THE EXTRA MILE REGION VII, INC. SHREVEPORT, LOUISIANA. Audited Financial Statements June 30, 2008

Transcription

1 Page 1 of 18 ^^5 SAMUEL W. STEVENS, III Certified Public Accountant THE EXTRA MILE REGION VII, INC. SHREVEPORT, LOUISIANA Audited Financial Statements June 30, 2008 Under provisions of state law, this report is a public document. Acopy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerk of court. Release Date

2 Page 2 ol 18 THE EXTRA MILE, REGION VH, INC. SHREVEPORT, LOUISLVNA Financial Statements and Independent Accountant's Report For the Year ended June 30, 2008 Table of Contents Page(s) Independent Auditor's Report Statement of Financial Position Statement of Activities Statement of Functional Expenses Statement of Cash Flows Notes to Financial Statements OTHER REPORTS Report on Intemal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Schedule of Findings For the Year Ended June 30, 2008 Schedule of Prior Year Findings For the Year Ended June 30, Management's Corrective Action Plan 17

3 Paged ol 18 SAMUEL W. STEVENS, III CPA P.O. Box 5263J Shreveport, LA 7U35 (318) Fax (866) INDEPENDENT AUDFIOR'S REPORT Tlie Board of Directors The Extra Mile, Region Vn, Inc. Shreveport, Louisiana I have audited the accompanying statements of fmancials positions of The Extra Mile Region VII, Inc. (The Extra Mile) of Shreveport, Louisiana (a nonprofit organization) as of June 30, 2008 and the related statement of activities, and cash flows for the year then ended. These financial statements are the responsibility of the Organizations' management. My Responsibility is to express an opinion on these financial statements based on my audit. Except as discussed in the following paragraph, I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards required that I 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. I believe that may audit provide a reasonable basis for our opinion. Supporting documentation was not available for a significant number of disbursements made subsequent to June 30, Accordingly, it was not practicable for me to extend my audit of accounts payable beyond the amounts recorded as of June 30, In my opinion, except for the effects of such adjustment, if any, as might have been determined to be necessary had the supporting documentation referred to in the preceding paragraph been susceptible to satisfactory audit tests, the fmancial statements referred to above present fairly, in all material respects, the fmancial position of The Extra Mile as of June 30, 2008, 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, I have also issued my report dated June 27, 2009, on my consideration of The Extra Mile's intemal control over fmancial reporting and on my tests of it's compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The puipose of that report is to describe the scope of my testing of intemal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the intemal control over fmancial reporting or on compliance. The report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of my audit June 27, 2009

4 Page 4 of 18 The Extra Mile, Region VII, Inc. Shreveport, Louisiana Statement of Financial Position June 30, 2008 Current Assets Cash Grant Receivable Prepaid expenses Total Current Assets Assets 205 9, ,127 Equipment net Total Assets 1,033 11,160 Liabilities and Net Assets Current Liabilities Accounts payable & accrued expenses Accmed payroll and taxes Refundable advances Line of credit Total Current Assets 23,126 10,634 10,829 28,803 73,392 Total Liabilities 73,392 Net Assets: Unrestricted Temporarily Restricted Total Net Assets Total Liabilities and Net Assets (71,344) 9,112 (62,232) 11,160 See Accompanying Notes to Financial Statements Page 2

5 Pages of 18 Extra Mile, Region VII, Inc. Shreveport, Louisiana Statement of Activates For the Year Ended June 30, 2008 Revenue and Support Grant Revenue Contributions Other Revenue Total Revenue and Support Unrestricted 49,222 $ 491 2,149 51,862 Temporarily Restricted Total 353 J ; 49, ,149 52,215 Net Assets Released From Restrictions 12,581 (12,581) Total Revenue and Support 64,443 (12,228) 52,215 Expenses Program Services: Tobacco Free Living Total Program Services 9,652 9,652 9,652 9,652 Supporting Services: Management And General Total Support Services 68,671 68,671 68,671 68,671 Total Expenses 78,323 78,323 Change in Net Assets (13,880) (12,228) (26,108) Net Assets Beginning of Year (48,705) 12,581 (36,124) End of Year $ (62,585) $ 353 $ (62,232) See Accompanying Notes to Financial Statements Page 3

6 Page 6 of 18 The Extra Mile, Region VII, Inc. Slireveport, Louisiana Statement of Functional Expenses For the Year Ended June 30, 2008 Tobacco Free Living Management & General Total Expenses Salaries Payroll taxes and related benefits Travel Operating services Interest expense Internet expense Professional services Building rent Office supplies Utilities and telephone Printing and promotion Depreciation $ 1,655 $ 1,043 1,793 1,004 1,798 2,359 34,453 $ 3, ,020 4,885 1,365 8, ,834 1,628 36,108 3,166 1,838 10,020 4,885 1,365 9, ,713 4,632 2,359 1,628 Total Expenses $ 9,652 $ 68,671 $ 78,323 See Accompanying Notes to Financial Statements Page 4

7 Page 7 of 18 The Extra Mile, Region VII, Inc. Shreveport, Louisiana Statement of Cash Flows June 30, 2008 Cash Flows from Operating Activities: Changes in Net Assets $ (26,108) Adjustments to Reconcile Change in Net Assets to Net Cash Provided from Operations: Depreciation (Increase)/Decrease in: Grants Receivable Intermediary Receivable Prepaid expenses Increase/(Decrease) in: Accounts Payable & Accmed Expenses Bank Overdraft Accrued payroll and taxes Refundable advances Net Cash Provided ( Used) by Operating Activities Hows from Financing Activities Net (Payments) to Revolving Line of Credit Cancellation of Debt Obligations Net Cash Flows Provided Used by Financing Activities Net Decrease in Cash Cash, Beginning of Year Cash, End of Year $ 1,628 (1,102) 80, (16,271) (42,932) 6,473 2,435 6,473 (1,876) (6,371) (8,247) (1,774) 1, See Accompanying Notes to Financial Statements Page 5

8 Page 8 ol 18 The Extra Mile, Region VII, Inc. Shreveport, Louisiana Notes to the Financial Statements June 30, 2008 Note 1 Organization and Significant Accounting Policies The Extra Mile, Region, Vn, Inc (Extra Mile") is a notforprofit corporation under the laws of the State of Louisiana. Extra Mile was established to provide volunteer coordination and support services for the Offices of Mental Health, Developmental Disabilities and Substance Abuse. Extra Mile serves the parishes of Caddo, Bossier, Webster, Claiborne, Bienville, Red River, Desoto, Sabine, Natchitoches, and Winn in Region VII. The Extra Mile is comprised of the following two principal programs: Youth Volunteer Corps The Youth Volunteer Corps of Shreveport Bossier (YVC) is a program sponsored under The Extra Mile, Regions VH, Inc. Youth Volunteer Corps is a national organization that mobilizes youth between the ages of 11 and 18 in community service projects that promote service, learning, citizenship, relationship building and leadership. YVC has several projects throughout the year such as the Martin Luther King Day service project, National Youth Service Day, Make a Difference Day and other national days of service. The program is funded primarily from the Department of Health and Hospitals office of Mental Heath, Hands On, and other miscellaneous contributions. Big Brothers Big Sisters Big Brother Big Sisters of CaddoBossier (BBBS) is a program sponsored by Extra Mile, Region VH, Inc. Big Brother Big Sister of America is a national organization that targets youth between the ages of 6 and 15 who come primarily from single parent households, grandparent as primarycaregiver homes, low to moderate income households or children at risk of academic or behavior modification. The program's primary purpose is the creation of oneonone relationships between adult volunteers and children through schoolbased and community based mentoring partnerships with faith based organizations. This program is fiinded primarily by the Department of Health and Hospitals Office of Mental Health, Hands On, grants, contributions, membership fees and fundraising efforts of Big Brother Big Sister of America. Funds also come from other miscellaneous contributions. Extra Mile also acts as fiscal agent for the Office of Mental Health in administering its Consumer Care Resources and Systems of Care grants and for the Office for Citizens with Developmental Disabilities grant Summary of Significant Accounting Policies Accounting policies of Extra Mile conform with accounting principles generally accepted in the United States of America and reflect practices appropriate to he industry in which it operates. The significant pohcies are summarized below. Basis of Accounting: The agency prepares itsfinancialstatements of the accmal basis of accounting. Accordingly, revenue is recognized when eamed and expenses are recognized when incurred. Functional Expenses: Expenses are charged to each program based upon direct expenditures incurred. Page 6

9 Pages of 18 Grants Receivable: Various funding sources provide reimbursement of allowable costs and payment on units of service in connection with providing services under contracts or agreements. This balance represents amounts due from funding sources at June 30, 2008, but received after that date. Refundable Advances: Certain funds have been received by Extra Mile as agent for the resource provider, and may be transferred to third parties only upon the authority of he resource provider. Since Extra Mile has no discretion as to their use, they are accounted for as refundable advances as follows: NWRMROADA $ 320 NWRMROCDD 1,294 NWRMH 456 Mental Health Coalition 1,980 Breakaway Natchitoches/Metamorphosis 2,389 Pines Treatment Center 2,652 Challenge 766 Minden Mental Health 211 LA State Association Treasurer/BBBS 509 Shreveport Mental Health Center 252 Totals $ 10,829 Grant Revenue: Extra Mile is dependent on federal and state grants. Its continued existence is based on annual contract renewals with various funding sources. Net Assets: Under the provisions of Statement of Financial Accounting Standards No. 117, "Financial Statements for NotForProfit Organizations" net assets and revenues and contributions, expenses, gains and losses are classified based on the existence or absence of donorimposed restrictions. Accordingly, net assets of the Extra Mile and changes therein are classified and reported as follows: Unrestricted net assets Net assets that are not subject to donorimposed stipulations. Support restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. Temporarily restricted net assets Net assets that are subject to donorimposed stipulations which may or will be met either by actions of the Extra Mile and/or the passage of time. All donorrestricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (i.e., 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. Contribudons: All contributions are considered available for unrestricted use unless specifically restricted by the donor. Federal Income Taxes: Extra Mile is a taxexempt organization as described in Section 501(c) (3) of the Intemal Revenue Code and is classified by the Intemal Revenue Service as an organization other than a private foundation. Extra Mile therefore is not subject to income taxes. However, income from certain activities not directly related to Extra Mile's tax exempt purpose is subject to taxation as unrelated business income. Extra Mile had no such income for the year ended June 30, Extra Mile is also exempt from state income taxes. Page 7

10 Page 10of 18 Equipment: is stated at cost Extra Mile follows the practice of capitalizing expenditures for equipment in excess of $500. Depreciation of equipment is computed on a straightline basis over the estimated useful lives of the assets. Equipment owned by Extra Mile while used in the program for which it was purchased or in other future authorized programs totaled SO for the year ended June 30, The funding sources, however, have a reversionary interest in the equipment purchased with grant funds; therefore, its disposition as well as the ownership of any sale proceeds therefore, is subject to funding source regulations. Website Development: Costs are amortized on the straightline basis over an estimated useful life of five years. Amortization expense for the year ended June 30, 2008, was $0. Risks and Uncertainties: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentrations of Credit Risk: Financial instmments that potentially subject Extra Mile to concentrations of credit risk consist principally of temporary cash investments and grant receivables. Concentrations of credit risk with respect to grant receivables are limited due to these amounts being due from govemmental agencies under contractual terms. Extra Mile maintains cash balances at a single financial institution. These accounts collectively are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At June 30, 2008, there were no uninsured balances at this institution. Note 2 Equipment net A summary of equipment at June 30, 2008 follows: Computer Equipment $ 5,748 Accumulated Depreciation (4,715) Equipment, net $ 1,033 Total depreciation expense charged to operations was $1,628 for the year ended June 30, Note 3 Notes Payable The Extra Mile entered into the following debt agreements: Promissory note payable on demand under a $30,000 line of credit with a bank, bearing interest at prime plus 3%, adjusted monthly, unsecured. The interest rate at June 30, 2008, was 11.00%. $ 28,803 Less current portion 28,803 Longterm portion $ Interest expense for the year ended June 30, 2008, totaled $2,856. Note 5 Temporarily Restricted Net Assets Temporarily restricted net assets of $353 at June 30, 2008, was composed of unexpended grant funds. Page 8

11 Page llol 18 Note 6 Concentrations The Extra Mile received grant revenue from the following sources in 2008: State and local DHH Office of Mental Health Louisiana Public Health Institute TobaccoFree Living Other Miscellaneous Totals % % % % % Note 7 Commitments and Contingencies Grants require the fulfillment of certain conditions as set forth in grant contracts. Failure to fulfill the conditions as set forth in the grant contracts could result in the retum of grant funds to the grantor. Note 8 Going Concern Considerations The accompanying financial statements have been prepared assuming that the Extra Mite. Region VII, Inc. will continue as a going concem. At June 30, 2008, total liabilities exceed total assets by $62,232. Additionally, the organization has sustained substantial decreases in net assets in recent years resulting in a deficit in net assets. Currently, the Extra Mile is experiencing cash flow problems. The checking account is being regularly overdrawn and the revolving line of credit that was being used for working capital has been depleted. Management anticipates growth in both fundraised monies and community support in Although Extra Mile has experienced setbacks, the Board of Directors and staff are diligently working to strengthen the organization financially through strategic planning, fund development, board development, and by seeking technical assistance for financial planning, The ability of the organization to continue as a going concem is dependent upon the success of managements endeavors to increase revenues and to reduce expenses. Page 9

12 Page12of 18 SAMUEL W, STEVENS, III CPA P.O. Box Shreveport, LA (318) 458^0930 Fax (866) REPORT ON INTERNAL CONTROL OVER FINANCUL REPORTING AND ON COMPLUNCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCLVL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Extra Mile, Region VII, Inc. Shreveport, Louisiana I have audited the financial statements of The Extra Mile, Region Vn, Inc., (The Extra Mile) (a notforprofit organization) as of and for the year ended June 30, 2008 and have issued my report thereon dated June 27, I conducted my 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. Internal Control Over Financial Reporting In planning and performing my audit, I considered The Extra Mile's internal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressing my opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of The Extra Mile's intemal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of the Organization's intemal control over financial reporting. My consideration of intemal control over fmancial reporting was for the limited puipose described in the preceding paragraph and would not necessarily identify all deficiencies in intemal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, I identified a deficiency in intemal control over financial reporting that I consider to be a significant deficiency. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing then assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the organization's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles, such that there is more than a remote Ukelihood that a misstatement of the organization's financial statements that is more than inconsequential will not be prevented or detected by the organization's intemal control. I consider the deficiencies described in the accompanying schedule of findings and responses to be significant deficiencies in intemal control over financial reporting. The control deficiencies noted are described in the accompanying schedule of fmdings as items 20081, 20082, 20083, 20084, 20085, 20086, and A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the organization's internal control. My consideration of the intemal control over fmancial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the intemal control Page 10

13 Page13of 18 that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the control deficiencies described above, I consider items 20082, 20083, 20074, and 20085, to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether The Extra Mile's financial statements are free of material misstatement, I 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 my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no Instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the board of directors, management, Louisiana Legislative Auditor and federal awarding agencies and pass through entities and is not intended and should not be used by anyone other than these specified parties,>z?^ June 27, 2009 Page 11

14 Page 14of 18 The Extra Mile, Region VII, Inc. Shreveport, Louisiana Schedule of Findings and Questioned Costs For the Year Ended June 30, 2008 I have audited the financial statements of The Extra Mile, Region VII, Inc, as of and for the year ended June 30, 2008 and have issued my report thereon dated June 27, I conducted my auditing standard 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. My audit of the fmancial statements as of June 30, 2008, resulted in an unqualified opinion. Section 1 Summary of Auditor's Report a. Report on Intemal Control and Compliance Material to the Financial Statements Intemal Control Material Weakness: Yes Control Deficiencies: Yes Compliance Compliance Material to Financial Statements: No b. Federal Awards Not Applicable c. Identification of Major Programs Not Applicable Section H Financial Statement Findings Finding 20081: Bank reconciliation for Extra Mile's Special Account and Northwest Louisiana Coalition accounts were not prepared as of June 30, Old outstanding items on main operating account were not researched and resolved in a timely maimer. Conditions: Bank reconciliations were not properly prepared for yearend reporting. Criteria: Bank reconciliation should be prepared and reviewed on a monthly basis. Effect: Cash as reported in the intemally prepared financial statements was misstated at June 30, Cause: The Extra Mile experienced turnover in the Executive Director and bookkeeper positions during the year ended June 30, No one recognized the need to prepare monthly bank reconciliations on the special accounts. Recommendations: All back accounts should be reconciled on a monthly basis. The reconciliation should be reviewed and signed or initialed by the Executive Director. Finding 20082: The Extra Mile is not recording items on an accmal basis. Condition: Prepaid expenses and accounts payable were not properly recorded. Criteria; Income is reported in the fiscal period it is earned, regardless of when it is received, and expenses are deducted in the fiscal period they incurred, whether paid or not. Page 12

15 Page 15of 18 Effect: Intemal financial statements were materially misstated at June 30, Audit adjustments were made to record prepaid expenses and accounts payable. Cause: Staff did not comprehend the importance of yearend accmals. Staff did not examine supporting documentation to assure income, prepaid and accounts payable balances were properly recorded at June 30, Recommendations: The Extra Mile should invest in formal training of staff responsible for the financial records. I recommend examination of documentation supporting disbursements made after year end to identify payables. Finding 20073: Certain transaction could not be supported by documentation. Condition: The Extra Mile could not locate two supporting documents during the audit. Missing items included cash disbursement for one vendor and credit card statements. Criteria: All transactions should be supported by documentation. This documentation should be readily available in order o provide evidence that the transaction is valid. Effects: Certain expenses and other transactions needed to be reclassed during the audit. Disbursements recorded as expense for the current period should have been recorded as payments on accounts payables. Accounts receivable amounts were not properly supported at yearend. Cause: Prior to the change in key positions, the organization was relocated and documentation was lost or inadequately filed. Recommendation: I recommend that the Extra Mile implement policies to retain and file supporting documentation. Finding 20084: The Extra Mile is not complying with IRS and state payroll reporting requirements. Conditions: I noted Federal Form 941 and state quarterly payroll reports for the quarter ended June 30, 2008 were prepared and mail out but were not paid. Criteria: Payroll taxes should be paid timely. Effect: Payroll taxes not paid timely resulting in expensive penalties and interest. Cause: Loss of grant funding occurred during the transition of key personnel resulting in greater financial difficulties. Recommendations: I recommend timely preparation of payroll taxes payments. The Executive Director should review tax payments monthly to assure Federal and State payroll taxes are adequately and timely remitted. Finding 20085: Instances of improper recording. Conditions: I noted the following items: Income fi"om prior periods was recorded in current period. Classification of expenses was not properly done throughout the fiscal year between grants and notgrant expenses. Page 13

16 Page 16of 18 Was not consistent in the coding of expenses Property that was no longer in the possession of Extra Mile remained on the books Credit Card invoices were being improperly recorded. Fees and Interest was not being recorded as expense and liability Criteria: All transactions should be properly and timely recorded. Effect: The intemally prepared fmancial statements were materially misstated at June 30, Cause; Lack of technical training of staff responsible for maintaining the financial records. Recommendations: The Extra Mile should expend the necessary funds to acquire technical training of staff responsible for maintaining fmancial records. Finding 20086: The Extra Mile did not comply with Financial Reporting requirements of is Grantor agencies and the Louisiana Auditor. Conditions: Financial Statements were not timely audited and submitted. Criteria: The Extra Mile was required to provide audited financial statements to the Louisiana Legislative Auditor by December 31, Effected: Financial support from grant agencies ceased funding. Cause: Proper intemal fmancial statements were not prepared timely. Recommendation: The Board of Directors should engage a Certified Public Accountant prior to yearend to ensure audit is prepared and submitted within the compliance requirements of the grantor and Louisiana Auditor. Finding 20087: The Extra Mile serves as an agent for resource providers by receiving and holding funds until the providers authorize the funds to be transferred to third parties. I noted there is not enough cash to cover the undistributed funds that have been received by the resource provider. Condition: There is no cash available to cover any requests for distribution by the resource providers. Criteria: The Extra Mile is responsible for distributing funds for certain resource providers. The Extra Mile has no discretion as to their use. The funds are accounted for as refundable advances. A cash reserve should be set aside for these liabilities. Effect: The Extra Mile currently has no cash available when providers request a distribution of their funds to a third party. Cause: The Extra Mile currently has a cash flow problem and no policy to set aside funds for these refundable liability accounts. Recommendations: The Board of Directors should create a pohcy regarding funds when the Extra Mile is acting as an agent for resource providers. Any funds received by a resource provider for future distribution to a third party should be reserved or board restricted. This will prevent those funds fiom being used for the operations of The Extra Mile, Page 14

17 Page 17ol 18 The Extra Mile, Region VII, Inc. Shreveport, Louisiana Schedule of Prior Year Findings For the Year Ended June 30, 2007 Finding 20071: Bank reconciliation for Extra Mile's Special Account and Northwest Louisiana Coalition accounts were not prepared as of June 30, Old outstanding items on main operating account were not researched and resolved in a timely manner. Status: Similar finding noted in The accounts were closed by the bank and all remaining funds were deposited to the operations account of The Extra Mile. Finding 20072: The Extra Mile is not recording items on an accrual basis. Status: This is a repeat finding in Finding 20073: Certain transaction could not be supported by documentation. Status: This is a repeat finding m Finding 20074: I noted three instances where the signature pohcy was circumvented by splitdng the invoice and writing two or three checks. Status: Corrective action taken. The Board changed checked signers which ensured two signatures were always available. Finding 20075: The Extra Mile is not complying with IRS and state payroll reporting requirements. Status: Similar finding noted in Funds are not sufficient. Findings 20076: Instances of improper recording. Status; This is a repeat finding in Finding 20077: The Extra Mile did not comply with Financial Reporting requirements of is Grantor agencies and the Louisiana Auditor. Status: This is a repeat finding in Finding 20078: The Extra Mile serves as an agent for resource providers by receiving and holding fiinds until the providers authorize the funds to be transferred to third parties. I noted there is not enough cash to cover the undistributed funds that have been received by the resource provider. Status: This is a repeat fmding in Page 15

18 Page 18of 18 iextra^i! HaBfflprs The Extra Mile Region VfT, Fnc, =^fc^l^9 ^^^^"^ MJdwav Street Slireveport. LA H1, idctra^i > (318) FAX: (318) en The Extra Mile Region VII, Inc. Management's Corrective Action Plan For The Year Ended June 30, infb(i^cxtrnmile7,org www. 1800volunteer.org June 11,2009 Response 1: Procedures for reconciling statements will be incorporated and performed monthly to ensure that all bank accounts are reconciled, items are reviewed, researched and resolved monthly and approved by the Executive Director. Response 2: January 2008 though June 2008, the Extra Mile contracted with an external accounting firm to ensure expenses and payables were recorded in the proper period. Due to fmancial difficulty, TEM was not able to continue with the external fmn. We will look at getting the necessary technical training for staff. Response 3: Items noted as missing were before the current Executive Director. The Extra Mile has reestablished the filing system that was in place prior to the physical move of the operations. Files and supporting documentation are readily accessible. Response 4: The organization has filed all past state and federal payroll tax reports; however, payment arrangements have been established for tlie payment of the past liabilities. The organization has implemented procedures to monitor the timely filing of payroll reports and future paying payroll taxes timely. Response 5: January 2008 though June 2008, the Extra Mile contracted with an external accounting firm to ensure expenses and payables were recorded in the proper period. Due to financial difficulty, TEM was not able to continue with the external firm. We will look at getting the necessary technical training for staff Response 6: Funding has been a barrier that has prevented compuance with the Financial Reporting requirements of its Grantor agencies and the Louisiana Legislative Auditor. TEM will look to engage a Certified Public Accountant prior to yearend. Response 7: The Board is aware of the unavailable funds. The organization is in the process of extensive grant writing and search for funds. The Board has committed to replacing the funds for the Liability Accounts. Sincerely, Kenya Scruggs Executive Director Page 16