SERVICE OPPORTUNITY FOR SENIORS FINANCIAL STATEMENTS. (With Supplementary Information) Years Ended June 30, 2017 and 2016

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1 FINANCIAL STATEMENTS (With Supplementary Information) Years Ended June 30, 2017 and 2016

2 FINANCIAL STATEMENTS Years Ended June 30,2017 and 2016 TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT FINANCIAL STATEMENTS: Statements of Financial Position Statement of Activities- Year Ended June 30, 2017 Statement of Activities- Year Ended June 30, 2016 Statement of Functional Expenses - Year Ended June 30, 2017 Statement of Functional Expenses- Year Ended June 30, 2016 Statements of Cash Flows Notes to Financial Statements SUPPLEMENTARY INFORMATION: Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Schedule of Revenue - Alameda County Contracts REPORT ON COMPLIANCE AND INTERNAL CONTROL: Independent Auditor's Report on Internal Control Over Financial Reporting and on 20 Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Independent Auditor's Report on Compliance for Each Major Federal Program; Report on 22 Internal Control Over Compliance; and Report on the Schedule ofexpenditures of Federal Awards Required by the Uniform Guidance Schedule of Findings and Questioned Costs 25 Summary Schedule of Prior Audit Findings 26

3 Noe and Company To the Board of Directors of Service Opportunity for Seniors San Leandro, California Independent Auditor's Report Report on the Financial Statements I have audited the accompanying financial statements of Service Opportuni ty for Seniors (SOS), a California nonprofit corporation, which compri se the statements of financial positio n as of June 30, 2017 and 2016, and the related statements of activities, functional expenses, and cash fl ows fo r the years then ended, and the related notes to the fi nancial statements. Management's Responsibilitv 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; th is 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 Responsibilitv My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with auditing standards generall y 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 I plan and perform the audit to obtai n reasonable assurance about whether the financial statements are free fro m material misstatement. An audit involves perf01ming procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the aud itor's judgment, including the assessment of the risk 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 circum stances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, I express no such opinion. An audit also includes evaluating the appropriateness of accounting poli cies used and the reasonableness of significant accounting estimates made by management, as well as eva! uating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is suffi cient and appropriate to provide a basis fo r my audit opinion Edgewater Drive, Suite 220, Oakland, CA Tel: (5 10) Fax (5 10) www. noecpa.com

4 Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, SOS's financial positions as ofjune 30,2017 and 2016, 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 Matters Other Information My audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of expenditures of federal awards, as required by Title 2 US Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards is presented for purposes of additional analysis. The schedule of revenue- Alameda County Contracts is also presented as required by the County of Alameda. Those schedules are 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 ceriain 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 procedmes in accordance with auditing standards generally accepted in the United States of America. In my opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required bv Government Auditing Standards In accordance with Government Auditing Standards, I have also issued my report dated March 26, 2018, on my consideration of SOS 's internal control over financial reporting and on my 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 my 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 repori is an integral part of an audit performed in accordance with Government Auditing Standards in considering SOS' s internal control over financial reporting and compliance. Oakland, California March 26,

5 STATEMENTS OF FINANCIAL POSITION June 30, 2017 and 2016 Assets Current Assets Cash $ 209,302 Accounts Receivable 185,459 Grants Receivable Inventory 16,154 Prepaid Expenses 16~898 Total Current Assets 427,813 Property and Equipment, net 624,560 Deposits Total Assets $ 1,063,194 $ 46, ,171 42,500 12, , , $ 919,479 Liabilities and Net Assets Current Liabilities Accounts Payable $ Accrued Payroll and Payroll Taxes Line of Credit Notes Payable- Short Term Total Current Liabilities Notes Payable - Long Term Net Assets Total Liabilities Unrestricted Temporarily Restricted Total Net Assets Total Liabilities and Net Assets $ 168,167 50,295 10,543 31~ , , !063!194 $ 110,843 18,496 21,292 61~ , ,320 42~ $ 919!479 See accompanying notes to financial statements 3

6 STATEMENT OF ACTIVITIES Year Ended June 30,2017 Unrestricted Temporarily Restricted Total Support and Revenues: Governmental Contracts $ 2,355,373 Grants 147,500 Contributions 557,739 Special Events Revenue 90,198 Special Events Direct Benefit Costs (8,075) Donated Services 127,872 Other Income 58,845 Net Assets Released from Restrictions $ (42.500) Total Support and Revenues 3,371,952 (42,500) $ 2,355, , ,739 90,198 (8,075) 127,872 58,845 3,329,452 Expenses: Program Services 2,716,706 General and Administrative 345,056 Fundraising Total Expenses Change in Net Assets 167,225 (42,500) Net Assets, Beginning of the Year Net Assets, End of the Year $ 705,545 $ 2,716, , , $ 705,545 See accompanying notes to financial statements 4

7 STATEMENT OF ACTIVITIES Year Ended June 30,2016 Unrestricted Temporarily Restricted Total Support and Revenues: Governmental Contracts $ 2,002,676 Grants 179,250 $ Contributions 308,960 Special Events Revenue 82,848 Special Events Direct Benefit Costs (24,099) Donated Services 76,992 Other Income 35,596 Expenses: Total Support and Revenues 2,662,223 Program Services 2,325,605 General and Administrative 221,274 Fundraising 130,372 Total Expenses 2,677,251 Change in Net Assets (15,028) Net Assets, Beginning of the Year 553,348 Net Assets, End of the Year $ 538~320 $ 42,500 42,500 42, $ 2,002, , ,960 82,848 (24,099) 76,992 35,596 2,704,723 2,325, , ,372 2,677,251 27, ,348 $ 580~820 See accompanying notes to financial statements 5

8 STATEMENT OF FUNCTIONAL EXPENSES Year Ended June 30,2017 Program General and Services Administration Fundraising Total Expenses Salaries $ 979,781 $ 181,773 Payroll Taxes 85,671 25,612 Benefits 162,424 25,716 Contract Services 12,411 29,649 Contributed Services 127,668 Occupancy 168,558 8,871 Telephone and Internet 4,587 8,256 Office Supplies 15,612 7,069 Dues and Subscriptions 1,195 Depreciation 78,405 4,127 Direct Material - Program 923,512 Auto and Travel 101,870 3,384 Insurance 6,711 27,591 Interests 13,943 Printing 3,993 3,993 Equipment Rental and Maintenance 14,454 Miscellaneous Total $ 2,716,706 $ 345,056 $ 74,730 5,720 1,151 26,891 5,504 6,775 6, ,983 7, $ 142,965 $ 1,236, , ,291 68, , ,429 18,347 29,456 7,963 82, , ,829 37,285 13,943 15,973 14, $ 3,204,727 See accompanying notes to financial statements 6

9 STATEMENT OF FUNCTIONAL EXPENSES Year Ended June 30, 2016 Program General and Total Services Administration Fundraising Expenses Salaries $ 807,663 $ 120,399 Payroll Taxes 66,839 9,902 Benefits 179,384 26,575 Contract Services 22,208 13,572 Contributed Services 76,992 Occupancy 148,725 7,828 Telephone and Internet 3,297 5,935 Office Supplies 12,270 5,557 Dues and Subscriptions 2,071 Depreciation 77,049 4,055 Direct Material - Program 797,213 Auto and Travel 87,257 Insurance 12,453 14,618 Interests 11,335 Printing Property Taxes 3,875 3,875 Equipment Rental and Maintenance 9,368 Miscellaneous Total $ 2~325~605 $ 221~274 $ 58,230 $ 986,292 5,776 82,517 15, ,461 25,909 61,689 76, ,553 3,957 13,189 5,325 23,152 11,737 13,808 81, , ,139 27,071 11,335 1,365 2,729 7,750 9,368 1, $ 130,372 $ 2,677,251 See accompanying notes to financial statements 7

10 STATEMENTS OF CASH FLOWS Years Ended June 30,2017 and 2016 Cash Flows From Operating Activities: Change in Net Assets $ 124,725 $ 27,472 Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities: Depreciation 82,532 81,104 Changes in Assets and Liabilities: Increase in Accounts Receivable Decrease (Increase) in Grants Receivable Decrease (Increase) in Inventory Decrease (Increase) in Prepaid Expenses Increase in Accounts Payable Increase (Decrease) in Accrued Payroll and Payroll Taxes (33,288) 42,500 (3,840) (16,898) 57, (31,097) (42,500) 12,302 27,356 30,102 (65.143) Net Cash Provided by Operating Activities 284~854 39~596 Cash Flows From Investing Activities: Purchases of Property and Equipment ( ) (4.095) Net Cash Used in Investing Activities ( ) (4.095) Cash Flows Financing Activities: Proceeds from Notes Payable Principal Payments ofnotes Payable Principal Payments of Line of Credit (59,384) (10.749) 148,065 (78,271) ( ) Net Cash Used in Financing Activities (70.133) (58.904) Net Increase (Decrease) in Cash 162,561 (23,403) Cash, Beginning of Year Cash, End of Year $ 209~302 $ Supplemental Disclosure of Cash Flow Information: Interests Paid $ $ See accompanying notes to financial statements 8

11 NOTES TO FINANCIAL STATEMENTS Years Ended June 30, 2017 and ORGANIZATION Service Opportunity for Seniors (SOS) Meals on Wheel is a California nonprofit corporation founded in SOS delivers balanced meals and nutrition education to low income homebound seniors in Hayward, San Leandro, Castro Valley, San Lorenzo, and Oakland. Our primary mission is to help seniors stay in their homes and remain healthy happy for as long as safely possible and to help maintain the overall quality of their lives. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The SOS 's financial statements have been prepared on the accrual basis of accounting, and accordingly reflect all significant receivables, payables, and other liabilities. Basis of Presentation Net assets of SOS are classified and reported as follows: Unrestricted net assets- Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets- Net assets subject to donor-imposed stipulations that may or will be met, either by actions of SOS and/or passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. SOS had no temporarily restricted net assets at June 30, Permanently restricted net assets- Net assets subject to donor-imposed stipulations that they be maintained permanently by SOS. Generally, the donors of such assets permit an organization to use all or part of the income earned on the assets. SOS had no permanently restricted net assets at June 30, 2017 and Concentration of Revenue SOS receives approximately 71% and 7 4% of its revenue from governmental sources during the years ended June 30, 2017 and 2016, respectively. 9

12 NOTES TO FINANCIAL STATEMENTS (Continued) Years Ended June 30, 2017 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Donated Assets Donated marketable securities and other noncash donations are recorded as contributions at their estimated fair value at the date of donation. Donated property and equipment are reported as increases in unrestricted net assets unless the donor has restricted the donated assets to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted contributions. Absent donor stipulations regarding how long those donated assets must be maintained, SOS reports expiration of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. Donated Services Donated services are recognized as contributions, if the services (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would typically need to be purchased if not provided by donation. Revenue Recognition SOS recognizes services and other fee revenue in the period when the service has been provided. Estimates Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Inventory Inventories are maintained for the nutrition program and are stated at the lower of cost or market determined by the first-in, first-out method. Property and Equipment Property and equipment are recorded at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the various classes of assets which range from 3 years to 25 years. 10

13 NOTES TO FINANCIAL STATEMENTS (Continued) Years Ended June 30, 2017 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <Continued) Contributions Contributions, including unconditional promises to give, are recorded as made. All contributions are available for unrestricted use unless specifically restricted by the donor. Restricted contributions, including contributions oflong-lived assets, whose restrictions are met in the same reporting period are reported as unrestricted contributions. Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. Conditional promises to give are not included as support until the conditions are substantially met. Grants All grants are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. When a temporary restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Functional Allocation of Expenses The costs of providing the various programs and activities have been summarized on a functional basis in the statement of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Credit Risk Financial instruments that potentially subject SOS to concentrations of credit risk are primarily cash investments and accounts receivable. SOS places its cash in banks that are insured in limited amounts by the Federal Deposit Insurance Corporation. Subsequent Events SOS has evaluated subsequent events through March 26, 20 I8, which is the date the financial statements were available to be issued. II

14 NOTES TO FINANCIAL STATEMENTS (Continued) Years Ended June 30,2017 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <Continued) Income Taxes SOS is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and is exempt from California franchise taxes under Section d of the Revenue and Taxation Code. It is the opinion of management that all income earned has been related to SOS' s tax -exempt status, and there has been no unrelated business income. GAAP requires an organization to determine whether it is more likely than not that a tax position will be sustained upon examination on the technical merits of the position, assuming the taxing authority has full knowledge of all information. If the tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. SOS has no assets or liabilities related to uncertain tax positions. SOS is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Generally, Federal returns for the past three years remain subject to examination. 3. LEASES SOS has entered into long-term operating leases for office space and rental property with monthly payments ranging from $60 to $3,752. The future minimum rental payments required under the long-term non-cancelable lease at June 30, 2017, are as follows: Year Ending June 3 0, 2018 $ 87, , , , ,554 Thereafter 27,014 Total $ Total rental expense for office space lease for the years ended June 30, 2017 and 2016 were $79,181 and $70,545, respectively. 12

15 NOTES TO FINANCIAL STATEMENTS (Continued) Years Ended June 30,2017 and ACCOUNTS RECEIVABLE A summary of accounts receivable as of June 30, 2017 and 2016 is as follows: 2017 County of Alameda $ 172,973 $ City of San Leandro 2,296 City of Hayward 6,456 Others Total $ 185~459 $ ,721 2,149 8, ~ PROPERTY AND EQUIPMENT Property and equipment as of June 30, 2017 and 2016, consisted of the followings: Office Furniture and Equipment Kitchen Equipment Leasehold Improvements Leasehold Improvements - Machinery Vehicles $ 48,978 $ 96, , , : ,908 54,847 44, , , : ,617 Less: Accumulated Depreciation (278348) ( ) Net Property and Equipment $ 624:1560 $ 654~932 Depreciation expense for the years ended June 30, 2017 and 2016 were $82,532 and $81,104, respectively. 6. LINE OF CREDIT On June 20, 2014, SOS had a line of credit with Bank of the West, allowing for borrowings up to $25,000. The line is renewable annually and accrues interests on the bank's variable rate. As of June 30, 2017 and 2016, the line had balances of $10,543 and $21,292 and was accruing interest at 15% and at 14.50%, respectively. 13

16 NOTES TO FINANCIAL STATEMENTS (Continued) Years Ended June 30,2017 and NOTES PAYABLE The following is a summary of Notes Payable: % Note Payable to the Bank of the West, Payable $2,874 per month commencing March 2016 for 60 months, secured by fixed assets. $ 119, % Note Payable to the Bank of the West, Payable $755 per month commencing July 2014 for 36 months, secured by a vehicle % Note Payable to TD Auto Finance, Payable $281 per month commencing December 2014 for 60 months, secured by a vehicle. 7, % Note Payable to the Bank of the West, Payable $6,035 per month commencing May 2013 for 60 months, secured by fixed assets. Total 128,644 Less: Current Portion (31,702) Long-term Portion $ 96~ $ 144,108 9,568 11,256 23, ,028 (61.819) $ 126~209 Notes payable due as of June 30, 2017, in: 2018 $ Total $ 31,702 32,892 33,208 30,

17 NOTES TO FINANCIAL STATEMENTS (Continued) Years Ended June 30,2017 and TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets of$42,500 as of June 30,2016 were available for supporting operations in the future. 9. NET ASSETS RELEASED FROM RESTRICTIONS During the year ended June 30,2017, temporarily restricted net assets of$42,500 were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors. 10. COMPLIANCE WITH GRANTOR OR DONOR RESTRICTIONS Financial awards from federal, state, and local governmental entities in the form of grants are subject to special audits. Such audits could result in claims against SOS for disallowed costs or noncompliance with grantor restrictions. No provision has been made for any liabilities that may arise from such audits since the amounts, if any, cannot be determined at this date. 15

18 SUPPLEMENTARY INFORMATION

19 SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS Year Ended June 30,2017 Federal Pass-Through Entity CFDA Contract Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Number Period Program Award Amount Revenue Recognized Federal Expenditures Department of Health and Human Services: Aging Cluster: Passed through the County of Alameda: Special Programs for the Aging - Title III, Part C - Nutrition Services MC /1116-6/30/17 $ 1,128,216 $ 1,128,216 $ 976,922 Nutrition Services Incentive Program MC /1/16-6/30/17 232, Total Department of Health and Human Services 1.360, CDBG - Entitlement Grants Cluster: Passed through the City of San Leandro: Community Development Block Grants/Entitlement Grants NIA 7/1/16-6/30/17 26, Total Department of Housing and Urban Development ,591 Total Expenditures of Federal Awards $ 1.387,527 $ 1,236,233 The accompanying notes are an integral part of the schedule of expenditures of federal awards 17

20 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS Year Ended June 30, BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal awards includes the federal grant activities of Service Opportunity for Seniors (SOS) under programs of the federal government for the year ended June 30, 2017.The information in this schedule is presented in accordance with the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion ofsos's operations, it is not intended to and does not present the financial position, changes in net assets or SOS 's cash flows. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A- 122, Cost Principles for Non-Profit Organizations, or the cost principles contained in Uniform Guidance for the cost principles contained in Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. 18

21 SCHEDULE OF REVENUE- ALAMEDA COUNTY CONTRACTS Year Ended June 30,2017 Program Name Master Contract No. Procurement Contract No. Contract Period Contract Revenue SOCSA - Nutrition Service HCSVC - Nutrition Service /1116-6/30/17 7/1/16-6/30/17 $ 2,061,782 16,000 Total $ 2,077,782 19

22 Noe a nd C o m pany Independent Auditor's 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 Service Opportunity for Seniors San Leandro, California I have audited, in accordance with the auditing standards generally accepted in the Uni ted 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 fi nancial statements of Service Opportunity fo r Seniors (SOS), which comprise the statement of financial position as of June 30,2017, 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 my report thereon dated March 26, Internal Contr ol Over Financial Reporting In plmming and performing my audit of the financial statements, I considered SOS's internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing my opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of SOS 's internal control. Accordingly, I do not express an opinion on the effectiveness of SOS'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 a combination of deficiencies, in internal control such that there is a reasonable possibil ity that a materi al 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 co mbination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. My 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 that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during my audit I did not identified any deficiencies in internal control that I consider to be material weaknesses. However, material weaknesses may exist that have not been identified Edgewater Drive, Suite 220, Oakland, CA Tel: (51 0) Fax (5 10)

23 Compliance and Other Matters As part of obtaining reasonable assurance about whether SOS' s financial statements are free from material misstatement, I performed tests of its compliance with cettain 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. Purpose of This Report The purpose of this report is solely to describe the scope of my 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. Oakland, California March 26,

24 Noe and Company Independent Auditor's 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 the Uniform Guidance To the Board of Directors of Service Opportunity for Seniors San Leandro, California Report on Compliance for Each Major Federal Program I have audited the compliance of Service Opportunity for Seniors (SOS) with the types of compliance requirements described in the 0/v/B Compliance Supplement that could have a direct and material effect on each of the SOS's major federal programs for the year ended June 30, SOS' s major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibilitv Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibilitv My responsibility is to express an opinion on compliance for each ofsos' s major federal programs based on my aud it of the types of compliance requirements referred to above. I conducted my 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 Comptro ller General of the United States; and the audit requirements of Title 2 U. S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements/or Federal Awards (U niform Guidance). Those standards and Uniform Guidance require that I plan and perform the audit to obtain reasonable assurance about w hether noncompliance wi th the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occun ed. An audit includes examining, on a test basis, evidence about SOS's compliance with those requirements and performing such other procedures as I considered necessary in the circumstances. I believe that my audit provides a reasonable basis for my opinion on compli ance for each maj or federal program. However, my audit does not provide a legal determination of SOS's compliance Edgewater Drive, Suite 220, Oakland, CA Tel: (51 0) Fax (51 0)

25 Opinion on Each Major Federal Program In my opinion, SOS 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 SOS 's management is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements refer to above. In planning and performing my audit of compliance, I considered SOS '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 the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, I do not express an opinion on the effectiveness ofsos's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. 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. My 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. I did not identify any deficiencies in internal control over compliance that I 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 my testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 23

26 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance I have audited SOS 's financial statements as of and for the year ended June 30, 2017, and have issued my rep01t thereon dated March 26, 2018, which contained an unmodified opinion on those financial statements. My 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 by the Uniform Guidance and is not 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 informati on has been subjected to the auditing procedures applied in the audit of 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 my opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. Oakland, California March 26,

27 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30,2017 SECTION I- SUMMARY OF AUDITOR'S RESULTS Financial Statements: I. The type of auditor's report of Service Opportunity for Seniors (SOS) issued: Unmodifed opinion 2. Internal control over financial reporting: Material weaknesses identified? No. Significant deficiencies identified? None reported. 3. Noncompliance material to the financial statements noted? No. Federal Awards: I. Internal control over major programs: Material weaknesses identified? No. Significant deficiencies identified? None reported. 2. Type of auditor's report issued on compliance for major federal programs: Unmodified opinion. 3. Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? No. 4. Programs tested as major program: PROGRAM NAME CFDA# Aging Cluster and Dollar threshold used to distinguish between type A and type B programs: $ SOS qualified as a low-risk auditee? Yes. SECTION ll- FINANCIAL STATEMENT FINDINGS None. SECTION lli- FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None. 25

28 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Year Ended June 30, There were no prior year audit findings. 26