AREA AGENCY ON AGING OF PALM BEACH/ TREASURE COAST, INC. DBA YOUR AGING RESOURCE CENTER FINANCIAL STATEMENTS WITH INDEPENDENT AUDITOR S REPORT THEREON

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1 AREA AGENCY ON AGING OF PALM BEACH/ TREASURE COAST, INC. FINANCIAL STATEMENTS WITH INDEPENDENT AUDITOR S REPORT THEREON ANNUAL AUDIT FOR THE YEAR ENDING DECEMBER 31, 2009

2 DECEMBER 31, 2009 TABLE OF CONTENTS Pages Independent Auditor s Report 1-2 Financial Statements Statement of Financial Position 3-4 Statement of Activities 5 Statement of Functional Expenses 6-7 Statement of Cash Flows 8 Notes to Financial Statements 9-18 Supplemental Information Schedule of Expenditures of Federal Awards and State Financial Assistance Other Reports Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance with Requirements Applicable to Each Major Federal Program and State Project and on Internal Control over Compliance in Accordance with OMB Circular A-133 and Chapter , Rules of the Auditor General Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings 29 Management Letter 30-31

3 INDEPENDENT AUDITOR S REPORT Board of Directors Area Agency on Aging of Palm Beach/ Treasure Coast, Inc N. Congress Avenue West Palm Beach, Fl We have audited the accompanying statement of financial position of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center (the Agency, a non-profit organization) as of December 31, 2009, and the related statements of activities, functional expenses and cash flows for the year then ended. These financial statements are the responsibility of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Agency s 2008 financial statements and, in our report dated June 22, 2009, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

4 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center as of December 31, 2009, and the changes in its net assets and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated July 27, 2010, on our consideration of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Our audit was performed for the purpose of forming an opinion on the basic financial statements of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center taken as a whole. The accompanying schedule of expenditures of federal awards and state financial assistance is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and Chapter Rules of the Auditor General, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. West Palm Beach, Florida July 27,

5 Statement of Financial Position December 31, 2009 (with Comparative Totals for December 31, 2008) Current assets ASSETS Cash $ 130,131 $ 550,306 Federal and state grants receivable 3,025,658 2,205,025 Other grants receivable 372, ,606 Prepaid expenses 9,954 85,352 Advances to providers 400, ,396 Total current assets 3,939,206 3,699,685 Property and equipment, net 122, ,229 Total assets $ 4,061,918 $ 3,862,914 3

6 LIABILITIES AND NET ASSETS Current liabilities Accounts payable $ 81,660 $ 9,139 Accrued expenses 91,333 86,654 Due to providers 3,013,628 2,239,482 Due to Department of Elder Affairs Deferred revenue 567, ,704 Total current liabilities 3,754,587 3,064,979 Net assets Unrestricted Current 58, ,646 Equity in fixed assets 122, ,229 Total unrestricted 181, ,875 Temporarily restricted 126, ,060 Total net assets 307, ,935 Total liabilities and net assets $ 4,061,918 $ 3,862,914 See notes to financial statements. 4

7 Statement of Activities Year Ended December 31, 2009 (with Comparative Totals for December 31, 2008) Temporarily Unrestricted Restricted Total Total Revenues Grants and donations Federal grants $ 11,674,754 $ $ 11,674,754 $ 10,432,560 State grants 5,596,828 5,596,828 7,586,483 Other grants and contributions 536, , ,793 1,447,938 Total grants and donations 17,808, ,263 17,951,375 19,466,981 Special events 12,243 12,243 62,722 Investment income 3,570 Net assets released from restrictions 501,051 (501,051) Total revenues 18,321,406 (357,788) 17,963,618 19,533,273 Expenses Program services: Older Americans Act 7,780,321 7,780,321 7,111,917 Community Care for the Elderly 2,959,753 2,959,753 4,372,571 Home Care for the Elderly 214, , ,585 Alzheimer's Disease Initiative 1,522,379 1,522,379 1,846,052 Respite for Elders Living in Everyday Families 116, , ,092 Serving Health Insurance Needs of Elders 160, , ,107 Nutrition Services Incentive Program 1,002,624 1,002, ,763 Medicaid Waiver Specialist 144, , ,545 Wellness 348, , ,440 Other DOEA Programs 1,327,366 1,327, ,123 Foster Grandparents 1,330,861 1,330,861 1,386,233 Other non-doea 210, , ,932 Total program services 17,118,889 17,118,889 17,880,360 Supporting services General and administrative 1,281,790 1,281,790 1,274,603 Fundraising 53,543 53, ,466 Total expenses 18,454,222 18,454,222 19,284,429 Change in net assets (132,816) (357,788) (490,604) 248,844 Net assets, beginning of year 313, , , ,091 Net assets, end of year $ 181,059 $ 126,272 $ 307,331 $ 797,935 See notes to financial statements. 5

8 Statement of Functional Expenses Year Ended December 31, 2009 (with Comparative Totals for December 31, 2008) Department of Elder Affairs (DOEA) Programs Respite for Serving Elders Health Nutrition Older Community Home Alzheimer's Living in Insurance Services Americans Care for Care for Disease Everyday Needs Incentive Act the Elderly the Elderly Initiative Families of Elders Program Salaries $ 331,422 $ $ $ $ 6,201 $ 66,664 $ Payroll taxes and benefits 77, ,475 Travel 2,787 12,468 Communications/postage 18,005 3,494 Utilities 4,990 1,834 Advertising 3, Insurance 6,086 1,068 Maintenance and repair 4, Printing/supplies 28,641 5,354 Building costs 69,386 22,858 Equipment 33,449 7,473 Professional fees/legal/audit 7, Sub-contractors 7,137,940 2,938,716 22,149 1,517, , ,224 Program supplies 11, Depreciation 26,386 10, , ,400 Food and food supplies 30 Subsidy payments 191,534 Volunteer recognition 1,259 Training 1,247 8,625 Other 27,442 8,969 Total expenses 7,780,321 2,959, ,410 1,522, , ,911 1,002,624 Allocation of management and general expenses 606, ,871 16, ,751 9,062 12,552 78,208 Total expenses after allocation $ 8,387,213 $ 3,190,624 $ 231,135 $ 1,641,130 $ 125,241 $ 173,463 $ 1,080,832 6

9 Non-DOEA Programs Medicaid Other Other Total Waiver Wellness DOEA Volunteer Non-DOEA Program Management & Total Total Specialist Initiative Programs Services Programs Funds General Fundraising Expenses Expenses $ 93,896 $ 148,793 $ 256,591 $ 428,605 $ 85,649 $ 1,417,821 $ 641,485 $ 27,746 $ 2,087,052 $ 1,992,527 26,262 25,244 82, ,566 28, , ,986 3, , , ,777 6,861 82,738 2, ,857 40,700 1, , ,653 2,577 5,612 18,863 17,940 6,014 72,505 22,463 1,902 96,870 96, ,227 7,010 7,003 3,970 32,814 10,387 43,201 37, , ,492 1,746 8,238 13,377 1,415 2,335 6,939 13,438 1,252 32,533 8,768 41,301 24, ,188 4,673 4, ,084 5,280 22,364 37, ,178 17,624 21,124 7,639 86,487 30,276 4, ,661 99,007 11, ,728 89,755 83,338 23, , ,117 9, , ,674 4,313 1,528 1,231 3,156 1,092 52,242 6,504 58,746 18, ,269 2,779 1,199 28,853 33,120 61,973 66, ,986 13,503,657 13,503,657 14,162,645 4,697 11,730 6,830 7,064 41,520 41, , ,183 4,502 4, ,055 4, ,583 65, ,593 2,539 12,528 19, , , , , ,505 4, ,511 6,577 1, , , ,253 4,207 4, ,691 1,517 22,208 20, ,191 15,280 6,665 34,891 96,776 30,924 1, , , , ,714 1,327,366 1,330, ,835 17,118,889 1,281,790 53,543 18,454,222 19,284,429 11,274 27, , ,812 16,446 1,335,333 (1,281,790) (53,543) $ 155,810 $ 375,915 $ 1,430,905 $ 1,434,673 $ 227,281 $ 18,454,222 $ $ $ 18,454,222 $ 19,284,429 See notes to financial statements. 7

10 Statement of Cash Flows Year Ended December 31, 2009 (with Comparative Totals for December 31, 2008) Cash flows from operating activities: Increase (decrease) in net assets $ (490,604) $ 248,844 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 62,583 65,177 Loss on disposal of property and equipment (Increase) decrease in operating assets Federal and state grants receivable (820,633) (59,329) Other grants receivable 311,867 (446,409) Other receivables Advances to providers (226,328) (111,691) Prepaid expenses 75,398 (64,487) Increase (decrease) in operating liabilities Accounts payable 72,521 (6,735) Accrued expenses 4,679 16,511 Due to providers 774, ,008 Due to Department of Elder Affairs (120,874) Deferred revenue (161,738) 490,993 Net cash provided by operating activities (398,109) 253,008 Cash flows from investing activities: Payments for property and equipment (22,066) (22,311) Net cash used by investing activities (22,066) (22,311) Net increase in cash (420,175) 230,697 Beginning cash 550, ,609 Ending cash $ 130,131 $ 550,306 See notes to financial statements. 8

11 Notes to Financial Statements December 31, 2009 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Purpose Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center (the Agency) was incorporated on September 27, 1988, to operate as an Area Agency on Aging as designated by the State of Florida in accordance with the Older Americans Act of 1965, as amended, and to engage in multi-year planning, advocacy and coordination consistent with said Act. The Agency develops a comprehensive and coordinated system of services for older persons within the Planning Service Area (PSA) 09 composed of the following counties: Palm Beach, Martin, St. Lucie, Indian River and Okeechobee. In order to accomplish its objectives, the Agency receives and administers grants from the U.S. Government and state and local government entities and subcontracts for delivery of services. Private donors and foundations have enthusiastically supported the Agency since its incorporation. The Agency also enjoys the support of a strong, stable and active board of directors and is advised by an active advisory council composed of elders and other community representatitives. The Mission of the Area Agency on Aging is to advocate, plan and promote the independence, dignity, health and well being of all elders and their caregivers in a manner that embraces diversity and reflects the communities we serve. The Agency is a dynamic non-profit organization dedicated to serving the needs of seniors and their caregivers. In the Agency s service area, this includes 552,856 residents aged 60 and older, making the Agency the largest of Florida s eleven Area Agencies on Aging. In fact, the senior population of its service area surpasses that of twenty-eight different states. Part of a nationwide network, The Area Agency on Aging serves seniors through information on aging issues, advocacy, one-on-one assistance and many other services that help seniors maintain their independence and dignity. Through its network of thousands of volunteers, donors, sponsors and professional agencies, The Area Agency on Aging delivers a host of services including the 211 Seniors information & referral hotline, Foster Grandparent Program providing one-on-one child teaching support, Serving Health Insurance Needs of Elders health insurance counseling services, Leadership Institute for Active Aging, training seniors for volunteerism leadership, Senior Advocacy Program delivering support to seniors in need, Retired and Senior Volunteer Program training volunteers for local non-profit organizations and agencies. During 2009, 2,300 volunteers affiliated with the Agency reported more than 561,354 hours of services to a myriad of non-profit agencies, senior services, health care providers, governmental agencies and advocacy organization, amounting to a combined contribution of approximately $11.4 million. The vision of the Area Agency on Aging is to be the recognized community leader dedicated to meeting the diverse needs of elders and their caregivers. 9

12 Notes to Financial Statements December 31, 2009 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Accounting Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center follows standards of accounting and financial reporting prescribed for not-for-profit organizations. It uses the accrual basis of accounting which recognizes revenues in the accounting period in which they are earned and become measurable and expenses in the period incurred, if measurable. Federal and state government grants are recorded as support when performance occurs under the terms of the grant agreement. The costs of providing the various programs and other activities have been detailed in the Statement of Functional Expenses and summarized on a functional basis in the Statement of Activities. Expenses of the provider and the Agency which are associated with a specific program are charged directly to that program. Administrative expenses of the Agency and depreciation are allocated to the various programs based on each program's total expenses. Recognition of Donor Restrictions The Agency reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor 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. Property and Equipment Donations of 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, the Agency reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Agency reclassifies temporarily restricted net assets to unrestricted net assets at that time. The Agency capitalizes all expenditures for equipment in excess of $1,000; or if donated, at fair market value (at date of gift) in excess of $1,000. Property and equipment are depreciated using the straight-line method. 10

13 Notes to Financial Statements December 31, 2009 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are recorded at fair value. Donated Services and Space Contributed services are recognized in the financial statements if the services received create or enhance nonfinancial assets; require specialized skills; are provided by individuals possessing those skills; and are typically purchased if not provided by donation. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Volunteer services and goods are recorded at values consistent with fair market value for similar services. Donated building space is valued as the difference between fair rental value of the space occupied and the rent paid, or at an estimate of the fair rental value when no rent is paid. Advertising Costs Advertising costs are charged to operations when incurred. Cash and Cash Equivalents For the purposes of the statement of cash flows, the Agency considers only demand deposits to be cash and cash equivalents. Grants Receivable Grants receivable are un-collateralized federal and state obligations due under normal trade terms requiring payment within 30 days from the request date. Unpaid receivables with request dates over 30 days do not bear interest. Grants receivable are stated at the amount management expects to collect from outstanding balances. In the past, substantially all of grants receivable have been collected within 60 days, so no valuation allowance has been considered necessary. Payments of receivables are allocated to the specific requests identified on the state s remittance advice. 11

14 Notes to Financial Statements December 31, 2009 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Compensated Absences Employees of the Agency are entitled to paid vacation/annual leave and paid sick leave, which they earn throughout the year. Sick leave is forfeited upon separation of service. The Agency accrued an estimated liability for compensated absences of $76,918 as of December 31, Income Taxes The Agency has been granted an exemption from income taxes under Internal Revenue Code Section 501(c)(3) as a non-profit corporation and has been classified as a publicly supported organization, which is not a private foundation under Section 509(a) of the Code. The Agency adopted FASB Interpretation No. 48 (ASC ), Accounting for Uncertainty in Income Taxes, applicable to nonpublic entities for the year ended December 31, No interest and penalties were recognized in the financial statements. The years that remain subject to examination by tax authorities are December 31, 2007, December 31, 2008, and December 31, Funding Ninety-four percent of the Agency's support consists of funds received from federal and state governments, which are contracted through the Florida Department of Elder Affairs and other governmental entities. The continued existence of the programs administered by the Agency is dependent upon support received from these grants. 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. NOTE 2 CASH AND INVESTMENTS Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center maintains cash balances at one bank. Accounts at the bank are insured by the Federal Deposit Insurance Corporation (FDIC). Effective October 3, 2008, the basic limit on federal deposit insurance coverage was temporarily increased from $100,000 to $250,000 per depositor through December 31, On January 1, 2014, FDIC deposit insurance for deposit accounts will return to at least $100,000 per depositor. As of December 31, 2009, the Agency did not have any cash in excess of the FDIC insurance. 12

15 Notes to Financial Statements December 31, 2009 NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment as of December 31, 2009, consisted of the following: Equipment $ 396,801 Less: accumulated depreciation (274,089) $ 122,712 The State of Florida Department of Elder Affairs holds a reversionary interest in all nonexpendable tangible personal property acquired with funds received from the department. NOTE 4 OTHER GRANT RECEIVABLES Other receivables consist of the following: Children s Services Council of Palm Beach County $ 58,106 School Districts 20,165 Palm Beach County 117,957 United Way 17,558 Quantum Foundation 156,112 Other 2,841 $ 372,739 NOTE 5 TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes or periods: Restricted for: Retired and Senior Volunteer Program $ 13,823 Wellness 107,848 Other 4,601 $ 126,272 13

16 Notes to Financial Statements December 31, 2009 NOTE 5 TEMPORARILY RESTRICTED NET ASSETS (Continued) Net assets released from restrictions were as follows: Foster Grandparents Program $ 13,206 Volunteers Serving Communities 112,859 Retired and Senior Volunteer Program 12,469 Wellness 355,732 Other 6,785 NOTE 6 OTHER GRANT AND CONTRIBUTION REVENUE Other grant and contribution revenue consisted of the following: $ 501,051 Foster Grandparent Program Children s Services Council of Palm Beach County $ 283,296 Children s Services Council Okeechobee County 17,750 School Districts 18,040 Palm Beach County 226,810 United Way 30,826 Palm Healthcare Foundation 50,000 Contributions 27,037 Other 26,034 $ 679,793 14

17 Notes to Financial Statements December 31, 2009 NOTE 7 - EMPLOYEE BENEFIT PLAN In August 1996, the Agency adopted a 403(a) Employer Retirement Plan. The plan provides coverage for all those employees 18 years of age or older, employed longer than one year and who worked 1,000 hours or more. The employer contributions under the plan are discretionary. The plan was changed to a 401(a) in Employees hired before January 1, 2008 are fully vested after three years of service. Employees hired on or after January 1, 2008 are 25% vested after two years of service, 50% vested after three years, 75% vested after four years and 100% vested after five years of service. Total contributions of $160,708 were made by the Agency during Also in 1996, the Agency adopted a 403(b) Voluntary Deferred Annuity Plan that provides for employee contributions to fixed or variable annuity contracts. NOTE 8 - LEASES Operating Lease In November of 2007, the Agency entered into a new lease for office space commencing May 1, 2008, for a period of ten years. The lease payments start at $397,424 annually and increase three percent a year. The Agency also is to pay 62% of operating expenses, real estate taxes and assessments, and property and liability insurance for the premises under lease. The lease contains a purchase option that the Agency had the option to exercise by December 2009 at a purchase price of $5,250,000. The Agency elected not to exercise this option. The purchase price increases one percent every month after December Building costs, which include operating expenses, were $646,847 for the year ended December 31, The future minimum annual lease payments related to this lease were as follows: Year Ended December $ 458, , , , ,786 Thereafter 2,020,063 Total $ 4,273,373 15

18 Notes to Financial Statements December 31, 2009 NOTE 9 - SUPPORT THAT REQUIRED MATCHING FUNDS The Agency received a substantial portion of its support from the State of Florida and U.S. Government through the State of Florida, Department of Elder Affairs. The contracts are renegotiated annually. Although a maximum amount is established, income is earned on a reimbursement basis, which is only to the extent of eligible expenses incurred. Community Care for the Elderly (CCE) grants were provided by the State of Florida and required a 10% local match, as do Older Americans Act Title III program grants. The Title III Administration grant requires a 25% match. The state provides the match amounts required for the Agency's administrative portion of the CCE. The following match calculation does not include funds that were matched by the state. During the year ended December 31, 2009, the matched expenses were as follows: Community Care For the Elderly Older Americans Act IC 009 (2) IC 008 (1) Title III Title III ADM Total matched expenses $ 133,723 $ 785,947 $ 3,506,272 $ 390,062 Amount received or receivable requiring match 1,430,717 3,708,336 7,554, ,613 Match required 158, , , ,871 Funds over (under) required match ($ 25,246) $ 373,910 $ 2,666,895 $ 114,191 (1) This match computation is for the grant year ending June 30, (2) This match did not need to be met until June 30, Foster Grandparents Total matched expenses $ 303,284 Amount received or receivable requiring match 558,682 Match required 62,076 Funds over (under) required match $ 241,208 16

19 Notes to Financial Statements December 31, 2009 NOTE 9 - SUPPORT THAT REQUIRED MATCHING FUNDS (Continued) The Community Care for the Elderly and Title III match amounts were met by the Agencies providers. The Older Americans Act Title III Administration, Foster Grandparents, and Wellness/IIID match amounts were met by the Agency from the following funding sources. Title III/ADM Foster Grandparents Palm Beach County $ 211,243 $ Department of Elder Affairs 178,819 Children's Services Council of -Palm Beach County 281,384 -Okeechobee County 8,694 Others 13,206 $ 390,062 $ 303,284 NOTE 10 COMMITMENTS AND CONTINGENCIES Commitments - Grant Programs The Agency has contractual obligations with providers for the administration of grant programs. These obligations are subject to the Agency receiving funds from the state. The contract terms coincide with the various grant dates. Total commitments for unexpended contracts, which have not lapsed as of December 31, 2009, are as follows: 17 Unexpended as of December 31, 2009 Nutrition Services Incentive Program $ 710,510 Emergency Home Energy Assistance 111,912 Community Care for the Elderly 2,206,573 Services (CCE) Local Service Programs 111,251 Alzheimer s Respite Services 723,276 Home Care for the Elderly 204,864 Relief 54,905 Commitments to providers $ 4,123,291

20 Notes to Financial Statements December 31, 2009 NOTE 11 SUBSEQUENT EVENTS The Agency has evaluated subsequent events through July 27, 2010, the date which the financial statements were available to be issued. Operating Lease Amendment On February 17, 2010 the Agency amended its office space lease agreement, which reduced the amount of useable space under the lease by approximately 3,387 square feet. Under the terms of the amendment, this space will be leased to the State of Florida Department of Elder Affairs (DOEA). The amendment did not change the term of the lease, but will result in an annual cost savings to the Agency of approximately $48,490. Additionally, the Agency s proportionate share of operating expenses, real estate taxes/assessments, and property/liability insurance for the premises under the lease, will be reduced to 51.8%. The amendment became effective April 1,

21 Schedule of Expenditures of Federal Awards And State Financial Assistance Year Ended December 31, 2009 CFDA Contract/ Amounts CFSA Grant Award Paid to Grantor/Program Title Number Number Amount Expenditures Subrecipients Federal Awards Department of Health and Human Services Passed Through State of Florida Department of Elder Affairs Older Americans Act Title VII Elder Abuse Prevention I7009 $ 22,000 $ 22,000 $ Title III Administration IA , ,613 Title III B IA009 3,318,982 3,318,343 2,725,806 Title III C IA009 1,359,903 1,359,903 1,359,903 Title III C1 (ARRA) IA , ,743 91,974 Title III C IA009 1,953,509 1,953,509 1,953,509 Title III C2 (ARRA) IA ,896 88,618 87,174 Title III D IA009 99,577 99,576 Title IV & II Discretionary Projects IDD08 10,000 1,853 Title IV & II Discretionary Projects XQ ,246 42, Title III E IA , , ,362 Total Older Americans Act 9,449,757 8,750,422 7,115,608 Nutrition Services Incentive Program IU009 1,010, , ,592 Nutrition Services Incentive Program IU , , ,632 Emergency Home Energy Assistance IP , , ,184 Emergency Home Energy Assistance IP ,466 33,656 15,554 Medical Assistance Program IX ,793 72,812 Medical Assistance Program IX ,450 74,461 Medicaid IW ,629 70,845 Medicaid IW ,629 73,927 Shine IN , ,304 Shine IN ,254 46,156 Total Department of Health and Human Services 12,885,515 10,679,976 8,296,570 Corporation for National & Community Service Retired and Senior Volunteer Program SRSFL , ,559 Foster Grandparent Program SFSFL , ,682 Passed thru the University of Maryland AmeriCorps Z ,004 1,905 AmeriCorps Z ,004 86,424 Total Corporation for National & Community Service 889, ,570 Department of Justice Enhanced Training and Services to End EW-AX-K , ,772 Violence and Abuse of Women Later in Life Passed Through State of Florida Office of the Attorney General Victims of Crime V ,012 73,177 Victims of Crime V ,012 25, ,024 98,436 Total Department of Justice 673, ,208 Total Federal Awards $ 14,447,788 $ 11,674,754 $ 8,296,570 19

22 Schedule of Expenditures of Federal Awards And State Financial Assistance Year Ended December 31, 2009 CFDA Contract/ Amounts CFSA Grant Award Paid to Grantor/Program Title Number Number Amount Expenditures Subrecipients (Continued) State Financial Assistance Department of Elder Affairs Older Americans Act N/A IA009 $ 35,012 $ 35,012 $ Community Care for the Elderly IX ,793 72,812 Community Care for the Elderly IX ,450 74,460 Community Care for the Elderly IC009 3,705,362 1,498,789 1,430,718 Community Care for the Elderly IC008 3,776,407 1,522,006 1,507,998 Community Care for the Elderly XV912 30,000 30,000 Local Service Programs IL , , ,335 Local Service Programs IL , , ,200 Alzheimer's Disease Initiative IZ009 1,374, , ,444 Alzheimer's Disease Initiative IZ008 1,687, , ,773 Home Care for the Elderly IH , ,693 16,895 Home Care for the Elderly IH , ,719 5,254 Respite for Elders Living in Everyday Families IR ,958 47,053 47,053 Respite for Elders Living in Everyday Families IR ,464 68,832 62,372 Total Department of Elder Affairs 12,599,900 5,547,128 4,982,042 Florida Department of Transportation Public Transit Development Program A ,000 49,700 Total State Financial Assistance $ 12,699,900 $ 5,596,828 $ 4,982,042 Note 1 - Significant Accounting Policies The schedule of expenditures of federal awards and state financial assistance is a summary of the activity of the Agency's federal award programs and state projects presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. Note 2 - Contingency Amounts received or receivable from grantor agencies are subject to audit and adjustment by those agencies. Any disallowed claims, including amounts already received, might constitute a liability of the Agency for the return of those funds. In the opinion of management, all grant expenditures were in compliance with the terms of the grant agreements and applicable federal and state laws and regulations. 20

23 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors Area Agency on Aging of Palm Beach/ Treasure Coast, Inc N. Congress Avenue West Palm Beach, Fl We have audited the financial statements of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center (a nonprofit organization) as of and for the year ended December 31, 2009, and have issued our report thereon dated July 27, We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Agency s internal control over financial reporting. 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.

24 Our consideration of the internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified one deficiency in internal control over financial reporting, described in the accompanying schedule of findings and questioned costs as item that we consider to be a significant deficiency in internal control over financial reporting. 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the Organization in a separate letter dated July 27, The Agency s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the Agency s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the Board, management and federal and state agencies and pass-through entities and is not intended to be and should not be used by anyone other than those specified parties. West Palm Beach, Florida July 27,

25 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE WITH OMB CIRCULAR A-133 AND CHAPTER , RULES OF THE AUDITOR GENERAL Board of Directors Area Agency on Aging of Palm Beach/ Treasure Coast, Inc N. Congress Avenue West Palm Beach, Fl Compliance We have audited the compliance of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center (a non-profit organization) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement, and the requirements described in the Florida Department of Financial Service s State Projects Compliance Supplement, that are applicable to each of its major federal programs and state projects for the year ended December 31, Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center's major federal programs and state projects are identified in the summary of Auditor s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal programs and state projects is the responsibility of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center's management. Our responsibility is to express an opinion on Area Agency on Aging of Palm Beach County/Treasure Coast, Inc.'s compliance based on our audit. We conducted our audit of compliance in accordance with U.S. generally accepted auditing standards, 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 Organization, and Chapter Rules of the Auditor General. Those standards, OMB Circular A-133, and Chapter Rules of the

26 Auditor General, 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 or state project occurred. An audit includes examining, on a test basis, evidence about Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource 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. Our audit does not provide a legal determination on Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center's compliance with those requirements. In our opinion, Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center complied, in all material respects, with the requirements referred to above that are applicable to its major federal programs and state projects for the year ended December 31, Internal Control over Compliance The management of Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs and state projects. In planning and performing our audit, we considered Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center s internal control over compliance with the requirements that could have a direct and material effect on a major federal program or state project in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133 and the Florida Department of Financial Service s State Projects Compliance Supplement, 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 Agency 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 or state project 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 or state project will not be prevented, or detected and corrected, on a timely basis. 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 deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, we identified one deficiency in internal control 24

27 over compliance that we consider to be a significant deficiency as described in the accompanying schedule of findings and questioned costs as item 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 or state project that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance The Agency s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit Agency s response and, accordingly, we express no opinion on it. We noted certain matters that we have reported to the Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center s management in the Management Letter dated July 27, This report is intended solely for the information and use of the Board, management and federal and state agencies and pass-through entities and is not intended to be and should not be used by anyone other than those specified parties. West Palm Beach, Florida July 27,

28 Schedule of Findings and Questioned Costs December 31, 2009 SECTION I SUMMARY OF AUDITORS RESULTS Financial Statements Type of auditor s report issued: Internal control over financial reporting: 26 Unqualified Material weakness identified? yes X no Significant control deficiency identified that is not considered to be a material weakness? X yes none reported Noncompliance material to financial statements noted? yes X no Federal Awards/State Projects Internal control over major programs/projects: Material weakness identified? yes X no Significant control deficiency identified that is not considered to be a material weakness? Type of auditor s report issued on compliance for major programs/project: X yes none reported Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133 or Chapter Rules of the Auditor General? X yes no Identification of Major Programs CFDA Numbers Name of Federal Program * Older Americans Act Title III B * Older Americans Act Title III C1 and C * Nutrition Services Incentive Program * Older Americans Act Title III C1 ARRA * Older Americans Act Title III C2 ARRA Emergency Home Energy Assistance CSFA Numbers * Aging Cluster, these are considered one major program Name of State Project Local Service Programs Community Care for the Elderly Dollar threshold used to distinguish between type A and type B programs: $300,000 Auditee qualified as low-risk auditee? X yes no

29 Schedule of Findings and Questioned Costs December 31, 2009 SECTION II FINANCIAL STATEMENTS FINDINGS Finding Condition: We noted that the prior year s audit adjustments were not timely posted to the general ledger and that there were posting errors resulting in net assets being understated and income being overstated in the current year. We also noted that the agency is reconciling the bank accounts before the closing entries are posted to the general ledger which results in errors to the reconciliations when the closing entries are posted. Criteria: It is important to timely reconcile and post transactions in order for management and the Board to have up to date financial information. Recommendation: We recommend that the Agency timely post and reconcile all adjustments and transactions and that the bank reconciliations be completed after the monthly closing entries are posted. Management Response: The Agency agrees and will develop a policy to cover monthly and yearly accounting closeout procedures in order to ensure the financial information and reporting is current and accurate. SECTION III FEDERAL AWARD AND STATE PROJECT FINDINGS AND QUESTIONED COSTS Finding CFDA Numbers Name of Federal Program Department of Health and Human Services, passed through the Florida Department of Elder Affairs Emergency Home Energy Assistance Condition: In reviewing the semi-monthly monitoring of energy vendor payments made under the Emergency Home Energy Assistance program we noted that the monitoring that was being performed by the Agency under this program was not being adequately documented and maintained. The Agency s subrecipients under this program are responsible for establishing the participant eligibility and the allowability of the energy vendor payments. The Agency s policies and procedures require them to review ten percent of these transactions before they make a payment. The Agency was not able to timely locate documentation that these reviews were being performed and the documentation provided did not always clearly show what procedures were performed. 27

30 Schedule of Findings and Questioned Costs December 31, 2009 Finding (Continued) Criteria: Federal regulations require that the Agency appropriately monitor subrecipients to ensure that payments are made for participants that meet the eligibility criteria for the program and that the costs are allowable. Recommendation: We recommend that the Agency expand the current policies and procedures to include the steps needed to be performed in reviewing the payments under this program and also how the performance of these procedures are to be documented and maintained. We also recommend that these procedures be reviewed by a supervisor at least quarterly. Management Response: Management agrees that the administration of the Emergency Home Energy Assistance Program (EHEAP) did not attain the quality levels of documentation and oversight that was intended by the established procedures. Since the administration of this funding has reverted to prior procedures, expansion of the procedures in effect during 2009 is not necessary. However, cognizant of this and other related improvement needs, management has restructured the staffing and supervision in the Center of Excellence responsible for these activities. Quality assurance reviews will take place in the course of monitoring and quarterly file reviews. 28

31 Summary Schedule of Prior Audit Findings December 31, 2009 Finding Condition: In reviewing the monitoring of subrecipient contracts, we noted that the policies and procedures need to be more detailed and comprehensive when exceptions are noted during the monitorings. We also noted that the policies and procedures need to be more detailed in evaluating the corrective action plan of the subreciepient. Current Status: Management has developed a more comprehensive policy regarding subrecipient monitoring and corrective action plans. 29

32 MANAGEMENT LETTER Board of Directors Area Agency on Aging of Palm Beach/ Treasure Coast, Inc N. Congress Avenue West Palm Beach, Fl We have audited the financial statements of the Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center (a non-profit organization) as of and for the year ended December 31, 2009, and have issued our report thereon dated July 27, In planning and performing our audit of the financial statements of the Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center for the year ended December 31, 2009, we considered its internal control structure in order to plan our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is 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. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. PRIOR YEARS' COMMENTS All prior years comments have been implemented and no longer apply.