Presentation to those Charged with Governance March 10, 2017

Transcription

1 f Presentation to those Charged with Governance March 10, 2017

2 INTRODUCTIONS KNOWLEDGE QUALITY CLIENT SERVICE

3 KNOWLEDGE QUALITY CLIENT SERVICE Engagement Team Leadership SB & Company, LLC Cynthia Borders-Byrd, Audit Principal Chris Lehman, Audit Partner 3

4 EECUTIVE SUMMARY KNOWLEDGE QUALITY CLIENT SERVICE

5 KNOWLEDGE QUALITY CLIENT SERVICE Scope of Services Audit of the June 30, 2016, financial statements Uniform Guidance Single Audit; Florida Single Audit; Chapter 1650, Rules of the Auditor General; and Special Guidance Provided y the Florida Office of Early Learning Preparation of the 2015 Federal Form 990 Availale for year-round consultation 5

6 KNOWLEDGE QUALITY CLIENT SERVICE Summary of the Results Planning to issue an unmodified opinion on the financial statements No material weaknesses noted We did not discover any instances of fraud Received full cooperation from management Results: Change in Net Assets $ (12,354) $ (28,421) $ 43,124 Net Assets $ 261,602 $ 273,956 $ 302,377 Audit journal entries One proposed journal entry for compensated asences liaility (restatement to eginning net assets) No single audit findings 6

7 KNOWLEDGE QUALITY CLIENT SERVICE

8 KNOWLEDGE QUALITY CLIENT SERVICE FORCAM Audit Approach Focus on Risk, Controls and Misstatement 8

9 KNOWLEDGE QUALITY CLIENT SERVICE Assessment of Control Environment Area Points to Consider Our Assessment Control Environment Risk Assessment Control Activities Key executive integrity, ethics, and ehavior Control consciousness and operating style Commitment to competence Exercise oversee responsiility Organizational structure, responsiility, and authority Enforce accountaility HR policies and procedures Define ojectives and risk tolerances Identify, analyze, and respond to risk Assess fraud risk Identify, analyze, and respond to change Mechanisms to anticipate, identify, and react to significant events Processes and procedures to identify changes in GAAP, usiness practices, and internal control Design control activities Design activities for the information system Implement control activities Existence of necessary policies and procedures Clear financial ojectives with active monitoring Logical segregation of duties Periodic comparisons of ook-to-actual and physical count-to-ooks Adequate safeguards of documents, records, and assets Assess controls in place Not effective Suggested improvements Effective 9

10 KNOWLEDGE QUALITY CLIENT SERVICE Assessment of Control Environment (continued) Area Points to Consider Our Assessment Information and Communication Monitoring Not effective Suggested improvements Effective Use quality information Communicate internally Communicate externally Adequate performance reports produced from information systems Information systems are connected with usiness strategy Commitment of HR and finance to develop, test, and monitor IT systems and programs Business continuity and disaster plan for IT Estalished communication channels for employees to fulfill responsiilities Adequate communication across organization Perform monitoring activities Remediate deficiencies Periodic evaluations of internal controls Implementation of improvement recommendations 10

11 KNOWLEDGE QUALITY CLIENT SERVICE Significant Accounts and Processes 11

12 KNOWLEDGE QUALITY CLIENT SERVICE A Understand the Process C What Can Go Wrong B Walk-Through D Test of Control Evaluation of Key Processes Process Function A B C D Design Operation Treasury Estimation Financial Reporting Cash Management Investment Accounting Investment Monitoring Investment Valuation Investment Policy Reconciliation Methodology Information Calculation Accounting Principles and Disclosure Closing the Books Report Preparation General Ledger and Journal Entry Processing Verification and Review of Results Not effective Suggested improvements Effective 12

13 KNOWLEDGE QUALITY CLIENT SERVICE Evaluation of Key Processes (continued) Process Function A B C D Design Operation Expenditures Payroll Revenue Purchasing Receiving Accounts Payale and Cash Disursement Purchase Card Transactions Hiring Attendance Reporting Payroll Accounting and Processing Payroll Disursements Separation Billing Cash Receipts Revenue Recognition Cutoff A Understand the Process C What Can Go Wrong B Walk-Through D Test of Control Not effective Suggested improvements Effective 13

14 KNOWLEDGE QUALITY CLIENT SERVICE A Understand the Process C What Can Go Wrong B Walk-Through D Test of Controls Evaluation of Key Processes (continued) Process Function A B C D Design Operation Fixed Assets Compliance Information Technology Physical Custody Asset Accounting Assess Internal and External Risk Regulatory Compliance Monitor Compliance Grant Compliance Program Integrity and Change Management Information Security and Transaction Authorization Segregation of Duties and Management Oversight Computer Operations Not effective Suggested improvements Effective 14

15 KNOWLEDGE QUALITY CLIENT SERVICE Cash Grants receivale Material adjustments Immaterial adjustments No adjustments Key Accounts Assertions and Audit Results Key Accounts Assertions Results Accounts payale and accrued expenses Due to providers Revenue and support Expenses Existence Existence, Valuation Completeness Completeness Occurrence Completeness 15

16 KNOWLEDGE QUALITY CLIENT SERVICE

17 KNOWLEDGE QUALITY CLIENT SERVICE Financial Statement Highlights STATEMENT OF NET ASSETS JUNE 30, 2016, 2015 and ASSETS Cash $ 385,408 $ 416,358 $ 225,273 Grants receivale 7,373,496 6,693,130 6,769,242 Advance to providers 13,626 14,659 13,837 Prepaid expenses 36,990 27,744 28,008 Furniture and equipment, net 10,758 22,090 33,259 Total Assets $ 7,820,278 $ 7,173,981 $ 7,069,619 LIABILITIES AND NET ASSETS Accounts payale and accrued expenses $ 182,358 $ 353,633 $ 259,894 Advances from OEL 38,061 16,974 13,370 Due to providers: Family Central 161,757 6,057,878 5,906,740 School Board of Broward 174, , ,946 Nova Southeastern University 170, , ,776 Children's Forum 10, ,341 90,516 Broward Regional Health Planning Commission 6,693, Broward 126, Total Liailities 7,558,676 6,900,025 6,767,242 Net Assets Unrestricted 261, , ,377 Total Liailities and Net Assets $ 7,820,278 $ 7,173,981 $ 7,069,619 17

18 KNOWLEDGE QUALITY CLIENT SERVICE Financial Statement Highlights (continued) STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED JUNE 30, 2016, 2015 and Revenue and Support Federal grants $ 46,586,840 $ 44,699,749 $ 43,728,739 State grants 39,065,527 38,232,900 37,381,831 Children's Services Council of Broward County 7,028,509 4,395,576 6,012,827 Other income 85,848 57,625 26,515 Total Revenue and Support 92,766,724 87,385,850 87,149,912 Expenses Program Services School Readiness (SR) 44,591,310 39,410,957 41,881,079 Voluntary Pre-kindergarten (VPK) 37,471,489 36,715,668 34,443,335 Entrance/Refugees 74, Program support and administration 8,780,679 9,645,901 9,105,040 Total Program Services 90,917,595 85,772,526 85,429,454 General and administrative 1,861,483 1,615,055 1,627,715 Fundraising - 26,690 49,619 Total Expenses 92,779,078 87,414,271 87,106,788 Change in unrestricted net assets (12,354) (28,421) 43,124 Net assets, eginning of year 273, , ,253 Net Assets, End of Year $ 261,602 $ 273,956 $ 302,377 18

19 KNOWLEDGE QUALITY CLIENT SERVICE Single Audit Results Major Federal Program CFDA Numer Federal Expenditures Temporary Assistance for Needy Families (TANF) $ 7,994,928 Temporary Assistance for Needy Families Maintenance of Effort Funds ,648,389 Total TANF $ 13,643,317 Total Expenditures of Federal Awards $ 46,586,840 Percentage Coverage 29% Major Florida State Program CFDA Numer Federal Expenditures Florida Office of Early Learning Voluntary Pre-Kindergarten Services $ 38,969,526 Voluntary Pre-Kindergarten Services ,001 Total Florida Office of Early Learning $ 39,065,527 Total Expenditures of State Financial Assistance $ 39,065,527 Percentage Coverage 100% 19

20 KNOWLEDGE QUALITY CLIENT SERVICE

21 KNOWLEDGE QUALITY CLIENT SERVICE Required Communications 1. Auditor s Responsiilities Under Generally Accepted Auditing Standards (GAAS) The financial statements are the responsiility of management. Our audit was designed in accordance with auditing standards generally accepted in the United States of America, and provide for reasonale, rather than asolute, assurance that the financial statements are free of material misstatement. 2. Significant Accounting Policies Management has the responsiility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management aout the appropriateness of accounting policies and their application. The significant accounting policies used y management are descried in the notes to the financial statements. 3. Auditor s Judgments Aout the Quality of Accounting Principles We discuss our judgments aout the quality, not just the acceptaility, of accounting principles selected y management, the consistency of their application, and the clarity and completeness of the financial statements, which include related disclosures. We have reviewed the significant accounting policies adopted y the Early Learning Coalition of Broward County, Inc. (ELC) and have determined that these policies are acceptale accounting policies. 21

22 KNOWLEDGE QUALITY CLIENT SERVICE 4. Audit Adjustments We are required to inform ELC s oversight ody aout adjustments arising from the audit (whether recorded or not) that could in our judgment either individually or in the aggregate have a significant effect on the entity s financial reporting process. We also are required to inform ELC s oversight ody aout unadjusted audit differences that were determined y management to e individually and in the aggregate, immaterial. There were no passed adjustments identified during the audit process. We proposed one journal entry related to compensated asences liaility, which was recorded y management. 5. Fraud and Illegal Acts We are required to report to ELC s oversight ody any fraud and illegal acts involving senior management and fraud and illegal acts (whether caused y senior management or other employees) that cause a material misstatement of the financial statements. Our procedures identified no instances of fraud or illegal acts. 6. Material Weaknesses in Internal Control We are required to communicate all significant deficiencies in ELC s systems of internal controls, whether or not they are also material weaknesses. Required Communications (continued) There were no material weaknesses noted during the audit. 22

23 KNOWLEDGE QUALITY CLIENT SERVICE 7. Other Information in Documents Containing Audited Financial Statements None. 8. Disagreements with Management on Financial Accounting and Reporting Matters None. 9. Serious Difficulties Encountered in Performing the Audit None. 1 Major Issues Discussed with Management Prior to Acceptance None. 11. Management Representations We will receive certain written representations from management as part of the completion of the audit. 12. Consultation with Other Accountants To our knowledge, there were no consultations with other accountants since our appointment as the Foundation s independent pulic accountants. 13. Non-Attest Services We assisted with drafting the financial statements and the completion of the 990 tax return. 14. Independence Required Communications (continued) As part of our client acceptance process, we go through a process to ensure we are independent of ELC. We are independent of ELC. 23

24 KNOWLEDGE QUALITY CLIENT SERVICE 15. Our Responsiility Related to Fraud Plan and perform the audit to otain reasonale assurance that there is no material misstatement caused y error or fraud; Comply with AU-C Section 240: Consideration of Fraud in a Financial Statement Audit Approach all audits with an understanding that fraud could occur in any entity, at any time, y anyone; and Required Communications (continued) Perform mandatory procedures required y GAAS and our firm policies. Examples of Procedures Performed Discuss thoughts and ideas on where the financial statements might e susceptile to material misstatement due to fraud; Understand pressures on the financial statement results; Understand the tone and culture of the organization; Look for unusual or unexpected transactions, relationships, or procedures; Discussions with individuals outside of finance; Evaluate key processes and controls; and Consider information gathered throughout the audit. 24

25 KNOWLEDGE QUALITY CLIENT SERVICE

26 KNOWLEDGE QUALITY CLIENT SERVICE External Auditor Responsiility for Mitigating Fraud Evaluate management programs and controls to deter and detect fraud for identified risks Reasonale assurance that financial statements are free of material misstatement due to fraudulent financial reporting or misappropriation of assets Compliance with fraud standard (SAS 99) Conversations with finance and operations personnel Disaggregated analytics Surprise audit procedures Journal entry testing Costs & Expenses Avoided y Fraud Financial Misconduct y Memer(s) of Sr. Management of the Board Revenue & Assets Otained y Fraud Fraudulent Financial Reporting Misappropriation of Assets Expenditures & Liailities for an Improper Purpose Management: CFO/Controller: controls to deter and detect fraud General Counsel/Compliance: monitoring Audit Committee: Evaluate management identification of fraud risk Evaluate implementation of fraud controls Reinforce tone at the top Conduct special investigations 26

27 KNOWLEDGE QUALITY CLIENT SERVICE SBC s Service Pledge to You We will consistently deliver a Quality Product and Quality Service so that we have the opportunity to estalish a Quality Relationship with you, allowing us to provide you with Quality Knowledge for your continual success. Only after we have provided you with the knowledge that enales your usiness to grow and prosper, we have hit the ullseye! Our commitment to you is the execution of our Bullseye Philosophy. We execute this philosophy for every client, on every engagement, every time. 27

28 KNOWLEDGE QUALITY CLIENT SERVICE

29 KNOWLEDGE QUALITY CLIENT SERVICE Engagement Team Contact Information Cynthia Borders, CPA, MBA Engagement Principal Office:(954) Cell:(954) Fax: Executive Assistant: Kristina Ortiz Office: Chris Lehman, CPA Audit Partner Office:(410) Cell:(301) Fax: Executive Assistant: Jordan Wida Office: (410)

30 KNOWLEDGE QUALITY CLIENT SERVICE Baltimore Office: 200 International Circle Suite 5500 Hunt Valley, MD Philadelphia Office: 1500 Market Street 12th Floor, East Tower Philadelphia, PA Washington, DC Office: 1299 Pennsylvania Ave. NW Suite 1120 Washington, DC Richmond Office: 6802 Paragon Place Suite 410 Richmond, VA South Florida Office: 4000 Hollywood Boulevard Suite 555-S Hollywood, FL KNOWLEDGE QUALITY CLIENT SERVICE

31 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Financial Statements Together with Reports of Independent Pulic Accountants For the Years Ended June 30, 2016 and 2015

32 JUNE 30, 2016 AND 2015 CONTENTS REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 FINANCIAL STATEMENTS Statements of Financial Position 3 Statements of Activities and Change in Net Assets 4 Statements of Functional Expenses 5 Statements of Cash Flows 7 Notes to the Financial Statements 8 SUPPLEMENTAL INFORMATION 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 14 REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM, STATE PROJECT AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCE AND CHAPTER 1650, RULES OF THE FLORIDA AUDITOR GENERAL 16 Schedule of Expenditures of Federal Awards and State Financial Assistance 18 Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance 19 Schedule of Findings and Questioned Costs 21 Summary Schedule of Prior Year Findings 24

33 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors Early Learning Coalition of Broward County, Inc. Report on the Financial Statements We have audited the statements of financial position of the Early Learning Coalition of Broward County, Inc. (ELC), as of June 30, 2016 and 2015, and the related statements of activities and change in net assets, functional expenses, and cash flows for the year then ended and the related notes to the financial statements. Management s Responsiility for the Financial Statements Management is responsile for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsiility Our responsiility is to express an opinion on these financial statements ased on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicale to financial audits contained in Government Auditing Standards, issued y the Comptroller General of the United States. Those standards require that we plan and perform the audit to otain reasonale assurance aout whether the financial statements are free from material misstatement. An audit involves performing procedures to otain audit evidence aout the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, ut not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonaleness of significant accounting estimates made y management, as well as evaluating the overall presentation of the financial statements. We elieve that the audit evidence we have otained is sufficient and appropriate to provide a asis for our audit opinion Hollywood Boulevard Suite 555-S Hollywood Florida P F

34 Opinion In our opinion, the financial statements referred to aove present fairly, in all material respects, the financial position of the Early Learning Coalition of Broward County, Inc., as of June 30, 2016 and 2015, and the change 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 Matters 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 is presented for purposes of additional analysis as required y the Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and is not a required part of the financial statements. Such information is the responsiility 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 een sujected 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 is fairly stated in all material respects in relation to the financial statements as a whole. Other Reporting Required y Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated, 2017, on our consideration of ELC 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 descrie the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering ELC s internal control over financial reporting and compliance. Hollywood, Florida,

35 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Statements of Financial Position As of June 30, 2016 and ASSETS Cash $ 385, ,358 Grants receivale 7,373,496 6,693,130 Advance to providers 13,626 14,659 Prepaid expenses 36,990 27,744 Furniture and equipment, net 10,758 22,090 Total Assets $ 7,820,278 $ 7,173,981 LIABILITIES AND NET ASSETS Accounts payale and accrued expenses $ 182,358 $ 353,633 Advances from OEL 38,061 16,974 Due to providers: Family Central 161,757 6,057,878 School Board of Broward 174, ,497 Nova Southeastern University 170, ,702 Children's Forum 10, ,341 Broward Regional Health Planning Commission 6,693, Broward 126,891 - Total Liailities 7,558,676 6,900,025 Net Assets Unrestricted 261, ,956 Total Liailities and Net Assets $ 7,820,278 $ 7,173,981 The notes to the financial statements are an integral part of these financial statements. 3

36 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Statements of Activities and Change in Net Assets For the Years Ended June 30, 2016 and Revenue and Support Federal grants $ 46,586,840 $ 44,699,749 State grants 39,065,527 38,232,900 Children's Services Council of Broward County 7,028,509 4,395,576 Other income 85,848 57,625 Total Revenue and Support 92,766,724 87,385,850 Expenses Program Services School Readiness (SR) 44,591,310 39,410,957 Voluntary Pre-kindergarten (VPK) 37,471,489 36,715,668 Entrance/Refugees 74,117 - Program support and administration 8,780,679 9,645,901 Total Program Services 90,917,595 85,772,526 General and administrative 1,861,483 1,615,055 Fundraising - 26,690 Total Expenses 92,779,078 87,414,271 Change in unrestricted net assets (12,354) (28,421) Net assets, eginning of year, as restated 273, ,377 Net Assets, End of Year $ 261,602 $ 273,956 The notes to the financial statements are an integral part of these financial statements. 4

37 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Statement of Functional Expenses For the Year Ended June 30, 2016, with Comparative Totals for 2015 School Readiness Voluntary Pre- Kindergarten Program Services Children's Services Council Other Total Support Services 2016 Total 2015 Total Pass-through payments to surecipients and quality initiatives $ 44,623,487 $ 38,489,287 $ 7,002,827 $ 84,752 $ 90,200,353 $ - $ 90,200,353 $ 84,885,794 Salaries and enefits 1,245, ,678 25,682 72,973 1,834,693 11,193 1,845,886 1,511,159 Professional fees 274,268 45,872-73, ,685 8, , ,511 Insurance 9,983 1, ,533-11,533 8,779 Printing and reproduction ,019 Rent 89,965 16, , , ,210 Repairs and maintenance 4, ,492-5,492 4,974 Training and developments 6, ,972-6,972 7,634 Travel 25,757 4, , ,023 19,342 Office expense 20,067 4, ,918 3,096 28,014 80,868 Capital expense 7, ,302-8,302 - Other expense 78,514 10,601 25, ,196 18, , ,981 Total Expenses $ 46,385,552 $ 39,065,603 $ 7,028,509 $ 257,533 $ 92,737,197 $ 41,881 $ 92,779,078 $ 87,414,271 The notes to the financial statements are an integral part of this financial statement. 5

38 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Statement of Functional Expenses For the Year Ended June 30, 2015 School Readiness Voluntary Pre- Kindergarten Program Services Children's Services Council Other Total Support Services 2015 Total Pass-through payments to surecipients and quality initiatives $ 42,561,921 $ 37,880,758 $ 4,363,681 $ 50,041 $ 84,856,401 $ 29,393 $ 84,885,794 Salaries and enefits 1,174, ,989 31,507 85,836 1,510, ,511,159 Professional fees 431,363 26,714-17, , ,511 Insurance 7, ,779-8,779 Printing and reproduction 2, ,019-2,019 Rent 121,772 13, , ,210 Repairs and maintenance 4, ,974-4,974 Training and developments 6, , ,634 Travel 16,500 1, , ,342 Office expense 37,360 5, ,168 37,700 80,868 Other expense 266,459 8, ,211 6, ,981 Total Expenses $ 44,630,081 $ 38,158,368 $ 4,395,576 $ 155,367 $ 87,339,392 $ 74,879 $ 87,414,271 The notes to the financial statements are an integral part of this financial statement. 6

39 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Statements of Cash Flows For the Years Ended June 30, 2016 and Cash Flows from Operating Activities Change in unrestricted net assets $ (12,354) $ (28,421) Adjustments to reconcile change in net assets to net cash from operating activities: Depreciation 11,332 12,322 Effect of changes in non-cash operating assets and liailities: Grants receivale (680,366) 76,112 Advance to providers 1,033 (822) Prepaid expenses (9,246) 264 Accounts payale and accrued expenses (171,275) 93,739 Advances from OEL 21,087 3,604 Due to providers 808,839 35,440 Net Cash from Operating Activities (30,950) 192,238 Cash Flows from Investing Activities Purchases of furniture and equipment - (1,153) Net change in cash (30,950) 191,085 Cash, eginning of year 416, ,273 Cash, End of Year $ 385,408 $ 416,358 The notes to the financial statements are an integral part of these financial statements. 7

40 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Notes to the Financial Statements June 30, 2016 and ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization The Early Learning Coalition of Broward County, Inc. (the Coalition or ELC) is a not-forprofit organization exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. The Coalition has een classified as a pulicly supported organization that is not a private foundation under Section 509(a) of the Code. The Coalition was organized as a corporation under the laws of the State of Florida on June 12, 200 The purpose of the Coalition is to implement an integrated and quality seamless service delivery system for all pulicly-funded early education and care programs in Broward County serving children from irth to thirteen years of age. The Coalition provides child-care services to school age children under statutory guidelines. Its mission is to promote voluntary pre-kindergarten education program (VPK) and school readiness programs, which will increase the achievement of future educational success for all children residing in Broward County in the specified age groups. Although the Coalition has a variety of goals and ojectives, all of its goals and ojectives relate to the Coalition s primary ojective of school readiness for children. Program goals include preparation of children for kindergarten, provision of childcare to meet the needs of working parents with children aged irth to thirteen, and development and training of childcare centers and family childcare homes. Basis of Accounting The accompanying financial statements are presented on the accrual asis of accounting and have een prepared in accordance with accounting principles generally accepted in the United States of America. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liailities, revenue and expenses, and disclosure of contingent assets, liailities, revenue and expenses as of the date of the financial statements. Actual results could differ from those estimates. Grants Receivale Grants receivale as of June 30, 2016 and 2015, consisted primarily of Federal and state grant receivales. Management elieves that all receivales are fully collectile as of June 30, 2016 and

41 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Notes to the Financial Statements June 30, 2016 and ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Furniture and Equipment, Net Furniture and equipment is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method. The capitalization threshold for furniture and equipment is $1,00 Expenditures for major repairs and improvements are capitalized. Expenditures for minor repairs and maintenance are expensed as incurred. Net Assets Unrestricted net assets are assets and contriutions that are not restricted y donors or for which restrictions have expired. Temporarily restricted net assets are those whose use y ELC has een restricted y donors primarily for a specific time period or purpose. When a donor restriction is met, temporarily restricted net assets are reclassified to unrestricted net assets. If a donor restriction is met in the same reporting period in which the contriution is received, the contriution (to the extent that the restrictions have een met) is reported as unrestricted net assets. Permanently restricted net assets are those that are restricted y donors to e maintained y ELC in perpetuity. As of June 30, 2016 and 2015, there were no temporarily or permanently restricted net assets. Revenue Recognition ELC s grant revenue is derived from Federal and state reimursement type grants and is recorded as a receivale and revenue when the related expenses are incurred or services are performed. Grant money received in advance is ooked as deferred revenue until funds have een spent to satisfy grant requirements. Other grants are also recorded as a receivale and revenue when the related expenses are incurred or services are performed. Revenue Concentration For oth years ended June 30, 2016 and 2015, 100%, of ELC s revenues and support were from the Office of Early Learning (OEL) and the Children's Services Council of Broward County. Of the amounts received from the OEL, 54% and 54%, of ELC s revenue and support were passed-through from the U.S. Department of Health and Human Services for the years ended June 30, 2016 and 2015, respectively. 9

42 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Notes to the Financial Statements June 30, 2016 and ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Functional Allocation of Expenses The costs of providing the various programs and other activities have een summarized on a functional asis in the statements of activities and change in net assets. Accordingly, certain costs have een allocated among the program and supporting services that enefit from those costs. General and administrative expenses include those expenses that are not directly identified with any other specific function ut provide for the overall support and direction of ELC. Expenses in the statement of activities include general, administrative and programmatic cost funded y each funding source. Tax Exempt Status ELC has received a determination letter from the Internal Revenue Service (IRS) stating that it is exempt from Federal income tax under Section 509(a) of the Internal Revenue Code. The provisions included in accounting principles generally accepted in the United States of America provide consistent guidance for the accounting for uncertainty in income taxes recognized in an entity s financial statements and prescrie a threshold of more likely than not for recognition of tax positions taken or expected to e taken in a tax return. ELC performed an evaluation of uncertain tax positions as of June 30, 2016, and determined that there were no matters that would require recognition in the financial statements or, which may have any effect on its tax-exempt status. As of June 30, 2016, the statute of limitations for fiscal years 2013 through 2016 remains open with the U.S. Federal jurisdiction or the various states and local jurisdictions in which ELC files tax returns. It is ELC s policy to recognize interest and/or penalties related to uncertain tax positions, if any, in income tax expense. Susequent Events ELC s management has evaluated the accompanying financial statements for susequent events and transactions through, 2017, the date that these financial statements were availale for issue and have determined that no material susequent events have occurred that would affect the information presented in the accompanying financial statements or require additional disclosure. 10

43 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Notes to the Financial Statements June 30, 2016 and FURNITURE AND EQUIPMENT Furniture and equipment consisted of the following as of June 30, 2016 and 2015: Useful Life Furniture and equipment $ 24,833 $ 24,833 5 years Computers and software 103, ,823 3 years 128, ,656 Less: accumulated depreciation 117, ,566 Furniture and equipment, net $ 10,758 $ 22,090 Depreciation expense for the years ended June 30, 2016 and 2015, was $11,333 and $12,322, respectively. 3. LEASE COMMITMENTS The Coalition s office space is under an operating lease agreement etween Lakeside IV, LLC ("Landlord") for a six-year lease term that commenced on April 30, 2015 and expires on April 30, 202 Monthly payments for the year ended June 30, 2016 were approximately $11,345, which includes the annual ase rent and an amount equal to the tenant's proportionate share of operating expenses paid or incurred y the landlord for each year. Total facility rental expense for the years ended June 30, 2016 and 2015 were $95,292 and $135,210, respectively. The minimum future lease commitments as of June 30, 2016 were as follows: 4. CONTINGENT LIABILITIES Years Ending June 30, Amount 2017 $ 124, , , ,043 Total $ 541,186 Most grants and cost reimursale contracts specify the types of expenditures for which the grant or contract funds may e used. The expenditures made y ELC under some of these grants and contracts are suject to audit. Management of ELC does not elieve that any such audit would result in a material effect on the accompanying financial statements. 11

44 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Notes to the Financial Statements June 30, 2016 and CONTINGENT LIABILITIES (continued) The Coalition receives a sustantial portion of its revenue from Federal and state grants. If a significant reduction in this revenue should occur, it may have an effect on the Coalition s programs. During the years ended June 30, 2016 and 2015, the Coalition earned revenue of $85,652,367 and $82,932,649, from Federal and state grants, which is 92% and 95% of the total revenue and support, respectively. 5. RELATED PARTIES The Coalition s Board of Directors is required y Florida State statute to include certain appointed individuals. Consequently, the Coalition s Board of Directors includes several individuals who are affiliated with organizations funded y the Coalition. 6. DEFINED CONTRIBUTION PENSION PLAN In Septemer 2002, ELC started a 403() defined contriution pension plan. According to the plan, ELC contriutes 7% of eligile employees salaries to the plan, if the employee contriutes 2%. For the years ended June 30, 2016 and 2015, ELC had $86,604 and $66,942 respectively, in pension expense. 7. PRIOR YEAR RESTATEMENT During the year ended June 30, 2016, ELC discovered that it had not recorded a liaility for compensated asences. ELC has restated the eginning net assets as of July 1, 2015 to record the liaility. As a result of this restatement, net assets as of July 1, 2015 were decreased y $79,

45 SUPPLEMENTAL INFORMATION

46 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 Early Learning Coalition of Broward County, Inc. We have audited in accordance with the auditing standards generally accepted in the United States of America and the standards applicale to financial audits contained in Government Auditing Standards issued y the Comptroller General of the United States, the financial statements of the Early Learning Coalition of Broward County, Inc. (ELC) which comprise the statements of financial position as of June 30, 2016, and the related statements of activities and change in net assets and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered ELC 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, ut not for the purpose of expressing an opinion on the effectiveness of ELC s internal control. Accordingly, we do not express an opinion on the effectiveness of ELC 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 asis. A material weakness is a deficiency, or a comination of deficiencies, in internal control, such that there is a reasonale possiility that a material misstatement of the entity s financial statements will not e prevented, or detected and corrected on a timely asis. A significant deficiency is a deficiency, or a comination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention y those charged with governance. Our consideration of the internal control was for the limited purpose descried in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might e material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to e material weaknesses. However, material weaknesses may exist that have not een identified Hollywood Boulevard Suite 555-S Hollywood Florida P F

47 Compliance and Other Matters As part of otaining reasonale assurance aout whether ELC 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 ojective 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 e reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to descrie 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 suitale for any other purpose. Hollywood, Florida,

48 REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM, STATE PROJECT AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCE AND CHAPTER 1650, RULES OF THE FLORIDA AUDITOR GENERAL To the Board of Directors Early Learning Coalition of Broward County, Inc. Report on Compliance for Each Major Federal Program We have audited Early Learning Coalition of Broward County, Inc. (ELC) compliance with the types of compliance requirements descried in the U.S. Office of Management and Budget (OMB) Compliance Supplement and State projects and the requirements descried in the Department of Financial Services Florida State Projects Compliance Supplement, that could have a direct and material effect on each of ELC s major federal programs and State projects for the year ended June 30, ELC s major federal programs and State projects are identified in the summary of independent pulic accountants results section of the accompanying schedule of findings and questioned costs. Management s Responsiility Management is responsile for compliance with the requirements of laws, regulations, contracts, and grants applicale to its Federal programs and Florida State projects. Auditor s Responsiility Our responsiility is to express an opinion on compliance for each of the Board s major Federal programs ased on our audit of the types of compliance requirements referred to aove. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicale to financial audits contained in Government Auditing Standards, issued y the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to otain reasonale assurance aout whether noncompliance with the types of compliance requirements referred to aove that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test asis, evidence aout the Board s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We elieve that our audit provides a reasonale asis for our opinion on compliance for each major Federal program and State project. However, our audit does not provide a legal determination of ELC s compliance Hollywood Boulevard Suite 555-S Hollywood Florida P F

49 Opinion on Each Major Federal Program and State Project In our opinion, ELC complied, in all material respects, with the compliance requirements referred to aove that could have a direct and material effect on each of its major Federal programs and State projects for the year ended June 30, Report on Internal Control over Compliance The management of ELC is responsile for estalishing and maintaining effective internal control over compliance with the types of compliance requirements referred to aove. In planning and performing our audit of compliance, we considered ELC s internal control over compliance with requirements that could have a direct and material effect on each major Federal program and State project as a asis for designing auditing procedures that are appropriate in these circumstances for the purpose of expressing our opinion on compliance for each major Federal program and State project and to test and report on internal control over compliance in accordance with the Uniform Guidance, and Chapter 1650, Rules of the Florida Auditor General, ut 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 ELC 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 and State project on a timely asis. A material weakness in internal control over compliance is a deficiency, or comination of deficiencies in internal control over compliance, such that there is a reasonale possiility that material noncompliance with a type of compliance requirement of a Federal program and State project will not e prevented, or detected and corrected on a timely asis. A significant deficiency in internal control over compliance is a deficiency, or a comination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program or State project that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention y those charged with governance. Our consideration of internal control over compliance was for the limited purpose descried in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might e material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to e material weaknesses. However, material weaknesses may exist that have not een identified. The purpose of this report on internal control over compliance is solely to descrie the scope of our testing of internal control over compliance and the results of that testing ased on the requirements of the Uniform Guidance. Accordingly, this report is not suitale for any other purpose. Hollywood, Florida,

50 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Schedule of Expenditures of Federal Awards and State Financial Assistance For the Year Ended June 30, 2016 Pass-Through Entity Identifying Numer CFDA/ Federal Grantor/ State Agency Pass-Through Grantor/ Program or Cluster Title CSFA Numer Expenditures U.S. Department of Health and Human Services Pass-through State of Florida Office of Early Learning Child Care Mandatory and Matching Funds of the Child Care and Development Fund Block Grant SR096 $ 13,253,774 Child Care Development State Matching Funds of the Child Care Maintenance of Effort Funds SR096 1,975,545 Child Care and Development Block Grant SR096 17,459,923 Temporary Assistance for Needy Families SR096 7,994,928 Temporary Assistance for Needy Families Maintenance of Effort Funds SR096 5,648,389 Social Services Block Grant SR096 41,737 Child Care and Dev.Block grant Trust Fund PP604 86,265 46,460,561 Pass-through Florida Department of Children and Families Refugee and Entrant Assistance State Administrered Programs K048 86,975 Total U.S. Department of Health and Human Services 46,547,535 Center for Disease Control Partnership To Improve Community Health U58DP ,305 Total Expenditures of Federal Awards $ 46,586,840 Florida Office of Early Learning Voluntary Pre-Kindergarten Services SV096 $ 38,969,526 Voluntary Pre-Kindergarten Services OA096 96,001 Total Florida Office of Early Learning $ 39,065,527 Total Expenditures of Federal Awards and State Financial Assistance $ 85,652,367 The accompanying notes are an integral part of this schedule. 18

51 EARLY LEARNING COALITION OF BROWARD COUNTY, INC. Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance For the Year Ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES All Federal grant operations of Early Learning Coalition of Broward County, Inc. (ELC) are included in the scope of Title 2 U.S. Code of Federal Regulations part 200, Uniform Administration Requirement, Cost Principles, and Audit Requirements for Federal Awards (the Single Audit). The Single Audit was performed in accordance with the provisions of the OMB Compliance Supplement (the Compliance Supplement). Compliance testing of all requirements, as descried in the Compliance Supplement, was performed for the major grant programs noted elow. The programs on the Schedule of Expenditures of Federal Awards and State Financial Assistance (the Schedule) represent all Federal award programs and other grants with fiscal year 2016, cash or non-cash expenditure activities. For our single audit testing, we tested the Federal award programs elow to ensure coverage of at least 25% of Federally granted funds. Our actual coverage was 29%. Expenditures reported on the Schedule of expenditures of Federal awards are reported on the accrual asis of accounting. Such expenditures are recognized following, as applicale, either the cost principles in OMB Circular A-122, Cost Principles for Non-Profit Organizations, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowale or are limited as to reimursement. ELC has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. Major Programs CFDA Numer Federal Expenditures Temporary Assistance for Needy Families $ 7,994,928 Temporary Assistance for Needy Families- Maintenance of Effort Funds $ 5,648,389 13,643,317 All Florida State grant operations of ELC are included in the scope of the Department of Financial Services Florida State Projects Compliance Supplement (the Compliance Supplement). The audit was performed in accordance with the provisions of the Compliance Supplement. Compliance testing of all requirements, as descried in the Compliance Supplement, was performed for the major Florida State program noted elow. The State programs on the Schedule represent all State awards and other grants with fiscal year 2016 cash or non-cash expenditure activities. For our Florida State single audit testing, we tested the Florida State financial assistance with 2016 cash and non-cash expenditures to ensure coverage of at least 50% of the Florida State programs. Our actual coverage was 100% of Florida State projects. 19