Big Bend Transit, Inc.

Transcription

1 Big Bend Transit, Inc. FINANCIAL STATEMENTS September 30, 2016

2 Big Bend Transit, Inc. Table of Contents September 30, 2016 REPORT Independent Auditors Report 1 FINANCIAL STATEMENTS Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 Notes to Financial Statements 6 SUPPLEMENTARY INFORMATION Schedule of Functional Expenses (Program Costs) 11 Schedule of Expenditures of Federal Awards and State Financial Assistance 12 Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance 13 SINGLE AUDIT AND AUDITOR GENERAL REPORTS 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 15 Independent Auditors Report on Compliance For Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance and Chapter , Rules of the Auditor General 17 Schedule of Findings and Questioned Costs Federal Programs and State Projects 19

3 REPORT

4 INDEPENDENT AUDITORS REPORT To the Board of Directors Big Bend Transit, Inc. Tallahassee, Florida Report on the Financial Statements We have audited the accompanying financial statements of Big Bend Transit, Inc. (a nonprofit organization), which comprise the statement of financial position as of September 30, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1

5 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 Big Bend Transit, 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. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards and state financial assistance, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Audits of States, Local Governments, and Non Profit Organizations and Chapter , Rules of the Auditor General, is presented for purposes of additional analysis and is not a required part of the financial statements. The accompanying schedule of functional expenses (program costs) is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 29, 2017, on our consideration of Big Bend Transit s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Big Bend Transit s internal control over financial reporting and compliance. CARR, RIGGS & INGRAM, LLC June 29,

6 FINANCIAL STATEMENTS

7 Big Bend Transit, Inc. Statement of Financial Position September 30, 2016 Assets Current assets: Cash and cash equivalents $ 1,411,176 Certificates of deposit current 550,222 Accounts receivable net 454,957 Grants receivable 434,107 Inventory 44,777 Prepaid expenses 250,796 Total current assets 3,146,035 Certificates of deposit noncurrent 208,939 Investments 4,059,356 Revenue vehicles and equipment net 1,752,004 Total assets $ 9,166,334 Liabilities and Net Assets Current liabilities: Accounts payable $ 70,420 Accrued wages 140,249 Accrued pension 15,075 Total current liabilities 225,744 Accrued leave 104,675 Total liabilities 330,419 Net Assets Unrestricted net assets: Designated 558,721 Undesignated 8,277,194 Total net assets 8,835,915 Total liabilities and net assets $ 9,166,334 The accompanying notes are an integral part of these financial statements. 3

8 Big Bend Transit, Inc. Statement of Activities Year ended September 30, 2016 Unrestricted Net Assets Operating revenues Customer revenues $ 3,206,690 Federal awards and state financial assistance 2,078,335 Total operating revenues 5,285,025 Operating expenses Operations 3,891,400 Vehicle maintenance 573,343 General administration 932,890 Total operating expenses 5,397,633 Change in net assets from operations (112,608) Non operating revenues, gains and losses Interest and dividends 163,962 Realized loss on investments (165,119) Unrealized gain on investments 291,099 Total non operating revenues 289,942 Change in net assets 177,334 Net assets, beginning of year 8,658,581 Net assets, end of year $ 8,835,915 The accompanying notes are an integral part of these financial statements. 4

9 Big Bend Transit, Inc. Statement of Cash Flows Year ended September 30, 2016 Cash flows from operating activities Change in net assets $ 177,334 Adjustments to reconcile change in net assets to cash provided by operating activities: Realized loss on investments 165,119 Unrealized gain on investments (291,099) Depreciation 531,123 Bad debts (75,200) Increase (decrease) in: Accounts receivable and grants receivable (95,389) Inventory (9,229) Prepaid expenses 72,003 (Increase) decrease in: Accounts payable (1,876) Accrued wages 36,627 Accrued leave (12,665) Retirement funds payable (577) Net cash provided by operating activities 496,171 Cash flows from investing activities Purchase of vehicles and equipment (501,677) Purchase of investments (4,535,722) Proceeds from sale of investments 5,361,359 Net cash provided by investing activities 323,960 Net increase in cash and cash equivalents 820,131 Beginning cash and cash equivalents 591,045 Ending cash and cash equivalents $ 1,411,176 The accompanying notes are an integral part of these financial statements. 5

10 Big Bend Transit, Inc. Notes to Financial Statements NOTE 1 NATURE OF BUSINESS Big Bend Transit, Inc. (Big Bend Transit) is a non profit organization incorporated on March 21, 1978 under Florida Statutes to provide transit services for the elderly, handicapped and other disadvantaged groups in Gadsden, Madison, Taylor, Jefferson, and Leon Counties in the State of Florida. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Financial Statement Presentation Big Bend Transit has adopted FASB ASC 958, Not for Profit Entities. Under FASB ASC 958, Big Bend Transit is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Big Bend Transit has classified all net assets as unrestricted. Investments Investments in marketable securities with readily determinable fair values are valued at their fair values in the statement of financial position. Certificates of deposit are classified as current if original maturities are one year or less. Certificates of deposit are recorded at cost which approximates fair value. Realized and unrealized gains and losses are included in the statement of activities as non operating revenues. Cash and Cash Equivalents Cash and cash equivalents include all short term, highly liquid investments with original maturities of three months or less. Accounts and Grants Receivable Receivables are stated at the amount management expects to collect. Management determines the allowance for doubtful accounts based on factors including experience and the current economic environment. Inventory Inventories are stated at the lower of cost or net realizable value using the first in, first out method. Inventory consists of spare parts and fuel. 6

11 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue Recognition Big Bend Transit, Inc. Notes to Financial Statements Grant revenue is recognized as income when the applicable grant expense is incurred. Customer revenue is recognized as income when the applicable services have been provided. Operating revenue represents all revenue other than investment income. Revenue Vehicles and Equipment Big Bend Transit follows the practice of capitalizing all expenditures for fixed assets in excess of $500. Revenue vehicles and equipment are recorded at cost and depreciated over estimated useful lives of 2 7 years. Depreciation is computed using the straight line method. Under the terms of grant agreements with the Florida Department of Transportation, monies are received by Big Bend Transit and used to buy new vehicles. The new vehicles are titled to Big Bend Transit, subject to liens to the respective funding agencies until such time as the funding agencies no longer consider the vehicles serviceable. This title restriction does not limit Big Bend Transit s intended use of such vehicles in any way. Employee Annual and Sick Leave Annual and sick pay are recognized on the accrual basis. Provision is made for all annual and sick time earned in accordance with Big Bend Transit s policies. Income Taxes Big Bend Transit is exempt from federal income tax under Section 501(c)(3) of the U.S. Internal Revenue Code except on unrelated business income and is not classified as a private foundation. No provision for income taxes has been recorded within the financial statements. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Subsequent Events Subsequent events have been evaluated through the date of the independent auditors report, which is the date the statements were available to be issued. 7

12 Big Bend Transit, Inc. Notes to Financial Statements NOTE 3 ACCOUNTS AND GRANTS RECEIVABLE Accounts and grants receivable at September 30, 2016 are reported net of an allowance for doubtful accounts in the amount of $23,392. Bad debt expense totaled $75,200 for the year ended September 30, NOTE 4 INVESTMENTS Investments include the following: September 30, 2016 FMV Cost Mutual funds $ 3,260,386 $ 3,191,047 Equities 798, ,407 Total investments $ 4,059,356 $ 3,931,454 Unrealized gains due to the change in market value was $291,099 for the year ended September 30, Realized losses were $(165,119) for the year ended September 30, NOTE 5 FAIR VALUE MEASUREMENTS FASB ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Significant other observable inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Level 3 Significant unobservable inputs. The asset s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. 8

13 Big Bend Transit, Inc. Notes to Financial Statements NOTE 5 FAIR VALUE MEASUREMENTS (Continued) Fair values of investments measured on a recurring basis at September 30, 2016 are as follows: Fair Value Level 1 Level 2 Level 3 Mutual funds $ 3,260,386 $ 3,260,386 $ $ Equities 798, ,970 Total $ 4,059,356 $ 4,059,356 $ $ NOTE 6 REVENUE VEHICLES AND EQUIPMENT NET Revenue vehicles and equipment includes the following: September 30, 2016 Revenue vehicles $ 4,809,186 Equipment 423,366 Revenue vehicles and equipment 5,232,552 Less accumulated depreciation (3,480,548) Revenue vehicles and equipment net $ 1,752,004 Depreciation expense for the year ended September 30, 2016 was $531,123. NOTE 7 RETIREMENT PLAN Big Bend Transit contributes to a profit sharing plan to provide retirement benefits for all employees who have completed one year of service. Contributions to the plan are based on a percentage of the employees salaries. The current year s pension expense was $109,300, which represents 5% of eligible employees salaries. NOTE 8 NET ASSETS The organization has designated $558,721 of unrestricted net assets for the future purchase of revenue vehicles and equipment. NOTE 9 COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS The organization recognized revenue of $2,078,335 from governmental grants for the year ended September 30, This amount represents approximately 39% of operating revenue for the year then ended. The Organization applies for grants on an annual basis. Therefore, the possibility exists that funding amounts could be decreased or eliminated in future years. 9

14 Big Bend Transit, Inc. Notes to Financial Statements NOTE 10 OPERATING LEASES The organization leases facilities in various Florida locations on a month to month basis. Current total monthly rental expense on these operating leases is approximately $400. In addition, the organization has operating leases on facilities in various Florida locations with commitments beyond September 30, 2016 these leases expire in various years ending The following schedule of future minimum lease payments required under the operating leases that have initial non cancelable terms in excess of one year as of September 30, Years ending September 30, 2017 $ 44, , , , ,080 Total $ 107,260 Total rental expense for the year ended September 30, 2016 was $90,303. NOTE 11 FUNCTIONAL EXPENSES Expenses are charged directly to operations, vehicle maintenance or general administration categories based on specific identification. 10

15 SUPPLEMENTARY INFORMATION

16 Big Bend Transit, Inc. Schedule of Functional Expenses (Program Costs) Total Vehicle General Program Costs Year ended September 30, 2016 Operations Maintenance Administration 2016 Labor & fringe benefits $ 2,678,708 $ 416,657 $ 358,072 $ 3,453,437 Materials & supplies 602, ,644 3, ,953 Depreciation 476,505 54, ,123 Casualty & liability expense 240, ,480 Services 23,082 11, , ,211 Rent expense 84,723 1,974 3,606 90,303 Utilities 53,293 53,293 Bad debts 75,200 75,200 Miscellaneous 25,615 5,952 39,066 70,633 Total $ 3,891,400 $ 573,343 $ 932,890 $ 5,397,633 See independent auditors report. 11

17 Big Bend Transit, Inc. Schedule of Expenditures of Federal Awards and State Financial Assistance Year Ended September 30, 2016 Federal Grantor/Pass Through Grantor/Program Title CFDA/CSFA Contract/ Number Grant Number Expenditures FEDERAL AWARDS U.S. DEPARTMENT OF TRANSPORTATION Passed through Florida Department of Transportation Formula Grants for Other Than Urbanized Areas ARL55 $ 516, ARQ02 13, G , G ,032 Total Formula Grants for Other Than Urbanized Area 746,876 Transit Services Program Cluster: Enhanced Mobility for Seniors and Individuals FL 16 X009 55,440 with Disabilities FL 16 X , FL 16 X , NA 109,671 Total Transit Services Program Cluster 259,272 Federal Transit Cluster: Bus and Bus Facilities Formula Program FL ,807 Total Federal Awards Expended $ 1,051,955 STATE FINANCIAL ASSISTANCE FLORIDA DEPARTMENT OF TRANSPORTATION Direct Programs CTD Trip and Equipment Grant Program G0B77 $ 61, G0B54 48, G , G , G , G0C10 61, G0B19 103, G ,160 Total CTD Trip and Equipment Grant Program 948,751 Commuter Assistance AR739 6, AQH40 9, AQU57 8, AQU58 11, AQH52 6,702 Total Commuter Assistance 42,101 Public Transit Service Development Program ARM42 3,120 State Matching on Federal Capital Assistance Grants N/A N/A 32,408 Total State Financial Assistance Expended $ 1,026,380 Total Federal Awards and State Financial Assistance Expended $ 2,078,335 See independent auditors report and the notes to schedule of expenditures of Federal Awards and State Financial Assistance. 12

18 NOTE 1 BASIS OF PRESENTATION Big Bend Transit, Inc. Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance Year Ended September 30, 2016 The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance (the Schedule) includes the federal and state grant activity of Big Bend Transit, Inc. (the Organization). The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Audits of States, Local Governments, and Non Profit Organizations and Chapter , Rules of the Auditor General. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. For purposes of the Schedule, federal and state awards include all grants, contracts, and similar agreements entered into directly with the federal or state government and other pass through entities. The Organization has obtained Catalog of Federal Domestic Assistance (CFDA) and Catalog of State Financial Assistance (CSFA) numbers to ensure that all programs have been identified in the schedule. Federal programs with different CFDA numbers that are closely related because they share common compliance requirements are defined as a cluster by the Uniform Guidance. A cluster is separately identified within the Schedule. NOTE 2 RELATIONSHIP OF THE SCHEDULE TO PROGRAM FINANCIAL REPORTS The amounts reflected in the financial reports submitted to the awarding federal or state agency and the Schedule may differ. Some of the factors that may account for any potential difference include the following: The Organization s fiscal year end may differ from the program s year end. Accruals recognized in the Schedule, because of year end procedures, may not be reported in the program financial reports until the next program reporting period. Fixed asset purchases and the resulting depreciation charges are recognized as fixed assets in the Organization s financial statements and as an expenditure in the program financial reports. NOTE 3 BASIS OF ACCOUNTING The Schedule was prepared on the modified accrual basis of accounting. The modified accrual basis differs from the full accrual basis of accounting as expenditures for fixed assets are expensed when incurred rather than capitalized and depreciated over their useful lives. 13

19 Big Bend Transit, Inc. Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance Year Ended September 30, 2016 (Continued) NOTE 4 CONTINGENCIES Grant monies received and disbursed by the Organization are subject to review by the grantor agencies. Such audits may result in requests for reimbursement due to disallowed expenditures. Based upon prior experience, the Organization does not believe that such disallowance, if any, would have a material effect on the financial position of the Organization. As of September 30, 2016, there were no material questioned or disallowed costs as a result of grant audits in process or completed. NOTE 5 NONCASH ASSISTANCE The Organization did not receive any federal or state noncash assistance for the fiscal year ended September 30, NOTE 6 INDIRECT COST The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. 14

20 SINGLE AUDIT AND AUDITOR GENERAL REPORTS

21 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 To the Board of Directors of Big Bend Transit, Inc. We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Big Bend Transit, Inc. (a nonprofit organization), which comprise the statement of financial position as of September 30, 2016, and the related statements of activities, and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated June 29, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Big Bend Transit, 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 financial statements, but not for the purpose of expressing an opinion on the effectiveness of Big Bend Transit, Inc. s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization 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 possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the preceding paragraph 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. However, as described in the accompanying schedule of findings and questioned costs as item , we identified a deficiency in internal control that we consider to be a material weakness. 15

22 Additional matters for improvement were included in a separate letter dated June 29, Compliance and Other Matters As part of obtaining reasonable assurance about whether Big Bend Transit, Inc. s 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 financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization 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 Organization s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. CARR, RIGGS & INGRAM, LLC Tallahassee, Florida June 29,

23 INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE AND CHAPTER , RULES OF THE AUDITOR GENERAL To the Board of Directors of Big Bend Transit, Inc. Tallahassee, Florida Report on Compliance for Each Major Federal Program and State Project We have audited Big Bend Transit, Inc. s compliance with the types of compliance requirements described in the OMB Compliance Supplement and the requirements described in the Department of Financial Services State Projects Compliance Supplement, that could have a direct and material effect on each of Big Bend Transit, Inc. s major federal programs and state projects for the year ended September 30, Big Bend Transit, Inc. s major federal programs and state projects are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs and state projects. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of Big Bend Transit, Inc. s major federal programs and state projects 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), and Chapter , Rules of the Auditor General. Those standards, the Uniform Guidance and Chapter , Rules of the Auditor General 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 and state project occurred. An audit includes examining, on a test basis, evidence about Big Bend Transit, 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 and state project. However, our audit does not provide a legal determination of Big Bend Transit, Inc. s compliance. 17

24 Opinion on Each Major Federal Program and State Project In our opinion, Big Bend Transit, 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 and state projects for the year ended September 30, Report on Internal Control Over Compliance Management of Big Bend Transit, 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 Big Bend Transit, Inc. s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program and state project 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 state project and to test and report on internal control over compliance in accordance with the Uniform Guidance and Chapter , Rules of the Auditor General, 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 Big Bend Transit, 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 or state project 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 or state project 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 or state project 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 and Chapter , Rules of the Auditor General. Accordingly, this report is not suitable for any other purpose. CARR, RIGGS & INGRAM, LLC Tallahassee, Florida June 29,

25 Summary of Audit Results Big Bend Transit, Inc. Schedule of Findings and Questioned Costs Federal Programs and State Projects Year Ended September 30, The Independent Auditors' Report expresses an unqualified opinion on the financial statements of Big Bend Transit, Inc. 2. A material weakness relating to the audit of the financial statements is reported in the 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. 3. No instances of noncompliance material to the financial statements of Big Bend Transit, Inc. were disclosed during the audit. 4. No significant deficiencies relating to the audit of the major federal award program or state project are reported in the Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with the Uniform Guidance and Chapter , Rules of the Auditor General. 5. The Independent Auditors' Report on compliance for the major federal programs and state projects for Big Bend Transit, Inc. expresses an unqualified opinion on all major federal programs and state projects. 6. There are no audit findings or questioned costs relative to the major federal programs and state projects for Big Bend Transit, Inc. that are required to be reported under the Federal or Florida Single Audit Act, therefore no management letter is required. 7. The programs/projects tested as major programs/projects included the following: Federal Program Federal CFDA No. Formula Grants for Other than Urbanized Areas State Project State CSFA No. CDT Trip and Equipment Grant Program The threshold for distinguishing Type A and B programs/projects was $750,000 for major federal programs and $300,000 for major state projects. 9. Big Bend Transit, Inc. was not determined to be a low risk auditee for the year ended September 30,

26 Findings Financial Statement Audit Big Bend Transit, Inc. Schedule of Findings and Questioned Costs Federal Programs and State Projects Year Ended September 30, 2016 (Continued) Finding Financial Close and Preparation (Repeat Finding) Finding: Big Bend Transit does not have someone on staff to prepare the financial statements including disclosures in accordance with GAAP and to record complex adjustments resulting in a material weakness under professional standards. Management relies on the audit firm to prepare the financial statements including the required note disclosures. During the audit, the audit firm proposed certain adjustments related to the proper capitalization of fixed assets, depreciation, and investments. Recommendation: We suggest management continue to utilize CPAs to assist with its financial close reporting process until such time Big Bend Transit considers it more cost effective. We suggest management review the prior year closing entries and audit adjustments for consideration during annual financial reporting close outs. Management Response: Management believes this policy is the most cost effective approach to prepare annual financial statements in accordance with GAAP. Findings and Questioned Costs Major Federal Programs None. Findings and Questioned Costs Major State Projects None. 20