Area Agency on Aging of Southeast Arkansas, Inc.

Transcription

1 Independent Auditor s Reports and Financial Statements June 30, 2017

2 June 30, 2017 Contents Independent Auditor s Report... 1 Financial Statements Statement of Financial Position... 3 Statement of Activities... 4 Statement of Cash Flows... 5 Notes to Financial Statements... 6 Supplementary Information Schedules of Revenues and Expenses Title III-B Title III-C Title III-C Title III-D Title III-E Social Services Block Grant Nutrition Services Incentive Program State Older Workers State Aging Services Cigarette Tax FTA Senior Center Funding In God We Trust Ombudsman Computation of Indirect Cost Rate Schedule of Units of Service (Unaudited) Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Expenditures of State Awards... 31

3 June 30, 2017 Contents (Continued) Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance for the Major Federal Program and Report on Internal Control Over Compliance - Independent Auditor s Report Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings... 38

4 Independent Auditor s Report Board of Directors Area Agency on Aging of Southeast Arkansas, Inc. Pine Bluff, Arkansas Report on the Financial Statements We have audited the accompanying financial statements of Area Agency on Aging of Southeast Arkansas, Inc. (the Agency), which comprise the statement of financial position as of June 30, 2017, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 Agency'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 Agency'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.

5 Board of Directors Area Agency on Aging of Southeast Arkansas, Inc. Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Area Agency on Aging of Southeast Arkansas, Inc. as of June 30, 2017, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information including the schedules of revenues and expenses, computation of indirect cost rate, the schedule of expenditures of federal awards required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and the schedule of expenditures of state awards as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of units of service as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2017, on our consideration of the Agency'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 in considering the Agency's internal control over financial reporting and compliance. Little Rock, Arkansas October 31, 2017

6 Statement of Financial Position June 30, 2017 Assets Current Assets Cash and cash equivalents $ 1,658,764 Grant and program receivables 819,462 Other receivables 6,616 Inventory 101,310 Prepaid expenses 1 Total current assets 2,586,153 Property and Equipment, at Cost Buildings 1,953,936 Land 27,795 Leasehold improvements 158,548 Furniture and equipment 602,376 Vehicles 7,714,152 10,456,807 Less accumulated depreciation 7,392,419 3,064,388 Noncurrent Assets Receivables related parties, net of allowance 304,709 Total noncurrent assets 304,709 Total assets $ 5,955,250 See Notes to Financial Statements

7 Liabilities and Net Assets Current Liabilities Current portion of long-term debt $ 13,901 Accounts payable 219,677 Accrued expenses 775,989 Unearned revenues 6,922 Total current liabilities 1,016,489 Long-term Debt 36,824 Unrestricted Net Assets Capitalized funds 3,064,388 Unapplied funds 1,837,549 Total unrestricted net assets 4,901,937 Total liabilities and net assets $ 5,955,250 3

8 Statement of Activities Unrestricted Revenues, Gains and Other Support Grant funds (federal, state and private) $ 6,826,636 Medicaid revenues 7,181,305 Medicare revenues 397,645 Other resources nonfederal 879,388 In-kind contributions 207,827 Total unrestricted revenues, gains and other support 15,492,801 Expenses Personnel and fringe benefits 8,072,562 Travel 62,540 Rent and utilities 209,480 Supplies 205,543 Fuel 1,032,038 Communications 136,852 Minor equipment 2,448 Indirect costs 1,325,257 Other costs 1,654,146 Raw food 1,149,555 Interest 16 Provider contracts (federal and nonfederal) 123,462 Depreciation 571,042 In-kind contributions 207,827 Total expenses 14,752,768 Change in Unrestricted Net Assets 740,033 Unrestricted Net Assets, Beginning of Year 4,161,904 Unrestricted Net Assets, End of Year $ 4,901,937 See Notes to Financial Statements 4

9 Statement of Cash Flows Operating Activities Change in unrestricted net assets $ 740,033 Item not requiring operating activities cash flows Depreciation 571,042 Gain on disposition of assets (16,814) Changes in Grants and programs receivable 92,973 Related parties and other receivables (19,221) Inventory 1,141 Accounts payable and accrued expenses (101,687) Unearned revenues (42,788) Prepaid expenses 21,184 Net cash provided by operating activities 1,245,863 Investing Activities Purchase of property, plant and equipment (1,514,491) Proceeds from sale of property, plant and equipment 16,814 Net cash used in investing activities (1,497,677) Financing Activities Proceeds from long-term debt 41,728 Principal payments on long-term debt (11,714) Net cash provided by financing activities 30,014 Decrease in Cash and Cash Equivalents (221,800) Cash and Cash Equivalents, Beginning of Year 1,880,564 Cash and Cash Equivalents, End of Year $ 1,658,764 See Notes to Financial Statements 5

10 Notes to Financial Statements June 30, 2017 Note 1: Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Area Agency on Aging of Southeast Arkansas, Inc. (the Agency) is a nonprofit corporation organized to cooperate with, and assist the government and private agencies in, accomplishing the purposes described in the Older Americans Act of Its principal activities and revenuegenerating programs consist of developing and carrying out programs to benefit persons 60 years old and older in the southeast Arkansas area, in compliance with prescribed grant conditions and other special requirements including the furnishing of certain amounts of cash or noncash contributions to the programs from nonfederal sources. In addition, Southeast Arkansas Transportation (SEAT), a program provided by the Agency, offers demand-response rural public transportation to assist transportation-disadvantaged citizens of all ages gain access to goods and services in southeast Arkansas. Funding is primarily provided by various federal grants, state grants, performance-based contracts and private contributions. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Agency considers all liquid investments with original maturities of three months or less to be cash equivalents. At June 30, 2017, cash equivalents consisted primarily of certificates of deposit. At June 30, 2017, the Agency s cash accounts exceeded the federally insured limits by approximately $1,245,000. The financial institution had pledged collateral, held by a third party, in the name of the Agency sufficient to insure approximately $1,230,000 of the excess deposits at June 30, The Agency has not obtained a legal opinion regarding the enforceability of the pledged security arrangement. Accounts Receivable The Agency reports accounts receivable for services rendered at net realizable amounts from thirdparty payers and others. The Agency provides an allowance for doubtful accounts, when necessary, based upon a review of outstanding receivables, historical collection information and existing economic conditions. No allowance was deemed necessary at the statement of financial position date. Accounts receivable are due in full when billed. Accounts are considered delinquent and subsequently written off as bad debts based on credit evaluation and specific circumstances of the account. 6

11 Notes to Financial Statements June 30, 2017 Inventory Inventories consist of various supplies and are valued at the lower of cost (determined using the first-in, first-out method) or market. Property and Equipment Property and equipment additions are stated at cost less accumulated depreciation and are depreciated on a straight-line basis over the estimated useful life of each asset. Assets under capital lease obligations and leasehold improvements are depreciated over the shorter of the lease term or their respective estimated useful lives. Property acquired with federal and state grants is considered owned by the Agency while used in the program for which it was purchased or in other future authorized programs. In addition, the federal and state governments have a reversionary interest in the property. The disposition of property purchased with federal and state grant funds, as well as any proceeds from its sale, is subject to federal/state regulations. The estimated useful lives for each major depreciable classification of property and equipment are as follows: Buildings and improvements Furniture and equipment years 5 20 years Long-lived Asset Impairment The Agency evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. No asset impairment was recognized during the year ended June 30, In-kind Contributions In addition to receiving cash contributions, the Agency receives in-kind contributions of personal services, building space and supplies from various donors. It is the policy of the Agency to record the estimated fair value of certain in-kind donations as an expense in its financial statements, and similarly increase contribution revenue by a like amount. For the year ended June 30, 2017, $207,827 was received in in-kind contributions. Unearned Revenue Revenue from grants for which expenditures for the specific grant purpose have not yet occurred is deferred and recognized when requirements have been satisfied. 7

12 Notes to Financial Statements June 30, 2017 Compensated Absences Agency policies permit most employees to accumulate vacation and sick leave benefits that may be realized as paid time off or, in limited circumstances, as a cash payment. Compensated absences liabilities are computed using the regular pay and termination pay rates in effect at the statement of financial position date. Employees receive between one-half and one and one-quarter days of accrued leave per month, depending on years of service, which is available to be taken the next month. Any accrued leave not taken by the end of the year is carried forward to the next year. No employee may carry forward more than 30 days of accrued leave. The amount of accrued leave at June 30, 2017, was $197,001 and is included in accrued expenses on the statement of financial position. Medicaid and Private Pay Revenue The Agency provides services to individuals for which payment is both the responsibility of the individual and under the Agency s agreements with third-party payers (including Medicaid). These revenues are reported at the estimated net realizable amounts from the individuals, third party payers and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payers. Retroactive adjustments are considered in the recognition of revenue on an estimated basis in the period the related service are rendered and such estimated amounts are revised in future periods as adjustments become known. Government Grants Support funded by grants is recognized as the Agency performs the contracted services or incurs outlays eligible for reimbursement under the grant agreements. Grant activities and outlays are subject to audit and acceptance by the granting agency and, as a result of such audit, adjustments could be required. Medical Malpractice Claims The Agency purchases medical malpractice insurance under a claims-made policy. Under such policy, only claims made and reported to the insurer are covered during the policy term, regardless of when the incident giving rise to the claim occurred. For covered claims, in general, the Agency bears no costs of litigating or settling any asserted claim. However, the Agency bears unlimited risk for individual and aggregate claims in excess of $1 million and $3 million, respectively. The Agency accrues the expense of its share of covered claims plus unasserted claims and unreported incidents occurring during the year by estimating the probable ultimate cost of any related claims. Agency management is unaware of any claims or incidents that might give rise to a malpractice claim and thus no accrual has been made at June 30, It is reasonably possible that the Agency s estimate of losses will change by a material amount in the near term. 8

13 Notes to Financial Statements June 30, 2017 Income Taxes The Agency is exempt from income taxes under Section 501 of the Internal Revenue Code and a similar provision of state law. However, the Agency is subject to federal income tax on any unrelated business taxable income. The Agency files tax returns in the U.S. federal jurisdiction. Subsequent Events Subsequent events have been evaluated through the date of the Independent Auditor s Report, which is the date the financial statements were available to be issued. Note 2: Grant and Program Revenues Grant revenues are recognized for financial statement purposes to the extent of related program expenditures. Performance-based program revenues are reported at the estimated net realizable amounts due from patients, third-party payers and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with Medicare. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined. At June 30, 2017, receivables of $819,462 from federal and state funding sources, including Medicare and Medicaid, represent amounts of expenditures incurred in excess of grant funds received and fees earned for services performed. Note 3: Related Party Transactions The Agency manages the daily operations of the following entities: Heritage Manors of AAA of Southeast Arkansas, Inc. AAA Elderly Housing Brett Bradshaw Manor, Inc. AAA Elderly Housing Heritage Manor of Sheridan, Inc. AAA Elderly Housing Heritage Manor of Wilmot, Inc. AAA Elderly Housing Heritage Manor of Crossett, Inc. AAA Elderly Housing Heritage Manor of Fordyce, Inc. AAA Elderly Housing Heritage Court of Sheridan, Inc. AAA Elderly Housing Heritage Villa of Pine Bluff, Inc. AAA Elderly Housing William Bill Sanders Manor, Inc. 9

14 Notes to Financial Statements June 30, 2017 The Agency manages these housing projects under the terms of a management agreement approved by the U.S. Department of Housing and Urban Development. Additionally, these housing projects borrow money from the Agency to meet day-to-day operating obligations. These housing projects repay these amounts as cash flow allows. The amounts due from the nine related parties totaled $304,709 at June 30, The Agency has stated its intent not to demand receipt of the amounts due in the near term, and these amounts do not bear interest. Therefore, the amounts have been included as a noncurrent asset for financial statement purposes. The Agency earned management fees totaling $159,030 from these housing projects during the year ended June 30, Note 4: Functional Expenses The costs of supporting the various programs and other activities have been summarized below on a functional basis. Certain costs have been allocated among the program services and administration and general categories based on total expenses of each program and other methods. Expenses incurred by the Agency, classified by functional categories, were as follows: Program services $ 13,427,511 Administration and general 1,325,257 $ 14,752,768 Note 5: Pension Plan The Agency has a defined contribution pension plan covering substantially all employees. The board of directors annually determines the amount, if any, of the Agency s contribution to the plan. Pension expense of $119,171 was incurred during the year ended June 30,

15 Notes to Financial Statements June 30, 2017 Note 6: Significant Estimates and Concentrations Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following: Malpractice Claims Estimates related to the accrual for medical malpractice claims are described in Note 1. Economic Dependency The Agency is economically dependent upon revenue provided by state and federal grants, Medicare and Medicaid. During the year ended June 30, 2017, approximately 93 percent of the Agency s revenue was provided by these sources. Workers Compensation Program The Agency participates in a workers compensation trust program with other aging programs within the state of Arkansas. Premiums are paid monthly by the Agency based on projected claims and past experience. Annually, the trust is audited and any additional premiums are assessed, or excess payments are determined. Additional premiums or excess payments are recognized as expense or reductions of expense when paid or received. Arkansas Medicaid Non-Emergency Transportation Program During the year ended June 30, 2017, approximately 21 percent of the Agency s revenue was provided by the Medicaid Non-Emergency Transportation program with the State of Arkansas Department of Human Services. In April of 2017, the Agency experienced a 15% funding decrease to this program. The Agency has budgeted for a reduction of $380,000 of revenue related to the Medicaid Non-Emergency Transportation contract. Management of the Agency will continue to monitor the funding of this program and make adjustments to operations, as necessary. 11

16 Supplementary Information

17 Schedule of Revenues and Expenses Title III-B Actual Budget Revenues Grant funds federal $ 206,659 $ 206,659 In-kind contributions 39,416 39, , ,075 Expenses Personnel and fringe benefits 132, ,518 Rent and utilities 16,199 16,199 Supplies 10,008 - Fuel 9,666 19,675 Communications 4,200 4,200 Indirect costs 18,787 18,787 Other costs 5,346 5,346 Provider contracts (federal and nonfederal) 9,934 9,934 In-kind contributions 39,416 39, , ,075 Change in Unrestricted Net Assets $ - $ - 12

18 Schedule of Revenues and Expenses Title III-C1 Actual Budget Revenues Grant funds federal $ 376,212 $ 376,212 In-kind contributions 71,754 73,133 Other resources nonfederal 39, , ,345 Expenses Personnel and fringe benefits 95,080 95,080 Rent and utilities 15,300 15,300 Supplies 6,884 21,300 Fuel 14,416 - Communications 1,800 1,800 Indirect costs 34,201 34,201 Other costs 26,223 19,524 Raw food 213, ,000 Provider contracts (federal and nonfederal) 9,007 9,007 In-kind contributions 71,754 73, , ,345 Change in Unrestricted Net Assets $ - $ - 13

19 Schedule of Revenues and Expenses Title III-C2 Actual Budget Revenues Grant funds federal $ 279,013 $ 279,013 In-kind contributions 53,216 52,042 Other resources nonfederal 40, , ,055 Expenses Personnel and fringe benefits 112, ,301 Rent and utilities 10,095 10,095 Supplies 6,626 6,626 Fuel 10,423 10,423 Communications 1,500 1,500 Indirect costs 25,365 25,365 Other costs 19,125 12,415 Raw food 128,378 95,000 Provider contracts (federal and nonfederal) 5,288 5,288 In-kind contributions 53,216 52, , ,055 Change in Unrestricted Net Assets $ - $ - 14

20 Schedule of Revenues and Expenses Title III-D Actual Budget Revenues Grant funds federal $ 18,709 $ 18,709 Expenses Travel Supplies 9,641 9,641 Other costs 8,568 8,568 18,709 18,709 Change in Unrestricted Net Assets $ - $ - 15

21 Schedule of Revenues and Expenses Title III-E Actual Budget Revenues Grant funds federal $ 130,326 $ 130,326 In-kind contributions 43,441 43, , ,767 Expenses Personnel and fringe benefits 89,992 89,992 Travel Supplies Fuel 3 - Indirect costs 11,849 11,849 Other costs 4,985 4,985 Provider contracts (federal and nonfederal) 22,500 22,500 In-kind contributions 43,441 43, , ,767 Change in Unrestricted Net Assets $ - $ - 16

22 Schedule of Revenues and Expenses Social Services Block Grant Actual Budget Revenues Grant funds federal $ 171,750 $ 171, , ,750 Expenses Personnel and fringe benefits 112, ,301 Rent and utilities 5,400 5,400 Supplies 4,328 12,435 Fuel 8,107 - Communications 1,500 1,500 Indirect costs 15,614 15,614 Provider contracts (federal and nonfederal) 24,500 24, , ,750 Change in Unrestricted Net Assets $ - $ - 17

23 Schedule of Revenues and Expenses Nutrition Services Incentive Program Actual Budget Revenues Grant funds federal $ 265,226 $ 265,226 Expenses Raw food 253, ,575 Provider contracts (federal and nonfederal) 11,651 11, , ,226 Change in Unrestricted Net Assets $ - $ - 18

24 Schedule of Revenues and Expenses State Older Workers Actual Budget Revenues Grant funds state $ 99,599 $ 99,599 Expenses Personnel and fringe benefits 90,545 90,545 Indirect costs 9,054 9,054 99,599 99,599 Change in Unrestricted Net Assets $ - $ - 19

25 Schedule of Revenues and Expenses State Aging Services Actual Budget Revenues Grant funds state $ 452,739 $ 452,739 Expenses Personnel and fringe benefits 350, ,291 Travel 10,026 10,026 Supplies 1,401 - Fuel 257 1,658 Communications 3,800 3,800 Indirect costs 41,158 41,158 Other costs 25,962 25,964 Raw food 19,842 19, , ,739 Change in Unrestricted Net Assets $ - $ - 20

26 Schedule of Revenues and Expenses Cigarette Tax Actual Budget Revenues Grant funds state $ 198,693 $ 198,693 Expenses Personnel and fringe benefits 152, ,331 Supplies Fuel Indirect costs 18,063 18,063 Other costs 11,693 11,693 Provider contracts (federal and nonfederal) 15,612 15, , ,693 Change in Unrestricted Net Assets $ - $ - 21

27 Schedule of Revenues and Expenses FTA-5311 Actual Budget Revenues Grant funds federal $ 2,453,524 $ 3,396,840 Other resources nonfederal 3,212,827 2,844,652 Fare revenue 216, ,000 5,882,643 6,451,492 Expenses Personnel and fringe benefits 3,261,415 3,678,106 Travel 3,331 8,000 Rent and utilities 18,090 19,000 Supplies 37,847 24,000 Fuel 916,022 1,289,346 Communications 77,141 94,100 Minor equipment purchases 2,448 - Indirect costs 518, ,500 Other costs 920, ,440 5,756,098 6,451,492 Change in Unrestricted Net Assets $ 126,545 $ - 22

28 Schedule of Revenues and Expenses Senior Center Funding Actual Budget Revenues Grant funds state $ 473,079 $ 473,079 Expenses Personnel and fringe benefits 281, ,667 Rent and utilities 16,038 16,038 Supplies 3,708 11,421 Fuel 7,714 - Communications 2,522 4,080 Indirect costs 43,007 43,007 Other costs 7,508 5,951 Raw food 86,014 86,014 Provider contracts (federal and nonfederal) 24,901 24, , ,079 Change in Unrestricted Net Assets $ - $ - 23

29 Schedule of Revenues and Expenses In God We Trust Actual Budget Revenues Grant funds state $ 5,807 $ - 5,807 - Expenses Raw food 5,807-5,807 - Change in Unrestricted Net Assets $ - $ - 24

30 Schedule of Revenues and Expenses Ombudsman Actual Budget Revenues Grant funds federal $ 26,000 $ 26,000 26,000 26,000 Expenses Personnel and fringe benefits 6,800 9,863 Travel 4,200 4,200 Rent and utilities Supplies 5,200 5,200 Other costs 6,377 6,377 22,937 26,000 Change in Unrestricted Net Assets $ 3,063 $ - 25

31 Computation of Indirect Cost Rate Program Services Indirect Total Expenses Personnel and fringe benefits $ 8,072,562 $ - $ 8,072,562 Travel 62,540-62,540 Rent and utilities 209, ,480 Supplies 205, ,543 Fuel 1,032,038-1,032,038 Communications 136, ,852 Minor equipment purchases 2,448-2,448 Indirect costs - 1,325,257 1,325,257 Other costs 1,654,146-1,654,146 Raw food 1,149,555-1,149,555 Depreciation 571, ,042 Provider contracts (federal and nonfederal) 123, ,462 $ 13,219,668 $ 1,325,257 $ 14,544, The above schedule was prepared in accordance of Subpart 9900 and Part 31 of the Federal Acquisition Regulations (FAR). 2. Distribution Base Total program costs less interest and in-kind expense. 3. Indirect Cost Pool The following types of costs are included in the indirect cost pool where such costs are not identifiable with a single program: Office space rental, utilities, etc. Insurance and indemnification Maintenance and repair of office equipment Legal and accounting General and administrative salaries and expenses Of total indirect costs, $408,483 represents salaries and fringe benefits of employees such as the executive director, chief financial officer, etc. 4. Unallowed expenses such as interest, bonuses, advertising costs, etc., have been excluded from the above calculations. 5. Rate Calculation: Total indirect costs Total direct base costs = Indirect cost rate $1,325,257 = $13,219, % 26

32 Schedule of Units of Service (Unaudited) Units of Service TITLE III B Legal 326 Transportation 14,613 Socialization 45,725 60,664 TITLE III C Congregate Meals 49,891 Home Delivered Meals 41,662 91,553 TITLE III D Health Promotion Evidence Based 6,774 6,774 TITLE III E Counseling/Support Group/Training 97 Respite Caregiver 2,251 2,348 NUTRITION SERVICES INCENTIVE PROGRAM Congregate Meals 79,807 Home Delivered Meals 151, ,663 SSBG Congregate Meals 3,548 Home Delivered Meals 17,921 21,469 STATE AGING SERVICES Material Aid 3 Mental Health Client Referrals & Assessments 11 Chore 475 Client Representation 1,291 Personal Care 11,142 Information & Assistance 2,425 15,347 CIGARETTE TAX Transportation 9,709 Home Delivered Meals 22,741 32,450 STATE SENIOR CITIZENS CENTERS Transportation 8,495 Socialization 35,846 Congregate Meals 21,058 Home Delivered Meals 24,550 89,949 27

33 Schedule of Units of Service (Unaudited) (Continued) Units of Service OTHER Transportation 388 Congregate Meals 5,300 Home Delivered Meals 31,458 Material Aid 2 37,148 ELDERCHOICE MEDICAID Home Delivered Meals 129, ,376 Total 718,741 NOTE: As required under Guidelines for Financial and Compliance Audits of Programs Funded by the Department of Human Services, accountability for units of service must be reported. The above schedule represents units served by the Area Agency on Aging of Southeast Arkansas, Inc. and its following subrecipients: City of Monticello NOTE: A unit as shown in the above schedule is calculated as the following: Transportation Each one-way trip transporting a client from one location to another Socialization One session of at least 30 minutes associated with Senior Center activities Congregate Meals Each individually served meal at a Senior Center location Home Delivered Meal Each individually served meal delivered to a client s home Adult Day Care Each individual participant in day care activities 28

34 Schedule of Expenditures of Federal Awards Federal Grantor/Pass-Through Grantor/Program or Cluster Title Federal CFDA Number Pass-Through Entity Identifying Number Passed Through to Subrecipients Total Federal Expenditures U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ Special Programs for the Aging Title III, Part B Grants for Supportive Services and Senior Centers $ 9,934 $ 206,659 U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ Special Programs for the Aging Title III, Part C1 Nutrition Services , ,212 U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ Special Programs for the Aging Title III, Part C2 Nutrition Services , ,013 U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ Nutrition Services Incentive Program , ,226 Total Aging Cluster 35,880 1,127,110 U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ Special Programs for the Aging Title VII, Chapter 2 Long-Term Care Ombudsman Services for Older Individuals ,000 U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ Special Programs for the Aging Title III, Part D Disease Prevention and Health Promotion Services ,709 U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ National Family Caregiver Support, Title III, Part E ,326 U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ Affordable Care Act Medicare Improvements for Patients and Providers ,450 U.S. Department of Health and Human Services/ Arkansas Department of Human Services/ Social Services Block Grant , ,750 Total U.S. Department of Health and Human Services 60,380 1,485,345 Federal Transit Authority/ Arkansas Highway and Transportation Department/ Formula Grants for Rural Areas ,661,137 $ 60,380 $ 5,146,482 The accompanying notes are an integral part of this schedule. 29

35 Notes to the Schedule of Expenditures of Federal Awards 1. The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Agency under programs of the federal government for the year ended June 30, The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Agency, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Agency. 2. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Agency has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. 30

36 Schedule of Expenditures of State Awards Grantor Program Revenues/ Expenditures Arkansas Department of Human Services State Older Workers $ 99,599 Cigarette Tax 198,693 State Aging Services 452,739 Senior Citizens Center Grants 473,079 DAAS Other Revenue 565 In God We Trust 5,807 Arkansas State Highway and Transportation Department Public Trust 367,838 $ 1,598,320 Program Revenues Arkansas Department of Human Services (Medicaid) $ 1,938,952 NOTE: Revenue recognized from the various Medicaid programs is included in the total of program revenues in the accompanying statement of activities. Medicaid revenue noted above represents 27 percent (the percentage the State of Arkansas contributed) of total Medicaid revenue recognized during the year ended June 30,

37 Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards Board of Directors Area Agency on Aging of Southeast Arkansas, Inc. Pine Bluff, Arkansas We have audited, 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, the financial statements of Area Agency on Aging of Southeast Arkansas, Inc. (the Agency), which comprise the statement of financial position as of June 30, 2017, 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 thereon dated October 31, Internal Control Over Financial Reporting Management of the Agency is responsible for establishing and maintaining effective internal control over financial reporting (internal control). In planning and performing our audit of the financial statements, we considered the Agency s 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 the Agency s internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Agency 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. 32

38 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. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Agency s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Little Rock, Arkansas October 31,

39 Report on Compliance for the Major Federal Program and Report on Internal Control Over Compliance Independent Auditor s Report Board of Directors Area Agency on Aging of Southeast Arkansas, Inc. Pine Bluff, Arkansas Report on Compliance for the Major Federal Program We have audited Area Agency on Aging of Southeast Arkansas, Inc. s (the Agency) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on its major federal programs for the year ended June 30, The Agency s major federal program is identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the federal statutes, regulations, contracts and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for the Agency's major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Agency 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 the major federal program. However, our audit does not provide a legal determination of the Agency s compliance. 34

40 Opinion on the Major Federal Program In our opinion, Area Agency on Aging of Southeast Arkansas, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on the major federal program for the year ended June 30, Report on Internal Control Over Compliance Management of the Agency is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Agency s internal control over compliance with the types of requirements that could have a direct and material effect on its major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the 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 on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Little Rock, Arkansas October 31,

41 Schedule of Findings and Questioned Costs Summary of Auditor s Results Financial Statements 1. The type of report the auditor issued on whether the financial statements audited were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) was: Unmodified Qualified Adverse Disclaimer 2. The independent auditor s report on internal control over financial reporting disclosed: Significant deficiency(ies)? Yes None reported Material weakness(es)? Yes No 3. Noncompliance considered material to the financial statements was disclosed by the audit? Yes No Federal Awards 4. The independent auditor s report on internal control over compliance for the major federal awards program disclosed: Significant deficiency(ies)? Yes None reported Material weakness(es)? Yes No 5. The opinion expressed in the independent auditor s report on compliance for the major federal award was: Unmodified Qualified Adverse Disclaimer 6. The audit disclosed findings required to be reported by 2 CFR (a)? Yes No 36

42 Schedule of Findings and Questioned Costs (Continued) 7. The Agency s major program was: Cluster/Program CFDA Number Formula Grants for Rural Areas The threshold used to distinguish between Type A and Type B programs was $750, The Agency qualified as a low-risk auditee? Yes No Findings Required to be Reported by Government Auditing Standards Reference Number Finding No matters are reportable. Findings Required to be Reported by Uniform Guidance Reference Number Finding No matters are reportable. 37

43 Summary Schedule of Prior Audit Findings Reference Number Summary of Finding Status No matters are reportable. 38