THE GUIDANCE CENTER FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2016

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1 FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2016

2 TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT 1 BASIC FINANCIAL STATEMENTS - STATUTORY BASIS Statement of Assets, Liabilities, and Net Assets Statement of Activities Statement of Cash Flows Notes to the Financial Statements SUPPLEMENTAL INFORMATION Schedule of Funding Sources Relating to Grants from McKean County Human Services MH/ID Schedule of Service Utilization Mental Health - Blended Case Management Program. MH/ID Schedule of Service Utilization Mental Health - Family Based Services MH/ID Schedule of Expenditures and Service Utilization Intellectual Disabilities - Supports Coordination MH/ID Schedule of Expenditures and Service Utilization Intellectual Disabilities - Family Support Services MH/ID Schedule of Service Utilization Intellectual Disabilities - Early Intervention Program MH/ID Schedule of Service Utilization McKean County Children and Youth Contracted Services MH/ID Schedule of Revenue - Waiver MH/ID Schedule of Revenue - HSDF Schedule of Funding Sources Relating to Project RAPPORT Contracted Services MH/ID Schedule of Service Utilization - MH/ID Base Service Unit MH/ID Schedule of Revenue and Expenditures - Mental Health MH/ID Schedule of Revenue and Expenditures - Intellectual Disabilities

3 MH/ID Schedule of Revenue and Expenditures - Family Centers MH/ID Schedule of Revenue and Expenditures - Parent Education Programs INTERNAL CONTROLS AND COMPLIANCE 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 37 Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 39 Schedule of Expenditures of Federal Awards 41 Note to Schedule of Expenditures of Federal Awards 42 Schedule of Findings and Questioned Costs 43 Summary Schedule of Prior Audit Findings 44

4 Cathie J. Bridges, CPA Kenneth S. Frank, CPA Roger J. Lis, Jr., CPA Denise D. Veloski, CPA Julie L. Jagoda-Booth, CPA Kathryn A. Larracuenle, CPA R. A. MERCER & CO., P.C. Certified Public Accountants 63 South Main Street Cattaraugus, NY Phone Fax Raymond A. Mercer. CPA Robert W. Irwin, CPA INDEPENDENT AUDITOR'S REPORT To the Board of Directors The Guidance Center 110 Campus Drive Bradford, Pennsylvania We have audited the accompanying financial statements of The Guidance Center (a nonprofit organization), which comprise the statement of assets, liabilities, and net assets-statutory basis as of June 30, 2016, and the related statement of activities and statement of cash flows-statutory basis for the year then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting practices prescribed or permitted by the Pennsylvania Department of Public Welfare. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 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, and the Pennsylvania Department of Public Welfare Single Audit Supplement. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note A of the financial statements, the financial statements are prepared by The Guidance Center in accordance with the financial reporting practices prescribed or permitted by the Pennsylvania Department of Public Welfare, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the Pennsylvania Department of Public Welfare. The effects on CATTARAUGUS WEST SENECA l\'fember of _ AICPA)" SARDINIA SPRINGVILLE

5 the financial statements of the variances between the regulatory basis of accounting described in Note A and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of The Guidance Center as of June 30, 2016, or the changes in its net assets for the year then ended. Opinion on Statutory Basis of Accounting In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the assets, liabilities, and net assets of The Guidance Center as of June 30, 2016, and the changes in its net assets and its cash flows for the year then ended, in accordance with the financial reporting practices prescribed or permitted by the Pennsylvania Department of Public Welfare. Other Matters Supplementary and Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying information included in the supporting schedules is presented for additional analysis as supplementary information and is not a required part of the financial statements. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our reports dated March 31, 2017, on our consideration of The Guidance Center'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 those reports is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards in considering The Guidance Center's internal control over financial reporting and compliance. R.A. MERCER & CO., P.C. re.a IV\<AlU.. a. lo I P._ (_. Cattaraugus, New York March 31,

6 STATEMENT OF ASSETS, LIABILITIES, AND NET ASSETS - STATUTORY BASIS ASSETS Cash $ 833, 184 Accounts receivable 1,808,884 Prepaid Expenses 42,666 Investments at fair value 294,148 Property and equipment 4,204,453 TOTAL ASSETS $ 7, 183,335 LIABILITIES AND NET ASSETS Accounts payable $ 82,960 Accrued payroll and related 230,873 Other liabilities 327,632 TOTAL LIABILITIES 641,465 NET ASSETS Unrestricted 6,532,380 Temporarily restricted 9,490 TOTAL NET ASSETS 6,541,870 TOTAL LIABILITIES AND NET ASSETS $ 7, 183,335 See Accompanying Notes and Independent Auditors' Report. 3

7 STATEMENT OF ACTIVITIES - STATUTORY BASIS. Temporarily Un restricted Restricted Total REVENUE, GAINS, AND OTHER SUPPORT Mental health funding $ $ 1,259,282 $ 1,259,282 Intellectual disabilities funding 51,357 51,357 Other income 8,118,629 9,500 8,128,129 Net assets released in satisfaction of program restrictions 1,310,639 {1,310,639) TOTAL REVENUE, GAINS, AND OTHER SUPPORT 9,429,268 9,500 9,438,768 EXPENSES AND LOSSES: Personnel services: Salaries and wages 5,880,830 5,880,830 Employee benefits 1,471,893 1,471,893 Miscellaneous personnel 244, ,639 Total personnel services 7,597,362 7,597,362 Operating expenses: Occupancy 316, ,712 Communications 128, ,206 Administrative supplies 203, ,319 Treatment and supportive supplies 15,710 15,710 Transportation 255, ,624 Purchased treatment services 567, ,833 Miscellaneous operating 104, ,190 Total operating expenses 1,591, ,591,594 Equipment and other fixed assets: Purchase of fixed assets 277, ,594 Repairs and improvements of fixed assets Total equipment and other fixed assets 280, }07 TOTAL EXPENSES AND LOSSES 9,469, ,469,663 NET INCOME (LOSS) (40,385) 9,490 (30,895) PROPERTY & EQUIPMENT DISPOSITIONS (86,677) (86,677) EQUIPMENT ADDITIONS 277, ,594 UNREALIZED GAIN (LOSS) INVESTMENTS 10,624 10,624 PTO ACCRUAL (17,041) (17,041) PENSION FORFEITURES 26,787 26,787 CHANGE IN NET ASSETS 170,902 9, ,392 NET ASSETS - JULY 1, ,361,478 6,361,478 NET ASSETS - JUNE 30, 2016 $ 6,532,380 $ 9,490 $ 6,541,870 See Accompanying Notes and Independent Auditors' Report. 4

8 STATEMENT OF CASH FLOWS - STATUTORY BASIS CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: (Increase) decrease in accounts receivable (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable Increase (decrease) in payroll liabilities Increase (decrease) in other liabilities Restricted funds received PTO paid from liability account Unrealized (gain) loss on investments $ 180,392 (403,758) 26,192 (21,504) 18,449 (83,061) 9,500 (17,041) 10,624 NET CASH USED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: $ (280,207) Purchases of equipment Equipment dispositions $ (277,594) 86,677 NET CASH USED BY INVESTING ACTIVITIES $ (190,917) NET DECREASE IN CASH (471, 124) CASH AT JULY 1, ,304,308 CASH AT JUNE 30, 2016 $ 833,184 See Accompanying Notes and Independent Auditors' Report. 5

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10 NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2016 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities The Guidance Center (the Agency) is a nonprofit organization established to provide comprehensive mental health and mental retardation services including counseling, psychiatric evaluations, medical checks, and psychological evaluations. Basis of Accounting The financial statements have been prepared on the basis of accounting prescribed by Pennsylvania Code, Title 55, Chapter 4300 County Mental Health and Mental Retardation Program Fiscal Manual. These guidelines differ from accounting principles generally accepted in the United States of America primarily in the following respects: 1. Cash expenditures for property and equipment are expenses in the period purchased instead of capitalized. When debt is used to purchase property and equipment, the principal payments are charged to expense. 2. Property and equipment are not depreciated. 3. Compensated absences are recognized when paid instead of accrued as they are earned. 4. Principal payments on mortgages are expensed and classified as occupancy expense in the statement of activities. Funding The Agency receives funding from McKean County Department of Human Services, Cameron and Elk Counties Mental Health/Intellectual Disabilities Program, Pennsylvania Department of Public Welfare, and the Counties of Cameron, Elk, and McKean. The Agency's programs are either program funded, whereby the program receives funding up to a contracted ceiling for eligible expenses in excess of other earned revenues, or funded on a fee for service arrangement where the Agency receives a set rate for providing a service. Public Support, Revenue, and Contributions Grants and contributions are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and nature of any donor restrictions. Restricted net assets are reclassified to unrestricted net assets upon satisfaction of the time or purpose of restrictions. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Income Taxes The Agency is exempt from income taxes under Internal Revenue Code Section 501(c)(3) as a nonprofit organization other than a private foundation. Cash The Agency defines cash as all demand deposits and highly liquid debt instruments purchased with a maturity of three months or less. Allowance for Doubtful Accounts All accounts receivable are considered fully collectible; accordingly, no allowance for doubtful accounts is required. No accounts were written off during the year ended June 30,

11 Property and Equipment The cost of property and equipment maintained by the various programs represents the accumulation of the amounts reported as fixed asset purchases on the annual reports submitted to the state less dispositions. Depreciation is not recorded. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NOTE B - PROPERTY AND EQUIPMENT Cumulative Property and Equipment Expenditures and Dispositions as of June 30, 2016: Funding Source I Program Adult Outpatient Intensive Case Management STEPS Drop In Center Adolescent Offender Crisis Intervention RAPPORT Targeted Service Management Medical Assistance-MH Big Brothers/Big Sisters SCAN/PEP United Way Building Fund Family Based Services Cameron County Family Centers McKean County Family Centers Cameron County-FSSR McKean County-SHIP McKean-FSSR Elk County-CTC Early Learning Opportunities Elk County-SIG MIECHV Dubois Office Total Equipment Balance June 30, 2015 $ 256,552 $ 126,650 13,189 6,304 11, , ,626 30,387 10,617 69,142 7,947 38, ,826 9,280 87,747 6,255 6,704 75,652 3,425 2,444 5,313 18,648 24,581 $ 1,168,195 $ Balance Additions Reductions June 30, ,256 $ (9,720) $ 260,088 2,162 (2,347) 128,812 10,842 6,304 11, (31,750) (3,777) 128,777 96,422 27,438 10,617 7,409 (5,089) 71,462 7,947 4,802 (454) (1,249) 43,182 99,577 (9,280) 17,062 (16,756) (6,255) 88,053 6,704 75,652 3,425 2,444 5, ,047 24,581 47,116 $ (86,677) $ 1,128,634 Family Center Building 31,000 31,000 Leasehold Improvements 5,480 5,480 Coudersport Building 194, ,237 Guidance Center Building 2,634,110 2,634,110 Total Buildings $ 2,665,110 $ 199,717 $ $ 2,864,827 Land Total Property and Equipment $ 180,231 4,013,536 $ 30, ,594 $ (86,677) $ 210,992 4,204,453 8

12 The cost of property and equipment is considered by the State to be an expense in the year purchased and, therefore, it is included in expenditures. NOTE C - INVESTMENT SECURITIES The measurement of the fair value of the investment securities is made annually on a recurring basis. The fair value measurement at the reporting date is based on Level 1 Inputs which are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. For these financial statements, the fair value is based on quoted values reported on brokerage statements. Level 2 Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data (market corroborated inputs). Level 3 Inputs are unobservable inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The Guidance Center has no investments with Level 2 or Level 3 Inputs. The carrying amounts of investment securities as shown in the balance sheet of The Guidance Center and their approximate market values at June 30, 2016 were as follows: Fidelity Investment Account 6/30/2016 (bytype) Mutual Funds Large-Cap US Stock Mid-Cap US Stock Foreign and World Real Estate Natural Resource Fixed Income Security Subtotal Stock Investment Grade Bond Money Market Subtotal Bond Total $ $ FAIR VALUE MEASUREMENTS AT REPORTING DATE Quoted Significant Prices in Other Significant Active Observable Unobservable Fair Value 177,279 41,510 28, ,767 42,228 4,153 46, ,148 Markets (Level 1) 177,279 41, , ,767 42,228 4,153 46, ,148 Inputs (Level 2) 0 Inputs (Level 3) 0 9

13 The cost of investment securities as shown in the balance sheet of The Guidance Center and their approximate market values at June 30, 2016 were as follows: Unrestricted Investments (Fidelity Investment Account) 2016 Cost, Beginning of Year $ 291, Investment Income Dividend 6,690 Interest Total Investment Income 6,691 Realized Gain Realized Loss Net Realized Gain (Loss) 328 (17,122) (16,794) Investment Purchases Investment Sales Net Investment Activity 136, 180 (131,359) 4,821 Advisory Fees (3,605) Cost, End of Year Unrealized Gain 283,075 11,073 Fair Value $ 294, 148 Securities purchased and sold within the funds do not have a cash effect required to. be reported on the Statement of Cash Flows as the cash remained within the fund and was not used by the entity. NOTE D -TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes or periods: For. Subsequent Periods Specific programs Building Repairs Total $ 9,490 $ ==9=,4=9=0 = NOTE E - PENSION PLAN The Agency sponsors two defined contribution employee retirement plans. The Agency makes required contributions at the time wages are earned. No pension liability exists at June 30, 2016 except contributions due on accrued wages for June 30, Information concerning membership benefit provisions is contained in the overview of the retirement plan effective July 1984, and updated as of April Financial information is distributed quarterly to each employee. 10

14 An employee becomes eligible for voluntary participation in the Agency retirement plan immediately upon employment. The Agency offers a Tax Sheltered Annuity Plan, under IRC Section 403(b) as part of its retirement plan. Employees are allowed, under this plan, to contribute subject to the Exclusion Allowance to a maximum of $18,000. The participant's entire account balance in this plan is fully vested immediately. Participating employees who make federal pre-tax contributions of 5% or more of their salary to this plan are also eligible for participation in employer matching contributions. The Agency will make a contribution equal to 10% of a participating employee's salary to a Qualified Money Purchase Plan under IRC Section 401 (a) as managed by Principal Financial Group. An employee becomes 40% vested in these contributions at three years of service and fully vested at six years. 1,000 hours is considered to be one year of service. Forfeitures of non-vested benefits are used to reduce the Agency's future employer contributions or to defray plan expenses. Employer matching contributions for the year ended June 30, 2016, were $360,375. NOTE F - LINE OF CREDIT The Agency has available a $300,000 bank line of credit. Advances bear an interest rate of 4.25%. There were no outstanding advances at June 30, The line is secured by real estate. During the fiscal year ended June 30, 2016 the. Guidance Center secured an additional $700,000 loan. Collateral was inventory and accounts receivable. This was temporary to cover cash shortfalls due to the Pennsylvania impasse period. This loan was paid in full by June 30, NOTE G - OPERATING LEASES The Agency leases various office locations throughout northwestern Pennsylvania. The terms of these leases consist of month-to-month and annual agreements. Rent expense for the year ended June 30, 2016, was $159,021. NOTE H - COST ALLOCATION PLAN A plan is in place to provide an equitable allocation of all costs of the Agency to the specific programs administered. Certain programs operated by the Agency are subject to the Department of Public Welfare (DPW), Chapter 4300 Cost Regulations. Those regulations require a cost allocation plan to allocate indirect costs where DPW and Non-DPW programs are served by the same pool of indirect costs. Each cost is studied to determine how it is to be charged to the various programs. Some costs are direct, those that are specific to a given program and are allocable to that specific program. Other costs are indirect, those which relate to activities that serve more than one program and must be allocated on the basis of a formula which reflects the relative use of the benefits associated with the cost incurred. Administrative overhead (salaries, benefits, etc.) is allocated based on a full-time equivalent unit for each agency program. Other indirect costs such as occupancy costs (including utilities and housekeeping) are allocated by square footage occupied by each program at each location. Supplies and telephone expenses are allocated based on a full-time equivalent unit per program at each location. NOTE I - CONTINGENCIES Grants require the fulfillment of certain conditions as set forth in the instrument of grant. Failure to fulfill the grant conditions could result in the required return of the funds to the granters. The Agency receives support from federal, state, and local governments. A reduction in the level of support, if this were to occur, may have an effect on the Agency's programs and activities. 11

15 The Guidance Center files a tax return that is subject to examination by the taxing authority. Tax filings for periods ended June 30, 2013 and after are open to examination by authorities. Management is not aware of any pending examinations as of the date of these financial statements. NOTE J - CASH ON DEPOSIT The Agency maintains cash deposits at a financial institution located in Bradford, Pennsylvania. The deposits are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 for interest bearing accounts and $250,000 for non-interest bearing accounts. At June 30, 2016, the Agency's uninsured cash deposits were $522,341. The agencies policies do not require collateral coverage for uninsured deposit balances. NOTE K - RELATED PARTY TRANSACTION During the year ended June 30, 2016, the Board authorized the purchase of a building in the amount of $220,000 by The Guidance Center that was jointly owned by the Executive Director and an Administrative employee. There was nothing in the bylaws prohibiting such a transaction and the Executive Director refrained from participating in related Board discussions. NOTE L - SUBSEQUENT EVENTS Management has evaluated subsequent events through March 31, 2017, the date which the financial statements were available to be issued. 12

16 SUPPLEMENTAL INFORMATION 13

17 SCHEDULE OF FUNDING SOURCES RELATING TO GRANTS FROM MCKEAN COUNTY HUMAN SERVICES Funding Sources MH Program ID Program Total All Programs State Block Grant Funds: Community Mental Health Services App Community Services $ 96,182 Targeted Case Management 84, 170 Outpatient 261,087 Social Rehabilitation Services 133,581 Family Support Services 10,434 Family Based Mental Health Services 31,860 Administrative Management 171,479 Emergency Services 272,240 Behavior Health Services App Outpatient 87,960 Human Services Development App Social Rehabilitation Services 23,520 Family Support Services 13,480 Intellectual Disability Services App Case Management 37,652 Community Based Services 13,705 Federal Block Grant Funds: SSBG-Community MH Services App Social Rehabilitation Services 43,414 MHSBG-Community MH Services App Outpatient 66,876 $ 96,182 84, , ,581 10,434 31, , ,240 87,960 23,520 13,480 37,652 13,705 43,414 66,876 Total McKean County Human Services contract amount $ 1,296,283 $ 51,357 $ 1,347,640 See Accompanying Notes and Independent Auditors' Report. 14

18 MH/ID SCHEDULE OF SERVICE UTILIZATION MENTAL HEAL TH - BLENDED CASE MANAGEMENT PROGRAM Number of Units of Cost Center Clients Served Service 381 Blended Case Management 6, 110 $ Community Care Behavioral Health 8,987 $ 26, 123 $ Warren State Hospital 219 $ Unit Price Details of Revenues Per Cost Center Blended Case Management Medical Assistance $ 4,686 Community Care Behavioral Health 930,002 State funds: Match 8,701 CHIPPS -Warren State Hospital 2,727 MH funds, Non-FFP 72,742 Total state funds 84,170 Payee Fees 29,735 Sundry income Total Revenues $ 1,048,593 See Accompanying Notes and Independent Auditors' Report. 15

19 MH/ID SCHEDULE OF SERVICE UTILIZATION MENTAL HEAL TH - FAMILY BASED SERVICES Number of Units of Cost Center Clients Served Service 68 Family Based Services 2,325 Community Care Behavioral Health 20,873 Unit Price $ $ Detail of Revenues Medical Assistance $ 31,049 Community Care Behavioral Health 605,317 State funds: Match 28,360 MH funds, Non-FFP 3,205 Total state funds 31,565 Sundry income Total Revenues $ 667,931 See Accompanying Notes and Independent Auditors' Report. 16

20 MH/ID SCHEDULE OF EXPENDITURES AND SERVICE UTILIZATION INTELLECTUAL DISABILITIES - SUPPORTS COORDINATION Cost Center Number of Clients Served Units of Service Unit Price Eligible Expenditures Supports Coordination CSSID ,150 $ $ 598,079 Detail of Revenue Medical Assistance $ 126,259 State funds: Waiver ID funds, Non-FFP FSS funds Sundry Income 438,624 33,196 13,705 9 Total state funds 485,534 Payee Fees 22,673 Total Revenues $ 634,466 See Accompanying Notes and Independent Auditors' Report. 17

21 MH/ID SCHEDULE OF EXPENDITURES AND SERVICE UTILIZATION INTELLECTUAL DISABILITIES - FAMILY SUPPORT SERVICES Cost Center Number of Clients Served Eligible Expenditures Family Support Services 26 $ 13,705 See Accompanying Notes and Independent Auditors' Report. 18

22 MH/ID SCHEDULE OF SERVICE UTILIZATION INTELLECTUAL DISABILITIES - EARLY INTERVENTION PROGRAM McKean Potter Forest/Warren Cameron/Elk Funding Sources County County Counties Counties Total Number of Clients Served Medical Assistance $ 91,786 $ 11,021 $ 762 $ 35,317 $ 138,886 Waiver Funds 21,972 11,700 6,522 40,194 Early Intervention 125,203 88,868 15,395 17, ,521 Training Other Total Funding Sources $ 238,961 $ 111,589 $ 22,679 $ 52,522 $ 425,751 Units of Service Physical Therapy Special Instruction 4,203 3, ,579 Speech Therapy 3, ,608 5,053 Occupational Therapy Vision/Hearing Total Units of Service 8,022 3, ,649 14,418 See Accompanying Notes and Independent Auditors' Report. 19

23 MH/ID SCHEDULE OF SERVICE UTILIZATION MCKEAN COUNTY CHILDREN & YOUTH CONTRACTED SERVICES Cost Center Number of Clients Served Units of Service Unit Price Total Revenue 357 McKean County - Intensive Home Visits 10,013 $ $ 122,565 McKean County - Nurse Educator 2,492 $ $ 36,084 McKean County - Parent Workshops Group Preparation Incredible Years Program Parent/Child Group Strenghtening Families Program McKean County- Parent Child Interaction Program Nurturing Parent Program Hours $ 299 Total McKean County CYS Funds $ $ 8,703 $ ,689 $ ,660 $ $ 24, ,146 54,627 $ 70,773 $ 254,257 See Accompanying Notes and Independent Auditors' Report. 20

24 MH/ID SCHEDULE OF REVENUE - WAIVER Units of Service Total PA Medicaid Waiver for Infants, Toddlers and Families (0324.R03.00) Early Intervention Special Instruction: Forest Warren Counties 205 $ 6,522 McKean County ,972 Potter County , , PA Consolidated Waiver (0147.R05.00) Supports Coordination Targeted Service Managment: McKean County 9, ,917 PA Person/Family Directed Support (0354.R03.00) Supports Coordination Targeted Service Managment: McKean County Total Waiver 13, , 707 $ 478,818 See Accompanying Notes and Independent Auditors' Report. 21

25 MH/ID SCHEDULE OF REVENUE - HSDF Number of Clients Served Units of Service Total Mental Health: Community Services: McKean County Big Brothers/Big Sisters 64 N/A Steps Drop In Center 280 N/A Specialized Services Elk County Project RAPPORT McKean County School Based MH Services N/A N/A $ 13,480 9,020 2,500 14,500 Total HSDF Funds $ 39,500 See Accompanying Notes and Independent Auditors' Report. 22

26 SCHEDULE OF FUNDING SOURCES RELATING TO PROJECT RAPPORT CONTRACTED SERVICES Units of Service Contract Fee Cameron and Elk MH/ID Program 85 Hrs $ 4,171 Human Services Development Fund (HSDF) Elk County 51 Hrs 2,500 McKean County Human Services 493 Hrs 24,236 Potter County MH/ID Program 1,119 Hrs 55,059 Real Alternatives - Project WIN 3,685 Hrs 232,613 Seneca Highlands IU #9 Elect 7,225 Hrs 355,556 Other Totals $ 674, 135 See Accompanying Notes and Independent Auditors' Report. 23

27 MH/ID SCHEDULE OF SERVICE UTILIZATION MH/ID BASE SERVICE UNIT Units of Service Number of Units Provided Referrals/New liability determinations McKean County Liability re-determination McKean County Intakes McKean County Discharge summaries McKean County Total Units 2,107 2,570 1,518 1,347 7,542 Mental Health funds Intellectual Disabilities funds Total Allocation $ $ 171, See Accompanying Notes and Independent Auditors' Report. 24

28 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - MENTAL HEALTH Revenue: Student Blended Forensic PROGRAM Assistance Case Services Program Management Out~atient Grant State and county funds $ 96,182 $ 84,170 $ 381,562 $ 34,361 Federal funds Total Revenue 96,182 84, , ,361 Expenditures: Personnel Services: Salaries and wages 64, ,716 1,227,735 25,024 Employee benefits 15, , ,668 5,417 Miscellaneous personnel expense 7, , , ,909 Total Personnel Services 87, ,031 1,594,943 45,350 Operating Expenses: Occupancy 1,893 27,832 47,644 1,628 Communications ,396 15, Administrative supplies 1,081 20,603 35, Treatment and supportive supplies 4,001 Transportation 1,924 35,607 3, Purchased treatment services 486, 157 Miscellaneous operating 41 1,782 7, Total Operating Expenses 5, , ,701 3,422 Equipment and other Fixed Assets: Purchase of fixed assets 2,162 13,256 Repairs and improvements of fixed assets 145 Total Equipment and Other Fixed Assets 2,162 13,401 Total Expenditures Per Books 93, ,413 2,208,045 48,772 Income: Program service fees and other 964,421 1,918,938 29,460 H.S.D.F. 13,480 Total Income 964,421 1,932,418 29,460 Total Net Expenditures 93,381 {85,008) 275,627 19,312 Retained Revenue 2,801 Net Expenditures Eligible for MH/MR Reimbursement 96, 182 (85,008) 275,627 19,312 MH/MR Program Reimbursement 96,182 84, ,562 34,361 Excess(Deficit) Revenue Over Expenditures $ $ 169,178 $ 105,935 $ 15,049 See Accompanying Notes and Independent Auditors' Report. 25

29 THE Gl,JIDANCE CENTER MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - MENTAL HEAL TH Revenue: Elementary STEPS School PROGRAM Drop-in Based Big Brother Center {LIFE} RAPPORT Big Sister State and county funds $ 90;500 $ 61,570 $ 24,925 $ 10,434 Federal funds 588,169 Total Revenue 90,500 61, ,094 10,434 Expenditures: Personnel Services: Salaries and wages 43,078 36, ,159 6,387 Employee benefits 11,766 7, ,454 1,603 Miscellaneous personnel expense 15,889 11,025 74,618 1,655 Total Personnel Services 70,733 54, ,231 9,645 Operating Expenses: Occupancy 16,235. 2,037 29,115 Communications 1, ,928 Administrative supplies 8,454 1,266 11,946 Treatment and supportive supplies Transportation 58 1,046 39, Purchased treatment services Miscellaneous operating , Total Operating Expenses 27,055 5, , Equipment and other Fixed Assets: Purchase of fixed assets (31,348) Repairs and improvements of fixed assets 312 Total Equipment and Other Fixed Assets {31,036) Total Expenditures Per Books 97,788 59, ,650 10, 131 Income: Program service fees and other 904 (143) 83,467 H.S.D.F. 9,020 2,500 Total Income 9,924 {143) 85,967 Total Net Expenditures 87,864 59, ,683 10, 131 Retained Revenue 2,636 1, Net Expenditures Eligible for MH/MR Reimbursement 90,500 61,570 5,514 10,434 MH/MR Program Reimbursement 90,500 61,570 24,925 10,434 Excess(Deficit) Revenue Over Expenditures $ $ $ 19,411 $ See Accompanying Notes and Independent Auditors' Report. 26

30 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - MENTAL HEAL TH Revenue: Family Base Total PROGRAM Based Service Crisis Mental Services Unit Intervention Health State and county funds $ 31,860 $ 171,479 $ 272,240 $ 1,259,283 Federal funds 588,169 Total Revenue 31, , ,240 1,847,452 Expenditures: Personnel Services: Salaries and wages 331, , ,428 2,925,704 Employee benefits 77,557 26,488 63, ,453 Miscellaneous personnel expense 68,381 13,685 21, ,255 Total Personnel Services 477, , ,969 4, 125,412 Operating Expenses: Occupancy 18, , ,558 Communications 8, ,172 60,683 Administrative supplies 11, ,566 94,226 Treatment and supportive supplies 219 4,220 Transportation 39, ,806 Purchased treatment services 486,157 Miscellaneous operating 2, ,987 Total Operating Expenses 80,246 1,208 17, ,637 Equipment and other Fixed Assets: Purchase of fixed assets (15,930) Repairs and improvements of fixed assets Total Equipment and Other Fixed Assets 205 (15,268) Total Expenditures Per Books 558, , ,654 5,075,781 Income: Program service fees and other 636,070 7,140 3,640,257 H.S.D.F. 25,000 Total Income 636,070 7,140 3,665,257 Total Net Expenditures (77,821) 169, ,514 1,410,524 Retained Revenue 4,995 7,929 20,457 Net Expenditures Eligible for MH/MR Reimbursement (77,821) 174, , ,812 MH/MR Program Reimbursement 31, , ,240 1,259,283 Excess(Deficit) Revenue Over Expenditures $ 109,681 $ (2,580) $ (203) $ 416,471 See Accompanying Notes and Independent Auditors' Report. 27

31 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - INTELLECTUAL DISABILITIES Base Total Service Supports Intellectual Unit Coordination Disabilities Revenue: State and county funds $ 4,455 $ 33,196 $ 37,651 Family Support Services 13,705 13,705 Waiver 438, ,624 Total Revenue 4, , ,980 Expenditures: Personnel services: Salaries and wages 3, , ,252 Employee benefits , ,895 Miscellaneous personnel expense ,050 69,296 Total Personnel Services 3, , ,443 Operating Expenses: Occupancy ,698 42,192 Communications 31 10,543 10,574 Administrative supplies 70 14,903 14,973 Treatment and supportive supplies Transportation 8,502 8,502 Purchased treatment services Miscellaneous operating 3 11,514 11,517 Total Operating Expenses ,160 87,758 Equipment and Other Fixed Assets: Purchase of fixed assets Repairs and improvements of fixed assets Total Equipment and Other Fixed Assets 2 1,709 1,711 Total Expenditures Per Books 4, , ,912 Income: Program service fees and other 22,682 22,682 Medical Assistance 126, ,259 Total Income 148, ,941 Total Net Expenditures 4, , ,971 Retained revenue Net expenditures eligible for MH/ID reimbursement 4, , ,971 MH/ID program reimbursement 4, , ,980 Excess (Deficit) Revenue Over Expenditures $ $. 10,009 $ 10,009 See Accompanying Notes and Independent Auditors' Report 28

32 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - FAMILY CENTERS McKean McKean McKean McKean County County County County Family Family Center MIEC HV MIEC HV Centers Grant Formula Competitive Revenue: State and county funds $ 54,627 $ 124,641 $ $ Federal funds 174; , ,650 Total Revenue 54, , , ,650 Expenditures: Personnel services: Salaries and wages 123, ,845 95,865 61,928 Employee benefits 27,844 33,994 35,781 23,138 Miscellaneous personnel expense 83,424 24,705 6,364 17,905 Total Personnel Services 234, , , ,971 Operating Expenses: Occupancy 14,984 $ 29,800 5,291 5,178 Communications 1,395 5, ,201 Office supplies 7,329 2,315 6,362 6,796 Educational Supplies , Transportation 17,067 12,650 6,647 1,986 Other operating costs 2,146 4, Total Operating Expenses 43,513 55,402 21,779 17,679 Equipment and Other Fixed Assets: Purchase of fixed assets 8,852 11,350 Repairs and improvements of fixed assets 13 Total Equipment and Other Fixed Assets 8,865 11,350 Total Expenditures Per Books 286, , , ,650 Income: H.S.D.F. Children & Youth Services Contract 183,484 Other 26,809 Total Income 210,293 Total Net Expenditures 76, , , ,650 Retained Revenue Net expenditures eligible for reimbursement 76, , , ,650 Program reimbursement 54, , , ,650 Excess(Deficit) Revenue Over Expenditures $ (21,825) $ $ $ See Accompanying Notes and Independent Auditors' Report. 29

33 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - FAMILY CENTERS Total Family Centers Revenue: State and county funds Federal funds Total Revenue Expenditures: Personnel services: Salaries and wages Employee benefits Miscellaneous personnel expense Total Personnel Services Operating Expenses: Occupancy Communications Office supplies Educational Supplies Transportation Other operating costs Total Operating Expenses Equipment and Other Fixed Assets: Purchase of fixed assets Repairs and improvements of fixed assets Total Equipment and Other Fixed Assets Total Expenditures Per Books Income: H.S.D.F. Children & Youth Services Contract Other Total Income Total Net Expenditures Retained Revenue Net expenditures eligible for reimbursement Program reimbursement Excess(Deficit) Revenue Over Expenditures $ $ 179, , , , , , ,892 55,253 10,449 22,802 3,413 38,350 8, ,373 20, , , ,484 26, , , , ,362 (21,825) See Accompanying Notes and Independent Auditors' Report. 30

34 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - PARENT EDUCATION PROGRAMS Jefferson Jefferson County County Parent MIEC HV MIEC HV Educator Formula Expansion Program Revenue: State and county funds $ $ $ Federal funds 240, ,850 Jefferson County CVS funds Total Revenue 240, ,850 Expenditures: Personnel Services: Salaries and wages 128, ,278 24,904 Employee benefits 44, ,953 7,429 Miscellaneous personnel expense 30,869 22,280 5,815 Total Personnel Services 203, ,511 38, 148 Operating Expenses: Occupancy 22,253 16, 116 Communications 953 9, Administrative supplies 3,254 9,424 (34) Treatment and supportive supplies 431 6,637 Transportation 10,652 8,537 2,257 Other operating costs 2,525 2,130 Contract agreements Total Operating Expenses 37,543 52,339 5,122 Equipment and Other Fixed Assets: Purchase offixed assets Repairs and improvements of fixed assets Total Equipment and Other Fixed Assets Total Expenditures Per Books 240, ,850 43,270 Income: H.S.D.F. Program services and other 57,541 Total Income 57,541 Total Net Expenditures 240, ,850 {14,271) Retained Revenue Net Expenditures Eligible for Reimbursement 240, ,850 (14,271) Program Reimbursement 240, ,850 Excess (Deficit) Revenue Over Expenditures $ $ $ 14,271 See Accompanying Notes and Independent Auditors' Report. 31

35 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - PARENT EDUCATION PROGRAMS Total Revenue: State and county funds $ Federal funds 466,751 Jefferson County CYS funds Total Revenue 466,751 Expenditures: Personnel Services: Salaries and wages 268,563 Employee benefits 87,490 Miscellaneous personnel expense 58,964 Total Personnel Services 415,017 Operating Expenses: Occupancy 38,369 Communications 10,822 Administrative supplies 12,644 Treatment and supportive supplies 7,068 Transportation 21,446 Other operating costs 4,655 Contract agreements Total Operating Expenses 95,004 Equipment and Other Fixed Assets: Purchase of fixed assets Repairs and improvements of fixed assets Total Equipment and Other Fixed Assets Total Expenditures Per Books 510,021 Income: H.S.D.F. Program services and other 57,541 Total Income 57,541 Total Net Expenditures 452,480 Retained Revenue Net Expenditures Eligible for Reimbursement 452,480 Program Reimbursement 466,751 Excess (Deficit) Revenue Over Expenditures $ 14,271 See Accompanying Notes and Independent Auditors' Report. 32

36 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - PARENT EDUCATION PROGRAMS McKean McKean Elk McKean County County County County BBBS IND LIVING BBBS BBBS Revenue: State and county funds $ 10,434 $ 36,820 $ 3,950 $ Federal funds Total Revenue 10,434 36,820 3,950 Expenditures: Personnel Services: Salaries and wages 6,387 24,333 8,473 46,715 Employee benefits 1,603 6,094 1,693 11,564 Miscellaneous personnel expense 1,655 4,900 2,347 5,854 Total Personnel Services 9,645 35,327 12,513 64,133 Operating Expenses: Occupancy 763 3,437 Communications ,239 Administrative supplies 1,477 1,178 Fundraising supplies 3,502 Transportation 411 2, ,974 Other operating costs ,521 Contract agreements Total Operating Expenses 486 2,224 2,763 12,851 Equipment and Other Fixed Assets: Purchase of fixed assets Repairs and improvements of fixed assets Total Equipment and Other Fixed Assets Total Expenditures Per Books 10, ,551 15,276 76,984 Income: H.S.D.F. 14,500 Children & Youth Services Contract Program services and other 17,097 25,368 Total Income 17,097 39,868 Total Net Expenditures 10, ,551 (1,821) 37,116 Retained Revenue 303 Net Expenditures Eligible for Reimbursement 10,434 37,551 (1,821) 37, 116 Program Reimbursement 10,434 36,820 3,950 Excess (Deficit) Revenue Over Expenditures $ $ (731) $ 5,771 $ (37, 116) See Accompanying Notes and Independent Auditors' Report. 33

37 MH/ID SCHEDULE OF REVENUE AND EXPENDITURES - PARENT EDUCATION PROGRAMS SAE DR Jefferson Jefferson County County BBBS BBBS Total Revenue: State and county funds $ 80,040 $ $ 131,244 Federal funds Total Revenue 80, ,244 Expenditures: Personnel Services: Salaries and wages 48,642 3, ,837 Employee benefits 11,578 (27) 32,505 Miscellaneous personnel expense 2,679 8,934 26,369 Total Personnel Services 62,899 12, ,711 Operating Expenses: Occupancy 7,285 11,485 Communications 2,392 4,131 Administrative supplies 1,045 3,700 Fundraising supplies -. 1,049 4,551 Transportation 1,911 6,364 Other operating costs 3,701 1,702 7,178 Contract agreements Total Operating Expenses 16,334 2,751 37,409 Equipment and Other Fixed Assets: Purchase of fixed assets Repairs and improvements of fixed assets 1,379 1,379 Total Equipment and Other Fixed Assets 1,379 1,379 Total Expenditures Per Books 80,612 14, ,499 Income: H.S.D.F. 14,500 Children & Youth Services Contract Program services and other 15, ,631 Total Income. 15,166 72,131 Total Net Expenditures 80,612 (221) 163,368 Retained Revenue 303 Net Expenditures Eligible for Reimbursement 80,612 (221) 163,671 Program Reimbursement 80, ,244 Excess (Deficit) Revenue Over Expenditures $ (572) $ 221 $ (32,427) See Accompanying Notes and Independent Auditors' Report. 34

38 INTERNAL CONTROLS AND COMPLIANCE 35

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40 Cathie J. Bridges, CPA Kenneth S. Frank, CPA Roger J. Lis, Jr., CPA Denise D. Ve loski, CPA Julie L. Jagoda-Booth, CPA Kathryn A. Larracuente, CPA R. A. MERCER & CO., P.C. Certified Public Accountants 63 South Main Street Cattaraugus, NY Phone Fax Raymond A. Mercer. CPA Robert W. Irwin, CPA INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors The Guidance Center 110 Campus Drive Bradford, Pennsylvania 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 The Guidance Center (a nonprofit organization), which comprise the statement of assets, liabilities, and net assets-statutory basis as of June 30, 2016, and the related statements of activities and cash flows-statutory basis for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated March 31, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered The Guidance Center'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 opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of The Guidance Center's internal control. Accordingly, we do not express an opinion on the effectiveness of The Gu idance Center's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether The Guidance Center's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. CATTARA UGUS WEST SENECA Member of, AICPAJ 37 SARDI NIA SPRINGVILLE

41 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. R.A. MERCER & CO., P.C. <2.A ~ ~ 1 Re. Cattaraugus, New York March 31,

42 Cathie J. Bridges, CPA Kenneth S. Frank, CPA Roger J. Lis, Jr., CPA Denise D. Veloski, CPA Julie L. Jagoda-Booth, CPA Kathryn A. Larracuente, CPA R. A. MERCER & CO., P.C. Certified Public Accountants 63 South Main Street Cattaraugus, NY Phone Fax Raymond A. Mercer. CPA Robert W. Irwin, CPA INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Board of Directors The Guidance Center 110 Campus Drive Bradford, Pennsylvania Report on Compliance for Each Major Federal Program We have audited The Guidance Center's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of The Guidance Center's major federal programs for the year ended June 30, The Guidance Center's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of The Guidance Center's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about The Guidance Center's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of The Guidance Center's compliance. Opinion on Each Major Federal Program In our opinion, The Guidance Center complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Report on Internal Control over Compliance Management of The Guidance Center is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered The Guidance Center's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing CATTARAUGUS WEST SENECA >mber of, AICPA)" 39 SARDINIA SPRJNGVILLE

43 procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of The Guidance Center'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. R.A. MERCER & CO., P.C. fla f\'1,(alj.a. ~ Ci:> 1 A C.. Cattaraugus, New York March 31,