieved stable housing but are in need of on-going supportive services in an aftercare environment. Services provided include case management, counseling, food pantry, hygiene supplies, clothing, laundry services, family reunification, transportation assistance, and access to education. Public Education This program informs and educates the public on how to identify potential "runaway" and "throwaway" adolescents; public and private resources are available to help such adolescents before they leave home and public support services are also available to these families to improve their home environment. Rights of Passage Rights of Passage ("ROP") helps older adolescents progress from homelessness to productive lifestyles though stable residency, improved life skills and employment opportunities, and increased self-responsibility for determining their future. Rights of Passage Apartment Living ("ROPAL") offers youth up to two years of independent living in a furnished apartment with supportive case management. The ROPAL Program consists of 42 beds at scattered sites. 9

12 Notes to Financial Statements June 30, 2016 and Organization and Nature of Activities Components of Program and Supporting Services (continued) Supporting Services Management and General Management and general services include administration, finance and general support activities. Certain administrative costs that relate to specific programs have been allocated to those programs. Fundraising Fundraising services relate to the activities of the development program in raising general and specific contributions. Direct Benefit-to-Donor Costs Direct benefit-to-donor costs are costs incurred in conjunction with items such as meals and entertainment benefiting attendees of special events. 2. Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"}, which 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 statements and the reported amounts of revenues and expenses during the reporting period. Accordingly actual results could differ from those estimates. Net Asset Presentation The Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is received. All other donorrestricted support is reported as an increase in temporarily or permanently restricted net assets depending on the nature of the restriction. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as assets released from restrictions. There were no permanently restricted assets as of June 30, 2016 and Revenue Recognition Revenue is recognized as services are performed or expenditures are incurred under the Organization's contracts with its clients and funders. 10

13 Notes to Financial Statements June 30, 2016 and Summary of Significant Accounting Policies (continued) Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited. Cash and Cash Equivalents The Organization considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Fair Value of Financial Instruments The Organization follows U.S. GAAP guidance on fair value measurements which defines fair value and establishes a fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets. Level 1 inputs have the highest reliability and are related to assets with unadjusted quoted prices in active markets. Level 2 inputs relate to assets with other than quoted prices in active markets which may include quoted prices for similar assets or liabilities or other inputs which can be corroborated by observable market data. Level 3 inputs are unobservable inputs and are used to the extent that observable inputs do not exist. Investment Valuation and Income Recognition Investments consist of certificates of deposit with a maturity date greater than three months from the date of purchase valued at cost plus accrued interest, which approximates fair value. Investment income in the statements of activities consists of interest, dividends, and unrealized and realized gains (losses). Property and Equipment Property and equipment is recorded at cost. The Organization's policy is to capitalize all purchases of $3,000 or greater at the time of purchase. Leasehold improvements are depreciated over the lesser of the life of the asset or the term of the lease. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, as follows: Buildings Furniture, fixtures and equipment Vehicles 31 years 3 to 5 years 3 years 11

14 Notes to Financial Statements June 30, 2016 and Summary of Significant Accounting Policies (continued) Asset Recoverability Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There is no such impairment for the years ended June 30, 2016 and Contributions and Pledges Receivable Contributions to the Organization are recorded as revenue upon the receipt of an unconditional pledge of cash or other assets. Contributions are considered available for unrestricted use, unless the donors restrict their use. Contributions received that are due in more than one year are discounted at a risk adjusted rate. There were $25,000 and $125,000 in contributions receivable at June 30, 2016 and There were $2,420 and $61,222 in unconditional promises to give at June 30, 2016 and 2015 and are included in the bequests and other receivables in the accompanying statements of financial position. An allowance for uncollectible pledges receivable is provided, using management's judgment of potential defaults, which considers factors such as prior collection history, type of contribution and the nature of fundraising activity. Contribution revenue is recognized based on the present value of the estimated future payments to be made to the Organization. The Organization maintains an allowance for doubtful accounts for estimated losses that may result from the inability of its donors to make required payments. Such allowances are based upon several factors including, but not limited to, historical collection experience and financial condition of the respective donor. At June 30, 2016 and 2015, no allowance was considered necessary by management. Special Events Revenues and expenses incurred relative to special events are recognized upon occurrence of the respective event. Revenues are shown net of the cost of direct benefits to donors. 12

15 Notes to Financial Statements June 30, 2016 and Summary of Significant Accounting Policies (continued) Donated Goods and Services and Use of Building The Organization recognizes the fair value of donated services which create or enhance nonfinancial assets, or require specialized skills provided by individuals possessing those skills and would typically be purchased if not provided by donation. Contributed services which do not meet these criteria are not recognized as revenue and are not reported in the accompanying financial statements. As described in Note 7 under leases, the Organization entered into a five year lease with the Parent. The lease commenced on July 1, 2011, and expired on July 1, 2016 and required the payment of base and additional rent. Base rent for fiscal years 2016 and 2015 was $1 per year, and additional rent for June 30, 2016 and 2015 was $67,410 and $67,413 respectively. The Organization was responsible for all related repairs and maintenance and utility costs. The use of the rented facilities was restricted to accommodate facilities and operations which achieved the Parent's mission. This total amount of the in-kind revenue related to this lease of $1,360, 104 was recorded for the year ended June 30, 2011 and was based on the fair value of similar assets and past appraisals. Advertising Costs Advertising costs are expensed as incurred. Accounting for Uncertainty in Income Taxes The Organization recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Management has determined that the Organization had no uncertain tax positions that would require financial statement recognition and/or disclosure. The Organization is no longer subject to examinations by the applicable taxing jurisdictions for years prior to June 30, Reclassifications Certain accounts in the 2015 financial statements have been reclassified to conform to the current year financial statement presentation. Subsequent Events Evaluation by Management Management has evaluated subsequent events for disclosure and recognition in the financial statements through the date that the financial statements were available to be issued, which date is January 3, Investments Investments at June 30, 2016 and 2015 consist of certificate of deposits due within one year of statement of financial position dates. 13

16 Notes to Financial Statements June 30, 2016 and Government Grants Receivable Grants receivables of $602,077 and $477,413 at June 30, 2016 and 2015 represent the amounts due from various governmental agencies for the Organization's programs. All grants receivable at June 30, 2016 are expected to be collected within one year. 5. Property and Equipment Property and equipment consists of the following at June 30: Land Buildings Vehicles Leasehold improvements Furniture, fixtures and equipment Construction in progress Accumulated depreciation and amortization 2016 $ 404,800 1,656, , , ,657 9,960 3,939,472 {2,456,482) $ 1,482, $ 404,800 1,656, , , ,657 9,836 3,892,383 {2,296,512) $ 1,595,871 Construction in progress consists of demolition and plumbing pertaining to a remodeling project for four youth rooms. 6. Capital Leases The Organization has leased equipment under capital leases. The recorded costs for the assets under the capital leases are reflected as equipment within property and equipment on the statements of financial position. Amortization for the equipment under the capital lease is included in depreciation and amortization expense. At June 30, 2016 and 2015, the Organization's assets under capital leases were as follows: Leased equipment Accumulated amortization 2016 $ 91,398 {45,699) $ 45, $ 91,398 {27,419) $ 63,979 14

17 Notes to Financial Statements June 30, 2016 and Capital Leases (continued) Future minimum payments for equipment under capital leases for the years ending June 30 are as follows: Year Ending June $ 20, , ,253 Total minimum obligations 55,929 Amount representing Interest {4,489) $ 51, Commitments and Contingencies Leases The Organization leases facilities from the Parent under an agreement which requires annual rent of $1. The lease commenced on July 1, 2011, and expired on July 1, As described in Note 2, Donated Goods and Services and Use of Building, rent expense related to this lease for the years ended June 30, 2016 and 2015 was $67,410 and $67,413. The space is currently leased on a month-to-month basis. For the years ended June 30, 2016 and 2015, the Organization recognized $272,021 and $272,022 of expense per year for the contributed use of the building. The Organization also leases equipment from unrelated parties under operating leases. The rent expense related to these leases for the years ended June 30, 2016 and 2015 was $11,070 and $9,368. Leases Future minimum annual lease payments for the years ending June 30, are payable as follows: $ 13,392 8,065 $ 21,457 Government Grants In accordance with the terms of certain government grants, the records of the Organization are subject to audit for varying periods after the date of final payment of the grants. The Organization is liable for any disallowed costs; however, management believes that the amounts of disallowed costs, if any, would not be significant. Government grants amounted to $2,763,692 and $2,717,959 forthe years ended June 30, 2016 and

18 Notes to Financial Statements June 30, 2016 and Temporarily Restricted Net Assets Temporarily restricted net assets at June 30 are available for the following: Time restricted - use of building $ $ 272,021 Time restricted - operations 25, ,999 Purpose restricted - education 3,596 3,596 $ 28,596 $ 400,616 Amounts released from restrictions in the years ended June 30, are as follows: Time restricted - use of building Time restricted - operations $ 272, ,000 $ 372,021 $ 272, ,289 $ 388, Related Party Transactions The Parent provides financial support as well as management and organizational support for its affiliated organizations. The Parent conducts fundraising activities for its own programs and the programs of the affiliates. Contributions and promises to give totaled approximately $64.3 million and $60.8 million directly to the Parent for the years ended June 30, 2016 and Contributions received from the Parent are generally not specifically restricted by donors to specific affiliates. The Parent combines contributions received directly from individuals, corporations and foundations plus a Parent subsidy and appropriates funds classified as "Branding Dollars" or "Contributions Received from Parent" to each Covenant House affiliate. Total funds allocated to affiliates, based on the Parent's policy, approximated $33.6 million and $31.3 million for the years ended June 30, 2016 and In fiscal both 2016 and 2015, the Organization received $2,441,000 in contributions from the Parent. Use of Building As described in Note 2, Summary of Significant Accounting Policies, Use of Building and Note 7 Commitments and Contingencies, Leases, the Organization entered into a five year lease with the Parent which commenced July 2011 and expired on July 1,

19 Notes to Financial Statements June 30, 2016 and O. Employee Benefit Plan The Organization participates a defined benefit pension plan sponsored by the Parent covering substantially all of the employees of the Parent and its domestic affiliates. Benefits are generally based on years of service and final average salary. The Organization did not contribute to the defined benefit pension plan during the years ended June 30, 2016 and Effective December 31, 2006, the Parent froze service credits in the defined benefit pension plan. Compensation increases will continue to apply within the plan structure for those participants who have at least 45 points (age plus years of service). The Organization has further amended the plan effective August 1, 2009 to cease adjustments in the accrued benefits due to salary increases so that no further benefits will accrue under the plan to date. Effective January 1, 2007, the Parent adopted a defined contribution 403(b) savings and retirement plan. Employees are immediately eligible to participate in the plan. Employees who work at least 1,000 hours per year are eligible to receive an employer contribution. The Organization makes annual contributions into the plan on behalf of employees ranging from 1 % to 9% of employee compensation determined using a formula based on points, which equal the sum of age and years of service. Employer contributions to the plan are 100% vested after employees have completed three years of service. Total expense related to the 403(b) plan was $160,384 and $155,701 for the years ended June 30, 2016 and Concentration of Credit Risk Financial instruments that potentially subject the Organization to concentrations of credit risk consist primarily of cash, cash equivalents and receivables. The Organization maintains its cash in bank deposit accounts which generally exceed federally insured limits. The Organization has not experienced any losses in such accounts. * * * * * 17

20 Supplementary Information June 30, 2016

21 Schedule of State Actual Expenses and Revenues DATE PREPARED: 9/25/2016 AGENCY: Covenant House Florida, Inc. BUDGET PERIOD: FROM 7/1/2015-6/30/2016 CONTRACT #: PART I: ACTUAL FUNDING SOURCES & REVENUES COVERED STATE-FUNDED Program 1 Program 2 FUNDING SOURCES& Assessment Intervention Outreach Residential II REVENUES Total for State Total for Non- Total for All SAMH-Funded State-Funded Non-SAMH Total Covered Covered Covered Covered Services Funding Services Services Services (C Cx) (D+E) (F+G) A 81-a 81.b 82-a 82-b D E F G H IA. STATE SAMH FUNDING (1) CMH $ 13,918 $ $ $ - $ 13,918 )()()()()()()() $ 13,918 )()()()()()()() $ 13,918 (2) ASA 67,508 23,173 90,681 )()()()()()()() 90,681 )()()()()()()() 90,681 (3) CSA 19,438 81, ,310 )()()()()()()() 101,310 )()()()()()()() 101,310 (4) )()()()()()()() )()()()()()()() (5) )()()()()()()() )()()()()()()() (6) From Other Districts )()()()()()()() )()()()()()()() TOTAL STATE SAMH FUNDING= $ 13,918 $ 86,946 $ 81,872 $ 23,173 $ 205,909 $ - $ 205,909 $ - $ 205, OTHER GOVT. FUNDING (1) Other State Agency Funding $ - $ - $ - $ - $ - $ - $ $ 58,274 $ 58,274 (2) Medicaid (3) Local Government 590, , , , ,155 (4) Federal Grants and Contracts 1,754,353 1,754,353 (5) In-kind from local govt. only TOT. OTHER GOVT. FUNDING = $ - $ - $ - $ 590,813 $ 590,813 $ - $ 590,813 $ 1,966,96$ $ 2,557,782 IC. ALL OTHER REVENUES (1) 1st & 2nd Party Payments $ - $ - $ - $ - $ - $ - $ - $ - $ (2) 3rd Party Payments (except Medicare) (3) Medicare ( 4) Contributions and Donations 173,564 36, , , ,189 3,850,184 4,172,373 (5) Other 498, ,019 (6) In-kind 21,532 12,600 3,363 37,495 37, , ,254 TOT. ALL OTHER REVENUES = $ 195,096 $ $ 3,961 $ 111,545 $ 359,684 $ $ 359,684 $ 4,691,520 $ 5,563,646 TOTAL FUNDING= $ 209,014 $ 136,028 $ 85,833 $ 725,531 $ 1,156,406 $ - $ 1,156,406 $ 6,658,489 $ 8,327,337 See independent auditors' report 18

22 PART II: ACTUAL EXPENSES DATE PREPARED: 8/25/2015 BUDGET PERIOD: FROM 7/1/2015-6/30/2016 Schedule of State Actual Expenses and Revenues SAMH COVERED SERVICES AGENCY: Covenant House Florida, Inc. CONTRACT#:~3~43~5~3~~- STATE FUNDED Program 1 Program 2 except llc & lld Total for Non- Total for State State-Funded Total for All Non-SAMH SAMH-Funded Covered Covered Services Covered Other Support Total Covered Services EXPENSE CATEGORIES Assessment Intervention Outreach Residential II Services Services Costs (optional) Administration Expenses (C C,J (D+E) (F+G+H*+I*) A B,.. B,. B2-a B2- D E F G H I J lla. PERSONNEL EXPENSES (1) Salaries $ 120,235 $ 61,800 $ 42,968 $ 401,982 $ 626,985 $ $ 626,985 $ 3,317,608 $ 274,698 $ 306,095 $ 4,525,386 (2) Fringe Benefits 26,390 14,832 9,431 88, , , ,915 60,293 83, ,277 TOTAL PERSONNEL EXPENSES = $ 146,625 $ 76,632 $ 52,399 $ 490,213 $ 765,869 $ $ 765,869 $ 4,028,523 $ 334,991 $ 389,280 $ 5,518,663 llb. OTHER EXPENSES (1) Building Occupancy $ 17,834 $ 5,836 $ 12,645 $ 71,984 $ 108,299 $ $ 108,299 $ 236,295 $ 7,822 $ 18,288 $ 370,704 (2) Professional Services 26,745 68,900 41, ,455 (3) Travel 64 4,883 4,947 4,947 39,393 1,677 21,946 67,963 (4) Equipment 37, ,066 45,307 (5) Food Services 58,160 58,160 58, , ,675 (6) Medical and Pharmacy 22,630 22,630 22,630 16,107 38,737 (7) Subcontracted Services (8) Insurance 1,763 3,254 2,575 16,269 23,861 23, ,097 2,797 10, ,677 (9) Interest Paid 3,634 3,634 (10) Operating Supplies & Expenses 2,431 2,130 2,236 23,548 30,345 30,345 1,151,726 58,237 24,427 1,264,735 (11)0ther ,712 1,083 28,110 57,533 (12) Donated Items 21,532 12,600 3,363 37,495 37, ,730 4,807 17, ,254 TOTAL OTHER EXPENSES = $ 43,560 $ 47,142 $ 25,702 $ 169,961 $ 286,365 $ $ $ 2,203,162 $ 145,722 $ 173,425 $ TOT. PERSONNEL & OTH. EXP.= $ 190,185 $ 123,774 $ 78,101 $ 660, 174 $ 1,052,234 $ $ 1,052,234 $ 6,231,685 $ 480,713 $ 562,705 $ 8,327,337 llc. DISTRIBUTED INDIRECT COSTS (a) Other Support Costs (Optional) $ $ $ $ $ $ $ $ r , -1$< > $ -1$ (b) Administration ,254 7,732 65, , , ,726 (562,705) TOT. DISTR'D INDIRECT COSTS= $ 18,829 $ 12,254 $ 7JE. $ 65,357 $ $ $ 104,172 $ xxxxxxxxxxx xxxxxxxxx! TOTAL ACTUAL OPER. EXPENSES = $ 209,014 $ 136,028 $ 85,833 $ 725,531 $ 1,156,406 $ $ 1,156,406 $ 6,658,492 $ 512,439 $ 0.00 : $ 8,327,337 lld. UNALLOWABLE COSTS $ $ $ $ $ $ $ $ xxxxxxxxxxx xxxxxxxxx ' TOT. ALLOWABLE OPER. EXP.= $ 209,014 $ 136,028 $ 85,833 $ 725,531 $ 1,156,406 $ $ 1,156,406 $ 6 658,492 xxxxxxxxx xxxxxxxxx IL 8,327, lle. CAPITAL EXPENDITURES $ $ - $ $ $ $ $ $ $ - $ See independent auditors' report 19

23 Schedule of State Actual Expenses and Revenues Year Ended June 30, Total Expenditures Less Other State and Federal Funds Less Non-Match SAMH Funds Less Unallowable Costs per 65E-14, F.A.C. Total Allowable Expenditures (Sum of lines 1, 2, 3, and 4) Maximum Available Earnings (Line 5 times 75%) Amount of State Funds Requiring Match Amount Due to Department $ 1, 156,406 (75, 185) 1,081, , ,724 $ See independent auditors' report 20

24 Schedule of Expenditures of Local Awards Year Ended June 30, 2016 Granter/Program Title Granter Number Expenditures Broward County Broward - CHAMP at Ft Lauderdale Shelter 16-CP-CSA /2 Broward - Family Counseling Project at Ft. Lauderdale Shelter 16-CP-CSA /1 Broward - Crisis Counseling project at Ft. Lauderdale Shelter 14-CP-CSA /1 Other City of Pompano Beach City of Hollywood Osceola County Total Not Available Not Available Not A vai/able $ 590,813 13,912 90,383 10,000 13,047 27,000 $ 745, 155 See independent auditors' report 21

25 Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Federal Grantor/Pass-Though Grantor/Cluster or Program Title Federal CFDA Number Pass-through Entity ldentifi'.in9 Number Passed Through to Subreceieients Total Federal Exeenditures U. S. Department of Housing and Urban Development Direct Program Supportive Housing Program Pass-through Homeless Services Network of Orange County Supportive Housing Program Pass-through Homeless Services Network of Orange County Supportive Housing Program Pass-through Broward County Services Supportive Housing Program Pass-through Broward County Community Development Emergency Solutions Grant program Pass-through Orange County ESG Emergency Solutions Grant program Pass-through Broward County Community Development Community Development Block Grants (CDBG)IEntitlement Grants Pass-through Orange County Community Development Block Grants (CDBG)/Entitlement Grants Total U.S. Department of Housing and Urban Development U. S. Department of Health and Human Services Direct Program Basic Center Grant Pass-through Florida Department of Children and Families Block Grants for Prevention and Treatment of Substance Abuse Pass-through Florida Department of Children and Families Social Services Block Grant Pass-through Florida Department of Children and Families Block Grants for Community Mental Health Services Pass-through Broward County Healthy Start Coalition Maternal and Child Health Services Block Grant to the States Total U.S. Department of Health and Human Services U.S. Department of Agriculture Pass-through the State of Florida Child Nutrition Cluster School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Child Nutrition Discretionary Grants Limited Availability Total U.S. Department of Agriculture U.S. Department of Homeland Security Pass-through EFSP Local Boards Emergency Food and Shelter National Board Program U.S. Department of Labor Pass-through Career Source Central Florida WIA/WIOA Youth Activities Total Expenditures of Federal Awards FL0090B4H FL0091BH HUD-2 Not Available Not Available Not Available CDBGCH JD268 JD268 JD268 COVCC10R(1) , WIOA YC $ $ 169,457 88, , ,261 74,771 45,316 20,344 30, , , ,200 1,125 4,773 16, ,293 27,014 28,338 55,352 2,922 58,274 68, ,240 $ $ 1,938,265 See independent auditors' report and notes to schedule of expenditures of federal awards 22

26 Notes to Schedules of Expenditures of Federal Awards Year Ended June 30, Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal grant activity of Covenant House Florida, 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 the 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 Covenant House Florida, Inc., it is not intended to and does not present the financial position, changes in net assets or cash flows Covenant House Florida, Inc. 2. Summary of Significant Accounting Policies Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. 3. Indirect Cost Rate The Organization has elected not to use the 10-percent de minim is indirect cost rate allowed under Uniform Guidance. 23

27 r'\9 PKF '-' OCONNOR DAVIES ACCOUNTANTS AND ADVISORS 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 Covenant House Florida, Inc. Independent Auditors' Report 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 Covenant House Florida, Inc., (the "Organization"), which comprise the statement of financial position as of June 30, 2016, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated January 3, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Organization'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 Organization's internal control. Accordingly, we do not express an opinion on the effectiveness of 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. PKF O'CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Harrison, NY I Tel: I Fax: I PKF O'Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

28 Board of Directors Covenant House Florida, Inc. Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Organization'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 entity'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 entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Harrison, New York January 3, 2017

29 rf) PKr V aconnor DAVIES ACCOUNTANTS AND ADVISORS Report on Compliance for Federal Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance Board of Directors Covenant House Florida, Inc. Independent Auditors' Report Report on Compliance for Each Major Federal Program We have audited Covenant House Florida, lnc.'s (the "Organization") compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Organization's major federal programs for the year ended June 30, The Organization's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance wit~ federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of the Organization'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 Principals and Audit Requirements for Federal Awards. 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 the Organization'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 the Organization's compliance. PKF O'CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Harrison, NY I Tel: I Fax: I PKF O'Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent fi rms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

30 Board of Directors Covenant House Florida, Inc. Page 2 Opinion on Each Major Federal Program In our opinion, the Organization 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 June 30, Report on Internal Control Over Compliance Management of the Organization 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 the Organization'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 the 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 the Organization'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 Uniform Guidance. Accordingly, this report is not suitable for any other purpose. PkF tf)'~ ~I LLP Harrison, New York January 3, 2017