AREA AGENCY ON AGING OF PALM BEACH/TREASURE COAST, INC. DBA YOUR AGING RESOURCE CENTER DECEMBER 31, 2011 TABLE OF CONTENTS

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1 DECEMBER 31, 2011 TABLE OF CONTENTS Independent Auditor s Report 1-2 Pages 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 9-19 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 27-29

2 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, and the related statements of activities, functional expenses and cash flows for the year then ended. These financial statements are the responsibility of the Agency'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 2010 financial statements and, in our report dated June 30, 2011, 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. 1

3 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, 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 30, 2012, 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 conducted for the purpose of forming an opinion on the financial statements 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 financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards and state financial assistance is fairly stated in all material respects in relation to the financial statements as a whole. West Palm Beach, Florida July 30,

4 Statement of Financial Position (with Comparative Totals for December 31, 2010) Current assets ASSETS Cash $ 970,787 $ 551,847 Federal and state grants receivable 1,577,058 2,125,983 Other receivables 310, ,818 Prepaid expenses 11,884 11,040 Advances to providers 228, ,083 Total current assets 3,098,489 3,324,771 Property and equipment, net 73, ,021 Total assets $ 3,171,850 $ 3,436,792 3

5 LIABILITIES AND NET ASSETS Current liabilities Accounts payable $ 61,098 $ 66,945 Accrued expenses 101, ,934 Due to providers 2,626,597 2,571,472 Deferred revenue 296, ,947 Total current liabilities 3,085,492 3,237,298 Net assets Unrestricted Current ,021 Equity in fixed assets 73, ,021 Total unrestricted 73, ,042 Temporarily restricted 12,375 45,452 Total net assets 86, ,494 Total liabilities and net assets $ 3,171,850 $ 3,436,792 See notes to financial statements. 4

6 Statement of Activities Year Ended (with Comparative Totals for December 31, 2010) Temporarily Unrestricted Restricted Total Total Revenues Grants and donations Federal grants $ 11,157,886 $ $ 11,157,886 $ 12,044,341 State grants 5,912,613 5,912,613 6,648,768 Other grants and contributions 675,327 48, ,546 1,098,792 Total grants and donations 17,745,826 48,219 17,794,045 19,791,901 Special events 14,522 14,522 13,535 Net assets released from restrictions 81,296 (81,296) Total revenues 17,841,644 (33,077) 17,808,567 19,805,436 Expenses Program services: Older Americans Act 7,468,636 7,468,636 8,282,667 Community Care for the Elderly 3,370,543 3,370,543 4,070,389 Home Care for the Elderly 307, , ,110 Alzheimer's Disease Initiative 1,592,339 1,592,339 1,524,471 Respite for Elders Living in Everyday Families 111, ,945 98,398 Serving Health Insurance Needs of Elders 151, , ,527 Nutrition Services Incentive Program 673, , ,586 Medicaid Waiver Specialist 141, , ,009 Wellness 5,148 5, ,806 Other DOEA Programs 1,284,158 1,284,158 1,185,284 Foster Grandparents 1,291,302 1,291,302 1,384,115 Other non-doea 196, , ,967 Total program services 16,593,422 16,593,422 18,520,329 Supporting services General and administrative 1,312,699 1,312,699 1,379,667 Fundraising 15,582 15,582 13,277 Total expenses 17,921,703 17,921,703 19,913,273 Change in net assets (80,059) (33,077) (113,136) (107,837) Net assets, beginning of year 154,042 45, , ,331 Net assets, end of year $ 73,983 $ 12,375 $ 86,358 $ 199,494 See notes to financial statements. 5

7 Statement of Functional Expenses Year Ended (with Comparative Totals for December 31, 2010) 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 $ 447,878 $ 7,800 $ 62,823 Payroll taxes and benefits 110,049 2,477 14,525 Travel 4,308 15,439 Communications/postage 36,612 6,235 Utilities 7,931 2,098 Advertising Insurance 5,943 1,153 Maintenance and repair 8,596 1,136 Printing/supplies 15,910 4,537 Building costs 123,953 32,978 Equipment 1, Professional fees/legal/audit 4, ,017 Sub-contractors 6,655,598 3,361,445 55,606 1,588, , ,297 Program supplies 75 Depreciation 20,160 9, , ,817 Food and food supplies Subsidy payments 250,788 Volunteer recognition 5,218 Training 3,009 2,011 Other 22, Total expenses 7,468,636 3,370, ,223 1,592, , , ,114 Allocation of management and general expenses 597, ,807 24, ,465 8,961 12,140 53,882 Total expenses after allocation $ 8,066,491 $ 3,640,350 $ 331,816 $ 1,719,804 $ 120,906 $ 163,804 $ 726,996 6

8 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 $ 94,293 $ 2,909 $ 349,288 $ 479,448 $ 95,422 $ 1,539,861 $ 628,117 $ 12,150 $ 2,180,128 $ 2,243,498 25,509 87, ,899 26, , ,486 1, , ,630 1, , ,753 1, ,378 25, , ,426 2,179 15,976 16,234 6,601 83,837 18, , ,481 1,243 7,527 5,997 5,049 29,845 14,052 43,897 44, , ,890 6,318 4,376 6, ,842 18,066 36,908 41, ,855 3, ,390 19,611 38,001 35, ,013 23,406 5,091 58,442 39,399 97, ,797 13, , ,999 35, , , , , ,642 4, ,165 6,038 14,203 30, ,452 6,296 2,831 22,221 28,896 51,117 70, ,740 13,095,943 13,095,943 14,575, ,323 5,451 3,702 12,029 12,029 26, ,466 3, ,789 3, ,374 57,512 3,538 3,538 10, ,874 12, , , , , ,620 6, , , ,145 2, ,813 7, ,375 28, ,008 11,695 62,601 68, , , ,180 5,148 1,284,158 1,291, ,170 16,593,422 1,312,699 15,582 17,921,703 19,913,273 11, , ,367 15,703 1,328,281 (1,312,699) (15,582) $ 152,481 $ 5,560 $ 1,386,953 $ 1,394,669 $ 211,873 $ 17,921,703 $ $ $ 17,921,703 $ 19,913,273 See notes to financial statements. 7

9 Statement of Cash Flows Year Ended (with Comparative Totals for December 31, 2010) Cash flows from operating activities: Increase (decrease) in net assets $ (113,136) $ (107,837) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 48,374 57,512 (Increase) decrease in operating assets Federal and state grants receivable 548, ,675 Other grants receivable (11,555) 73,921 Advances to providers 108,696 63,641 Prepaid expenses (844) (1,086) Increase (decrease) in operating liabilities Accounts payable (5,847) (14,715) Accrued expenses (51,379) 61,601 Due to providers 55,125 (442,156) Deferred revenue (149,705) (122,019) Net cash provided by operating activities 428, ,537 Cash flows from investing activities: Payments for property and equipment (9,714) (46,821) Net cash used by investing activities (9,714) (46,821) Net increase in cash 418, ,716 Beginning cash 551, ,131 Ending cash $ 970,787 $ 551,847 See notes to financial statements. 8

10 Notes to Financial Statements 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 representatives. 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 548,353 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 2011, 2,200 volunteers affiliated with the Agency reported more than 312,000 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 $6.5 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

11 Notes to Financial Statements 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

12 Notes to Financial Statements 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

13 Notes to Financial Statements 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 $87,052 as of. 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, 2008, December 31, 2009, December 31, 2010, and. Funding Ninety-six 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 two banks. Accounts at the banks are insured by the Federal Deposit Insurance Corporation (FDIC). The standard FDIC insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. From December 31, 2010, through December 31, 2012, at all FDIC-insured institutions, deposits held in noninterest-bearing transaction accounts will be fully insured regardless of the amount in the account. As of, the Agency did not have any cash in excess of the FDIC insurance. 12

14 Notes to Financial Statements NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment as of, consisted of the following: Equipment $ 431,631 Less: accumulated depreciation (358,270) $ 73,361 The State of Florida Department of Elder Affairs holds a reversionary interest in all non-expendable tangible personal property acquired with funds received from the department. NOTE 4 OTHER RECEIVABLES Other receivables consist of the following: Children s Services Council of Palm Beach County $ 32,914 School Districts 20,378 Palm Beach County 228,828 Employee loans 24,175 Other 4,078 $ 310,373 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 $ 5,313 Emergency Readiness 6,246 Other programs 816 $ 12,375 13

15 Notes to Financial Statements NOTE 5 TEMPORARILY RESTRICTED NET ASSETS (Continued) Net assets released from restrictions were as follows: Foster Grandparents Program $ 3,652 Senior Advocacy 33,671 Volunteers Serving Communities 29,223 Retired and Senior Volunteer Program 9,750 Wellness 5,000 $ 81,296 NOTE 6 OTHER GRANT AND CONTRIBUTION REVENUE Other grant and contribution revenue consisted of the following: Foster Grandparent Program Children s Services Council of Palm Beach County $ 225,905 Children s Services Council Okeechobee County 17,520 Palm Beach County 376,245 United Way 9,970 Contributions 88,582 Other 5,324 NOTE 7 LINE OF CREDIT $ 723,546 On January 1, 2011, the Agency obtained a $250,000 revolving line of credit from The Harris Bank N.A for working capital needs. The line of credit is unsecured and interest is payable bimonthly at an annual rate of 3.25%. On August 29, 2011, The Agency borrowed $150,000 with a maturity date of January 25, The Agency repaid the entire principal on December 30, 2011, and incurred interest expense of $1,598 for the year ending. At, the Agency had no outstanding balance. 14

16 Notes to Financial Statements NOTE 8 - 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. In March 2011, the Agency reduced employer contributions from 10% to 5%. Furthermore, the Agency eliminated employer contributions effective August 1, Total contributions of $93,365 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 9 - LEASES Operating Lease In November 2007, the Agency entered into a 10-year office space lease for its Palm Beach County facility; the lease commenced May 1, In the prior year, the Agency requested that the lease terms be amended by the Landlord, and a portion of the premises be deleted from the Agency s original lease and leased to the Department of Elder Affairs (DOEA). In connection with this amendment, the Agency agreed to guarantee the lease agreement between the Landlord and the DOEA. As a result of the amendment, the Agency s annual base rent decreased, and its percentage of the CAM operating expenses, decreased from 62% to 51.8%. 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 In October 2008, the Agency entered into a second lease for their Treasure Coast Facility; the lease commenced November 1, 2008, and had a two year term. In the prior year, the Agency elected to exercise their option of renewing the lease, and extended the lease through October 31, Building costs for both leases, which include operating expenses, were $653,811 for the year ended. 15

17 Notes to Financial Statements NOTE 9 LEASES (Continued) The future minimum annual lease payments related to this both leases are as follows: 2012 $ 453, , , ,172 Thereafter 1,001,650 Total $ 2,727,605 NOTE 10 - 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. The Agency must meet certain contractual matching requirements through cash and/or in-kind contributions. These requirements are proportionately passed on to the Agency s providers through contractual provisions in their subcontracts. The subcontract provider s match is reported to the Agency and tracked to ensure that all contractual matching requirements are met. However, the match provided by the Agency s providers is not recognized in the financial statements of the Agency. 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. For the year ended, the Agency met its match requirements and the more significant grants are summarized on the next page. 16

18 Notes to Financial Statements NOTE 10 - SUPPORT THAT REQUIRED MATCHING FUNDS (Continued) Community Care For the Elderly Older Americans Act IC 011 (2) IC 010 (1) Title III Title III ADM Amount received or receivable requiring match $ 1,645,370 $ 3,704,254 $ 7,454,199 $ 828,349 Match required 182, , , ,116 Total matched expenses 166, , , ,982 Funds over (under) required match ($ 16,155) $ 387,159 $ 86,481 $ 47,866 (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 Amount received or receivable $ 529,611 requiring match Match required 58,846 Total matched expenses 192,859 Funds over (under) required match $ 134,013 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: Foster Title III/ADM Grandparents Palm Beach County $ 145,266 $ Department of Elder Affairs 178,716 Children's Services Council of -Palm Beach County 184,015 -Okeechobee County 8,520 Others 324 $ 323,982 $ 192,859 17

19 Notes to Financial Statements NOTE 11 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 that have started, as of, are as follows: Unexpended as of Nutrition Services Incentive Program $ 807,085 Emergency Home Energy Assistance 232,964 Community Care for the Elderly Services (CCE) 1,849,927 Local Service Programs 117,092 Alzheimer s Respite Services 1,223,012 Relief 36,629 Commitments to providers $ 4,266,709 Contingencies The Agency is a defendant in a number of legal actions. While the final outcome cannot be determined at this time, management is of the opinion that the ultimate liability, if any, from the final resolution of these matters will not have a material effect on the Agency s financial statements. NOTE 12 SUBSEQUENT EVENTS The Agency has evaluated subsequent events through July 30, 2012, the date which the financial statements were available to be issued. Line of Credit The Agency renewed the line of credit with BMO Harris Bank N.A. (formerly known as The Harris Bank N.A.) in the amount of $250,000 on February 15, The renewed line of credit has a maturity date of January 31, In March of 2012, $200,000 was borrowed under this line of credit. 18

20 Notes to Financial Statements NOTE 13 RELATED PARTIES Your Aging Resource Center Foundation, Inc. The Your Aging Resource Center Foundation (Foundation) was formed to assist the Area Agency on Aging of Palm Beach/Treasure Coast, Inc. as a supporting agency organization as defined in Section 509(a)(3) of the internal Revenue Code. The principal purpose of the Foundation is to support the Agency in its charitable efforts to improve the lives of senior citizens in Palm Beach County, Indian River County and Okeechobee County, Florida. The Foundation s function include, but are not be limited to; raising, receiving, investing, managing and administering funds for the Agency to use for its charitable purposes. The By-Laws of the Foundation specify that the Chief Executive Officer of the Agency is on the Board of the Foundation. There were no transactions between the Agency and the Foundation in the fiscal year ending. Board Members One of the Board members is an Officer of The Harris Bank, N.A., which is the bank selected by the Board of Directors after reviewing three proposals. A Board member is also an Officer of MorseLife, Inc. which had a contract for OAA caregiver counseling. Both board members abstained prior to discussion and voting on the items they had a conflict on. 19

21 Schedule of Expenditures of Federal Awards And State Financial Assistance Year Ended 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 I7011 $ 23,090 $ 23,091 $ Title III Administration IA , ,349 Title III B IA111 3,466,784 3,466,784 2,685,674 Total Title III 4,295,133 4,295,133 2,685,674 Title III C IA111 1,285,346 1,275,784 1,275,784 Title III C IA111 1,831,709 1,821,164 1,821,167 Title III D ID011 99,366 81,970 Title IV & II Discretionary Projects XQ ,118 43,118 Total Title IV & II Discretionary Projects 43,118 43,118 Title III E IA , , ,525 Total Older Americans Act 8,468,229 8,430,727 6,655,150 Nutrition Services Incentive Program IU , , ,334 Nutrition Services Incentive Program IU , , ,963 Total Nutrition Services Incentive Program 1,618, , ,297 Emergency Home Energy Assistance IP , , ,571 Emergency Home Energy Assistance IP , , ,495 Total Emergency Home Energy Assistance 1,147, , ,066 Medical Assistance Program IX ,793 68,454 Medical Assistance Program IX ,793 69,970 Medical Assistance Program IW ,629 68,308 Medical Assistance Program IW ,629 70,845 Total Medicaid 572, ,577 CMS Research IN , ,584 CMS Research IN ,079 37,043 CMS Research IM009 64,389 6,522 Total CMS Research 380, ,149 ARRA CDSMP Grant XQ135 87,206 56,047 Total Department of Health and Human Services 12,274,852 10,108,699 7,548,513 Department of Agriculture Passed Through State of Florida Department of Elder Affairs Supplemental Nutrition Assistance Program XQ010 41,762 20,338 Supplemental Nutrition Assistance Program XQ012 31,120 11,980 Total Supplemental Nutrition Assistance Program 72,882 32,318 Corporation for National and Community Service Retired and Senior Volunteer Program SRSFL , ,116 Retired and Senior Volunteer Program SRSFL ,000 79,405 Total Retired and Senior Volunteer Program 288, ,521 Foster Grandparent Program SFSFL , ,611 Americorps B , ,002 Americorps Z ,504 13,916 Total Americorps 283, ,918 Total Corporation for National and Community Service 1,121, ,050 Department of Justice Enhanced Training and Services to End Violence and Abuse of Women Later in Life EW-AX-K ,000 42,305 20

22 Schedule of Expenditures of Federal Awards And State Financial Assistance Year Ended CFDA Contract/ Amounts CFSA Grant Award Paid to Grantor/Program Title Number Number Amount Expenditures Subrecipients Passed Through State of Florida Office of the Attorney General Victims of Crime V ,900 81,819 Victims of Crime V ,900 25,695 Total Victims of Crime 217, ,514 Total Department of Justice 692, ,819 Total Federal Awards $ 14,162,086 $ 11,157,886 $ 7,548,513 State Financial Assistance Department of Elder Affairs Older Americans Act N/A IA111 $ 34,909 $ 34,909 $ Community Care for the Elderly IX ,793 68,454 Community Care for the Elderly IX ,793 69,969 Community Care for the Elderly IC011 3,581,297 1,645,370 1,577,299 Community Care for the Elderly IC010 3,704,254 1,784,146 1,790,145 Local Service Programs IL , , ,284 Local Service Programs IL , , ,476 Alzheimer's Disease Initiative IZ011 2,224,450 1,001,438 1,001,438 Alzheimer's Disease Initiative IZ010 1,383, , ,603 Home Care for the Elderly IH , ,349 25,491 Home Care for the Elderly IH , ,973 28,257 Respite for Elders Living in Everyday Families IR ,958 61,670 55,637 Respite for Elders Living in Everyday Families IR ,959 49,972 45,811 Total Department of Elder Affairs 12,813,511 5,912,613 5,344,441 Total State Financial Assistance $ 12,813,511 $ 5,912,613 $ 5,344,441 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. 21

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, and have issued our report thereon dated July 30, 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 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 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. 22

24 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. Our consideration of 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. 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 in the accompanying schedule of findings and questioned costs. 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 30,

25 REPORT ON COMPLIANCE WITH REQUIREMENTS COULD HAVE A DIRECT AND MATERIAL EFFECT ON 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 Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement, and the requirements described in the Florida Department of Financial Service s State Projects Compliance Supplement, that could have a direct and material affect on 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 each of 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; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and Chapter Rules of the 24

26 Auditor General. Those standards, OMB Circular A-133, and Chapter Rules of the 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 compliance requirements referred to above that could have a direct and material effect on each of its major federal programs and state projects for the year ended. Internal Control over Compliance 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 the 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 a deficiency in internal control 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, 25

27 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. Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center s response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit Area Agency on Aging of Palm Beach/Treasure Coast, Inc. d/b/a Your Aging Resource Center s response and, accordingly, we express no opinion on the response. 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 30,

28 Schedule of Findings and Questioned Costs SECTION I SUMMARY OF AUDITORS RESULTS Financial Statements Type of auditor s report issued: Internal control over financial reporting: Unqualified Material weakness identified? yes X no Significant control deficiency identified that is not considered to be a material weakness? yes X 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 E Foster Grandparent Program CSFA Numbers * Aging Cluster, these are considered one major program Name of State Project Community Care for the Elderly Alzheimer s Disease Initiative Home Care for the Elderly Dollar threshold used to distinguish between type A and type B programs/project: Federal Program $334,737 State Project $300,000 Auditee qualified as low-risk auditee? X yes no 27

29 Schedule of Findings and Questioned Costs SECTION II FINANCIAL STATEMENTS FINDINGS No material weaknesses were identified during the audit of the financial statements nor were any instances of noncompliance material to the financial statements disclosed during the audit. SECTION III FEDERAL AWARD AND STATE PROJECT FINDINGS AND QUESTIONED COSTS Corporation for National and Community Service CFDA Foster Grandparents Program Award Number: 10SFSFL006 Finding No Condition: While testing volunteer files for the Foster Grandparents program, we noted that the Agency needs to improve the supervision and review procedures for the files. Some of the errors we noted in our review of the files were clerical errors in submitted timesheets; missing sign offs, authorizations, or dates on forms; volunteer annual income calculations for determining stipend eligibility levels were not consistently documented and calculated; some files were missing required documentation such as annual evaluations for the service dates tested, annual emergency medical information forms, and documentation pre-approving volunteer stipends paid for hours worked in excess of 20 hours per week/40 hours per pay period. Criteria: Guidelines established by the Corporation for National and Community Service require that volunteers participating in the Foster Grandparents Program meet certain eligibility criteria, which should to be documented and maintained/updated properly in corresponding volunteer files. Effect: A significant deficiency in internal control that could lead to noncompliance with program requirements. Recommendation: We recommend the Agency revise the review procedures for the Foster Grandparents volunteer files to ensure compliance with grant requirements. Management response: The Agency will revise the file reviews procedures to ensure documentation is adequate to meet grant requirements. Although many improvements have been made in the Foster Grandparent Program in the past few years, two additional file reviews will be performed, one by the Project Director, and the last by the Agency s Compliance Officer. The Agency will implement this internal review process effective with the school year. No volunteer will return to school whose documentation is not complete. 28