ill. Reports in Accordance with the Uniform Guidance IV. Reports in Accordance with the State Single Audit Act

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1 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. September 30, 2016 and 2015 I. Consolidated Financial Statements II. Reports in Accordance with Government Auditing Standards ill. Reports in Accordance with the Uniform Guidance IV. Reports in Accordance with the State Single Audit Act

2 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Table of Contents September 30, 2016 and 2015 I. CONSOLIDATED FINANCIAL STATEMENTS Independent Auditors' Report Consolidated Statements of Financial Position Consolidated Statements of Activities... 4 Consolidated Statement of Functional Expenses... 5 Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements II. REPORTS IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Independent Audit.ors' 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 ID. REPORTS IN ACCORDANCE WITH UNIFORM GUIDANCE Independent Auditors' Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by Uniform Guidance Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Schedule of Federal Findings and Questioned Costs... : IV. REPORTS IN ACCORDANCE WITH THE STATE SINGLE AUDIT ACT Independent Auditors' Report on Compliance for Each Major. State Program and Report on Internal Control over Compliance Required by the State Single Audit Act Schedule of Expenditures of State Financial Assistance Note to Schedule of Expenditures of State Financial Assistance Schedule of State Findings and Questioned Costs... : Summary Schedule of Prior State Audit Findings

3 I. CONSOLIDATED FINANCIAL STATEMENTS

4 WHITTLESEY & HADLEY, P. C. Certified Public Accountants/Consultants 280 Trumbull Street, 24th Floor Hartford, Connecticut To the Board of Directors of Agency on Aging of South Central Connecticut, Inc. Report on the Financial Statements INDEPENDENT AUDITORS' REPORT (voice) (fax) c:::j We have audited the accompanying consolidated financial statements of Agency on Aging of South Central Connecticut, Inc. (the "Agency") which comprise the consolidated statement of financial position as of September 30, 2016, and the related consolidated statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the consolidated financial statements. Management's Responsibility for tlte Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial statement audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Agency's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Agency on Aging of South Central Connecticut, Inc. as of September 30, 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. Hartford Hamden Holyoke

5 Report on Summarized Comparative Information We have previously audited Agency on Aging of South Central Connecticut, Inc.'s 2015 financial statements, and our report dated February 17, 2016, expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended September 30, 2015, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying schedules of expenditures of federal awards and state financial assistance, as required by Title 2 U.S. Code offederal Regulations ("CFR") Part 200, Uniform Administrative Requirements, Cost Princ_iples and Audit Requirements for Federal Awards and the State Single Audit Act, are presented for purposes of additional analysis and are not a required part of the consolidated financial statements. Sucb 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 consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 8, 2017 on our consideration of Agency on Aging of South Central Connecticut, Inc.'s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion 9n 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 Agency on Aging of South Central Connecticut, Inc. 's internal control over financial reporting and compliance. Hartford, Connecticut February 8,

6 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Consolidated Statements of Financial Position September 30, 2016 and 2015 Assets: Current Assets: Cash Invested funds held by community foundation Grants and contracts receivable Prepaid expenses and other current assets Total current assets Other Assets: Property and equipment, net Total assets 2016 $ I,378,517 5,035,723 1,927, ,710 8,513, ,384 $ 8,847, $ 1,304,772 4,951,417 2,540, ,870 9,004, ,460 $ 9,384,051 Liabilities and Net Assets: Current Liabilities: Current portion of amount due to DSS Accounts payable and accrued expenses Grantor advance Refundable advances Total current liabilities Long-term Liabilities: Amount due to DSS, net of current portion Total liabilities Net Assets: Unrestricted Total liabilities and net assets $ 103,757 1,532, , ,136 2,421,054 90,508 2,511,562 6,335,517 $ 8,847,079 $ 98,707 1,873, , ,164 2,641, ,265 2,836,054 6,547,997 $ 9,384,051 The accompanying notes are an integral part of the consolidated financial statements. 3

7 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Consolidated Statements of Activities For the years ended September 30, 2016 and Change in unrestricted net assets: Support and revenue: Grants and contracts $ 13,298,959 $ 12,933,435 Non-cash contributions 257, ,777 Interest and dividends 30, ,131 Program and other income 139, ,466 Total support and revenue 13,726,264 13,532,809 Expenses: Program services 13,062,122 12,595,899 Management and general 1,246,347 1,427,273 Total expenses 14,308,469 14, Change in net assets from operations (582,205) (490,363) Other changes in net assets: Net realized and unrealized gain on invested funds held by community foundation 369,725 56,412 Change in unrestricted net assets (212,480) (433,951) Net assets at beginning of year 6,547,997 6,981,948 Net assets at end of year $ 6,335,517 $ 6,547,997 The accompanying notes are an integral part of the consolidated financial statements. 4

8 AGENCY ON AGJNG OF SOUTH CENTRAL CONNECTICUT, INC. Consolidated Statement of Functional Expenses For the year ended September 30, 2016 (with comparative totals for 2015) Personnel: Wages $ Employee health and retirement benefits Payroll taxes Total personnel Program Services 5,504,187 1,090, ,312 7,006, Management and General $ 586, ,870 44, ,334 Total $ 6,090,964 1,210, ,999 7,757,548 $ 2015 Total 6,238,541 1,099, ,893 7,813,499 Other expenses: Subrecipients Volunteer stipends and travel Occupancy Other program Contractual services Materials and supplies Travel and transportation Other Equipment rental and maintenance Depreciation Total other expenses 2,879, , ,632 1,065, , , ,574 57,079 59,462 6,055, ,982 46,315 62, , ,509 27, ,013 2,879, , ,614 1,065, , , ,377 56, ,588 87,453 6,550,921 2,803, , , , , , , , ,356 42,143 6,209,673 Total functional expenses $ 13,062,122 $ 1,246,347 $ 14,308,469 $ 14,023,172 The accompanying notes are an integral part of the consolidated financial statements. 5

9 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Consolidated Statements of Cash Flows For the years ended September 30, 2016 and Cash flows from operating activities: Change in net assets $ (212,480) $ (433,951) Adjustments to reconcile change in net assets to net change in cash from operating activities: Depreciation 87,453 42,143 Net realized and unrealized (gain) on invested funds held by community foundation (369,725) (56,412) Recovery of bad debts (30,000) (44,000) (Increase)/decrease in assets: Grants and contracts receivable 612,787 (656,204) Prepaid expenses and other current assets 66,160 40,600 Increase/( decrease) in liabilities: Accounts payable and accrued expenses (341,757) 290,389 Refundable advances 115, ,945 Net change in cash from operating activities (71,590) (577,490) Cash flows from investing activities: Net reinvested funds held by community foundation (30,134) (114, 131) Proceeds from the sale of invested funds held by community foundation 315, ,891 Purchase of property and equipment (41,377) (143,546) Net change in cash from investing activities 244,042 50,214 Cash flows from financing activities: Payments to DSS (98,707) (93,903) Net change in cash from financing activities (98,707) (93,903) Net change in cash 73,745 (621,179) Cash, beginning of year 1,304,772 1,925,951 Cash, end of year $ 1,378,517 $ 1,304,772 Supplemental disclosures: Cash paid for interest $ 12,407 $ 17,389 The accompanying notes are an integral part of the consolidated financial statements. 6

10 NOTE!-ORGANIZATION AGENCY ON AGING OF Soum CENTRAL CONNECTICUT, INC. Notes to Consolidated Financial Statements September 30, 2016 and 2015 Agency on Aging of South Central Connecticut, Inc. ("AASCC") is a non-profit, non-stock corporation that was organized in 1974 for the purpose of providing comprehensive programs designed to assist older adults and individuals with disabilities in leading independent, meaningful and dignified lives in their own homes and communities for as long as possible. Support and revenue consists primarily of Federal and State grants and contracts. Agency on Aging of South Central Connecticut, Inc. includes the activity of Care Network Link, LLC ("CNL"). CNL, for tax purposes, is a disregarded limited liability company formed in December, CNL is designed to provide a continuum of opportunities, care and support services that allow older or disabled Americans to remain in their homes and communities. CNL is a wholly-owned subsidiary of AASCC. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - Financial statement presentation follows the recommendations of Financial Statements of Not-for-Profit Organizations. AASCC reports information regarding its financial position and activities according to one class of net assets, unrestricted net assets, which represents resources that are available for operation other than donor-restricted contributions. Grant awards are classified as refundable advances until expended for the purposes of the grants. Principles of Consolidation - The consolidated financial statements include the accounts of AASCC and CNL. All intercompany transactions have been eliminated. Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures in the consolidated financial statements. Actual results could differ from those estimates. Invested Funds Held by Community Foundation Policy - AASCC has delegated to the Community Foundation for Greater New Haven full authority to determine the asset allocation and to specify the investment managers of AASCC's investments. Property and Equipment - Property and equipment acquisitions and improvements that individually exceed $1,000 are capitalized at cost and depreciated on a straight-line basis over their estimated service lives. Maintenance and repairs are charged to expense as incurred. Grants and Contracts - Governmental grants and contracts are generally considered to be exchange transactions rather than contributions. Revenue from cost reimbursement grants and contracts is recognized to the extent of costs incurred. Revenue from performance based grants and contracts is recognized to the extent of performance achieved. Grants and contract receipts in excess of revenue recognized are presented as refundable advances. Fair Value Measurement - AASCC adopted requirements of, Fair Value Measurements and Disclosures topic of the FASB ASC 820. Fair Value Measurements and Disclosures defines fair value and establishes a framework for measuring fair value in generally accepted accounting principles. Fair value is defined as the exchange price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the AASCC's own credit risk. 7

11 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fair Value Measurement (Continued) - In addition to defining fair value, Fair Value Measurements and Disclosures expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. The levels are: Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. Level 2 - inputs are based upon quoted prices, other than those included in Level 1, that are either directly or indirectly observable for the assets or liabilities, including inputs in markets that are not considered to be active and investments in third party investment funds which may permit redemption at net asset value at the measurement date. Level 3 - inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. Contributions - Unconditional contributions are recognized when pledged or received, as applicable, and are considered to be available for unrestricted use unless specifically restricted by the donor. Contributions received whose restrictions are met in the same period are presented with unrestricted net assets. Contributed services are recognized in the consolidated financial statements if they enhance nonfinancial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. General volunteer services do not meet these criteria for recognition. However, many volunteers have donated significant amounts of time in suppo1ting AASCC's programs. Expenses by Function - The costs of providing various programs and activities have been summarized on a functional basis in the accompanying consolidated statements of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Income Taxes - AASCC is exempt from Federal and State income taxes on exempt function income as a public charity under Section 501(c)(3) of the Internal Revenue Code. Consequently, no provision for income taxes has been made in the accompanying consolidated financial statements. Subsequent Events Measurement Date - AASCC monitored and evaluated any subsequent events for footnote disclosures or adjustments required in its consolidated financial statements for fiscal year 2016 through February 8, 2017, the date on which consolidated financial statements were available to be issued. NOTE 3- CONCENTRATIONS Cash - AASCC maintained deposits in financial institutions which exceeded Federal depository insurance limits. However, managejt!ent believes that AASCC's deposits are not subject to significant credit risk. Grants and Contracts Receivable - Grants and contracts receivable are supported by contracts with a variety of Federal and State governments. Based on historical experience, management believes these receivables represent negligible credit risk. Accordingly, management has not established an allowance for potential credit losses. Amounts receivable relative to AASCC's Home Care and Title III Cluster programs represented 46% and 53% of AASCC's total grants and contracts receivable as of September 30, 2016 and 2015, respectively. 8

12 NOTE 3 - CONCENTRATIONS (CONTINUED) Support and Revenue - AASCC receives a significant portion of its grants and contracts from the Department of Social Services and the State Department of Aging. AASCC's Home Care and Title III Cluster programs combined accounted for 65% and 66% of AASCC's total support and revenue as of September 30, 2016 and 2015 respectively. As with all governmental funding, these grants and contracts are subject to reduction or termination in future years. Any significant reduction in these grants and contracts could have a negative impact on AASCC's program services. NOTE 4 - INVESTED FUNDS HELD BY COMMUNITY FOUNDATION AASCC established The Agency on Aging Fund (the "Fund") at The Community Foundation for Greater New Haven, Inc. (the "Foundation") in 2005 with a contribution of $4,500,000 from unrestricted net assets. Earnings, net of administrative and management fees, are distributed to AASCC on an annual basis in accordance with the Foµndation 's policies on the distribution of earnings. The investments are part of the overall investment pool of the Foundation. The reconciliation of the invested funds held by the Foundation is as follows: Balance, October 1, 2014 $ 5,088,765 Interest and dividends 114,131 Investment fees (66,702) Realized gains 1,194,957 Unrealized (losses) (1, 13 8,545) Appropriated for expenditure (241,189) Balance, September 30, ,951,417 Interest and dividends, net of fees of $44, ,134 Investment fees (44,635) Realized gains 89,658 Unrealized gains 280,067 Appropriated for expenditure (270,918) Balance, September 30, 2016 $ 5,035,723 NOTE 5 - PROPERTY AND EQUIPMENT A summary of property and equipment is as follows at September 30,: Furniture and fixtures $ 356,913 $ 315,536 Leasehold improvements 122, ,665 Computer equipment and software 778, ,833 Office equipment 285, ,627 1,544,038 1,502,661 Less: accumulated depreciation 1,210,654 1,123,201 Property and equipment, net $ 33\384 $

13 NOTE 6 - REFUNDABLE ADVANCES Refundable advances are advance payments from a grantor that have not been recognized by incurring expenditures or achieving performance goals in the following areas at September 30,: Alzheimers Respite $ 90,263 $ 82,624 Title ID- Federal 199,882 71,343 Choices 130,180 Money Follows the Person 74, ,876 Title ID - State 49,191 Other 21,275 32,321 Total refundable advances $ 565,136 $ 449,164 NOTE 7 - GRANTOR ADVANCE DSS made an advance to AASCC for working capital purposes in connection with AASCC's Home Care Program. The advance is due on demand to DSS at the request of DSS. The balance owed for the years ended as of September 30, 2016 and 2015 was $220,000. NOTE 8- ESTIMATED RESERVE FOR THIRD PARTY PAYMENT The estimated reserve for third party payment relates to the Home Care Program. This represents management's best estimate of amounts due to DSS and is based on anticipated results of DSS conducting audits of amounts billed. It is reasonably possible that AASCC's ultimate liability from DSS audits could differ materially in the near term from the above estimates. The estimated reserve possible due to the funding source was $-0- and $100,000 as of September 30, 2016 and 2015, respectively, which is included in accounts payable and accrued expenses on the consolidated statements of financial position. NOTE 9 - NON-CASH CONTRIBUTIONS Non-cash contributions recognized in the accompanying statements of activities consist of donated meals for volunteers. NOTE 10 - LEASE COMMITMENTS AASCC leases office space and equipment under operating leases that expire through Rent expense under these lease agreements totaled $722,017 and $706,861 for the years ended September 30, 2016 and 2015, respectively. Future minimum lease payments under the above leases are as follows as of September 30,: $ 737, , ,186 10

14 NOTE 11- EMPLOYEE BENEFIT PLANS AASCC maintains a Section 403(b) tax-sheltered annuity plan (the "Plan") that is available to all employees subject to certain eligibility requirements as defined in the Plan. Employees can make voluntary contributions, and AASCC matches employee contributions to a maximum of 2.5% of annual salary, subject to certain limitations and employee service periods. All plan contributions vest immediately. Employer contributions for the years ended September 30, 2016 and 2015 totaled $78,746 and $76,476, respectively. NOTE 12 - DEPARTMENT OF SOCIAL SERVICE ("DSS") PAYABLE In November 2007, AASCC was notified that it had been overbilled for certain services provided by a sub-recipient. This overbilling took place during the three years ended September 30, This overbilling by the sub-recipient has resulted in AASCC overcharging the State of Connecticut Department of Social Services ("DSS"). DSS conducted an examination of the records involved and has issued its report demanding repayment of the overbilling. DSS has agreed to an interest-free repayment plan whereby future payments for program services will be reduced. Overbilling of state funded programs, amounting to $1,111,140 will be recouped $9,260 per month over the ten year period beginning September AASCC has recorded a liability due to the State of Connecticut at September 30, 2016 and 2015 of $194,265 and $292,972, respectively, which is the present value of the future repayments using a 5% interest factor. Scheduled repayments to DSS are as follows as of September 30,: $ 103,757 90,508 $ 194,265 NOTE 13-LINE OF CREDIT AASCC has a revolving line of credit with a bank for $3,000,000. The line of credit had no outstanding balance at September 30, 2016 and Interest payments on the line of credit are due monthly at a rate equal to 3% above the LIBOR advantage rate. The line of credit is secured by certain invested funds held by the Community Foundation owned by AASCC. NOTE 14-COMMITMENTS During the year ended September 30, 2013, AASCC entered into a legal settlement agreement with a subrecipient related to DSS overbillings. As a result, after certain conditions are met, AASCC is obligated to refund the insurance carrier a portion of payments received from the subrecipient. 11

15 II. REPORTS IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

16 WHITTLESEY & HADLEY, P.C. Certified Public Accountants/Consultants 280 Trumbull Street, 24th Floor Hartford, Connecticut (voice) (fax) INDEPENDENT AUDITORS' 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 c:::j To the Board of Directors of Agency on Aging of South Central Connecticut, Inc. We have audited, 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, the consolidated financial statements of Agency on Aging of South Central Connecticut, Inc., which comprise the consolidated statement of financial position as of September 30, 2016 and the related consolidated statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued a report thereon dated February 8, Internal Control over Financial Reporting In planning and performing our audit of consolidated financial statements, we considered Agency on Aging of South Central Connecticut, Inc.'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 consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of Agency on Aging of South Central Connecticut, Inc.'s internal control. Accordingly, we do not express an opinion on the effectiveness of Agency on Aging of South Central Connecticut, Inc.'s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Agency on Aging of South Central Connecticut, Inc.' s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Hartford Hamden Holyoke 12

17 Compliance and Other Matters As part of obtaining reasonable assurance about whether Agency on Aging of South Central Connecticut, Inc. 's consolidated financial statements are free from 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 consolidated financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be repmted under Government Auditing Standards. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of Agency on Aging of South Central Connecticut, Inc.' s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Agency on Aging of South Central Connecticut, Inc.'s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Hartford, Connecticut February 8,

18 Ill. REPORTS JN ACCORDANCE WITH THE UNIFORM GUIDANCE

19 WHITTLESEY & HADLEY, P.C. Certified Public Accountants/Consultants 280 Trumbull Street, 24th Floor Hartford, Connecticut (voice) (fax) INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE CJ To the Board of Directors of Agency on Aging of South Central Connecticut, Inc. Report on Compliance for Each Major Federal Program We have audited Agency on Aging of South Central Connecticut, Inc.'s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Agency on Aging of South Central Connecticut, Inc.'s major federal programs for the year ended September 30, Agency on Aging of South Central Connecticut, Inc.'s major federal programs are identified in the summary of auditors' results section of the accompanying schedule of federal findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of Agency on Aging of South Central Connecticut, Inc.' s major federal programs. based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 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"). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Agency on Aging of South Central Connecticut, Inc.'s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Agency on Aging of South Central Connecticut, Inc. 's compliance. Opinion on Each Major Federal Program In our opinion, Agency on Aging of South Central Connecticut, Inc. 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 September 30, Hartford Hamden Holyoke 14

20 Report on Internal Control Over Compliance Management of Agency on Aging of South Central Connecticut, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Agency on Aging of South Central Connecticut, Inc. 's internal control over compliance with the types of requirements that could have a direct and material effect on each inajor 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, we do not express an opinion on the effectiveness of Agency on Aging of South Central Connecticut, Inc. 's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Hartford, Connecticut February 8,

21 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Schedule of Expenditures of Federal Awards For the year ended September 30, 2016 Pass-through Federal Entity Expenditures Federal Grantor/Pass-through Grantor/Program or CFDA Identifying Total Federal to Cluster Title Number Number Expenditures Subrecipients Aging Cluster: U.S. Department of Health and Human Services Pass-through Programs: State of Connecticut Department on Aging - Special Program for the Aging - Title III, Part B - Grants for Supportive Services and Senior Centers $ 835,211 $ 590,784 State of Connecticut Department on Aging - Special Program for the Aging - Title III, Part C - Nµtrition Services ,394,055 1,341,555 State of Connecticut Department on Aging - Special Program for the Aging - Title III, Part A ,941 State of Connecticut Department on Aging - Nutrition Services Incentive Program , ,008 Total Aging Cluster 2,699,215 2,179,347 U.S. Department of Health and Human Services: Pass-through Programs: State of Connecticut Department on Aging - Special Program for the Aging - Title VII, Chapter 3 - Programs for Prevention of Elder Abuse, Neglec_t and Exploitation ,500 State of Connecticut Department on Aging - Special Program for the Aging - Title III, Part D - Disease Prevention and Health Promotion Services ,921 26,691 State of Connecticut Department on Aging - Special Program for the Aging - Title IV - and Title II Discretionary Projects SCA-HIC-l 8 293,876 State of Connecticut Department on Aging - Nation Family Caregiver Support Program ,580 28,232 State of Connecticut Department on Aging - Medicare Enrollment Assistance Program SCA-HIC-18 4,496 State of Connecticut Department on Aging - State Health Insurance Assisstance Program SCA-HIC-18 89,012 State of Connecticut Department on Aging - Social Services Block Grant ,234 72,234 State of Connecticut Department on Aging - Centers for Medicare and Medicaid Services, Research, Demonstrations and Evaluations ,492 Subtotal Department of Health and Human Services Passthrough Programs 1,305, ,157 Total Department of Health and Human Services Programs 4,004,326 2,306,504 See accompanying notes to schedule of expenditures of federal awards. 16

22 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Schedule of Expenditures of Federal Awards (Continued) For the year ended September 30, 2016 Pass-through Federal Entity Expenditures Federal Grantor/Pass-through Grantor/Program or CFDA Identifying Total Federal to Cluster Title Number Number Expenditures Subrecipients Foster Grantparent/Senior Companion Cluster: Corporation/or National and Community Service Direct Programs: Foster Grandparent ,276 Senior Companion ,191 Total Foster Grandparent/Senior Companion Cluster 700,467 U.S. Corporation for National and Community Service: Direct Programs: Retired Senior Volunteer Program ,583 Volunteers in Service to America ,605 Subtotal Corporation for U.S. National and Community Service Direct Programs 316,188 Pass-through Programs: Office of Higher Education - Experience Corps AHE1213AA 107,777 Total U.S. Corporation for National and Community Service 1,124,432 Total Expenditures offederal Awards $ 5,128,758 $ 2,306,504 See accompanying notes to schedule of expenditures of federal awards. 17

23 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Notes to Schedule of Expenditures of Federal Awards For the year ended September 30, 2016 NOTE 1- BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of Agency on Aging of South Central Connecticut, Inc. under programs of the federal government for the year ended September 30, The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements/or Federal Awards ("Uniform Guidance"). Because this schedule presents only a selected portion of the operations of Agency on Aging of South Central Connecticut, Inc., it is not intended to and does not present the financial position, changes in net assets or cash flows of Agency on Aging of South Central Connecticut, Inc. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (1) Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. (2) Agency on Aging of South Central Connecticut, Inc. has elected to use the 10 percent de minim us indirect cost rate as allowed under the Uniform Guidance. 18

24 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Schedule of Federal Findings and Questioned Costs For the year ended September 30, 2016 I. Summary of Auditors' Results: Financial Statements Type of auditors' report issued: Unmodified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Noncompliance material to financial statements noted? yes X no Federal Awards Internal control over major programs: Material weakness( es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Type of auditors' report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 2 CFR (a) of Uniform Guidance? yes X no Identification of Major Programs Federal Grantor/Pass-through Grantor/Program or Cluster Title Aging Cluster: U.S. Department of Health and Human Services Pass-through Programs: State of Connecticut Department on Aging - Special Program for the Aging - Title III, Part B - Grants for Supportive Services and Senior Centers State of Connecticut Department on Aging - Special Program for the Aging - Title III, Part C - Nutrition Services Federal CFDA Number State of Connecticut Department on Aging - Special Program for the Aging - Title III, Part A State of Connecticut Department on Aging - Nutrition Services Incentive Program U.S. Corporation for National and Community Service: Direct Programs: Volunteers in Service to America Dollar threshold used to distinguish between type A and type B programs: Auditee qualified as low-risk auditee? $ 750,000 X yes no II. Financial Statement Findings: No matters were reported III. Federal Award Findings and Questioned Costs: No matters were reported 19

25 IV. REPORTS IN ACCORDANCE WITH THE STATE SINGLE AUDIT ACT

26 WHITTLESEY & HADLEY, P. C. Certified Public Accountants/Consultants 280 Trumbull Street, 24th Floor Hartford, Connecticut (voice) (fax) INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR ST ATE PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE STATE SINGLE AUDIT ACT c:::j To the Board of Directors of Agency on Aging of South Central Connecticut, Inc. Report on Compliance for Each Major State Program We have audited Agency on Aging of South Central Connecticut, Inc.'s compliance with the types of compliance requirements described in the Office of Policy and Management's Compliance Supplement that could have a direct and material effect on each of Agency on Aging of South Central Connecticut, lnc.'s major state programs for the year ended September 30, Agency on Aging of South Central Connecticut, Inc.'s major state programs are identified in the summary of auditors' results section of the accompanying schedule of state findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its state programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of Agency on Aging of South Central Connecticut, Inc.'s major state programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the State Single Audit Act (C.G.S. Sections to 4-236). Those standards and the State Single Audit Act require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major state program occurred. An audit includes examining, on a test basis, evidence about Agency on Aging of South Central Connecticut, Inc.'s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major state program. However, our audit does not provide a legal determination of Agency on Aging of South Central Connecticut, Inc. 's compliance. Opinion on Each Major State Program In our opinion, Agency on Aging of South Central Connecticut, Inc., 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 state programs for the year ended September 30, Hartford Hamden Holyoke 20

27 Report on Internal Control over Compliance Management of Agency on Aging of South Central Connecticut, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Agency on Aging of South Central Connecticut, Inc.'s internal control over compliance with the types of requirements that could have a direct and material effect on each major state program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major state program and to test and report on internal control over compliance in accordance with the State Single Audit Act, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Agency on Aging of South Central Connecticut, Inc.' s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a state 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 state 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 combination of deficiencies, in internal control over compliance with a type of compliance requirement of a state program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the State Single Audit Act. Accordingly, this report is not suitable for any other purpose. Hartford, Connecticut February 8,

28 AGENCY ON AGING OF SOUTH CENTRAL CONNECTICUT, INC. Schedule of Expenditures of State Financial Assistance For the year ended September 30, 2016 State Grantor I Pass-Through Grantor I Program Title State Grant Program Core-CT Number Expenditures Department of Social Services Connecticut Home Care for Elders Department on Aging Elderly Nutrition & Discretionary Area Agency on Aging Administrative Funding Federal Title III Match Total Statewide Respite Care Program Elderly Health Promotion Services HUSKY Department of Public Health Diabetes Self Management Program Diabetes Self Management Program Office of Higher Education Experience Corps Total State Financial Assistance l 1000-DSS60000-l OOO-SDA62500-l OOO-SDA62500-l6260-l 0601 I 1OOO-SDA62500-l I 1OOO-SDA62500-l OOO-SDA62500-l6260-l OOO-SDA DPH DPH OOO-DHE66530-I2200 $ 6,244, ,917 13,974 18, , ,902 25,856 2,917 9,360 23,092 2,000 $ 7,266,668 See accompanying note to schedule of expenditures of state financial assistance. 22