AREA 1 AGENCY ON AGING. FINANCIAL STATEMENTS For the Years Ended June 30, 2014 and 2013

Transcription

1 AREA 1 AGENCY ON AGING FINANCIAL STATEMENTS For the Years Ended June 30, 2014 and 2013

2

3 AREA I AGENCY ON AGING TABLE OF CONTENTS June 30, 2014 INDEPENDENT AUDITORS REPORT... 1 FINANCIAL STATEMENTS Statements of Financial Position... 5 Statements of Activities... 6 Statements of Cash Flows... 8 Notes to Financial Statements... 9 SUPPLEMENTARY INFORMATION Schedules of Support and Revenue Schedules of Functional Expenses REPORTS REQUIRED BY U.S. OFFICE OF MANAGEMENT AND BUDGET CIRCULAR A-133 Schedule of Expenditures of Federal and State Awards 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 Independent Auditors Report on Compliance for Each Major Program and on Internal Control Over Compliance required by OMB Circular A Schedule of Findings and Questioned Costs i

4

5 523 Main Street P.O. Box 637 Ferndale, CA (707) Fax: (707) INDEPENDENT AUDITORS' REPORT To the Board of Directors of Area 1 Agency on Aging We have audited the accompanying statement of financial position of Area 1 Agency on Aging (a nonprofit organization) as of June 30, 2014 and 2013, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Area 1 Agency on Aging as of June 30, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Philip R. Aycock, CPA Stacey R. Edgmon, CPA philipaycock@aecpas.com AN ACCOUNTANCY CORPORATION stacey@aecpas.com 1

6 To the Board of Directors of Area 1 Agency on Aging Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of support and revenue and functional expenses, is presented for purposes of additional analysis and is not a required part of the financial statements. The accompanying schedule of expenditures of federal and state awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presented for purposes of additional analysis and is also not a required part fo the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2014, on our consideration of Area 1 Agency on Aging s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Area 1 Agency on Aging s internal control over financial reporting and compliance. Aycock and Edgmon November 18,

7 FINANCIAL STATEMENTS

8 This page intentionally left blank

9 AREA 1 AGENCY ON AGING STATEMENTS OF FINANCIAL POSITION June 30, 2014 and ASSETS Current Assets Cash and cash equivalents $ 318,357 $ 570,923 Grants and contracts receivable 211,800 43,385 Other receivables 2,004 1,165 Prepaid insurance 13,030 12,482 Other prepaid expenses 30,562 28,287 Investments 30,549 27,121 Total Current Assets 606, ,363 Property and Equipment Land 154, ,264 Property and equipment - Net of accumulated depreciation 949, ,564 Grant funded equipment 13,672 2,820 Total Property and Equipment 1,117,174 1,126,648 TOTAL ASSETS $ 1,723,476 $ 1,810,011 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable $ 70,131 $ 58,193 Refundable advances 9,724 16,894 Security deposits payable 3,612 4,201 Accrued liabilities: Payroll, benefits, and payroll taxes 27,540 27,277 Compensated absences 24,119 18,297 Total Current Liabilities 135, ,862 Net Assets Unrestricted net assets 1,524,398 1,553,490 Temporarily restricted net assets 63, ,659 Permanently restricted net assets - - Total Net Assets 1,588,350 1,685,149 TOTAL LIABILITIES AND NET ASSETS $ 1,723,476 $ 1,810,011 The accompanying notes to financial statements are an integral part of this statement. 5

10 AREA 1 AGENCY ON AGING STATEMENT OF ACTIVITIES For the Year Ended June 30, 2014 Temporarily Permanently Unrestricted Restricted Restricted Total SUPPORT, REVENUE, AND GAINS Support Federal and state financial assistance $ 1,297,997 $ 10,852 $ - $ 1,308,849 Other grants and contracts 243,533 26, ,647 Contributions 19, ,071 In-kind contributions 29, ,277 Fund-raising Total Support 1,589,878 36,966-1,626,844 Revenue Project revenue 4,428 1,164-5,592 Underwriting revenue 22, ,222 Other revenue 4, ,519 Interest and dividend income 1, ,077 Partnership income 84, ,875 Sublease income 49, ,452 Realized gains on investments Unrealized gains on investments 2, ,395 Total Revenue 169,346 2, ,485 Net Assets Released from Restrictions 106,812 (106,812) - - Total Support, Revenue, and Gains 1,866,036 (67,707) - 1,798,329 EXPENSES Program Services Senior support services 645, ,319 Nutrition services 672, ,389 Volunteer services 161, ,415 Total Program Services 1,479, ,479,123 Support Services General and administrative 233, ,111 Fund-raising 17, ,849 Real estate management 165, ,045 Total Support Services 416, ,005 Total Expenses 1,895, ,895,128 CHANGE IN NET ASSETS (29,092) (67,707) - (96,799) NET ASSETS, JULY 1, ,553, ,659-1,685,149 NET ASSETS, JUNE 30, 2014 $ 1,524,398 $ 63,952 $ - $ 1,588,350 The accompanying notes to financial statements are an integral part of this statement. 6

11 AREA 1 AGENCY ON AGING STATEMENT OF ACTIVITIES For the Year Ended June 30, 2013 Temporarily Permanently Unrestricted Restricted Restricted Total SUPPORT, REVENUE, AND GAINS Support Federal and state financial assistance $ 1,314,229 $ - $ - $ 1,314,229 Other grants and contracts 174,482 28, ,439 Contributions 4, ,700 In-kind contributions 36, ,862 Fund-raising income Total Support 1,530,464 28,957-1,559,421 Revenue Project revenue 2, ,354 Underwriting revenue 7,690 1,378-9,068 Other revenue 3, ,246 Interest and dividend income 1, ,549 Partnership income 82, ,400 Sublease income 51, ,087 Unrealized gains on investments 1, ,684 Total Revenue 150,010 1, ,388 Net Assets Released from Restrictions 115,611 (115,611) - - Total Support, Revenue, and Gains 1,796,085 (85,276) - 1,710,809 EXPENSES Program Services Senior support services 684, ,753 Nutrition support services 577, ,069 Volunteer services 167, ,252 Total Program Services 1,429, ,429,074 Support Services General and administrative 270, ,784 Fund-raising 4, ,992 Real estate management 162, ,875 Total Support Services 438, ,651 Total Expenses 1,867, ,867,725 CHANGE IN NET ASSETS (71,640) (85,276) - (156,916) NET ASSETS, JULY 1, ,625, ,935-1,842,065 NET ASSETS, JUNE 30, 2013 $ 1,553,490 $ 131,659 $ - $ 1,685,149 The accompanying notes to financial statements are an integral part of this statement 7

12 AREA 1 AGENCY ON AGING STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2014 and CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (96,799) $ (156,916) Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 33,309 37,186 Realized (gains) losses on sale of investments (353) 71 Unrealized (gains) losses on investments (2,395) (1,684) (Increase) decrease in operating assets: Receivables (169,254) 8,198 Prepaid expenses (2,823) 123 Increase (decrease) in operating liabilities: Accounts payable 11,937 13,599 Refundable advances (7,170) (4,446) Accrued liabilities 6,086 (13,367) Security deposits payable (589) - Net Cash Provided (Used) by Operating Activities (228,051) (117,236) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of land, building, and improvements (7,723) - Purchase of equipment (16,112) - Purchase of investments (680) (210) Net Cash Provided by Investing Activities (24,515) (210) NET DECREASE IN CASH AND CASH EQUIVALENTS (252,566) (117,446) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 570, ,369 CASH AND CASH EQUIVALENTS, END OF YEAR $ 318,357 $ 570,923 SUPPLEMENTAL INFORMATION Interest expense for the years ended June 30, 2014 and 2013 was $0 and $0, respectively. The accompanying notes to financial statements are an integral part of this statement. 8

13 NOTE A - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES AREA 1 AGENCY ON AGING NOTES TO FINANCIAL STATEMENTS June 30, 2014 Nature of Activities Area I Agency on Aging (A1AA) is a nonprofit corporation formed to function as a planning and administrative organization for the delivery of services to older individuals in Humboldt and Del Norte Counties. In addition to providing these services, A1AA operates the Volunteer Center of the Redwoods/RSVP, the purpose of which is to coordinate the recruitment and placement of citizens in meaningful volunteer stations within Humboldt and Del Norte Counties. A1AA also operates an Information and Assistance (I&A) program whereby A1AA provides needed information and relevant assistance to senior citizens and their caregivers; as well as a Health Insurance Counseling and Advocacy (HICAP) program; and a Caregiver Services program for caregivers, recipients of in-home care, and their families. The majority of revenue is passed through from the California Department of Aging which results in a concentration of credit risk for related receivables and revenues. Cash and Cash Equivalents For the purpose of the Statement of Cash Flows, A1AA considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Grants and Contracts Receivable Grants and contracts receivable from federal, state and other awarding agencies are based on closeout reports (or other applicable reports) prepared after year end. The amounts are all considered collectible, therefore there is no allowance for uncollectible amounts recorded. Property and Equipment A1AA capitalizes all property and equipment in excess of $5,000 and all expenditures for repairs, maintenance, renewals, and betterments that materially prolong the useful lives of assets. Purchased property and equipment are capitalized at historical cost. Donated property and equipment are recorded as support at their estimated fair value. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, A1AA reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. A1AA reclassifies temporarily restricted net assets to unrestricted net assets at that time. Property and equipment are depreciated using the straight-line method based on estimated useful lives. Contributions Certain grants and contributions are recorded as unrestricted or temporarily restricted support, depending on the existence and/or nature of any donor restrictions. Donor-restricted support is reported as an increase in temporarily restricted net assets. When the restriction expires (that is, 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. Contributed Services Contributed services are recognized as contributions if the services (a) create or enhance non-financial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Agency. Many individuals also volunteer their time and perform a variety of tasks that assist the Agency in its mission, but these services do not meet the criteria for recognition as contributed services. 9

14 AREA 1 AGENCY ON AGING NOTES TO FINANCIAL STATEMENTS June 30, 2014 NOTE A - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Advertising Advertising costs are charged to operations when incurred. The amount charged to expense was $44,284 and $16,111 for 2014 and 2013, respectively. Functional Expenses A1AA allocates its expenses on a functional basis among its various programs and support services. Expenses that can be identified with a specific program and support service are allocated directly according the their natural expense classification. Other expenses that are common to several functions are allocated by various statistical bases. Income Taxes A1AA is exempt from federal and state income taxes under Internal Revenue Code (IRC) Section 501(c)(3) and California Revenue and Taxation Code Section In addition, the Internal Revenue Service has determined that A1AA is not a private foundation within the meaning of IRC Section 509(a). The Agency has adopted the provisions of Interpretation ( FIN ) No. 48, Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109" (ASC 740). ASC 740 prescribes a new threshold for determining when an income tax benefit can be recognized, which is a higher threshold than the one imposed for claiming deductions on income tax returns. The adoption of ASC 740 did not have an impact on the Agency s financial statements. The Agency s federal and state tax returns are subject to possible examination by the taxing authorities until the expiration of the related statutes of limitations on those tax returns. In general, the federal and state income tax returns have three and four year statue of limitations, respectively. The Agency would recognize accrued interest and penalties associated with uncertain tax provisions, if any, as part of the income tax provision. Use of 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. Subsequent Events Management has evaluated subsequent events through November 18, 2014, the date on which the financial statements were available to be issued. Management is not aware of any subsequent events that require recognition or disclosure in the financial statements. Reclassifications and Comparative Financial Information Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation in the current-year financial statements. Moreover, the financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Agency s financial statements for the year ended June 30, 2013, for which the summarized information was derived. 10

15 AREA 1 AGENCY ON AGING NOTES TO FINANCIAL STATEMENTS June 30, 2014 NOTE B - CASH AND CASH EQUIVALENTS The carrying value of cash and cash equivalents were composed of the following combined balances: Cash on hand $ 139 $ 182 Checking and savings accounts 90,726 83,851 Money market accounts 227, ,890 $ 318,357 $ 570,923 A1AA maintains cash balances at several financial institutions. The balances are insured at each financial institution by the Federal Deposit Insurance Corporation up to $250,000 in 2014 and At June 30, 2014 and 2013, A1AA had uninsured cash balances of $0 and $85,017, respectively. NOTE C - RECEIVABLES The following is a summary of receivables as of June 30: Grant and Contract Awards Federal $ 157,751 $ 30,506 State 40,836 4,438 Other 13,213 $ 211,800 8,441 $ 43,385 Reimbursable expenses 2,004 1,165 $ 213,804 $ 44,550 NOTE D - INVESTMENTS Investments in securities available for sale are carried at fair value. Investments in securities held to maturity are carried at amortized cost. The investment in the limited partnership interest is carried at the fair value at the date of donation. Securities that are carried at the fair market value are all considered Level 1" investments with readily determinable fair market value. Fair Carrying Appreciation 2014 Cost Value Value (Depreciation) Pooled funds (Level 1) $ 15,999 $ 20,549 $ 20,549 $ 4,550 Limited Partnership 10,000 10,000 10,000 - $ 25,499 $ 30,549 $ 30,549 $ 4,550 Fair Carrying Appreciation 2013 Cost Value Value (Depreciation) Pooled funds (Level 1) $ 14,966 $ 17,121 $ 17,121 $ 2,155 Limited Partnership 10,000 10,000 10,000 - $ 24,966 $ 27,121 $ 27,121 $ 2,155 11

16 AREA 1 AGENCY ON AGING NOTES TO FINANCIAL STATEMENTS June 30, 2014 NOTE E - PROPERTY AND EQUIPMENT The following is a summary of the changes in property and equipment as of June 30, 2014: Balance Current Year Balance July 1, 2013 Additions Disposals June 30, 2014 Unrestricted Land (50%) $ 154,264 $ - $ - $ 154,264 Building and improvements (50%) 1,015, ,015,435 Leasehold improvements 87,040 7,723-94,763 Equipment 110,874 5,260 (19,357) 96,777 1,367,613 12,983 (19,357) 1,361,239 Accumulated depreciation (243,785) (33,309) 19,357 (257,737) Net book value $ 1,123,828 $ (20,326) $ - $ 1,103,502 Temporarily Restricted Equipment $ 2,820 $ 10,852 $ - $ 13,672 Total Property and Equipment $ 1,126,648 $ (9,474) $ - $ 1,117,174 NOTE F - ACCOUNTS PAYABLE Accounts payable consisted of the following as of June 30, 2014 and 2014: Payments to subcontractors $ 56,047 $ 35,125 Trade payables 13,854 22,953 Use tax payable $ 70,131 $ 58,193 NOTE G - REFUNDABLE ADVANCES A1AA records grant and contract revenue as a refundable advance until it is expended for the purpose of the grant or contract, at which time it is recognized as revenue. The balances in refundable advances of $9,724 and $16,894 as of June 30, 2014 and 2013, respectively, represent amounts received from funding agencies and not yet expended for allowable program costs. NOTE H - OPERATING LEASE AGREEMENT A1AA leased the Crescent City office under a noncancellable operating lease that expired on June 30, Rent expense for 2014 and 2013 totaled $3,720 and $2,820, respectively. A1AA leases its Eureka office under a noncancellable operating lease expiring on July 31, Rent expense for 2014 and 2013 totaled $173,470 and $168,418, respectively. Minimum future rental payments under this lease in total and for the following years are: Year Ending June 30, 2015 $ 178, , , , ,310 12

17 AREA 1 AGENCY ON AGING NOTES TO FINANCIAL STATEMENTS June 30, 2014 NOTE I - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes or periods: Contributions, Grants, and Fees Beginning balance, July 1, 2013 $ 128,839 Net assets released from donor restrictions by incurring expenses satisfying the purpose or time restrictions specified by donors: Grant and Foundation contributions $ (28,957) Cy Pres lawsuit distribution (76,477) Underwriting (1,378) (106,812) Net assets received for periods after June 30, 2014: Grant and Foundation contributions 26,114 Underwriting 550 Project revenue 1,164 Rent ,253 50,280 Assets Reverting to Others 13,672 $ 63,952 Assets reverting to others consists of equipment acquired with certain funding sources that require that title to these assets revert to the funding source should the program be discontinued. NOTE J - CONTINGENT LIABILITIES The major sources of support and revenue are grants and contracts from federal and state agencies. Such support and revenue is subject to review by the funding agency and may result in disallowance in subsequent periods. NOTE K - GRANTS, CONTRACTS, AND EXCHANGE TRANSACTIONS The following is a summary of revenue recognized from grants, contracts, and exchange transactions during the years ended June 30, 2014 and 2013: Federal grant awards $ 960,927 $ 980,199 State grant awards 347, ,030 $ 1,308,849 $ 1,314,229 NOTE L - RETIREMENT PLAN A1AA maintains a Simplified Employee Pension (SEP) plan which allows employer discretionary contributions of up to 25% of each eligible employee's gross wages subject to an IRS established limit ($250,000 and $250,000 in 2013 and 2012, respectively). A1AA made contributions totaling $0 and $0 for 2014 and 2013, respectively. 13

18 AREA 1 AGENCY ON AGING NOTES TO FINANCIAL STATEMENTS June 30, 2014 NOTE M - RELATED PARTY TRANSACTIONS On August 8, 2008, A1AA purchased a 50% interest in the commercial building it occupies. The ownership is held with the other 50% owner through a co-tenancy named the Lundblade/A1AA Seventh Street Co- Tenancy. The building in its entirety is leased to A1AA and, in turn, a portion of the building is sub-leased to various tenants. The entire amount of rent is expensed and the revenue from the sub-leases and 50% interest in the co-tenancy are reported as revenue. (See Note H for minimum future rental payments.) One board member is paid as an independent contractor to provide training to A1AA clients in the Caregiver Services program and the contract is approved by the Board. Total payments amounted to $975 and $1,600 in the years ended June 30, 2014 and 2013, respectively. 14

19 SUPPLEMENTARY INFORMATION

20 Total Senior Support Nutrition Volunteer Program Services Services Services Services UNRESTRICTED SUPPORT Federal awards $ 381,157 $ 297,324 $ 91,622 $ 770,103 Nutrition Services Incentive Program - 78,025-78,025 USDA Senior Farmers Market coupons - 5,680-5,680 State awards 180, , ,922 Other grants and contracts 6, ,132 23, ,775 Contributions ,250 3,100 Fund-raising income In-kind 29, ,277 UNRESTRICTED REVENUE AND GAINS Project revenue 4, ,428 Underwriting income 22, ,672 Other revenue Interest and dividend income Partnership income Sublease income Gain on disposition of equipment Realized gains investments Unrealized gains on investments Total unrestricted support, revenue, and gains 625, , ,724 1,406,356 NET ASSETS RELEASED FROM RESTRICTION 16,420 8,957 46,093 71,470 TOTAL UNRESTRICTED SUPPORT, REVENUE, AND GAINS $ 641,663 $ 672,346 $ 163,817 $ 1,477,826 16

21 AREA 1 AGENCY ON AGING Total Total Administrative Program and Support Administrative Total Services Support Services 2013 SCHEDULE OF SUPPORT AND REVENUE For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) $ 96,267 $ 866,370 $ 874,072-78, ,807-5,680 5, , ,030 98, , ,482 15,971 19,071 4, ,277 36,862-4,428 2,354-22,672 7,690 4,145 4,519 3,246 1,077 1,077 1,549 84,875 84,875 82,400 49,027 49,027 51, ,395 2,395 1, ,868 1,759,224 1,680,474 35, , ,611 $ 388,210 $ 1,866,036 $ 1,796,085 The accompanying notes to financial statements are an integral part of this statement. 16

22 SENIOR SUPPORT SERVICES Title III B Title III D HRSA Cash/Material Preventive Title III B Grant Aid Health Personal Care UNRESTRICTED SUPPORT Federal awards $ - $ 2,256 $ 11,504 $ 5,287 Nutritional Services Incentive Program USDA Senior Farmers Market coupons State awards Other grants and contracts Contributions Fund-rasing income In-kind contributions UNRESTRICTED REVENUE AND GAINS Project revenue Underwriting income Other revenue Interest and dividend income Gain on disposition of equipment Realized gains on sale of investments Unrealized gains on investments Total unrestricted support, revenue, and gains - 2,256 11,654 5,387 NET ASSETS RELEASED FROM RESTRICTION TOTAL UNRESTRICTED SUPPORT, REVENUE, AND GAINS $ - $ 2,256 $ 11,654 $ 5,387 17

23 AREA 1 AGENCY ON AGING SCHEDULE OF SUPPORT AND REVENUE For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) SENIOR SUPPORT SERVICES Title III B Title III B Legal Title III B Title III B Information Title III E Contracted Caregiver Community and Community Title III E Services Registry Education Assistance Education Access HICAP $ 36,000 $ 3,482 $ 892 $ 90,122 $ 215 $ 46,566 $ 87, , , , ,641-6, ,000 3, , , , ,250-5,525 - $ 36,000 $ 3,482 $ 892 $ 108,135 $ 215 $ 58,832 $ 258,416 The accompanying notes to financial statements are an integral part of this statement. 17

24 SENIOR SUPPORT SERVICES Medicare Improvements for Title III E Title VII B Patients & Caregiver Food Security Prevention of Providers Act Training Grant Ombudsman Elder Abuse UNRESTRICTED SUPPORT Federal awards $ 8,941 $ 13,700 $ - $ 50,918 $ 2,764 Nutritional Services Incentive Program USDA Senior Farmers Market coupons State awards ,401 - Other grants and contracts - - 2, Contributions Fund-rasing income In-kind ,121 - UNRESTRICTED REVENUE AND GAINS Project revenue Underwriting income Other revenue Interest and dividend income Gain on disposition of equipment Realized gains on sale of investment Unrealized gains on investments Total unrestricted support, revenue, and gains 8,941 13,880 2,436 97,590 2,764 NET ASSETS RELEASED FROM RESTRICTION TOTAL UNRESTRICTED SUPPORT, REVENUE, AND GAINS $ 8,941 $ 13,975 $ 2,436 $ 97,590 $ 2,764 18

25 AREA 1 AGENCY ON AGING SCHEDULE OF SUPPORT AND REVENUE For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) SENIOR SUPPORT SERVICES Title III E Title III B Title III E Title III E Cash/ Grandparents Public Public Total Total Respite Material Aid Respite Information Information $ 6,024 $ 348 $ 748 $ 6,867 $ 6,761 $ 381,157 $ 384, , , ,436 24, ,121 36, ,083 2, ,695 4,695 22, , , ,562 11, , , ,420 44,333 $ 6,024 $ 348 $ 748 $ 11,837 $ 11,731 $ 641,663 $ 674,566 The accompanying notes to financial statements are an integral part of this statement. 18

26 NUTRITION SERVICES Senior Title III C-2 Farmers Title III C-1 Home Contracted Market Congregate Delivered C-1 and C-2 Coupons Meals Meals Meals UNRESTRICTED SUPPORT Federal awards $ - $ 24,903 $ 17,451 $ 254,970 Nutritional Services Incentive Program ,025 USDA Senior Farmers Market coupons 5, State awards ,178 Other grants and contracts Contributions Fund-raising income In-kind contributions UNRESTRICTED REVENUE AND GAINS Project revenue Underwriting income Other revenue Interest and dividend income Gain on disposition of equipment Unrealized gains on investments Total unrestricted support, revenue, and gains 5,680 24,903 17, ,173 NET ASSETS RELEASED FROM RESTRICTION TOTAL UNRESTRICTED SUPPORT, REVENUE, AND GAINS $ 5,680 $ 24,903 $ 17,451 $ 500,173 The accompanying notes to financial statements are an integral part of this statement. 19

27 AREA 1 AGENCY ON AGING SCHEDULE OF SUPPORT AND REVENUE For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) NUTRITION SERVICES Total Total CalFresh I CalFresh II $ - $ - $ 297,324 $ 300, , , ,680 5, , , ,918 13, ,132 18, ,968 13, , ,069 8,957-8,957 - $ 110,925 $ 13,214 $ 672,346 $ 577,069 The accompanying notes to financial statements are an integral part of this statement. 19

28 VOLUNTEER SERVICES RSVP RSVP VCOR Match CNCS General UNRESTRICTED SUPPORT Federal awards $ - $ 91,622 $ - Nutritional Services Incentive Program USDA Senior Farmers Market coupons State awards Other grants and contracts 22, Contributions 2, Fund-raising income In-kind contributions UNRESTRICTED REVENUE AND GAINS Project revenue 5-20 Underwriting income Other revenue Interest and dividend income Gain on disposition of equipment Unrealized gains on investments Total unrestricted support, revenue, and gains 24,485 91, NET ASSETS RELEASED FROM RESTRICTION 13,268-2,007 TOTAL UNRESTRICTED SUPPORT, REVENUE, AND GAINS $ 37,753 $ 91,622 $ 2,027 20

29 AREA 1 AGENCY ON AGING SCHEDULE OF SUPPORT AND REVENUE For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) VOLUNTEER SERVICES Volunteer Driver Total Total Program $ - $ 91,622 $ 90, ,207 23,207 70, ,250 1, , , ,613 30,818 46,093 21,113 $ 32,415 $ 163,817 $ 182,726 The accompanying notes to financial statements are an integral part of this statement. 20

30 ADMINISTRATIVE SUPPORT SERVICES Area Plan Miscellaneous Administration Overhead Investments Administrative UNRESTRICTED SUPPORT Federal awards $ 96,267 $ - $ - $ - Nutritional Services Incentive Program USDA Senior Farmers Market coupons State awards Other grants and contracts 98, Contributions Fund-raising income In-kind contributions UNRESTRICTED REVENUE AND GAINS Project revenue Underwriting income Other revenue ,526 Interest and dividend income Partnership income Sublease income Realized gains on investments Unrealized gains on investments - - 2,395 - Total unrestricted support, revenue and gains 195,025-3,861 2,992 NET ASSETS RELEASED FROM RESTRICTIONS 35, TOTAL UNRESTRICTED SUPPORT, REVENUE, AND GAINS $ 230,367 $ - $ 3,861 $ 2,992 21

31 ADMINISTRATIVE SUPPORT SERVICES AREA 1 AGENCY ON AGING SCHEDULE OF SUPPORT AND REVENUE For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) Real Estate Total Total Management Fund-Raising $ - $ - $ 96,267 $ 99, ,758 62,102-15,471 15,971 3, ,690-1,617 4,145 1, ,077 1,549 84,875-84,875 82,400 49,027-49,027 51, ,395 1, ,902 17, , , ,342 50,165 $ 133,902 $ 17,088 $ 388,210 $ 361,724 The accompanying notes to financial statements are an integral part of this statement. 21

32 Total Senior Support Nutrition Volunteer Program Services Services Services Services Salaries and wages $ 279,865 $ 37,692 $ 67,172 $ 384,729 Fringe benefit expense 75,402 8,998 19, ,374 Total salaries and related expenses 355,267 46,690 87, ,103 Advertising and outreach 16,582 26, ,491 Consultants 16,034 37,197-53,231 Contracted services 36, , ,013 Expendable equipment 3, ,767 Insurance ,366 Interest expense and bank fees Investment management fees Membership and subscriptions 2, ,785 Office supplies 5, ,246 7,921 Printing and copier expense 18, ,261 21,069 Professional services Property taxes 5, ,091 7,198 Purchase of services 12, ,727 Rent 29,767 1,594 5,869 37,230 Repairs and maintenance 5, ,355 Staff travel and training 10,232 1,915 5,245 17,392 Telephone and utilities 10,112 1,145 1,868 13,125 Volunteer expenses ,079 29,704 Other 3,736 21,752 2,350 27,838 Total expenses before depreciation, other expenses, and losses 533, , ,016 1,323,809 Allocated overhead 79,535 20,701 22, ,479 Depreciation 3, ,558 In-kind expense 29, ,277 Realized losses on investments TOTAL EXPENSES AND LOSSES $ 645,319 $ 672,389 $ 161,415 $ 1,479,123 22

33 AREA 1 AGENCY ON AGING SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) Total Total Support Program and Total Services Support Services 2013 $ 210,982 $ 595,711 $ 592,644 53, , , , , , ,284 16,111 17,008 70,239 73, , , ,753 8,277 12,037 13,403 12, ,829 6,614 9,631 4,825 12,746 14,063 5,714 26,783 20,445 13,470 13,929 14,559 12,132 19,330 18,562-12,727 19, , , ,637 8,138 14,493 16,761 2,861 20,253 16,452 6,566 19,691 21, ,700 32,346 13,226 41,064 19, ,733 1,832,542 1,793,606 (122,479) ,751 33,309 37,186-29,277 36, $ 416,005 $ 1,895,128 $ 1,867,725 The accompanying notes to financial statements are an integral part of this statement. 22

34 SENIOR SUPPORT SERVICES Title III B Title III D Title III B HRSA Cash/Material Preventive Personal Grant Aid Health Care Salaries and wages $ - $ - $ 578 $ - Fringe benefit expense Total salaries and related expenses Advertising and outreach Consultants - - 8,135 - Contracted services Expendable equipment Insurance Membership and subscriptions Office supplies Printing and copier expense Professional services Property taxes Purchase of services - 1,945-4,644 Rent Repairs and maintenance Staff travel and training Telephone and utilities Volunteer expense Other - - 1,108 - Total expenses before depreciation and other expenses - 1,945 10,213 4,644 Allocated overhead , Depreciation 3, In-kind expense TOTAL EXPENSES $ 3,558 $ 2,256 $ 11,847 $ 5,387 23

35 AREA 1 AGENCY ON AGING SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) SENIOR SUPPORT SERVICES Title III B Title III B Legal Title III B Title III B Information Title III E Contracted Caregiver Community and Community Title III E Services Registry Education Assistance Education Access HICAP $ - $ 2,308 $ 593 $ 57,054 $ 147 $ 31,247 $ 125, , ,066 39,272-2, , , , , ,683-1,292-36, , , , , ,390-3,404 2, , , ,113-2,658 16, , , , , , , ,000 3, , , , , ,017 35, $ 36,000 $ 3,482 $ 892 $ 108,135 $ 215 $ 58,127 $ 258,552 The accompanying notes to financial statements are an integral part of this statement. 23

36 SENIOR SUPPORT SERVICES Medicare Title VII B Improvements for Title III E Prevention of Patients & Caregiver Food Security Elder Providers Act Training Grant Ombudsman Abuse Salaries and wages $ 2,604 $ 7,046 $ - $ 39,990 $ 1,950 Fringe benefit expense 927 1,539-7, Total salaries and related expenses 3,531 8,585-47,014 2,260 Advertising and outreach 2, Consultants - 2,806 2, Contracted services Expendable equipment 1, Insurance Membership and subscriptions Office supplies ,072 - Printing and copier expense Professional services Property taxes Purchase of services Rent ,518 - Repairs and maintenance Staff travel and training , Telephone and utilities ,927 - Volunteer expense Other Total expenses before depreciation and other expenses 7,708 12,047 2,100 59,431 2,386 Allocated overhead 1,233 1, , Depreciation In-kind expense ,121 - TOTAL EXPENSES $ 8,941 $ 13,975 $ 2,436 $ 98,060 $ 2,768 24

37 SENIOR SUPPORT SERVICES AREA 1 AGENCY ON AGING SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) Title III E Title III B Title III E Title III E Cash/ Grandparents Public Public Total Total Respite Material Aid Respite Information Information $ - $ - $ - $ 5,379 $ 5,302 $ 279,865 $ 291, ,402 83, ,195 6, , , ,582 7, ,034 22, ,000 40, ,341 4, , ,611 4, ,220 5, ,000 4,000 18,831 9, ,763 5,777 5, ,727 19, ,767 31, ,080 6, ,232 9, ,112 11, , ,736 4,100 5, ,204 10, , , ,633 1,618 79,535 81, ,558 7, ,121 36,862 $ 6,024 $ 348 $ 748 $ 11,837 $ 11,731 $ 645,319 $ 684,753 The accompanying notes to financial statements are an integral part of this statement. 24

38 NUTRITION SERVICES Senior Title III C-2 Farmers Title III C-1 Home Contracted Market Congregate Delivered C-1 and C-2 Coupons Meals Meals Meals Salaries and wages $ $ 139 $ - Fringe benefit expense Total salaries and related expenses Advertising and outreach Consultants - 19,639 13,204 - Contracted services ,173 Expendable equipment Insurance Membership and subscriptions Office supplies Printing and copier expense Property taxes Rent Repairs and maintenance Staff travel and training Telephone and utilities Volunteer expense Other 5, Total expenses before depreciation and other expenses 5,680 21,490 15, ,173 Allocated overhead - 3,438 2,409 - TOTAL EXPENSES $ 5,680 $ 24,928 $ 17,469 $ 500,173 The accompanying notes to financial statements are an integral part of this statement. 25

39 AREA 1 AGENCY ON AGING SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) NUTRITION SERVICES Total Total CalFresh I CalFresh II $ 28,580 $ 8,837 37,692 $ 7,224 6,839 2,035 8,998 1,912 35,419 10,872 46,690 9,136 26,064-26,064 6,592 4,354-37,197 35,589 12, , , ,594 1, , , , , ,752 5,320 97,272 12, , ,070 13,653 1,201 20,701 8,999 $ 110,925 $ 13,214 $ 672,389 $ 577,069 The accompanying notes to financial statements are an integral part of this statement. 25

40 VOLUNTEER SERVICES RSVP RSVP VCOR Match CNCS General Salaries and wages $ 3,541 $ 48,561 $ 1,187 Fringe benefits expense 1,264 15, Total salaries and related expenses 4,805 64,514 1,655 Advertising and outreach Consultants Expendable equipment Insurance Interest expense Membership and subscriptions Office supplies 99 1, Printing and copier expense Professional services Property taxes - 1,091 - Rent - 5,869 - Repairs and maintenance Staff travel and training 396 4,841 1 Telephone and utilities 2 1,866 - Volunteer expenses 11,955 7,945 - Other Total expenses before depreciation and other expenses 17,703 91,622 1,747 Allocated overhead 17, In-kind expense TOTAL EXPENSES $ 35,351 $ 91,622 $ 2,027 26

41 AREA 1 AGENCY ON AGING SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) VOLUNTEER SERVICES Volunteer Driver Total Total Program $ 13,883 $ 67,172 $ 71,111 2,289 19,974 20,051 16,172 87,146 91, , , ,246 3, ,261 1, ,091 1,103-5,869 5, , ,245 3,536-1,868 2,348 9,179 29,079 30,238 1,750 2, , , ,186 4,471 22,243 23, $ 32,415 $ 161,415 $ 167,252 The accompanying notes to financial statements are an integral part of this statement. 26

42 ADMINISTRATIVE SUPPORT SERVICES Area Plan Miscellaneous Administration Overhead Investments Administrative Salaries and wages $ 111,845 $ 87,473 $ - $ - Fringe benefits expense 27,190 23, Total salaries and related expenses 139, , Advertising and outreach Consultants 13,803 2, Contracted services Expendable equipment Insurance 1,049 9, Interest expense Investment management fees Membership and subscriptions 3, Office supplies 600 3, Printing and copier expense 2,203 1,735-7 Professional services 13, Property taxes 2,106 3, Rent 9,745 14, Repairs and maintenance 1,928 2, Staff travel and training 2, Telephone and utilities 2,009 2, Volunteer expenses Other 4,608 4, Total expenses before depreciation, other expenses, and losses 198, , ,133 Allocated overhead 31,741 (157,632) Depreciation Realized losses on investments TOTAL EXPENSES AND LOSSES $ 230,387 $ 1,113 $ 297 $ 1,314 27

43 AREA 1 AGENCY ON AGING SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2014 (With Comparative Totals for the Year Ended June 30, 2013) ADMINISTRATIVE SUPPORT SERVICES Real Estate Total Total Management Fund-Raising $ 3,954 $ 7,710 $ 210,982 $ 222, ,904 53,932 58,620 4,800 9, , , , ,008 15, , ,380 1,047-12,037 10, ,829 5, ,825 4,219-1,769 5,714 9, ,470 13,468 6,760-12,132 11, , , ,262 3,484-8,138 9, ,861 3,860 1,882-6,566 7, ,161 13,226 9, ,788 15, , , ,462 (122,479) (113,995) 29,488-29,751 29, $ 165,045 $ 17,849 $ 416,005 $ 438,651 The accompanying notes to financial statement are an integral part of this statement. 27

44 This page intentionally left blank

45 REPORTS REQUIRED BY U.S. OFFICE OF MANAGEMENT AND BUDGET CIRCULAR A-133

46 Federal Grant/ CFDA Contract Federal Grantor Number Number United States Department of Health and Human Services Administration on Aging Pass Through from California Department of Aging Special Programs for the Aging Title VII B - Programs for Prevention of Elder Abuse, Neglect, and Exploitation A Title VII B - Programs for Prevention of Elder Abuse, Neglect, and Exploitation A Title VII A - Long Term Care Ombudsman Services for Older Individuals A Title VII A - Long Term Care Ombudsman Services For Older Individuals A Title III, Part D - Disease Prevention and Health Promotion Services A Title III, Part D - Disease Prevention and Health Promotion Services A Title III, Part B - Grants for Supportive Services and Senior Centers A Title III, Part B - Grants for Supportive Services And Senior Centers A Title III, Part C - Nutrition Services Congregate Meals and Home Delivered Meals A Title III, Part C - Nutrition Services Congregate Meals and Home Delivered Meals A Title III, Part E - Family Caregiver Support Program A Title III, Part E - Family Caregiver Support Program A Nutrition Services Incentive Program A Nutrition Services Incentive Program A Health Insurance Counseling and Advocacy Program H Health Insurance Counseling and Advocacy Program HI Medicare Improvements for Patients and Providers Act MI Special Deposit Fund n/a A Special Deposit Fund n/a A SNF Quality and Accountability n/a A SNF Quality and Accountability n/a A Total United States Department of Health and Human Services United States Department of Agriculture Pass Through from California Department of Food and Agriculture Senior Farmers Market Nutrition Program None Corporation for National Service Retired Senior Volunteer Program SRPCA010 TOTAL FEDERAL AND STATE AWARDS 30

47 Program Federal State Award Awards Awards Amount Expended Expended AREA 1 AGENCY ON AGING SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS For the Year Ended June 30, 2014 $ 640 $ 640 $ - 2,124 2,124-6,017 6,017-18,805 18,805-2,969 2,969-8,535 8,535-49,039 49, , , ,769 77,974 41, , , ,383 21,414 21,414-66,796 66,796-15,430 15,430-62,595 62, ,913 66, ,507 67,512 26,676 40,836 8,941 8,941-1,310-1,310 3,929-3,929 3,041-3,041 9,121-9,121 1,212, , ,922 5,680 5,680-91,622 91,622 - $ 1,309,379 $ 960,927 $ 347,922 See accompanying notes to schedule of expenditures of federal and state awards. 31

48 AREA 1 AGENCY ON AGENCY NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS For the Year Ended June 30, 2014 NOTE A - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal and state awards includes the federal and state grant activity of Area 1 Agency on Aging and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. NOTE B - SUBRECIPIENTS Of the federal expenditures presented in the Schedule, Area 1 Agency on Aging provided federal awards to subrecipients as follow: Federal State Amounts Amounts CFDA Expended by Expended by Program Name Number Subrecipients Subrecipients Title III, Part B - Grants for Supportive Services and Senior Centers $ 36,000 $ - Title III, Part C - Nutrition Services Congregate Meals and Home Delivered Meals , ,178 Nutrition Services Incentive Program ,025 - $ 368,995 $ 167,178 32

49 523 Main Street P.O. Box 637 Ferndale, CA (707) Fax: (707) INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors of Area 1 Agency on Aging 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 Area 1 Agency on Aging (a nonprofit organization) which comprise the statement of financial position as of June 30, 2014, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report dated November 18, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Area 1 Agency on Aging s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Area 1 Agency on Aging s internal control. Accordingly, we do not express an opinion on the effectiveness of Area 1 Agency on Aging 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 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. Philip R. Aycock, CPA Stacey R. Edgmon, CPA philipaycock@aecpas.com AN ACCOUNTANCY CORPORATION stacey@aecpas.com 33

50 To the Board of Directors of Area 1 Agency on Aging Compliance and Other Matters As part of obtaining reasonable assurance about whether Area 1 Agency on Aging s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Area 1 Agency on Aging s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Area 1 Agency on Aging s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Aycock and Edgmon November 18,

51 523 Main Street P.O. Box 637 Ferndale, CA (707) Fax: (707) INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 To the Board of Directors of Area 1 Agency on Aging Report on Compliance for Each Major Federal Program We have audited Area 1 Agency on Aging s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Area 1 Agency on Aging s major federal programs for the year ended June 30, Area 1 Agency on Aging s major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of Area 1 Agency on Aging 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 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 Area 1 Agency on Aging 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 Area 1 Agency on Aging s compliance. Opinion on Each Major Federal Program In our opinion, Area 1 Agency on Aging 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, Philip R. Aycock, CPA Stacey R. Edgmon, CPA philipaycock@aecpas.com AN ACCOUNTANCY CORPORATION stacey@aecpas.com 35