CAREER RESOURCES, INC. FINANCIAL STATEMENTS JUNE 30, 2016

Transcription

1 FINANCIAL STATEMENTS JUNE 30, 2016

2 FINANCIAL STATEMENTS JUNE 30, 2016 CONTENTS Page INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS, SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND SCHEDULE OF EXPENDITURES OF STATE AWARDS 1-2 FINANCIAL STATEMENTS Statements of Financial Position 3 Statements of Activities and Changes in Net Assets 4 Statements of Cash Flows 5 Notes to Financial Statements 6-12 INDEPENDENT AUDITORS' REPORT ON THE SUPPLEMENTARY INFORMATION 13 Schedule of Functional Expenses 14 FEDERAL GOVERNMENTAL REPORTS AND SCHEDULES Schedule of Expenditures of Federal Awards Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance for a Major Program and on Internal Control Over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs 21 STATE GOVERNMENTAL REPORTS AND SCHEDULES Schedule of Expenditures of State Awards Independent Auditors Report on Compliance for Each Major State Program and on Internal Control Over Compliance Required by the State Single Audit Act Schedule of Findings and Questioned Costs 26

3 CARTER HAYES + ASSOCIATES, P.C. established 1988 CERTIFIED PUBLIC ACCOUNTANTS 1952 WHITNEY AVENUE HAMDEN CONNECTICUT (203) Fax (203) INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS, SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND SCHEDULE OF EXPENDITURES OF STATE AWARDS Board of Directors Career Resources, Inc. Bridgeport, Connecticut Report on the Financial Statements We have audited the accompanying financial statements of Career Resources, Inc. (a nonprofit organization), which comprise the statements of financial position as of June 30, 2016 and 2015 and the related statements of activities and changes in net assets and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about 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 statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Career Resources, Inc. as of June 30, 2016 and 2015, and the changes in its net assets and in its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Other Information Our 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 and Schedule of Expenditures of State Awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and by the State Single Audit Act, respectively, are presented for purposes of additional analysis and are 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 November 28, 2016, on our consideration of Career Resources, Inc.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Career Resources, Inc. s internal control over financial reporting and compliance. Carter, Hayes + Associates, P.C. Hamden, Connecticut November 28,

5 STATEMENTS OF FINANCIAL POSITION JUNE 30, 2016 AND 2015 ASSETS CURRENT ASSETS Cash $ 244,057 $ 56,270 Grants receivable 362, ,058 Accounts receivable 126, ,902 Contributions receivable - 50,000 Prepaid expenses 103,891 64,760 Total current assets 836, ,990 PROPERTY AND EQUIPMENT, net of accumulated depreciation of $154,629 in 2016 and $133,362 in ,933 67,872 SECURITY DEPOSIT 17,945 17,945 $ 906,595 $ 834,807 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 59,696 $ 40,357 Accrued expenses 181, ,592 Deferred grant revenue 50,000 - Total current liabilities 291, ,949 NET ASSETS Unrestricted Board of Directors' designations 317, ,709 Equipment 51,933 67,872 Unobligated excess 169, , , ,159 Temporarily restricted 76,666 96, , ,858 $ 906,595 $ 834,807 See Notes to Financial Statements. 3

6 UNRESTRICTED NET ASSETS CAREER RESOURCES, INC. STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS YEARS ENDED JUNE 30, 2016 AND SUPPORT AND REVENUE Federal awards $ 2,726,867 $ 2,575,129 State awards 2,364,945 2,551,600 Program revenue 394, ,175 Contributions 109, ,652 Net assets released from restrictions 163, ,308 Miscellaneous revenue 11,874 13,749 Total support and revenue 5,771,140 6,028,613 EXPENSES Program services Workforce development 3,561,796 3,541,276 Alternative incarceration 599, ,895 STRIVE program 500, ,672 Adult and youth programs 432, ,754 Supportive services General and administrative 657, ,589 Total expenses 5,750,569 6,011,186 Increase in unrestricted net assets 20,571 17,427 TEMPORARILY RESTRICTED NET ASSETS Contributions 143, ,547 Net assets released from restrictions (163,358) (153,308) Increase (decrease) in temporarily restricted net assets (20,033) 1,239 Increase in net assets ,666 NET ASSETS, beginning of year 614, ,192 NET ASSETS, end of year $ 615,396 $ 614,858 See Notes to Financial Statements. 4

7 STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2016 AND CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets $ 538 $ 18,666 Adjustments to reconcile changes in net assets to net cash provided by (used in) operating activities: Depreciation 21,267 18,911 (Increase) decrease in: Grants receivable 72,736 (223,524) Accounts receivable 16,455 48,195 Contributions receivable 50,000 92,834 Prepaid expenses (39,131) 56,744 Increase (decrease) in: Accounts payable 19,339 (25,531) Accrued expenses 1,911 2,930 Deferred grant revenue 50,000 - Deferred program revenue - (16,901) Net cash provided by (used in) operating activities 193,115 (27,676) CASH FLOWS FROM INVESTING ACTIVITIES Investments in the purchase of property and equipment (5,328) (34,059) Net cash used in investing activities (5,328) (34,059) NET INCREASE (DECREASE) IN CASH 187,787 (61,735) CASH, beginning 56, ,005 CASH, ending $ 244,057 $ 56,270 See Notes to Financial Statements. 5

8 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2016 AND Nature of Organization and Summary of Significant Accounting Policies Nature of Organization Career Resources, Inc. is a not-for-profit, non-stock Connecticut corporation, exempt from federal income taxes under Internal Revenue Code 501(c)(3). Career Resources provides job training, placement and support services for dislocated and economically disadvantaged individuals in Southwestern Connecticut. U.S. Congress has enacted the Workforce Innovation and Opportunity Act (WIOA), which supersedes the Workforce Investment Act (WIA). The WIOA provides employment and training services through a network of American Job Centers (AJC) (formerly known as One-Stop Career Centers). The WorkPlace, Inc. has been designated the Local Workforce Investment Board. Career Resources has been awarded various grants by The WorkPlace, Inc. to be the AJC Operator and Provider and the TANF case manager established by the WIOA. Career Resources is operating under a contract with The WorkPlace, Inc. that runs through June 30, Financial Statement Presentation In accordance with FASB ASC Not for Profit Entities, Presentation of Financial Statements, Career Resources reports 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. Unrestricted Equipment Net assets reflect the total carrying value after depreciation of all equipment used by Career Resources, less directly related liabilities. Unrestricted Undesignated Unrestricted net assets represents available sources other than donor restricted contributions. Included in unrestricted net assets are grants and contracts, which may be earmarked for specific purposes. Unrestricted Designated Net assets are to be used for purposes specified by the Board of Directors. Temporarily Restricted Temporarily restricted net assets represent contributions that are restricted by the donor either as to purpose or as to time of expenditure. Permanently Restricted Permanently restricted net assets represent contributions received with the donor restriction that the principal be invested in perpetuity. Career Resources has no permanently restricted net assets. 6

9 NOTES TO FINANCIAL STATEMENTS, Continued Recognition of Support and Revenue Grants and Contracts Grants and contracts are generally considered to be exchange transactions in which the grantor or contractor requires the performance of specified activities. Entitlement to cost reimbursement grants and contracts is conditioned on the expenditure of funds in accordance with grant restrictions and, therefore, revenue is recognized to the extent of grant expenditures. Entitlement to performancebased grants and contracts is conditioned on the attainment of specific performance goals and, therefore, is recognized to the extent of performance achieved. Grant and contract receipts in excess of revenues recognized are presented as deferred grant revenue. Contributions Contributions are defined as voluntary, non-reciprocal transfers. Unrestricted and unconditional contributions are recognized as support when received or pledged, if applicable. Contributions are reported as temporarily restricted support if they are received with donor stipulations that limit the use of such assets. When a restriction expires, that is, when a stipulated time restriction ends or a purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of changes in net assets as net assets released from restrictions. Career Resources policy is to present temporarily restricted net assets received during the year whose restrictions are also met during the current year as unrestricted net assets. Contributions received with donor imposed conditions are presented as deferred support until such conditions are substantially met, at which time they are recognized as support. Career Resources policy is to recognize the expiration of donor restrictions for contributions of property and equipment or the use of contributions restricted for property and equipment in the year the property and equipment is placed in service. Furniture, Equipment and Depreciation Donated property is stated at fair market value as determined by management at the date contributed. Property purchased is recorded at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the respective assets. For the years ended June 30, 2016 and 2015, depreciation expense was $21,267 and $18,911, respectively. Maintenance and repair costs are charged to operations as incurred; major renewals and betterments are capitalized. The costs relating to assets sold or retired are removed from the account balance at the time of the disposition and the related gains and losses are included in the change in net assets. Use of Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Actual results could vary from the estimates that are used. 7

10 NOTES TO FINANCIAL STATEMENTS, Continued Income Taxes Career Resources, Inc., a not-for-profit organization operating under section 501(c)(3) of the Internal Revenue Code, is generally exempt from federal, state and local taxes and, accordingly, no provision for income taxes is recorded in the financial statements. Career Resources accounts for uncertainty in income taxes in accordance with FASB ASC 740, Accounting for Uncertainty in Income Taxes. Career Resources believes that there are no uncertain tax position with any of its open tax years and has no open tax years prior to the year ended June 30, Career Resources tax returns are subject to examination, generally for three years after they are filed. 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 unrestricted revenues, expenses and other changes in unrestricted net assets. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Programs Workforce Development Grants passed through The WorkPlace, Inc. from the U.S. Department of Labor Workforce Innovation and Opportunity Act (WIOA) and from the Connecticut Department of Labor Jobs First Employment Services program for American Job Center Operator and Provider services. Alternative Incarceration Center Grants from the Connecticut Department of Corrections and Department of Mental Health and Addiction Services, and program revenue contracts with various organizations to perform specified activities. STRIVE Program Contributions from the general public and grants from Connecticut Department of Labor and U.S. Department of Labor. Adult and Youth Programs Grants passed through The WorkPlace, Inc. from the U.S. Department of Labor Workforce Innovation and Opportunity Act (WIOA), from the Connecticut Department of Social Services Fatherhood program; and program revenue contracts with various organizations to perform specified activities. Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision for bad debt expense and an adjustment to an allowance for doubtful accounts based on its assessment of the current status of individual accounts. 8

11 NOTES TO FINANCIAL STATEMENTS, Continued Balances still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to accounts receivable. There is no allowance for doubtful accounts at June 30, Disclosure of Subsequent Events Management has evaluated subsequent events through November 28, 2016, the date the financial statements were available to be issued. 2. Concentrations of Credit Risk Career Resources financial instruments that are exposed to concentrations of credit risk consist primarily of cash, and grants and contracts receivable. Cash 3. Net Assets Career Resources places its cash deposits with high credit-quality institutions and such deposits may exceed federal depository insurance limits. Career Resources believes it is not exposed to any significant credit risk on cash. Grants and Contracts Receivable Grants and contracts receivable are evidenced by signed contracts with a variety of state and federal governments and The WorkPlace, Inc. Based on historical experience, management believes these receivables represent negligible credit risk. Accordingly, management has not established an allowance for potential credit losses. Support and Revenue Concentrations Career Resources receives a significant portion of its support and revenue from federal and state grants passed through The WorkPlace, Inc., all of which are subject to reduction or termination in future years. Any significant reduction in these contracts could have an adverse impact on the Career Resources program services. Temporarily restricted net assets consisted of the following at June 30, 2016: Balance Balance at June 30, at June 30, 2015 Addition Released 2016 STRIVE program $86,808 $ 12,775 ($ 98,972) $ 611 Accessing Learning and Technology 8,841 7,500 (8,841) 7,500 Secure Jobs - 95,550 (39,674) 55,876 Ipad Academy - 7,500-7,500 Work Based Learning - 20,000 (15,871) 4,129 Semple Memorial Scholarship 1, ,050 $96,699 $143,325 ($163,358) $76,666 9

12 NOTES TO FINANCIAL STATEMENTS, Continued On January 14, 2000, the Career Resources Board of Directors designated unrestricted net assets for various purposes. During the year ended June 30, 2016 no amounts were released from the Board of Directors designations which consisted of the following: 4. Line of Credit Cash flow reserve $222,579 Funds to support additional capacity and personnel 57,000 Funds to address miscellaneous needs and expenses 20,000 Funds to address increased marketing needs and expenses 9,239 Funds to promote lifelong learning and economic self-sufficiency for graduates 8,891 $317,709 Career Resources has available a $250,000 line of credit with People s United Bank. Amounts outstanding bear interest at 1% above People s United Bank Prime Rate and are secured by all business assets of Career Resources. Career Resources has not been advanced any amounts under this line of credit and no amounts were outstanding as of June 30, Retirement Plan Career Resources has established a profit sharing plan in accordance with Section 401(k) of the Internal Revenue Code. Employees are eligible for participation in the plan after six months of employment and after they reach 21 years of age. Career Resources is required to match participant's contributions up to 1.5% of annual compensation. For the years ended June 30, 2016 and 2015, $24,570 and $21,484, respectively, has been recorded as an expense under the 1.5% matching requirement of this plan. In addition, under the plan Career Resources has the option to elect to make additional contributions to the plan as a fixed percentage of compensation. Career Resources has the right to change this fixed percentage in accordance with the plan documents. Effective July 1, 2012, Career Resources elected to not make future additional contributions to the plan. 6. Commitments STRIVE Trademark License Career Resources has been granted a non-exclusive license from STRIVE International, Inc. to use the STRIVE trademark. STRIVE International, Inc. owns the STRIVE trademark and has developed a distinctive and proprietary system to help unemployed men and women find jobs and achieve financial independence. Career Resources must adhere to the STRIVE guidelines which delineate basic mission, operating benchmarks and principles, outcome standards and activity standards for the program. As part of the agreement, STRIVE International, Inc. will provide Career Resources with training, technical support and guidance. 10

13 NOTES TO FINANCIAL STATEMENTS, Continued Effective July 1, 2015, Career Resources entered into an Affiliation and Trademark License Agreement (the Agreement ) with STRIVE International, Inc. The Agreement designates the State of Connecticut as the official STRIVE territory of Career Resources and requires Career Resources to follow the STRIVE International, Inc. s Affiliate Policy Manual. In addition, the Agreement requires Career Resources to pay an annual fee based upon $100 for each graduate of the STRIVE program or $20,000, whichever is lower. For the year ended June 30, 2016, $20,000 has been recorded as an expense. 350 Fairfield Avenue, Bridgeport, Connecticut Career Resources leases its corporate office space at 350 Fairfield Avenue, Bridgeport, Connecticut. In July 2005, Career Resources entered into a 5 year lease for 9,249 square feet of office space at 350 Fairfield Avenue for an annual minimum rent amount of $131,336 to be paid in monthly installments of $10,945. Career Resources was provided a Fit Up Allowance (the Allowance ), not to exceed $92,490, to paint, re-carpet and construct demising walls. In October 2005, Career Resources was notified that the unused portion of the Allowance was $54,430. The landlord issued a credit of $1,814 for the period of July through October 2005 and beginning in November 2005, $454 was credited to each month s rent through June 30, In January 2010, Career Resources entered into a lease extension for a period of 10 years commencing July The lease extension calls for annual minimum rent of $101,739 for years one through five and $112,375 for year six. For years one through five, the monthly rent will continue to be reduced by the Allowance of $454. For years seven through ten, annual minimum rent will be $112,375 increased annually by the CPI North East Factor. In addition, Career Resources is required to pay for electricity at $1.75 per square foot during year 1 of the lease extension, with this amount increasing 3% annually for years two through ten. Also, Career Resources is required to pay for building operating expenses at $5.25 per square foot during year one, amount to be increased for years two through ten to reflect increase in Landlord costs provided that such increase will not exceed more than 3% annually. For each of the years ended June 30, 2016 and 2015, rent expense for corporate office space, net of Allowance, amounted to approximately $182,700 and $167,000, respectively Sargent Street, Hartford, Connecticut Career Resources has entered into a lease agreement to rent office space for the STRIVE program in Hartford. The lease commenced January 1, 2011 and has been amended over time to increase space, relocate office space within the building and to extend the term. For the period July 1, 2013 through June 30, 2015, monthly rent was $2,350. Effective July 1, 2015 through June 30, 2017, monthly rent is $2,495. For the years ended June 30, 2016 and 2015, rent expense amounted to $29,940 and $28,200, respectively. 746 Chapel Street, New Haven, Connecticut Career Resources has entered into a lease agreement to rent office space for the STRIVE program in New Haven. The lease called for monthly lease payments of 11

14 NOTES TO FINANCIAL STATEMENTS, Continued $3,473 through December 31, Effective January 1, 2016 through December 31, 2018, monthly rent is $4,375 for 2016, increasing by 2% in 2017 and For the years ended June 30, 2016 and 2015, rent expense amounted to $47,088 and $41,700, respectively. Future minimum lease payments as of June 30, 2016 are as follows: 7. Subsequent Events Year ending June 30, 2017 $198, , , ,500 $648,600 Career Resources received an $800,000 three year federal grant through STRIVE National and the Employment and Training Administration to assist young adults in Hartford s Promise Zone. Young adults who exit the correctional system face a myriad of challenges that include a lack of education and employment skills, antisocial attitudes and values, mental health and substance abuse problems, medical issues, lack of housing and family issues. The grant is designed for adults ages 18 to 24 and will apply evidence-based interventions, such as mentoring, career pathways, registered apprenticeship, family reunification and other promising practices with a focus on providing occupational training and credentials. Career Resources, in partnership with The WorkPlace, Inc., secured funding to establish an American Job Center at Connecticut s York Correctional Institution for women. Career Resources will utilize an evidence based gender specific model to work with women to reduce recidivism while enhancing employment and training opportunities throughout Connecticut. Career Resources received a major grant from The WorkPlace, Inc. to serve out of school youth. The $500,000 grant will allow Career Resources to expand the Ipad Academy model to include such activities as leadership development, entrepreneurial skills training, culinary skills opportunities as well as opportunities in both construction and retail. Despite significant state budget reductions, CRI was able to secure funding for the STRIVE and Fatherhood Programs in Connecticut in the FY17 budget. 12

15 CARTER HAYES + ASSOCIATES, P.C. established 1988 CERTIFIED PUBLIC ACCOUNTANTS 1952 WHITNEY AVENUE HAMDEN CONNECTICUT (203) Fax (203) INDEPENDENT AUDITORS' REPORT ON THE SUPPLEMENTARY INFORMATION Board of Directors Career Resources, Inc. Bridgeport, Connecticut We have audited the financial statements of Career Resources, Inc. as of and for the year ended June 30, 2016, and have issued our report thereon dated November 28, 2016, which contained an unmodified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses is presented for the 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. Carter, Hayes + Associates, P.C. Hamden, Connecticut November 28,

16 SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2016 (with comparative totals for 2015) Workforce Development Program Services Total Adult Alternative and Youth General and Incarceration STRIVE Programs Administrative Salaries $ 2,356,467 $ 396,913 $ 257,939 $ 268,808 $ 410,240 $ 3,690,367 $ 3,825,131 Payroll taxes and fringe benefits 764, ,751 77,502 86, ,470 1,190,898 1,246,265 Occupancy 116,050 31,451 65,134 10,381 28, , ,536 Professional fees 112,679 14,787 13,865 5,422 20, , ,793 Office supplies and expenses 91,414 9,206 16,897 13,850 20, , ,350 Program service contracts 21, ,383 6,196 11,103 54, ,488 Travel 26,280 4,792 11,381 3, ,799 48,690 Equipment maintenance and leases 23,274 1,830 4, ,134 44,765 Conferences and meetings 7, ,775 3,358 9,191 23,633 40,065 Participant support and program supplies 16,344 1,990 7,222 19,275 1,125 45,956 51,817 Depreciation ,267 21,267 18,911 Insurance 13,181 2,910 2,703 1,594-20,388 18,252 Marketing 6,289 2,403 2, ,010 13,551 15,446 Equipment purchases ,993 12,945-15,508 8,083 Dues and subscriptions 5, , ,145 7,447 Staff training ,147 Total expenses $ 3,561,796 $ 599,145 $ 500,452 $ 432,089 $ 657,087 $ 5,750,569 $ 6,011,186 14

17 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2016 Catalog of Federal Domestic Pass Through Grantor/Program title Assistance Number Number Expenditures U.S. Department of Labor Passed through the WorkPlace, Inc.: Workforce Innovation and Opportunity Act (WIOA) Dislocated Worker Formula Grants AJC-2016-CRI-001 $ 542,185 WIA-2013-CR1Stop ,734 WIA-2013-CRICOAC ,750 WIA-2014-CRIDFSB ,875 Adult Program AJC-2016-CRI ,185 WIA-2013-CR1Stop ,604 WIA-2013-CRICOAC ,750 WIA-2014-CRIDFSB ,875 WIA Youth Activities WYOU-2015-CRI ,200 Total Workforce Innovation and Opportunity Act Cluster 2,167,158 Reentry Employment Opportunities FACE-2015-CRI ,180 T2W-2016-CRI ,197 Employment Service/Wagner- Peyser Funded Activities DEIN-2014-CRI-001 5,700 Total passed through The WorkPlace, Inc. 2,211,235 Reentry Employment Opportunities passed through STRIVE International, Inc YF A-36 70,580 Total U.S. Department of Labor 2,281,815 U.S. Department of Health and Human Services Substance Abuse and Mental Health Services Projects of Regional and National Significance passed through Connecticut Department of Mental Health and Addiction Services MHA2291AA 320,000 Affordable Care Act (ACA) Health Profession Opportunity Grants passed through The WorkPlace, Inc HHS CRI ,522 15

18 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS, Continued YEAR ENDED JUNE 30, 2016 Catalog of Federal Domestic Pass Through Grantor/Program title Assistance Number Number Expenditures Skills Training and Health Workforce Development of Professionals Grants Program passed through The WorkPlace, Inc HPOG CRI ,505 HPOG CRI ,025 Total U.S. Department of Health and Human Services 395,052 U.S. Department of Education Adult Education Basic Grants to States passed through the Connecticut Department of Education ,000 U.S. Department of Housing and Urban Development Community Development Block Grants/Entitlement Grants Passed through City of Hartford ,000 Passed through City of New Haven A ,000 Total U.S. Department of Housing and Urban Development 20,000 Total expenditures of federal awards $2,726,867 Basis of Presentation The accompanying schedule of expenditures of federal awards (the Schedule ) includes the federal award activity of Career Resources, Inc. under programs of the federal government for the year ended June 30, The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Career Resources, Inc., it is not intended to and does not present the financial position, changes in net assets or cash flows of Career Resources, Inc. Summary of Significant Accounting Policies Expenditures reported on 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. Indirect Cost Rate Career Resources, Inc. has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Passed Through to Subrecipients Career Resources, Inc. has not passed through any awards to subrecipients. 16

19 CARTER HAYES + ASSOCIATES, P.C. established 1988 CERTIFIED PUBLIC ACCOUNTANTS 1952 WHITNEY AVENUE HAMDEN CONNECTICUT (203) Fax (203) INDEPENDENT AUDITORS 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 To the Board of Directors Career Resources, Inc. Bridgeport, Connecticut 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 Career Resources, Inc. (a nonprofit organization), which comprise the statement of financial position as of June 30, 2016, and the related statement of activities and changes in net assets and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated November 28, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Career Resources, 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 Career Resources, Inc. s internal control. Accordingly, we do not express an opinion on the effectiveness of the Career Resources, Inc. s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of 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 weakness 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. 17

20 Compliance and Other Matters As part of obtaining reasonable assurance about whether Career Resources, Inc. s financial statements are free of 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. Carter, Hayes + Associates, P.C. Hamden, Connecticut November 28,

21 CARTER HAYES + ASSOCIATES, P.C. established 1988 CERTIFIED PUBLIC ACCOUNTANTS 1952 WHITNEY AVENUE HAMDEN CONNECTICUT (203) Fax (203) To the Board of Directors Career Resources, Inc. Bridgeport, Connecticut INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR A MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Report on Compliance for A Major Federal Program We have audited Career Resources, Inc. s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on Career Resources, Inc. s major federal program for the year ended June 30, Career Resources, Inc. s major federal program is 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 with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for Career Resources, Inc. s major federal program 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 Career Resources, 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 a major federal program. However, our audit does not provide a legal determination of Career Resources, Inc. s compliance. Opinion on a Major Federal Program In our opinion, Career Resources, Inc. complied, in all material respects, with the types compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30,

22 Report on Internal Control Over Compliance Management of Career Resources, 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, we considered Career Resources, Inc. s internal control over compliance with the types of requirements that could have a direct and material effect on a major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for a 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 Career Resources, 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. Carter, Hayes + Associates, P.C. Hamden, Connecticut November 28,

23 SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016 SUMMARY OF AUDITORS RESULTS Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: unmodified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Noncompliance material to financial statements noted? yes X no Federal Awards Internal control over major federal programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Type of auditor s report issued on compliance for major federal programs: unmodified Any findings disclosed that are required to be reported in accordance with 2 CFR (a)? yes X no Identification of major federal programs: Workforce Innovation and Opportunity Act (WIOA) cluster Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk? X yes no 21

24 SCHEDULE OF EXPENDITURES OF STATE AWARDS YEAR ENDED JUNE 30, 2016 State Grant Program Grantor/Program Title CORE-CT Number Expenditures Connecticut Department of Labor Jobs First Employment Services DOL Passed through The WorkPlace, Inc. AJC-2016-CRI-001 $ 475,630 WIA-2013-CRIStop ,664 Passed through Northwest Regional Workforce Investment Board 899,860 Total Jobs First Employment Services 1,833,154 STRIVE DOL ,788 Connecticut s Youth Employment Program passed through the WorkPlace, Inc DOL ,600 Total Connecticut Department of Labor 2,068,542 Connecticut Department of Corrections Nonresidential Programs DOC ,650 Connecticut Department of Social Services Fatherhood Initiative Program (FIP) DSS ,753 Total expenditures of state awards $2,364,945 Notes to Schedule The accompanying Schedule of Expenditures of State Awards includes state grant activity of Career Resources, Inc. under programs of the State of Connecticut for the fiscal year ending June 30, Various departments and agencies of the State of Connecticut have provided awards through grants and other authorizations in accordance with the General Statutes of the State of Connecticut. These awards fund the Workforce Development, Alternative Incarceration, STRIVE, and Adult and Youth programs. 22

25 SCHEDULE OF EXPENDITURES OF STATE AWARDS, Continued YEAR ENDED JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Career Resources, Inc. conform to accounting principles generally accepted in the United States of America as applicable to not-for-profit agencies. The information in the Schedule of Expenditures of State Awards is presented based upon regulations established by the State of Connecticut, Office of Policy and Management. Basis of Accounting The expenditures reported on the Schedule of Expenditures of State Awards are reported on the accrual basis of accounting. In accordance with Section of the Regulations to the State Single Audit Act, certain grants are not dependent on expenditure activity, and accordingly, are considered to be expended in the fiscal year of receipt. These grant program receipts are reflected in the expenditures column of the Schedule of Expenditures of State Awards. 2. Subrecipients Career Resources, Inc. has not passed through any awards to subrecipients. 23

26 CARTER HAYES + ASSOCIATES, P.C. established 1988 CERTIFIED PUBLIC ACCOUNTANTS 1952 WHITNEY AVENUE HAMDEN CONNECTICUT (203) Fax (203) INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR STATE PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE STATE SINGLE AUDIT ACT To the Board of Directors Career Resources, Inc. Bridgeport, Connecticut Report on Compliance for Each Major State Program We have audited Career Resources, Inc. s compliance with the types of compliance requirements described in the Office of Policy and Management Compliance Supplement that could have a direct and material effect on each of Career Resources, Inc. s major state programs for the year ended June 30, Career Resources, Inc. s major state 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 with the requirements of laws, regulations, contracts and grants applicable to its state programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of Career Resources, Inc. s major state 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 State Single Audit Act (C.G.S. Sections to 4-236). Those standards and the State Single Audit Act 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 state program occurred. An audit includes examining, on a test basis, evidence about Career Resources, 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 state program. However, our audit does not provide a legal determination of Career Resources, Inc.'s compliance. Opinion on Each Major State Program In our opinion, Career Resources, 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 state programs for the year ended June 30,

27 Report on Internal Control over Compliance Management of Career Resources, 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 Career Resources, Inc. s internal control over compliance with the types of requirements that could have a direct and material effect on each major state program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major state program and to test and report on internal control over compliance in accordance with the State Single Audit Act, 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 Career Resources, 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 state 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 state 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 state 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 State Single Audit Act. Accordingly, this report is not suitable for any other purpose. Carter, Hayes + Associates, P.C. Hamden, Connecticut November 28,