BLUEGRASS RAPE CRISIS CENTER, INC.

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1 FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION June 30, 2011 and 2010

2 TABLE OF CONTENTS June 30, 2011 and 2010 Page Report of Independent Auditors... 1 Financial Statements Statements of Financial Position... 3 Statements of Activities... 4 Statements of Cash Flows... 5 Notes to Financial Statements... 6 Schedules of Functional Expenses Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Schedule of Prior Year Findings Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A

3 REPORT OF INDEPENDENT AUDITORS To the Board of Directors of Bluegrass Rape Crisis Center, Inc. Lexington, Kentucky We have audited the accompanying statement of financial position of Bluegrass Rape Crisis Center, Inc. (the Center ) as of June 30, 2011 and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the Center s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Center as of and for the year ended June 30, 2010 were audited by other auditors, whose report dated October 8, 2010, expressed an unqualified opinion on those statements. 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 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. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bluegrass Rape Crisis Center, Inc. as of June 30, 2011, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 7, 2011 on our consideration of Bluegrass Rape Crisis Center, Inc. s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting 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 basic financial statements. The schedule of functional expenses is presented for purposes of additional analysis and is not a required part of the financial statements of the Center. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations, and is also not a required part of the financial 1

4 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. November 7,

5 STATEMENTS OF FINANCIAL POSITION As of June 30, 2011 and 2010 ASSETS Current Assets Cash and cash equivalents $ 228,262 $ 201,038 Accounts receivable 1,050 1,113 Grants receivable 65, ,233 Prepaid expenses 14,489 14,694 Investments 21,930 97,886 Total current assets 331, ,964 Property and Equipment Land 30,000 30,000 Building 190, ,585 Equipment 68,715 84,875 Furniture and fixtures 17,442 20, , ,081 Less accumulated depreciation 160, , , ,940 Other Assets Investments 42,055 40,763 Deposits ,705 41,413 Total assets $ 520,352 $ 614,317 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable $ 10,729 $ 9,361 Deferred revenue 6,946 3,149 Accrued compensated absences 42,478 46,115 Total current liabilities 60,153 58,625 Net Assets Unrestricted - undesignated 368, ,074 Unrestricted- Board designated 91,615 92,618 Total unrestricted 460, ,692 Total liabilities and net assets $ 520,352 $ 614,317 See accompanying notes to financial statements. 3

6 STATEMENTS OF ACTIVITIES For the Years Ended June 30, 2011 and Revenues and other support Victims of Crimes Act grant $ 503,996 $ 504,221 Violence Against Women grant (ARRA) 9,276 9,393 Mental health block grant 305, ,989 Rescue and restore grant 50,373 72,993 United Way 87,114 88,949 Lexington Fayette Urban County Government 69,380 75,000 Miscellaneous grant revenue 45,799 43,912 Contributions 9,756 14,124 Special events 14,180 28,512 Anti Trafficking services program 13,634 21,452 Interest income 5,050 4,252 Miscellaneous income, including fundraising 32,340 16,224 Total revenue and other support 1,146,724 1,176,021 Expenses Program services 1,089,762 1,073,112 Management and general 152, ,409 1,242,217 1,211,521 Change in net assets (95,493) (35,500) Net assets, beginning of year 555, ,192 Net assets, end of year $ 460,199 $ 555,692 See accompanying notes to financial statements. 4

7 STATEMENTS OF CASH FLOWS For the Year Ended June 30, 2011 and Cash Flows From Operating Activities Change in net assets $ (95,493) $ (35,500) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation 9,804 10,218 Contributions of non-cash assets (2,400) - Net changes in: Accounts receivable 63 (93) Grants receivable 38,853 (38,869) Prepaid expense 205 (461) Disposal of fixed assets - 1,009 Deposits - (450) Accounts payable 1,368 4,838 Deferred revenue 3,797 (1,145) Accrued compensated absences (3,637) (591) Net cash used in operating activities (47,440) (61,044) Cash Flows From Investing Activities Purchase of investments (1,292) 19,408 Proceeds from maturities of investments 75,956 - Purchase of fixed assets - (25,651) Net cash provided by (used in) investing activities 74,664 (6,243) Increase (decrease) in cash during the year 27,224 (67,287) Cash and cash equivalents at beginning of year 201, ,325 Cash and cash equivalents at end of year $ 228,262 $ 201,038 Supplemental Schedule of Noncash Transactions: In-kind contributions for the years ended June 30, 2011 and 2010 consisted of donated materials, services and equipment totaling $20,455 and $5,990, respectively. Of these amounts, $12,400 and $5,990 was expensed as special events expense by the Center for the years ended June 30, 2011 and 2010, respectively. In addition, $5,655 was recorded as professional services expense for the year ended June 30, See accompanying notes to financial statements. 5

8 NOTES TO FINANCIAL STATEMENTS For the Year Ended June 30, 2011 and NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Bluegrass Rape Crisis Center, Inc. (the Center) is a non-profit organization incorporated in April 1977 under the laws of the Commonwealth of Kentucky. The Center provides services to victims of rape and sexual assault through a 24-hour crisis intervention line, therapy for individuals and groups, hospital and medical advocacy, and community education to heighten public awareness of rape and the prevention of rape. The Center's main office is located in Lexington with seven satellite offices located in Cynthiana, Danville, Richmond, Winchester, Georgetown, Nicholasville and Frankfort. Management s Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, 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 For purposes of the statement of cash flows, the Center considers cash and certificates of deposit with an original maturity date of 90 days or less to be cash and cash equivalents. Promises to Give Contributions are recognized when the donor makes a promise to give to the Center that is, in substance, unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Property and Equipment Property and equipment are stated at cost. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets. All acquisitions costing in excess of $500 and all expenditures for repairs and maintenance that materially prolong the useful lives of the assets are capitalized 6

9 NOTES TO FINANCIAL STATEMENTS For the Year Ended June 30, 2011 and 2010 The estimated useful lives of assets for depreciation purposes are summarized as follows: Life Building Equipment Furniture and fixtures 5-40 years 4-5 years 5 years Depreciation expense for the years ended June 30, 2011 and 2010 was $9,804 and $10,218, respectively. Investments The Center s investments are comprised of certificates of deposit and U.S. savings bonds. Investments are stated at fair market value. Net Assets The Center reports two classes of net asset categories according to external donor imposed restrictions: Unrestricted net assets encompass the portion of net assets that are not temporarily restricted by donor-imposed stipulations. The Center maintains unrestricted funds as follows: Undesignated used to fund current operations of the Center. Board designated used to fund future maintenance and renovations to the Center s primary facility, as designated by the Board of Directors. Temporarily restricted net assets are the net assets resulting from contributions and other inflows whose use by the Center is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Center pursuant to those stipulations. There were no temporarily restricted net assets at June 30, 2011 and Income Taxes The Center is organized as a not-for-profit corporation under Section 501(c) (3) of the United States Internal Revenue Code. Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by the Center and recognize a tax liability if the Center has taken an uncertain position that more likely than not would not be sustained upon examination by various federal and state taxing authorities. Management has analyzed the tax positions taken by the Center, and has concluded that as of June 30, 2011 and 2010, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure 7

10 NOTES TO FINANCIAL STATEMENTS For the Year Ended June 30, 2011 and 2010 in the accompanying financial statements. The Center is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. As such, the Center is generally exempt from income taxes. However, the Center is required to file Federal Form 990 Return of Organization Exempt from Income Tax which is an informational return only. Functional Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the Statements of Activities and in the Schedules of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. While the methods of allocation are considered appropriate, other methods could produce different results. Advertising The Center expenses advertising costs as incurred. For the years ended June 30, 2011 and 2010 advertising expense totaled $1,374 and $683, respectively. Subsequent Events The Center has evaluated events or transactions occurring subsequent to the Statement of Financial Position date for recognition and disclosure in the accompanying financial statements through November 7, 2011, the date the financial statements were available to be issued. Reclassifications Certain amounts in the 2010 financial statements have been reclassified to conform to the 2011 presentation. The reclassifications have no impact on the change in net assets or unrestricted and restricted net assets. 2. CONCENTRATIONS Cash is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Center maintains its cash and certificates of deposit balances with financial institutions located in central Kentucky. Additionally, non-interest bearing accounts at participating financial institutions are fully insured by the FDIC. At June 30, 2011 and 2010, the Center had no uninsured balances. The Center received 85% and 84% of its income from government grants during the years ended June 30, 2011 and 2010, respectively. Effective February 2011, the federal government did not renew its grant to the Commonwealth of Kentucky to support the Rescue and Restore Victims of Human Trafficking Program. The Center recorded $50,373 and $72,993 in grant revenues under this program during the years ended June 30, 2011 and 2010, respectively. 8

11 NOTES TO FINANCIAL STATEMENTS For the Year Ended June 30, 2011 and IN-KIND DONATIONS The Center reports revenue for the fair value of contributed services received where the services require specialized skills, are provided by individuals possessing these skills, and represent services that would have been purchased had they not been donated. A substantial number of volunteers have donated significant amounts of their time to the Center; however, these donated services are not reflected in the financial statements since these services do not meet the criteria for recognition as contributed services. During the year ended June 30, 2011, $5,655 was recorded for donated legal services. In kind contributions of equipment and other materials are recorded at the fair value of the items contributed. Such contributions for the years ended June 30, 2011 and 2010 totalled $20,455 and $5,990, respectively. Of these amounts, $12,400 and $5,990 was expensed as special events expense for the years ended June 30, 2011 and 2010, respectively. 4. INVESTMENTS Investments consisted of the following at June 30: U.S. Savings Bonds $ 42,055 $ 40,763 Certificates of Deposit 21,930 97,886 $ 63,985 $ 138,649 Major classes of assets and liabilities that are measured at fair value are categorized according to a fair value hierarchy that prioritizes the inputs to value techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used fall within different levels of the hierarchy, the categorization is based upon the lowest level input that is significant to the fair value measurement. The certificates of deposit are carried at cost, plus interest income earned thereon, which approximates fair value. Investments in U.S. savings bonds are carried at fair value based on quoted prices in active markets (Level 1 inputs). The certificates of deposit are valued at $21,930 and $97,886 as of June 30, 2011 and 2010, respectively. Interest earned on the Center s certificates of deposits totaled $2,340 and $1,309 for the years ended June 30, 2011 and 2010, respectively. Interest earned on the U.S. savings bonds for the years ended June 30, 2011 and 2010 totalled $1,292 and $1,067, respectively. 9

12 NOTES TO FINANCIAL STATEMENTS For the Year Ended June 30, 2011 and COMMITMENTS AND CONTINGENCIES The Center receives funding from federal, state and local government agencies and private contributions. These funds are to be used for designated purposes only. For government agency grants, if based upon the grantor's review, the funds are considered not to have been used for the intended purpose, the grantors may request a refund of monies advanced, or refuse to reimburse the Center for its disbursements. The amount of such future refunds and unreimbursed disbursements, if any, is not expected to be significant. Continuation of the Center's grant programs is predicated upon the grantors' satisfaction that the funds provided are being spent as intended and the grantors' intent to continue their programs. During the year ended June 30, 2011, the Center received a notice from the Lexington-Fayette Urban County Government Division of Code Enforcement that indicated the Center s primary facility was in violation of various code ordinances, and that a fine would be levied if the violations were not resolved. Management of the Center appealed the notice, and has been working with several local contractors who have agreed to perform the needed renovations at a reduced cost. The Division of Code Enforcement has agreed to suspend any further action while such renovation plans are in process. The Center expects to incur approximately $30,000 to $35,000 in costs during the year ended June 30, 2012 in order to have the necessary renovations completed. These costs will be capitalized as building improvements when incurred. Management is currently applying for grants to cover the renovation costs, but there can be no assurance that they will be awarded any such grants. 6. RETIREMENT PLANS Beginning October 1, 2000, the Center's employees could elect to join the Kentucky Employees Retirement System Non-Hazardous Pension Fund (KERS). KERS is a multiple employer costsharing public employee retirement system which covers substantially all regular full time employees of each state department, board or agency directed by Executive Order to participate in the system. KERS participants have a fully vested interest after completion of sixty months of service, twelve months of which are current service. At a minimum, terminated employees are refunded their contributions with credited interest of 2.5%. Benefits and contribution rates are established by state statute. Any new employee to the KERS program is required to contribute an amount equal to 6% of gross pay. Five percent of this contribution is deposited to the individual employee s account, while the other 1% is deposited to the KERS Insurance Fund. The Center contributed an amount equal to 16.98% and 11.61% of gross pay for the years ended June 30, 2011 and 2010, respectively. Subsequent to June 30, 2011, the rate is 19.82%. For the years ended June 30, 2011 and 2010, the Center's contribution was $124,806 and $87,324, respectively. Benefits under the KERS program will vary based on final compensation, years of service and other factors as fully described in the KERS plan documents. 10

13 NOTES TO FINANCIAL STATEMENTS For the Year Ended June 30, 2011 and 2010 The "pension benefit obligation" is a standardized disclosure measurement of the present value of pension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measurement, which is the actuarial present value of credited projected benefits, is intended to help users assess the pensions' funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among the plans and employers. KERS does not make separate measurements of assets and pension benefit obligation for individual employers. The following table presents certain information regarding the plans' status as a whole, derived from actuarial valuations performed as of the dates indicated: KERS KERS June 30, 2010 June 30, 2009 Assets available for plan benefits, at fair value $ 4,210,215,585 $ 4,794,611,365 Pension benefit obligation (11,004,795,089) (10,658,549,532) $ (6,794,579,504) $ (5,863,938,167) Ten-year historical trend information showing KERS's progress in accumulating sufficient assets to pay benefits when due is presented in its June 30, 2010 and June 30, 2009 comprehensive annual financial reports. As the Center is only one of several employers participating in the KERS program, it is not practicable to determine the Center's portion of the unfunded past service cost or the vested benefits of the Center's portion of the Plan assets. The Center s employees may also elect to contribute to 401(k) and 457 plans administered by the Kentucky Public Employees Deferred Compensation Authority. The Center does not make any contributions to these plans on behalf of its employees. 11

14 NOTES TO FINANCIAL STATEMENTS For the Year Ended June 30, 2011 and OPERATING LEASES The Center leases office equipment and its satellite offices. Many of the Center s facilities are leased on a month-to-month basis. Future minimum lease payments required under the operating leases for which the Center is obligated for more than one year at June 30, 2011 are as follows: Year Ending June 30, 2012 $ 15, ,600 Total $ 22,250 Total rent expense amounted to $35,846 and $35,165 for the years ended June 30, 2011 and 2010, respectively. 12

15 SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2011 Program Management Services and General Total Salaries and wages $ 663,154 $ 76, ,549 Payroll taxes 48,354 5,540 53,894 Employee benefits 184,094 21, ,279 Advertising ,374 Building maintenance 3, ,929 Communications 30, ,385 Electrical equipment Conferences and training 10, ,293 Dues and memberships Equipment rental and maintenance 3, ,285 Outreach facilities 36,613-36,613 Depreciation 9, ,804 Insurance 10,990 3,283 14,273 Office supplies 29,455 1,688 31,143 Professional services 3,008 21,305 24,313 Security 7, ,241 Technical supplies 7-7 Travel 16, ,277 Utilities 16, ,336 Victim assistance 11,787-11,787 Volunteer training 1,851-1,851 Fundraising expense - 17,186 17,186 Miscellaneous Total $ 1,089,762 $ 152,455 $ 1,242,217 13

16 SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2010 Program Management Services and General Total Salaries and wages $ 681,283 $ 74, ,847 Payroll taxes 49,415 5,663 55,078 Employee benefits 155,751 17, ,809 Advertising Building maintenance 5,708 1,812 7,520 Communications 24, ,697 Electrical equipment 2, ,553 Conferences and training 8, ,073 Dues and memberships ,178 Equipment rental and maintenance 3, ,612 Outreach facilities 32,723-32,723 Depreciation 9, ,218 Insurance 10,917 3,261 14,178 Office supplies 19,888 1,220 21,108 Professional services 3,350 15,963 19,313 Security 5, ,997 Technical supplies 1,443-1,443 Travel 25, ,515 Utilities 13, ,231 Victim assistance 15,255-15,255 Volunteer training 2,679-2,679 Fundraising expense 0 12,736 12,736 Miscellaneous 0 2,075 2,075 Total $ 1,073,112 $ 138,409 $ 1,211,521 14

17 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year ended June 30, 2011 Federal Total CFDA Federal Federal Program Title Number Grant Identification Number Expenditures Major Programs: United States Department of Justice Pass-through from the State Justice Cabinet Crime Victim Assistance VOCA-2009-Bluegras $ 121,282 Crime Victim Assistance VOCA-2010-Bluegras ,162 Total Crime Victim Assistance 502,444 Non-Major Programs: United States Department of Justice Pass-through from the State Justice Cabinet ARRA-Violence Against Women Grant VAWA ARRA-2009-Bluegras ,754 Pass-through from Kentucky Association of Sexual Assault Programs (KASAP) Sexual Assault Services Formula Program M ,878 Pass-through from Lexington-Fayette Urban County Government (LFUCG) Grants to Encourage Arrest Policies and Enforcement of Protection Orders WE-AX ,099 Pass-through from Legal Aid of the Bluegrass Legal Assistance for Victims WL-AX0077 5,525 Legal Assistance for Victims WL-AX0052 3,394 Total Legal Assistance for Victims 8,919 Pass-through from Eastern Kentucky Unversity Grants to Reduce Domestic Violence, Dating Violence Sexual Assault and Stalking on Campus WA-AX Department of Health and Human Services Pass-through from KASAP Preventative Health and Health Services Block Grant M ,540 Injury Prevention and Control Research and State and State and Community Based Programs M ,099 Green Dot Across the Bluegrass: Evaluation of Primary Prevention Intervention to Reduce Sexual Assault U01 CE ,198 Pass-through from Catholic Charities Rescue and Restore Victims of Human Trafficking Program ZV0071/01 50,311 Total Federal Expenditures $ 645,226 15

18 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year ended June 30, 2011 NOTE A - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Bluegrass Rape Crisis Center, Inc. and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The financial statement classifications may include other financial activity for reporting purposes. Therefore, some of the amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. 16

19 SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended June 30, 2011 SUMMARY OF AUDITOR S RESULTS 1. The auditor s report expresses an unqualified opinion on the financial statements of the Bluegrass Rape Crisis Center, Inc. 2. No significant deficiencies were disclosed during the audit of the financial statements. 3. No instances of noncompliance material to the financial statements of the Bluegrass Rape Crisis Center, Inc., which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. 4. No significant deficiencies in internal control over major federal award programs were disclosed during the audit. 5. The auditor s report on compliance for the major federal award programs for the Bluegrass Rape Crisis Center expresses an unqualified opinion on all major federal programs. 6. There were no audit findings that are required to be reported in accordance with Section 510(a) of OMB Circular A-133 are reported in this Schedule. 7. The programs tested as major programs included: CFDA Number(s) Name of Federal Program or Cluster Crime Victim Assistance 8. The threshold used for distinguishing between Type A and B programs was $300, The Bluegrass Rape Crisis Center, Inc. qualifies as a low-risk auditee. FINDINGS FINANCIAL STATEMENT AUDIT No matters were reported. FINDINGS AND QUESTIONED COSTS MAJOR FEDERAL AWARD PROGRAMS No matters were reported. 17

20 SCHEDULE OF PRIOR YEAR FINDINGS June 30, 2011 No findings or questioned costs were reported for the year ended June 30,

21 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors of Bluegrass Rape Crisis Center, Inc. Lexington, Kentucky We have audited the financial statements of Bluegrass Rape Crisis Center, Inc. as of and for the year ended June 30, 2011, and have issued our report thereon dated November 7, 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 Governmental Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Bluegrass Rape Crisis Center, Inc.'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 Bluegrass Rape Crisis Center, Inc.'s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Center's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or 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 Bluegrass Rape Crisis Center, Inc.'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 19

22 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 Governmental Auditing Standards. This report is intended solely for the information and use of the Board of Directors, management, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 7,

23 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To the Board of Directors Bluegrass Rape Crisis Center, Inc. Lexington, Kentucky Compliance We have audited the compliance of Bluegrass Rape Crisis Center, Inc. with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Bluegrass Rape Crisis Center, Inc. s major federal programs for the year ended June 30, Bluegrass Rape Crisis Center, Inc.'s major federal programs 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 is the responsibility of Bluegrass Rape Crisis Center, Inc.'s management. Our responsibility is to express an opinion on Bluegrass Rape Crisis Center, Inc.'s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Bluegrass Rape Crisis Center, Inc.'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 of Bluegrass Rape Crisis Center, Inc.'s compliance with those requirements. In our opinion, Bluegrass Rape Crisis Center, Inc. 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 for the year ended June 30,

24 Internal Control Over Compliance Management of Bluegrass Rape Crisis Center, Inc. is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered Bluegrass Rape Crisis Center, Inc.'s internal control over compliance with the requirements that could have a direct and material effect on a major federal program 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, 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 Bluegrass Rape Crisis Center, Inc.'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. Our consideration of the 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. This report is intended solely for the information and use of the Board of Directors, management, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 7,