(A nonprofit public benefit corporation) FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT FOR THE YEAR ENDED JUNE 30, 2016

Transcription

1 SAN BERNARDINO & RIVERSIDE COUNTIES (A nonprofit public benefit corporation) FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT FOR THE YEAR ENDED JUNE 30, 2016

2 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT FOR THE YEAR ENDED JUNE 30, 2016 TABLE OF CONTENTS Page Independent Auditors' Report 1-2 FINANCIAL STATEMENTS Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 Statement of Functional Expenses 6 Notes to Financial Statements 7-17

3 Board of Directors Catholic Charities San Bernardino & Riverside Counties San Bernardino, CA Report on the Financial Statements INDEPENDENT AUDITORS REPORT We have audited the accompanying financial statements of Catholic Charities San Bernardino & Riverside Counties which comprise the statement of financial position as of June 30, 2016, and the related statement of activities, cash flows, and functional expenses for the year then ended and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Catholic Charities San Bernardino & Riverside Counties as of June 30, 2016, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

4 INDEPENDENT AUDITORS REPORT (CONTINUED) Report on Other Legal and Regulatory Requirements In accordance with Government Auditing Standards, we have also issued our report dated November 11, 2016 on our consideration of Catholic Charities San Bernardino & Riverside Counties s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Catholic Charities San Bernardino & Riverside Counties internal control over financial reporting and compliance. November 11,

5 FINANCIAL STATEMENTS

6 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED JUNE 30, 2016 ASSETS Current Assets Cash and cash equivalents $ 3,019,347 Cash - restricted 370,431 Subtotal Cash 3,389,778 Accounts receivable 3,534 Grants receivable 849,729 Prepaid expenses 7,149 Total Current Assets 4,250,190 Non-Current Assets Long term investments 1,635,046 Property and equipment (net) 284,677 Deposits 9,953 Total Non-Current Assets 1,929,676 TOTAL ASSETS $ 6,179,866 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable and accrued expenses $ 173,061 Deferred revenue and advances 422,631 Total Current Liabilities 595,692 Noncurrent Liabilities Unfunded Lay Pension Liability 345,198 Total Noncurrent Liabilities 345,198 Net Assets Unrestricted/undesignated 2,799,917 Unrestricted/designated 1,934,505 Subtotal Unrestricted 4,734,422 Temporarily restricted 504,554 Total Net Assets 5,238,976 TOTAL LIABILITIES AND NET ASSETS $ 6,179,866 See notes to financial statements 3

7 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2016 Temporarily SUPPORT AND REVENUE Unrestricted Restricted Totals Support Contributions $ 255,340 $ - $ 255,340 Other contributions 155, ,824 Contributions by Diocese 650, ,000 United Way 79,880-79,880 Special events 77,018-77,018 In-kind contribution 2,142,279-2,142,279 Total Support 3,360,341-3,360,341 Revenue Grant income 3,500,073 3,500,073 Program service fees 149, ,749 Net investment (additional interest) return 75,926-75,926 Expense reimbursement 27,030-27,030 Total Revenue 3,752,778-3,752,778 Net Assets Released from Restrictions Satisfaction of program restrictions 41,360 (41,360) - TOTAL SUPPORT AND REVENUE $ 7,154,479 $ (41,360) $ 7,113,119 EXPENSES Program Services Family and Community Services $ 3,982,549 $ - $ 3,982,549 Citizenship and Immigration 350, ,979 Counseling 1,881,647-1,881,647 Investment in Higher Education 40,080-40,080 Social Enterprise 72,749-72,749 Disaster Relief Recovery 41,360-41,360 Total Program Services 6,369,364-6,369,364 Support Services General and administration 607, ,056 Fundraising 147, ,032 Total Support Services 754, ,088 TOTAL EXPENSES 7,123,452-7,123,452 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES 31,027 (41,360) (10,333) OTHER CHANGES IN NET ASSETS Acturarial adjustment - unfunded pension liability 152, ,869 Changes in Net Assets (121,842) (41,360) (163,202) Net Assets - Beginning 4,856, ,914 5,402,178 Net Assets - Ending $ 4,734,422 $ 504,554 $ 5,238,976 See notes to financial statements 4

8 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets $ (163,202) Adjustments to reconcile change in net assets to net used in operating activities: Non-cash items included in net income: Depreciation 19,862 Unrealized (gain) loss on investments 25,379 Unfunded pension liability 152,869 Net (increase) decrease in: Accounts receivable 19,922 Grants receivable 101,541 Prepaid expenses 6,621 Net increase (decrease) in: Accounts payable and accrued expense (46,578) Deferred revenue and advances (8,002) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 108,413 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment (8,153) Purchase of investments (3,442) Reinvested interest and dividends (35,798) NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (47,393) CASH FLOWS FROM FINANCING ACTIVITIES (Increase) decrease in debt - NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES - Net Increase (Decrease) in Cash and cash equivalents 61,020 Cash and cash equivalents at beginning of year 3,328,758 Cash and cash equivalents at end of year $ 3,389,778 SUPPLEMENTAL DATA: Interest paid $ - In-kind contributions $ 2,142,279 See notes to financial statements 5

9 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2016 Program Services Support Services Family and Citizenship Investment Social Disaster General & Community and Counseling in Higher Enterprise Relief Sub Admin- Fund Sub Combined Services Immigration Education Recovery Total station Raising Total Total EXPENSES Salaries $ 661,704 $ 146,866 $ 972,677 $ - $ 45,943 $ - $ 1,827,190 $ 475,338 $ 58,563 $ 533,901 $ 2,361,091 Health and retirement benefits 67,395 31,271 55,631-4, ,748 52,861 3,558 56, ,167 Payroll taxes 82,683 16, ,272-5, ,975 54,267 7,129 61, ,371 Fundraising ,703 19,703 19,703 Professional services 241 5,413 2,662 15,253 2,538-26,107 25,280 20,671 45,951 72,058 Supplies 46,197 5,632 21,901-4,984-78,714 20,764 2,061 22, ,539 Telephones 18,863 2,418 19, ,722 6, ,610 48,332 Postage and shipping 1,851 1, , ,813 7,648 11,490 Occupancy 147,268 6,758 95, ,777 29,420 29, ,197 Rental and maintenance of equipment 11,940 2,957 7, ,337 4,323 4,323 26,660 Printing and publications 3, , ,622 3,950 9,222 13,172 20,794 Transportation 40,540 3,986 19, ,725 3, ,336 69,061 Conference and meetings 4, ,847 2, ,266 9,113 Specific assistance to individuals 814,145 38, , ,659 4,735 4, ,394 Agency dues ,055 8,251 14,306 14,625 Awards and grants 1, , ,181 25,181 Insurance 7,679 1,052 12, ,372 16,103 16,103 37,475 Volunteer expense 8, , ,067 In-kind expense 1,991,597-86, ,078,249 47,055 8,822 55,877 2,134,126 Interest Subcontractor - 67, , , ,234 Depreciation ,862 19,862 19,862 General and administrative ,968 7,968 8,912 Other program expense 71,469 20,267 74,207-8, ,158 (174,158) (174,158) TOTAL EXPENSES $ 3,982,549 $ 350,979 $ 1,881,647 $ 40,080 $ 72,749 $ 41,360 $ 6,369,364 $ 607,056 $ 147,032 $ 754,088 $ 7,123,452 See notes to financial statements 6

10 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Entity Catholic Charities San Bernardino & Riverside Counties (Catholic Charities) is a California nonprofit public benefit corporation established to provide critically necessary social services to individuals and families in the counties of San Bernardino and Riverside. The Corporation administers various social service programs funded by multiple government and private sources. Catholic Charities delivers these services at numerous sites throughout San Bernardino and Riverside counties. Services are regularly scheduled at locations listed below: SERVICE SITES* PROGRAMS & SERVICES PROVIDED County City Full Time Part Time Counseling Family & Community Immigration San Bernardino Adelanto 1 San Bernardino Apple Valley 1 San Bernardino Chino 1 San Bernardino Chino Hills 1 San Bernardino Colton 1 San Bernardino Fontana 1 San Bernardino Hesperia 1 San Bernardino Lake Arrowhead 1 San Bernardino Lucerne Valley 1 San Bernardino Montclair 1 San Bernardino Needles 1 San Bernardino Ontario 1 San Bernardino Rancho Cucamonga 1 San Bernardino Rialto 1 San Bernardino San Bernardino 4 1 San Bernardino Upland 1 San Bernardino Victorville 1 San Bernardino Yucaipa 1 San Bernardino Yucca Valley 1 Riverside Cathedral City 1 Riverside Coachella 1 Riverside Corona-Norco 1 Riverside Crestline 1 Riverside Desert Hot Springs 1 Riverside Hemet 1 Riverside Indio 1 Riverside Jurupa Valley 1 Riverside Lake Elsinore 1 Riverside Mecca 1 Riverside Moreno Valley 1 Riverside Menifee 1 Riverside North Shore 1 Riverside Nuevo 1 Riverside Palm Desert 1 Riverside Palm Springs 1 Riverside Perris 1 Riverside Riverside 1 Riverside Rubidoux 1 Riverside San Jacinto 1 Riverside T hermal 1 Subtotal Total Locations 44 *Other service site locations are arranged as needed. 7

11 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Programs Catholic Charities provides compassionate social services that respond to the suffering of the vulnerable and those in crisis in our local communities. Staff and volunteers work to stabilize and strengthen thousands of families in need each year by providing a range of programs and services. The purpose of Catholic Charities is to fight poverty and its consequences through crisis intervention and strengthening individual potential resulting in new opportunities and changed futures. Primary programs and services include: Casework Services Rental Assistance/Eviction Prevention Utility Assistance Mobile Home Outreach Transportation Assistance Prescription Assistance Food Pantries and Food Vouchers Family Burial Assistance Temporary Shelter Clothing & Furniture Assistance Summer Lunch Program Family Evening Meal Program Holiday Meals & Toy Distribution Programs Home Economics & Life Skills Classes Community Gardens FAMILY & COMMUNITY SERVICES HIV/AIDS Case Management Eastern Coachella Valley Grocery Distribution Program Senior Outreach and Grocery Delivery Program Cal Fresh Outreach & Application Assistance Nutrition Outreach & Education SB "Hope in the City" Youth & Family Resource Center In Home Visitation Services Medical Insurance Enrollment, Utilization, & Retention (Covered CA & Medi Cal) Document Replacement Assistance VITA Tax Preparation Low Cost Auto Insurance Applications Utility Discount Programs Advocacy Information & Referral COUNSELING SERVICES Individual & Family Counseling In Home Visitation Services Child Abuse Prevention Services Head Start Preschool Support Services Parent Education Programs Therapist Supervision & Training Anger Management Programs Women's Re entry Program On Site School Counseling Services Caregiving Training & Support Services Late Life Depression Services Support Groups IMMIGRATION AND REFUGEE SERVICES BIA Credentialed Consultation Services Volunteer Citizenship Instructor Training USCIS Application Assistance Refugee Resettlement Services Informational Workshops Multi lingual Interpreter Services Citizenship Preparation Classes Community Outreach HIGHER EDUCATION STUDENT INVETMENT PROGRAM Providing Help, Creating Hope Community College Scholarships Bachelors and Master s Degree University Field Placements Non Profit Social Work Fellowship Program Student Initiated Research Projects DISASTER RELIEF AND RECOVERY Immediate relief services for impacted families following a disaster Intermediate recovery services for impacted families with continuing needs Longer term recovery services for impacted families with greatest needs SOCIAL ENTERPRISE Preparation for launch of a socially impactful venture that generates alternative revenue for the organization 8

12 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Basis of Accounting The Agency maintains its books on an accrual basis of accounting in accordance with generally accepted accounting principles. Basis of Presentation The Agency is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Contributions The Agency records contributions received as increases in unrestricted, temporarily restricted, or permanently restricted net assets depending on the existence and/or nature of any donor restrictions. Catholic Charities has not received any contributions with donor imposed restrictions that would result in permanently restricted net assets. All donor restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restriction. When a restriction expires, (i.e. when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Promises to Give Unconditional promises to give are recognized as contribution revenue in the period received as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Promises to give are recorded at net realizable value if expected to be collected in one year and at fair value if expected to be collected in more than one year. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Property and Equipment Property and equipment acquired by purchase is stated at cost. Assets of material value acquired by gift, donation or bequests are stated at fair market values at time of receipt. Catholic Charities follows the practice of capitalizing all expenditures for property and equipment in excess of $1,000. Depreciation is computed by the straight-line method over the estimated useful lives of the assets generally as follows: Buildings Building improvements Equipment & Vehicles 40 years life of improvement 3-5 years Investment in Securities Investments in marketable securities with readily determinable fair values and all investments in debt securities are valued at their fair values in the balance sheet. Unrealized gains and losses are included in the change in net assets on the statement of activities. Income Taxes Catholic Charities is a nonprofit organization recognized as exempt from taxes under Federal IRS code 501(c)(3), and State of California revenue and tax code section 23701(d); therefore, no provision for income taxes are made in the financial statements. Catholic Charities has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509(a) of the Internal Revenue Code. In accordance with accounting standards, which provide accounting and disclosure guidance about uncertain tax positions taken by an Organization, Management believes that all of the positions taken by the Organization in its federal and state income tax returns are more likely than not to be sustained upon examination. The Organization files returns in the U.S. Federal jurisdiction and the State of California. The Organization s federal income tax returns for the prior three tax years remain subject to examination by the Internal Revenue Service. The Organization s California income tax returns for the prior four tax years remain subject to examination by the Franchise Tax Board. 9

13 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statements of cash flows, the Agency considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash. Functional Allocation of Expenses The costs of providing various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services based on benefits derived. Compensated Absences Compensated absences, i.e. vacation earned but not paid as of year-end up to a maximum of 30 days is accrued as an expense. Accrual of vacation time stops once 30 days have been accumulated. Sick time may be accumulated up to a maximum of 30 days. In the event of voluntary or involuntary termination, any unused sick time is not paid to the employee. Accrued vacation amounted to $81,755. Donated Materials, Facilities and Services (In-kind Contributions) Significant services, materials and facilities are donated to the Agency by various individuals and organizations. Donated materials are recorded at fair value. Free or use of facilities below fair value is recorded at fair value. Donated services are recorded only if the services enhance or create an asset or relate to a specialized skill that would have been purchased if not donated. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The organization also follows a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard three levels of inputs that may be used to measure fair value: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices in active or inactive markets for the same or similar assets. Level 3: Estimates using the best information available when there is little or no market. The organization currently recognizes all assets and liabilities at level 1 of the valuation hierarchy unless stated otherwise. This section intentionally left blank 10

14 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. PROPERTY AND EQUIPMENT Property and equipment held by Catholic Charities consists of the following items: Description Cost Accumulated Depreciation Net Land $ 66,207 $ - $ 66,207 Buildings 201,874 (30,039) 171,835 Equipment and Vehicles 219,565 (186,960) 32,605 Office equipment 123,487 (116,576) 6,911 Furniture/fixtures 35,405 (28,286) 7,119 Total $ 646,538 $ (361,861) $ 284,677 Depreciation expense for the year amounted to: $ 19, GRANTS RECEIVABLE Grants receivable represents funds due to Catholic Charities at year-end based on eligible grant expenditures for which reimbursement has not been received. The Agency uses the allowance method of accounting for its receivables and considers all grants receivable to be collectible. As of June 30, 2016 the total of Grants Receivable was $849, DIOCESAN CONTRIBUTION Catholic Charities receives an annual contribution from the Diocese of San Bernardino for the support of administration and programs. The Diocesan contribution for the fiscal year amounted to $650, DEFERRED REVENUE AND ADVANCES Deferred revenue represents grant funds received in excess of grant expenditures for the current accounting period and are expected to be used in subsequent accounting periods for the grant program. Advances represent funds received and are expected to be used in subsequent accounting periods. As of June 30, 2016, the total of Deferred Revenue was as follows: Foundation grant advances $ 422,631 Total Deferred Revenue & Advances $ 422, PENSION COSTS Catholic Charities employees are covered under a defined benefit pension plan maintained and administered by the Diocese of San Bernardino. The plan was amended and restated on September 1, All regular and fulltime employees of Catholic Charities shall be eligible to participate in the plan provided they agree to make the required contributions under the plan. The plan is funded in part by employee contributions of two percent of gross wages. Catholic Charities contributes seven and a half percent of gross wages. 11

15 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Benefits under the plan are determined based on a formula which takes into account years of service and the monthly average of total compensation paid during the five (5) consecutive years of participation when compensation was the highest. Effective with the plan year ending August 31, 2011, the benefit formula has been changed to take into account years of service and the monthly average total compensation paid during the ten (10) consecutive years of participation when compensation was the highest. Normal retirement is the first day of the month upon attaining age 65. Each year, an actuarial valuation is performed to determine the benefit security of the participants and the sufficiency of the Employers contributions on an ongoing plan basis. For the plan year ended June 30, 2016, Catholic Charities total covered payroll for 16 active participants was $715,752. The following information regarding asset categories and expected cash flow for the Diocese of San Bernardino Restated Pension Plan for Lay Employees (the Plan ) is for the period ending June 30, The assets and liabilities represent the portion allocated to Catholic Charities and these actuarial estimates used the percentage of the projected benefit obligation for active participants to allocate liabilities and assets. In the future, data may be made available by the Diocese to reflect inactive liabilities based on actual inactive participants in Catholic Charities. The liabilities at June 30, 2016 reflect a phasing in of the RP2006 mortality table projected with the Social Security generational scale over a four year period by phasing in an additional 25% of the liabilities under the new table each year. There were no other changes in actuarial assumptions since June 30, While the discount rate is independent of the interest assumption used for the actuarial valuation, it remains unchanged at 6.5% at June 30, Note that the actual payments allocated to Catholic Charities are not known. The actuarial used a percentage of the projected benefit obligation for active participants to allocate actual benefit payments to each group. *Actual payments allocated to Catholic Charities are not known. We have used a percentage of the projected benefit obligation for active participants to allocate actual benefit payments to each group. As of June 30, 2015, there were 15 active participants form Catholic Charities out of a total of 722 active participants and they represent 2.9% of the total active liabilities. As of June 30, 2016, there were 13 active participants from Catholic Charities out of a total of 701 active participants and they represent 2.7% of total active liabilities. The additional Unfunded Lay Employee Pension Liability that Catholic Charities will assume from the Diocese of San Bernardino for the year ending June 30, 2016 is $152,869. The cumulative total Unfunded Lay Employee Pension Liability that has been assumed from the Diocese of San Bernardino is $345,198 as of June 30, The following illustrates the disclosures at June 30, 2016 required by ASC 715 (formerly known as FAS 87, updated by FAS 132 and FAS 158) for the portion of liabilities and assets allocated to Catholic Charities: Change in benefit obligation Projected Benefit Obligation at beginning of year $1,759,934 Service cost (excluding expense load) 39,038 Expected employee contributions 13,186 Interest cost 104,565 Plan changes - Actuarial (gains)/losses during year 26,872 Change in assumptions 35,948 Expected benefit payments (72,927) Projected Benefit Obligation at end of year $ 1,906,616 12

16 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Change in plan assets Fair value of plan assets at beginning of year $1,567,605 Actual return on plan assets, net of expenses 6,826 Company contributions 47,296 Actual employee contributions 12,612 * Actual benefit payments (72,921) Fair value of plan assets at end of year $ 1,561,418 Plan Assets by Category Interest bearing cash 52,893 Equity securities 63,042 Equity common collective trust 897,525 Equity mutual funds - Debt mutual funds 38,006 Debt securities 509,952 Total $ 1,561,418 Funded status of the plan Fair value of plan assets at end of year $ 1,561,418 Less: benefit obligation at end of year 1,906,616 Funded status of the plan $ (345,198) Unrecognized past service cost (credit) $ - Unrecognized net actuarial loss/(gain) at end of year 337,550 Items not yet recognized in pension cost ($337,550) Net amount recognized (345,198) Recognition of gain/loss $ - Recognition of past service cost - Assumption gain/(loss) (35,948) Plan amendment gain/(loss) - Experience gain/(loss) at end of year (27,440) Asset gain/(loss) at end of year (94,664) Change in Other Comprehensive Income ($158,052) Accumulated Other Comprehensive Income at beginning of year (179,498) Accumulated Other Comprehensive Income at end of year ($337,550) Accrued Benefit Obligation $1,670,640 Net periodic pension cost $42,113 Weighted average assumptions for pension cost: Discount rate 6.50% Expected return on plan assets 6.50% Rate of compensation increase 3.50% Expense load (as a percent of market value of assets ) 0.45% 13

17 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Expected benefit payments 1st year following measurement date $89,742 2nd year following measurement date 91,407 3rd year following measurement date 98,127 4th year following measurement date 103,473 5th year following measurement date 108,040 6th through 10th year following measurement date 640,823 Expected contribution for year following measurement date $49, CASH AND CASH EQUIVALENTS Cash and cash equivalents are further identified by whether the accounts are interest bearing or non-interest bearing. The Federal Deposit Insurance Corporation (FDIC) fully insures all funds in non-interest transaction accounts. Interest bearing accounts are insured for at least $250,000. Cash in the aggregate at these institutions did exceed the federally insured limits. The cash is maintained in accounts as follow: Total Insured or Held in Trust Uninsured Petty Cash Fund on Hand $ 2,900 $ - $ 2,900 Cash earnings interest accounts - CBB 163, ,309 - Cash non-interest bearing accounts - UB 3,559 3,559 - Funds on Deposit with Diocese of SB 2,569,190 2,569,190 - Acolia Estate - FOD 280, ,389 - $ 3,019,347 $ 3,016,447 $ 2, CASH RESTRICTED Restricted cash represents funds held by Catholic Charities that are restricted for a specific purpose or program. The cash is maintained in accounts as follows: Total Insured or Held in Trust Uninsured Life Insurance Policy $ 869 $ 869 $ - HDS, Inc. - FOD 369, ,562 - $ 370,431 $ 370,431 $ - FOD represents fund on deposit with the Diocese of San Bernardino. 14

18 NOTES TO FINANCIAL STATEMENTS (CONTINUED) 9. NET ASSETS Unrestricted/Undesignated - Funds available for general operations. Unrestricted/Designated - Funds available for general operations that have been set aside by management for an intended purpose. Designated funds are as follows: Family & Community Services (San Bernardino County) $ 281,997 Family & Community Services (Riverside County) 334,478 Counseling Services 549,107 Immigration & Refugee Services 370,950 New & Expanding Programs 152,119 Higher Education Student Investment Program 133,255 Social Enterprise Development 60,000 Building Repairs & Renovations $ 52,599 1,934,505 Temporarily Restricted - funds restricted by the donor, grantor, or other outside party for particular operating purposes. At year end the temporarily restricted is comprised of the following: HDS, Inc. $ 201,564 Disaster Relief & Recovery Fund 302,990 $ 504, NET ASSETS RELEASED FROM RESTRICTIONS Net assets have been released from restrictions as a result of the following: Disaster Relief & Recovery Fund $ 41,360 $ 41, LEASES Catholic Charities has entered into the following leases: Colton Space is leased at 1265 La Cadena Ave., Colton, California. Units 4, 5, & 6: The lease expires on June 30, 2017 and requires monthly lease payments of $2,196. Indio Space is leased at Requa Avenue, Suite 8-9, Indio, CA The lease expires June 30, 2017 and requires monthly lease payments of $2,400. Moreno Valley Space is leased at Sunnymead Blvd. Suite E, Moreno Valley, CA. The lease expires January 31, 2019 and requires monthly lease payments of $2,

19 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Ontario Space is leased at 904 East California, Ontario, CA The lease expires June 30, 2017 and requires monthly lease payments of $1,000. San Bernardino Space is leased at 680 S. Waterman Ave., Ste. C1 & C2, San Bernardino, CA The lease expires June 30, 2017 and requires monthly lease payments of $850. Victorville Space is leased at th Street, Victorville, CA The lease expires January 31, 2017, and requires monthly lease payments of $650.Lease expense for the year amounted to $139,161. Future minimum lease payments are: June 30, 2017 $ 85,476 June 30, ,306 June 30, 2019 $ 15, ,797 (this amount does not include leases that are in process of renewal) 12. INVESTMENTS Investments are stated at fair value and consist of equities and money market cash accounts as follows: Fair Unrealized Cost Value Gain (Loss) Catholic Foundation $ 1,464,327 $ 1,635,046 $ 170,719 $ 1,464,327 $ 1,635,046 $ 170,719 Investment return consists of the following: Interest income $ 65,507 Realized gain (loss) on investments 35,798 Net Unrealized gain (loss) on investments $ (25,379) 75, RELATED PARTIES Bishop Barnes of the Diocese of San Bernardino serves as a corporate member of Catholic Charities San Bernardino & Riverside Counties and is engaged in the following transaction with the Diocese of San Bernardino. The Diocese of San Bernardino makes an annual contribution to the agency. For the year ended June 30, 2016 the contribution was $650,000. The Diocese of San Bernardino owns the administrative building (1450 & 1441 North D Street) the agency occupies in San Bernardino. The building is rented to the agency for $1 each year. 16

20 NOTES TO FINANCIAL STATEMENTS (CONTINUED) The Diocese of San Bernardino administers the insurance policy and passes the insurance cost, including an administrative fee, to the agency. The insurance expense for the period ended June 30, 2016 was $15,049. The Diocese of San Bernardino provides copying and printing services to the agency. The copy and print fees for the period ended June 30, 2016 was $10,075. The Diocese of San Bernardino administers payroll and passes the processing fee to the agency. The payroll fees for the period ended June 30, 2016 were $15, IN-KIND CONTRIBUTIONS Catholic Charities received the following in-kind contributions for the year: Donated space $ 236,200 Donated food 1,880,764 Donated fundraising items 8,822 Donated vehicles 5,000 Donated services 8,340 Donated equipment $ 3,153 2,142, CONTINGENCIES The Agency receives a substantial amount of its support from federal, state and local governments. A significant reduction in the level of this support, if this were to occur, may have an effect on the Agency s programs. 16. SUBSEQUENT EVENTS Management has evaluated subsequent events through November 11, 2016, the date on which the financial statements were available to be issued and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. * * * * 17

21 SAN BERNARDINO & RIVERSIDE COUNTIES (A nonprofit public benefit corporation) SINGLE AUDIT INTERNAL CONTROL AND COMPLIANCE REPORTS FOR THE YEAR ENDED JUNE 30, 2016

22 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES INTERNAL CONTROL AND COMPLIANCE REPORTS FOR THE YEAR ENDED JUNE 30, 2016 TABLE OF CONTENTS Page 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 1-2 Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 3-4 Schedule of Expenditures of Federal Awards 5-6 Notes to Schedule of Expenditures of Federal Awards 7 Schedule of Findings and Questioned Costs 8 Status of Prior Year Findings and Corrective Action 9

23 Board of Directors Catholic Charities San Bernardino & Riverside Counties San Bernardino, CA 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 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 Catholic Charities San Bernardino & Riverside Counties, which comprise the statement of financial position as of June 30, 2016, and the related statements of activities, cash flows and functional expenses for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated November 11, 2016 Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Catholic Charities San Bernardino & Riverside Counties 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 Catholic Charities San Bernardino & Riverside Counties internal control. Accordingly, we do not express an opinion on the effectiveness of Catholic Charities San Bernardino & Riverside Counties 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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Organization s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or 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, as defined above. However, material weaknesses may exist that have not been identified.

24 GOVERNMENTAL AUDITING STANDARDS COMPLIANCE REPORT (CONTINUED) Compliance and Other Matters As part of obtaining reasonable assurance about whether Catholic Charities San Bernardino & Riverside Counties 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 statements 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. November 11, 2016 * * * * * 2

25 Board of Directors Catholic Charities San Bernardino & Riverside Counties San Bernardino, CA REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE INDEPENDENT AUDITORS REPORT Report on Compliance for Each Major Federal Program We have audited Catholic Charities San Bernardino & Riverside Counties compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Catholic Charities San Bernardino & Riverside Counties major federal programs for the year ended June 30, Catholic Charities San Bernardino & Riverside Counties 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 with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of Catholic Charities San Bernardino & Riverside Counties major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Catholic Charities San Bernardino & Riverside Counties 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 Catholic Charities San Bernardino & Riverside Counties compliance. Opinion on Each Major Federal Program In our opinion, Catholic Charities San Bernardino & Riverside Counties 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, 2016.

26 REPORT ON COMPLIANCE WITH THE UNIFORM GUIDANCE (CONTINUED) Report on Internal Control over Compliance Management of Catholic Charities San Bernardino & Riverside Counties 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 Catholic Charities San Bernardino & Riverside Counties 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 Catholic Charities San Bernardino & Riverside Counties 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 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of Catholic Charities San Bernardino & Riverside Counties as of and for the year ended June 30, 2016, and have issued our report thereon dated November 11, 2016 which contained an unmodified opinion on those financial statements. 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 is presented for purposes of additional analysis as required by the Uniform Guidance 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 schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. November 11, 2016 * * * * * 4

27 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2016 Contract Federal Program Name No. CFDA No. Expenditures US Department of Homeland Security - Emergency Food and Shelter National Board Program EFSP Phase 32-SAN BERNARDINO [2] LRO #4 $ 125,413 EFSP Phase 32-WEST END [2] LRO #4 10,004 EFSP Phase 32-HIGH DESERT [2] LRO #4 4,423 EFSP Phase 32-YUCCA [2] LRO #4 1,081 EFSP Phase 32-CATHEDRAL [2] LRO # ,297 EFSP Phase 32-REDLANDS [2] LRO #4 692 EFSP Phase 33-REDLANDS [2] LRO #4 10,217 EFSP Phase 33-SAN BERNARDINO [2] LRO #4 121,362 EFSP Phase 33-ARLANZA/RIVERSIDE [2] LRO # ,111 EFSP Phase 33-WEST END [2] LRO #4 45,243 EFSP Phase 33-ROUBIDOUX [2] LRO # ,290 EFSP Phase 33-HIGH DESERT [2] LRO #4 5,585 EFSP Phase 33-TEMECULA/HEMET [2] LRO # ,459 EFSP Phase 33-DHS/MECCA/CATHEDRAL/INDIO [2] LRO # ,844 EFSP Phase 33-BARSTOW [2] LRO #4 4,810 EFSP Phase 33-MORENO VALLEY/PERRIS [2] LRO # ,639 EFSP Phase 33-YUCCA [2] LRO #4 14,302 EFSP Phase 33-REDLANDS [2] LRO #4 6,522 Subtotal ,294 US Department of State US Catholic Conference Immigration and Migration Services [4] SPRMCO15CA ,194 Subtotal ,194 US Department of Agriculture Cal-Fresh [4] ,585 Head Start - Casa Blanca [13] C ,511 NEOP/SNAP ED [4] A-1 566,430 Subtotal ,526 Department of Housing and Urban Development City of Moreno Valley - CDBG [11] ,000 CDBG - City of San Bernardino [9] NA 20,000 Subtotal ,000 Department of Housing and Urban Development Emergency Shelter Grant (ESG) - County of San Bernardino [6] EDA ,000 Emergency Shelter Grant (ESG) - City of San Bernardino [9] NA 74,933 Emergency Shelter Grant (ESG) - City of Riverside [5] ,000 Subtotal ,933 Department of Housing and Urban Development Housing Opportunities for Persons with Aids (HOPWA) [16] NA 47,703 Subtotal ,703 Department of Health and Human Services Promoting Safe and Stable Families (CAPITS) - San Bernardino County [8] T ,285 Promoting Safe and Stable Families (MSM)- Riverside County [7] [17] CS ,935 Subtotal ,220 Total Indirect Funding 2,276,870 See auditors' report on schedule of expenditures of federal awards 5

28 CATHOLIC CHARITIES SAN BERNARDINO & RIVERSIDE COUNTIES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2016 Contract Federal Program Name No. CFDA No. Expenditures US Department of Homeland Security - Emergency Food and Shelter National Board Program United States Citzenship and Immigration Services 78,777 Subtotal ,777 Total Direct Funding 78,777 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 2,355,647 [1] Direct assistance [2] Pass-through agency Emergency Food and Shelter Program Local Board [3] Pass-through agency United States Catholic Conference [4] Pass-through agency Catholic Charities - CA [5] Pass-through agency City of Riverside [6] Pass-through agency County of San Bernardino Economic and Community Development Department [7] Pass-through agency Riverside County Department of Public Social Services [8] Pass-through agency County of San Bernardino, Human Services System [9] City of San Bernardino [10] Pass-through agency Riverside County Economic Development Agency [11] City of Moreno Valley [12] CA State Dept of Mental Health [13] Riverside County Superintendent of Schools [14] Community Action Partnership [15] Pass-through agency Catholic Charities of California, Inc. [16] Pass-through agency Housing Authority of the County of Riverside [17] See notes to Schedule of Expenditures of Federal Awards See auditors' report on schedule of expenditures of federal awards 6