Audited Financial Statements and A-133 Audit Reports

Transcription

1 Audited Financial Statements and A-133 Audit Reports June 30, 2014 and 2013

2 CENTER FOR EMPLOYMENT OPPORTUNITIES TABLE OF CONTENTS PAGE Independent Auditors Report 1 2 Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 6 Statement of Cash Flows 7 Notes to Financial Statements 8 14 Schedules: Schedule of Expenditures of Federal Awards 15 Notes to Schedule of Expenditures of Federal Awards 16 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 for Each Major Federal Program; Report on Internal Control over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by OMB Circular A Schedule of Findings and Questioned Costs: Section I Summary of Auditors Results 22 Section II Financial Statement Findings 23 Section III Federal Award Findings 23

3 INDEPENDENT AUDITORS REPORT To the Board of Directors of Center for Employment Opportunities Report on the Financial Statements We have audited the accompanying financial statements of Center for Employment Opportunities ( CEO ), which comprise the statement of financial position as of June 30, 2014 and 2013, and the related statements of activities, functional expenses, 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. Auditors 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 auditors 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 organization 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 organization 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.

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CEO as of June 30, 2014 and 2013, 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 16, 2015 on our consideration of CEO s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering CEO s internal control over financial reporting and compliance. January 16, 2015 Schall & Ashenfarb Certified Public Accountants, LLC 2

5 CENTER FOR EMPLOYMENT OPPORTUNITIES Statement of Financial Position As of June 30, 2014 and ASSETS Cash and cash equivalents $707,558 $2,491,637 Contracts and contributions receivable 5,265,809 4,593,391 Prepaid expenses and other assets 334, ,499 Security deposits (Note 7) 480, ,199 Equipment, furniture and fixtures, and leasehold improvements, net of accumulated depreciation (Note 3) 852,086 83,934 Total Assets $7,640,433 $7,585,660 LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses $1,449,893 $1,124,559 Advances payable 2,026,099 2,987,911 Capital lease obligations (Note 5) 318,130 0 Deferred rent (Note 7) 343,855 0 Total Liabilities 4,137,977 4,112,470 Net Assets: Unrestricted Undesignated 837,243 1,338,282 Investment in fixed assets 852,086 83,934 Total Unrestricted Net Assets 1,689,329 1,422,216 Temporarily restricted (Note 8) 1,813,127 2,050,974 Total Net Assets 3,502,456 3,473,190 Total Liabilities and Net Assets $7,640,433 $7,585,660 The attached notes and auditors' report are an integral part of these financial statements. 3

6 CENTER FOR EMPLOYMENT OPPORTUNITIES Statement of Activities For the Years Ended June 30, 2014 and CHANGES IN UNRESTRICTED NET ASSETS: Public Support & Revenue Program service contracts: New York State $8,824,922 $9,842,301 New York City 1,556,951 1,472,845 Other state, city and private contracts 4,577,356 1,670,995 14,959,229 12,986,141 Contributions 1,171, ,394 Interest and other income 43, ,748 16,174,907 14,099,283 Net assets released from restrictions 5,605,640 4,804,246 Total public support and revenue 21,780,547 18,903,529 Expenses: Program services 17,656,378 14,832,997 General and administrative 3,415,147 2,596,381 Fundraising 441, ,116 Total expenses 21,513,434 17,905,494 Increase in unrestricted net assets 267, ,035 CHANGES IN TEMPORARILY RESTRICTED NET ASSETS: Contributions 5,367,793 5,279,886 Net assets released from restrictions (5,605,640) (4,804,246) (Decrease)/increase in temporarily restricted net assets (237,847) 475,640 Change in net assets 29,266 1,473,675 Net assets, beginning of year 3,473,190 1,999,515 Net assets, end of year $3,502,456 $3,473,190 The attached notes and auditors' report are an integral part of these financial statements. 4

7 CENTER FOR EMPLOYMENT OPPORTUNITIES Statement of Functional Expenses For the Year Ended June 30, 2014 (With comparative totals for the year ended June 30, 2013) PERSONNEL Program Services Supporting Services CEO Total General Total Total Transitional Vocational Training Program and Fund Expenses Expenses Jobs Services Center Services Administrative Raising Salaries and wages: Staff $2,642,652 $4,284,830 $303,965 $7,231,447 $1,412,639 $316,387 $8,960,473 $8,109,636 Participants 3,601, ,601, ,601,782 2,874,654 Employee benefits: Staff 570, ,129 47,035 1,334, ,940 38,041 1,653,144 1,248,190 Participants 317, , , ,813 Payroll taxes: Staff 235, ,380 27, , ,854 23, , ,492 Participants 478, , , ,055 Total Personnel 7,846,950 5,379, ,873 13,605,162 1,806, ,698 15,789,293 13,471,840 OTHER THAN PERSONNEL Sub-contracts ,000 85, ,000 47,000 Consultants 1, , , , , ,218 Professional services , ,057 67,243 Occupancy expense 281, , ,280 1,169, ,249 39,982 1,580,204 1,218,685 Equipment purchases and rentals 316, ,587 8, , ,216 4, , ,791 Publication and subscriptions 0 11, ,534 4, ,011 17,535 Training 3,790 12, , ,152 5, ,191 40,464 Office expenses 134,789 41,016 5, , ,808 9, , ,313 Telephone 61, ,963 15, , ,813 3, , ,327 Travel and subsistence 289, ,408 19, ,394 42, , ,518 Insurance 344,541 81,039 6, ,816 85,822 4, , ,295 Office supplies 17,608 53,894 2,942 74,444 32,337 1, ,795 40,736 Interest , ,048 60,892 Conference/meetings 15 2, ,003 3, ,523 12,525 Participant activities supplies 269,373 15,787 5, , ,346 86,088 Participant incentives 4, ,777 2, , , ,048 Bad debt expense ,450 Miscellaneous 4,459 28,009 2,595 35, , , ,473 Sub-total 9,577,379 7,333, ,721 17,656,378 3,297, ,909 21,395,785 17,807,441 Depreciation expenses , ,649 98,053 Total Expenses $9,577,379 $7,333,278 $745,721 $17,656,378 $3,415,147 $441,909 $21,513,434 $17,905,494 The attached notes and auditors' report are an integral part of these financial statements. 5

8 CENTER FOR EMPLOYMENT OPPORTUNITIES Statement of Functional Expenses For the Year Ended June 30, 2013 PERSONNEL Program Services Supporting Services CEO Total General Total Transitional Vocational Training Program and Fund Expenses Jobs Services Center Services Administrative Raising 2013 Salaries and wages: Staff $2,360,816 $3,821,466 $308,875 $6,491,157 $1,306,216 $312,263 $8,109,636 Participants 2,874, ,874, ,874,654 Employee benefits: Staff 482, ,457 26,886 1,060, ,692 27,307 1,248,190 Participants 166, , ,813 Payroll taxes: Staff 215, ,449 27, ,115 97,455 22, ,492 Participants 376, , ,055 Total Personnel 6,476,906 4,704, ,707 11,544,985 1,564, ,492 13,471,840 OTHER THAN PERSONNEL Sub-contracts ,000 47, ,000 Consultants 2, , , ,928 23, ,218 Professional services 1, ,423 65, ,243 Occupancy expense 90, ,977 95, , ,004 66,995 1,218,685 Equipment purchases and rentals 315,393 97,718 9, ,754 50,019 8, ,791 Publication and subscriptions , ,614 1,424 1,497 17,535 Training 7,182 23,445 5,634 36,261 3, ,464 Office expenses 116,553 26,071 5, , ,841 1, ,313 Telephone 46, ,504 13, ,177 33,570 3, ,327 Travel and subsistence 220, ,427 5, ,458 26, ,518 Insurance 364,551 71,101 6, ,986 20,996 5, ,295 Office supplies 8,431 23,960 1,115 33,506 6, ,736 Interest , ,892 Conference/meetings 500 5, ,439 6, ,525 Participant activities/ supplies 42,740 35,814 7,495 86, ,088 Participant incentives 0 264,265 1, , ,048 Bad debt expense , ,450 Miscellaneous 11,466 19, ,596 93, ,473 Sub-total 7,703,347 6,483, ,160 14,751,769 2,582, ,509 17,807,441 Depreciation expenses 42,417 35,699 3,112 81,228 14,218 2,607 98,053 Total Expenses $7,745,764 $6,518,961 $568,272 $14,832,997 $2,596,381 $476,116 $17,905,494 The attached notes and auditors' report are an integral part of these financial statements. 6

9 CENTER FOR EMPLOYMENT OPPORTUNITIES Statement of Cash Flows For the Years Ended June 30, 2014 and CASH FLOW FROM OPERATING ACTIVITIES: Change in net assets $29,266 $1,473,675 Adjustments to reconcile change in net assets to net cash provided by/(used for) operating activities: Depreciation 117,649 98,053 Disposal of fixed assets 0 41,145 (Increase)/decrease in contracts and contributions receivable (672,418) 1,230,940 (Increase)/decrease in prepaid expenses and security deposits (398,282) 112,496 Increase/(decrease) in accounts payable and accrued expenses 325,334 (36,363) Decrease in advances payable (961,812) (597,134) Increase in deferred rent 343,855 0 Net cash (used for)/provided by operating activities (1,216,408) 2,322,812 CASH FLOW FROM INVESTING ACTIVITIES: Purchase of equipment and leasehold improvements (885,801) (8,550) Net cash used for investing activities (885,801) (8,550) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from capital lease obligation 352,892 0 Principal payments under capital lease obligation (34,762) 0 Repayments on loans (6,000,000) (3,000,000) Proceeds from loans 6,000,000 2,000,000 Net cash provided by/(used for) financing activities 318,130 (1,000,000) Net (decrease)/increase in cash and cash equivalents (1,784,079) 1,314,262 Cash and cash equivalents, beginning of year 2,491,637 1,177,375 Cash and cash equivalents, end of year $707,558 $2,491,637 Supplemental disclosure Interest payments $58,048 $60,892 The attached notes and auditors' report are an integral part of these financial statements. 7

10 CENTER FOR EMPLOYMENT OPPORTUNITIES Notes to Financial Statements June 30, 2014 and 2013 NOTE 1 ORGANIZATION Center for Employment Opportunities ( CEO ) was organized on April 6, 1995 pursuant to Section 201 of the Not-for-Profit Corporation Law of the State of New York. CEO is exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue Code and has been classified as a publicly supported organization as described in Code Sections 509(a)(1) and 170(b)(A)(VI). Operations commenced on January 1, CEO was formed in order to: provide employment and rehabilitative and support services to persons with criminal convictions and persons facing barriers to employment, including but not limited to applicants or recipients of public assistance; design, implement, demonstrate, and evaluate innovative supportive and rehabilitative services for men and women with recent criminal convictions, including but not limited to employment and training services and other services designed to alleviate barriers to employment; conduct studies and research regarding services for formerly incarcerated people and their barriers to employment; and to disseminate information regarding the work of the corporation and the administration of such services. CEO operates two main programs, the Transitional Jobs ( TJ ) and the Vocational Services ( VS ) and an ancillary program, the CEO Training Center. TJ, which is CEO s signature work experience program, provides immediate, paid, time-limited employment for people with criminal records and provides them with the skills they need to rejoin the workforce and restart their lives. The VS places participants in full-time, unsubsidized employment and follows up through the first year after placement, providing retention and advancement counseling and referral. CEO Training Center provides vocational support and industry trade-training preparatory classes such as plumbing, electrical and refrigeration mechanics that enable formerly incarcerated individuals overcome barriers to entering community colleges and technical institutes, and advance in the workforce. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting which is the process of recording revenue and expenses when earned or incurred, rather than when received or paid. 8

11 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation Not-for-profit organizations report information regarding their financial position and activities according to specific classes of net assets as follows: *Unrestricted represents all activity without donor imposed restrictions. *Temporarily restricted accounts for activity based on specific donor restrictions that are expected to be satisfied by passage of time or performance of activities. *Permanently restricted accounts for activity restricted by donors that must remain intact in perpetuity. CEO did not have any activity of this type. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include short-term, highly liquid investments that are readily convertible to known amounts of cash and are so near their maturity (with original maturity of three months or less) that they present insignificant risk of change in value because of changes in interest rates. Concentration of Credit Risk Financial instruments which potentially subject CEO to concentration of credit risk consist of cash and money market accounts, which are placed with financial institutions that management deems to be creditworthy. From time-to-time and at year end, CEO s balances were in excess of insurance levels by material amounts. However, CEO has not experienced any losses due to bank failure. Contributions CEO records unconditional promises to give as revenue in the period received at net realizable value if expected to be received within one year or at the fair value using a risk adjusted discount rate if expected to be received after one year. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Contributions are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. 9

12 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Contributions received with donor-restrictions are reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a 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. Equipment, Furniture, Fixtures, and Leasehold Improvements Equipment, furniture, fixtures, and leasehold improvements are stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method based on the estimated useful lives of the assets as follows: Equipment, furniture and fixtures Computer equipment Automobiles Leasehold improvements 3-10 years 3 years 5 years 7 years CEO capitalizes all equipment greater than or equal to $500 and all improvements greater than or equal to $5,000. Recognition of Revenue Cost Recovery Grants The terms under which these grants are awarded provide for reimbursements of budgeted expenditures within the grant period. These funds are received in either predetermined installments or increments, based upon expenses incurred. Accordingly, grant income is recognized in amounts equal to expenditures incurred. Any excess or deficiency of cash receipts over expenditures incurred is reported as advance payable or contacts receivable. Upon termination of operations under each grant, the unexpended funds received under the terms of the grant revert to the grantor. Performance-Based Grant The terms under which these grants are awarded provide for payment based on unit costs for agreed-upon milestones achieved within the award period up to the maximum amount allowable under a given milestone, if any, and/or the total grant amount. Accordingly, income is recognized in amounts equal to the amount earned, based on performance. Advances Payable Government grants are subject to audit by State and City auditors for a specified period of time after the grants have been completed. Once the statute of limitations has expired, it is CEO s policy to remove any advances that remain on the books and recognize as revenue. 10

13 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Rent Expense Rent expense is recognized on the straight line basis over the full term of each lease. Deferred rent is reflected in periods where amounts paid exceed the rent expense recognized. Functional Expenditures Certain expenses of CEO are allocated among program services, general and administrative, and fundraising in the accompanying statements of functional expenses, based on management s estimates. Accounting for Uncertainty of Income Taxes CEO does not believe its financial statements include any material uncertain tax positions. Tax filings for periods ending June 30, 2011 and later are subject to examination by applicable taxing authorities. Subsequent Events Management has evaluated for potential recognition and disclosure events subsequent to the date of the statement of financial position through January 16, 2015, the date the financial statements were available to be issued. All events that have occurred subsequent to the statement of financial position date through our evaluation date have been adjusted to or disclosed in the financial statements. NOTE 3 EQUIPMENT, FURNITURE AND FIXTURES, AND LEASEHOLD IMPROVEMENTS Equipment, furniture and fixtures, and leasehold improvements consist of the following: Computer and project equipment $ 431,399 $ 405,351 Office furniture and equipment 837, ,464 Vehicles 57,514 54,709 Leasehold improvements 612, ,098 1,939,423 1,053,622 Less accumulated depreciation 1,087, ,688 Totals $ 852,086 $ 83,934 11

14 NOTE 4 PENSION PLAN CEO maintains a defined contribution group pension plan whereby contributions are made on behalf of all eligible employees. Employees are eligible to participate in the plan if they have completed one year of service and have contributed at least 3% of their annual salary to the CEO tax sheltered annuity plan. Contributions to the plan amounted to $143,404 and $128,342 for the years ended June 30, 2014 and 2013, respectively. NOTE 5 CAPITAL LEASE OBLIGATION During the year ended June 30, 2014, CEO entered into two separate agreements with a vendor whereby CEO leases furniture for its offices for sixty (60) months. The recurring monthly lease charges for the furniture, including principal and interest, totals $6,753. Future annual principal payments are as follows: Total payments due June 30, 2015 $64,939 Total payments due June 30, ,655 Total payments due June 30, ,584 Total payments due June 30, ,738 Total payments due June 30, ,214 Total: $318,130 NOTE 6 LOANS PAYABLE On November 1, 2013, CEO obtained a line of credit, in the amount of $3.5 million with a financial institution. The line of credit has a floating rate of interest at prime on any outstanding balance. The line of credit expires on March 1, At June 30, 2014 there was no amount outstanding on this line. CEO maintained a $3 million line of credit with a financial institution that expired March 31, The line had a floating rate of interest at prime plus 1.5% on any outstanding balance. At June 30, 2013 there was no amount outstanding on this line. NOTE 7 COMMITMENTS AND CONTINGENCIES Lease Commitments In October 2013, CEO entered into a 16-year operating lease agreement for the new CEO headquarters at 50 Broadway in New York, New York. The lease became effective March 2014 and expires in February The lease is subject to additional payments for utilities, maintenance, and real estate tax escalations. In May 2009, CEO entered into a 10-year operating lease agreement for the CEO Training Center facilities at 975 Kelly Street in the Bronx, New York. The lease became effective September 2009 and expires in August

15 NOTE 7 COMMITMENTS AND CONTINGENCIES (Continued) CEO also leases office and program facilities in Buffalo, Albany and Rochester New York, Tulsa, Oklahoma and San Diego and Oakland, California for the Transitional Jobs expansion initiatives in these locations. Leases expire at various points in 2014 for these locations. Total rent expense for the years ended June 30, 2014 and 2013 was $1,133,489 and $1,061,668, respectively. Minimum annual rental payments under these lease agreements in the years subsequent to June 30, 2014 are as follows: Year-Ending Total 2015 $1,247, ,135, ,114, ,108, ,109,755 Thereafter 11,023,010 Total $16,737,996 Cost Recovery Grants Contracts are subject to audit by state and city auditors and costs charged to funding sources may be adjusted. Any adjustments will be recorded when it is probable that a liability has been incurred. During 2013, approximately $700,000 of revenue was recognized due to write-offs of grant advances where the statute of limitations expired on older program service contracts. Litigation In the normal course of business, legal actions occur. Based on advice of legal counsel, management does not believe any exposure to legal matters will have a material impact on the financial statements and has not recorded liabilities within the accompanying financial statement. 13

16 NOTE 8 TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets and activity consist of: Net Released Net Assets from Assets 7/1/13 Contributions Restrictions 6/30/14 Program restrictions: Social Innovation Fund $1,424,648 $2,011,784 $3,436,432 $0 Adopt-A-Crew Model 117, ,597 0 Employment and Retention 450,277 1,654,700 1,225, ,206 Single Stop Services 0 140, , Moving 0 200, ,000 0 E.D. Transition 0 175, ,000 Fund Development 0 750, , ,846 Other programs 58, , , ,647 Total $2,050,974 $5,367,793 $5,605,640 $1,813,127 Net Released Net Assets from Assets 7/1/12 Contributions Restrictions 6/30/13 Program restrictions: Social Innovation Fund $1,347,167 $4,029,786 $3,952,305 $1,424,648 Adopt-A-Crew Model 128, , ,597 Employment and Retention 75, , , ,277 Single Stop Services 0 140, ,000 0 Other programs 24, , ,605 58,452 Total $1,575,334 $5,279,886 $4,804,246 $ 2,050,974 14

17 CENTER FOR EMPLOYMENT OPPORTUNITIES Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 Pass-through Federal Entity CFDA Identification Grant Grant Federal Federal Grantor / Pass Through Grantor / Program or Cluster Number Number Period Amount Expenditures U.S. Department of Agriculture Supplemental Nutrition Assistance Program (SNAP) State of New York Office of Temporary and Disability Assistance Food Stamp Employment and Training (FSET) C /01/11-12/31/16 286,250 $172,250 Total for U.S. Department of Agriculture 172,250 U.S. Department of Labor The Workforce Investment Act (WIA) National Emergency Grants OK 16 Spring 2013 Tornados and Flooding OK16 8/19/13-8/19/14 248, ,164 Unemployed Worker Training Program C /1/13-3/31/14 59,359 59,359 Total for U.S. Department of Labor 307,523 U.S. Department of Housing and Urban Development Housing and Community Development Act Community Development Block Grant Program City of Binghamton Community Development Block Grant Entitlement Program /1/14-12/31/14 20,000 13,397 City of Tulsa Community Development Block Grant Entitlement Program /1/13-9/30/14 36,045 36,045 City of Chula Vista Community Development Block Grant Entitlement Program /1/13-6/30/14 14,000 14,000 Total for U.S Department of Housing and Urban Development 63,442 Corporation for National and Community Service Social Innovation Fund (REDF) S1HDC001 Social Innovation Fund (EMCF) S1HNY003 04/01/11-12/31/12 07/01/11-06/30/14 348, ,422 3,000,000 1,016,293 Total for Corporation for National and Community Service 1,364,715 * Total Expenditures of Federal Awards $1,907,930 * Indicates a major program. 15

18 CENTER FOR EMPLOYMENT OPPORTUNITIES NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS JUNE 30, 2014 Note 1 - Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of CEO 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Because the schedule presents only a selected portion of the operations of CEO, it is not intended to and does not present the financial position, changes in net assets or cash flows of CEO. Note 2 - Grant Expenditures Expenditures reported on the Schedule of Expenditures of Federal Awards are presented on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-122, Cost Principles for Non-Profit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying members are presented where available. No sub-recipients were used. 16

19 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 Center for Employment Opportunities Report on the Financial Statements We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Center for Employment Opportunities ( CEO ), which comprise the statement of financial position as of June 30, 2014, and the related statements of activities, functional expenses, and cash flows for the year then ended and the related notes to the financial statements, and have issued our report thereon dated January 16, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered CEO s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of CEO s internal control. Accordingly, we do not express an opinion on the effectiveness of CEO s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting 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. 17

20 Compliance and Other Matters As part of obtaining reasonable assurance about whether CEO 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 entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. January 16, 2015 Schall & Ashenfarb Certified Public Accountants, LLC 18

21 REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY OMB CIRCULAR A-133 To the Board of Directors of Center for Employment Opportunities Report on Compliance for Each Major Federal Program We have audited Center for Employment Opportunities ( CEO ) compliance with the types of compliance requirements described in the OMB Circular A-133, Compliance Supplement that could have a direct and material effect on each of CEO s major federal programs for the year ended June 30, CEO s major federal programs are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors Responsibility Our responsibility is to express an opinion on the compliance for each of CEO s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about CEO s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of CEO s compliance with those requirements. 19

22 Opinion on Each Major Federal Program In our opinion, CEO complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Report on Internal Control over Compliance Management of CEO 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 CEO s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program 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 CEO 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 non-compliance 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 OMB Circular A Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 We have audited the financial statements of Center for Employment Opportunities as of and for the year ended June 30, 2014, and have issued our report thereon dated January 16, 2015, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by OMB Circular A-133 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 20

23 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 statement as a whole. March 18, 2015 Schall & Ashenfarb Certified Public Accountants, LLC 21

24 CENTER FOR EMPLOYMENT OPPORTUNITIES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2014 Section I Summary of Auditors Results Financial Statements Type of auditors report issued: UNMODIFIED Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiencies identified Not considered to be material weaknesses? Yes X No Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major programs: Material weakness(es) identified? Yes X No Significant deficiency(s) identified Not considered to be material weaknesses? Yes X No Type of auditors report issued on compliance for major programs: UNMODIFIED Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section.510(a)? Yes X No Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster Social Innovation Fund Dollar threshold used to distinguish between Type A and Type B programs: $ 300,000 Auditee qualified as low-risk auditee? X Yes No 22

25 CENTER FOR EMPLOYMENT OPPORTUNITIES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2014 Section II Financial Statement Findings Current Year: None Prior Year Follow-up: None There were no findings in the prior year. Section III Federal Award Findings Current Year: None Prior Year Follow-up: None There were no findings in the prior year. 23