THE TALLAHASSEE-LEON SHELTER, INC. (A NONPROFIT ORGANIZATION) FINANCIAL STATEMENTS Septeniber 30, 2010 and 2009

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1 THE TALLAHASSEE-LEON SHELTER, INC. (A NONPROFIT ORGANIZATION) FINANCIAL STATEMENTS Septeniber 30, 2010 and 2009

2 CONTENTS Page No. Independent Auditors' Report... 1 Financial Statements Statements of Financial Position... 2 Statements of Activities... 3 Statements of Cash Flows... 5 Statements of Functional Expenses... 6 Notes to the Financial Statements... 8 Supplementary Information Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards... 15

3 LANIGAN & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS MANAGEMENT CONSULTANTS 314 Gordon Avenue Thomasville, GA (229) Facsimile: (229) To The Board of Directors The Tallahassee-Leon Shelter, Inc. Tallahassee, Florida INDEPENDENT AUDITORS' REPORT 2630 Centennial Place Tallahassee, FL (850) Facsimile: (850) Piedmont Road, Suite 105 Atlanta, GA (404) We have audited the accompanying statements of financial position of The Tallahassee-Leon Shelter, Inc. (a nonprofit organization) as of September 30, 2010 and 2009, and the related statements of activities, cash flows, and functional expenses for the years then ended. These financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial position of The Tallahassee-Leon Shelter, Inc. as of September 30, 2010 and 2009, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 14, 2010, on our consideration of The Tallahassee-Leon Shelter, 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 fmancial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Tallahassee, Florida December 14,

4 THE TALLAHASSEE-LEON SHELTER, INC. STATEMENTS OF FINANCIAL POSITION AS OF SEPTEMBER 30,2010 AND ASSETS Current Assets Cash $ 296,425 $ 400,516 Grants Receivable 21,400 Prepaid Expenses 10,979 9,093 Total Current Assets 328, ,609 Beneficial Interest In Assets Held By Others 4,555 4,275 Property, Plant and Equipment, Net 1,065, ,857 TOTAL ASSETS $ 1,399,265 $ 1,269,741 LIABILITIES AND NET ASSETS Liabilities Accounts Payable $ 2,679 $ 1,146 Salaries Payable 10,765 8,819 Payroll Taxes Payable 1, Total Liabilities 14,631 10,677 Net Assets Unrestricted 1,378,211 1,232,814 Temporarily Restricted 6,423 26,250 Total Net Assets 1,384,634 1,259,064 TOTAL LIABILITIES AND NET ASSETS $ 1,399,265 $ 1,269,741 See accompanying notes to the financial statements. 2

5 THE TALLAHASSEE-LEON SHELTER, INC. STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND Temporarily Unrestricted Restricted Total REVENUE AND SUPPORT Contributions $ 342,165 $ 17,404 $ 359,569 United Way 355, ,177 Fundraising and Special Events 93,606 93,606 Interest Income Grants: Community Foundation Endowment Fund 4,927 4,927 Leon County - CHSP 21,400 21,400 Faith Presbyterian Church 21,737 21,737 City of Tallahassee - CRA 30,000 30,000 Emergency Food & Shelter 40,836 40,836 Other Grants 2,150 2,150 Assets Released from Restrictions 37,231 (37,231) Total Revenue and Support 949,278 (19,827) 929,451 EXPENSES Shelter Operations 772, ,452 General and Administrative 29,518 29,518 Fundraising 2,126 2,126 Total Expenses 804, ,096 Total Operating Income 145,182 (19,827) 125,355 NON-OPERATING (EXPENSES) Gain (Loss) on Investments Investment Fees (65) (65) Total Non-Operating (Expenses) Change in Net Assets 145,397 (19,827) 125,570 Net Assets, Beginning of Year 1,232,814 26,250 1,259,064 Net Assets, End of Year $ 1,378,211 $ 6,423 $ 1,384,634 See accompanying notes to the financial statements. 3

6 Unrestricted 2009 Temporarily Restricted Total $ 253, ,208 85,068 1,610 2,500 47,406 $ 43,415 $ 297, ,208 85,068 1,610 2,500 47,406 50,536 30, ,334 (30,137) 13,278 50, , ,472 28,266 2, , ,069 13, ,472 28,266 2, , ,347 (751) (215) (751) (215) (966) 141,103 1,091,711 $ 1,232,814 13,278 12,972 $ 26,250 (966) 154,381 1,104,683 $ 1,259,064 See accompanying notes to the financial statements. 4

7 THE TALLAHASSEE-LEON SHELTER, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30,2010 AND Cash Flows from Operating Activities Net Increase in Net Assets $ 125,570 $ 154,381 Adjustments to Reconcile Net Increase in Net Assets to Net Cash Provided by Operating Activities: Depreciation 40,925 38,408 (Gain) Loss on Investments (280) 751 (Increase) in Grants Receivable (21,400) (Increase) in Prepaid Expense (1,886) (4,564) Increase (Decrease) in Accounts Payable 1,533 (398) Increase in Salaries Payable 1,946 4,593 Increase (Decrease) in Payroll Taxes Payable 475 (162) Net Cash Provided by Operating Activities 146, ,009 Cash Flows from Investing Activities Purchases of Investments (5,140) Proceeds from Sale of Investments 4,624 Payments for the Purchase of Property (250,974) (38,398) Net Cash (Used in) Investing Activities (250,974) (38,914) Net (Decrease) Increase in Cash and Cash Equivalents (104,091) 154,095 Cash and Cash Equivalents at Beginning of Year 400, ,421 Cash and Cash Equivalents at End of Year $ 296,425 $ 400,516 See accompanying notes to the financial statements. 5

8 THE TALLAHASSEE-LEON SHELTER, INC. STATEMENTS OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED SEPTEMBER 30, 2010 AND Shelter General and Total Operations Administrative Fundraising Expenses Employee Compensation and Benefits $ 354,107 $ 18,638 $ $ 372,745 Payroll Taxes 30,866 1,624 32,490 Professional Fees 5,070 5,070 Office Supplies 11, ,126 14,148 Taxes and Licenses 2,829 2,829 Utilities 62,823 3,306 66,129 Telephone 5, ,575 Insurance 19,288 19,288 Client Supplies and Services 215, ,517 Transportation 4,697 4,697 Repairs and Maintenance 23,483 23,483 Rent 1,200 1,200 Depreciation 40,925 40,925 Total Expenses $ 772,452 $ 29,518 $ 2,126 $ 804,096 See accompanying notes to the financial statements. 6

9 2009 Shelter General and Total Operations Administrative Fundraising Expenses $ 327,602 $ 17,241 $ $ 344,843 28,120 1,480 29,600 5,500 5,500 8, ,527 11,679 2,594 2,594 63,093 3,321 66,414 5, ,311 19,819 19, , ,771 7,436 7,436 12,690 12,690 1,200 1,200 38,408 38,408 $ 653,472 $ 28,266 $ 2,527 $ 684,265 7

10 Nature of Activities THE TALLAHASSEE-LEON SHELTER, INC. NOTES TO THE FINANCIAL STATEMENTS September 30, 2010 and 2009 NOTE 1: Organization The Tallahassee-Leon Shelter, Inc (the Shelter) is a not-for-profit, tax-exempt organization dedicated to providing overnight shelter for persons who cannot afford temporary or transient housing in the City of Tallahassee, Florida. The Shelter also assists single persons and families in finding resources for food, shelter and clothing. The Shelter also offers, whenever possible, counseling and referral services. Accounting Method NOTE 2: Summary of Sign~ficant Accounting Policies The fmancial statements of The Tallahassee-Leon Shelter, Inc. have been prepared on the accrual basis of accounting. The significant accounting policies followed are described below to enhance the usefulness of the fmancial statements to the user. Income Tax Status The Organization is exempt from federal income taxes under Section 501 (c) (3) of the Internal Revenue Code. As a result, no provision for income taxes has been recorded. Basis of Presentation Financial statement presentation follows the recommendations of the Financial Accounting Standards Board in its Accounting Standards Codification Topic 958, Not-for-Profit Entities. Net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donorimposed restrictions. Under Codification Topic 958, the Shelter is required to report information regarding its financial position and activities according to three classes of net assets as follows: Unrestricted Net Assets - Net assets which are not subject to donor-imposed stipulations. Temporarily Restricted Net Assets - Net assets subject to specific donor-imposed restrictions contingent upon specific performance of a future event or a specific passage of time before the Shelter may spend the funds. Permanently Restricted Net Assets - Net assets subject to donor-imposed stipulations that the funds be maintained in perpetuity by the Shelter. Generally, the donors permit the Shelter to use all or part of the income earned on these assets for general or specific purposes. 8

11 NOTE 2: Summary of Significant Accounting Policies (Continued) The Shelter had no permanently restricted net assets for the years ended September 30,2010 and 2009, respectively. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets, liabilities at the date of the financial statements and the reported amounts of revenues, expenses, gains and losses during the reporting period. Actual results could differ from those amounts. Cash and Cash Equivalents The Shelter defines its cash and cash equivalents to include only cash on hand, demand deposits and all highly liquid instruments with a maturity of three months or less when purchased. Property and Equipment Property and equipment are stated at cost, or if donated, at the fair market value at the date of donation. Depreciation is recorded over the estimated lives of the assets using the straight-line method. Property Furniture and Fixtures Machinery and Equipment Building and Improvements Estimated Useful Life Depreciation expense for the years ended September 30,2010 and 2009 was $40,925 and $38,408, respectively. The cost and accumulated depreciation of property sold or retired is removed from the related asset and accumulated depreciation accounts and any resulting gain or loss is recorded in the statement of activities. Revenue and Public Support Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. 9

12 NOTE 2: Summary of Significant Accounting Policies (Continued) When a restriction expires ( that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. If donor-imposed restrictions are met in the year in which the contribution is received, the contribution is reported as unrestricted support. The Shelter receives support through voluntary donations. Donations are from a variety of sources (i.e. individuals, churches, businesses and corporations). The donations are recognized as revenue when received by the Shelter. During the year, many individuals volunteer their time and perform a variety of tasks that assist the Shelter in providing program services and special events. No amounts have been reflected in the statements for donated services because they did not meet the criteria for recognition under accounting principles generally accepted in the United States of America. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position. Unrealized gains or losses on investments resulting from fair value fluctuations are recorded in the statement of activities in the period that such fluctuations occur. Dividend income is recorded based upon the ex-dividend date, and interest income is recorded as earned on an accrual basis. Fair Value of Financial Instruments The Shelter has adopted Financial Accounting Standards Board (F ASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements. ASC Topic 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements by establishing a fair value hierarchy that prioritized the inputs to valuation techniques used to measure fair value. F ASB ASC Topic 820 defmes fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date and establishes a framework for measuring fair value. Following is a description of the Shelter's valuation methodologies for assets and liabilities measured at fair value. The Shelter has an established process for determining fair values. Fair value is based upon quoted market prices, where available. Iflisted prices or quotes are not available, valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments include unobservable parameters that are applied consistently over time. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: 10

13 NOTE 2: Summary 'of Significant Accounting Policies (Continued) Levell - Quoted prices are available in active markets for identical assets or liabilities as ofthe report date. A quoted price for an identical asset or liability in an active market provides the most reliable fair value measurement because it is directly observable to the market. Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the report date. The nature of these securities includes investments for which quoted prices are available but that are traded less frequently and investments that are fairly valued using other securities, the parameters of which can be directly observed. Level 3 - Securities that have little to no pricing observability as of the report date. These securities are measured using management's best estimate of fair value, where the inputs into the determination of fair value are not observable and require significant management judgment or estimation. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. Any changes to the valuation methodology are reviewed by management to confirm the changes are justified. As markets and products develop and the pricing for certain products becomes more or less transparent, the Shelter continues to refine its valuation methodologies. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Shelter believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Statements of Functional Expenses The costs of providing program and supporting administrative services have been summarized in a functional basis in the statements of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting administrative services benefited. Reclassifications Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. The reclassifications had no impact on total assets, liabilities, net assets, changes in net assets, or cash flows. Subsequent Events Subsequent events were evaluated through December 14, 2010, which is the date the financial statements were available to be issued. As of this date, no subsequent events were noted. 11

14 NOTE 3: Economic Dependence The Shelter derives its support primarily from contributions and grants. Given that revenue is closely related to the overall health of the economy, a downturn could cause a material drop in voluntary contributions and budget cut backs could result in a reduction to some or all grants, which could have a materially adverse effect on the Shelter's operations. NOTE 4: Fair Value of Financial Instruments The following table summarizes the financial instruments carried at fair value as of September 30, 2010: Beneficial Interest In Assets Held By Others Total Levell Level 2 Level 3 Total FMV $ $ 4,555 $ $ 4,555 $ $ 4,555 $ $ 4,555 NOTE 5: Property, Plant and Equipment For the years ending September 30,2010 and 2009, the cost, net of accumulated depreciation, of property, plant and equipment was as follows: Land $ 50,000 $ 50,000 Buildings and Renovations 1,111,252 1,104,928 Machinery and Equipment 48,440 61,136 Furniture and Fixtures 36,382 30,828 Vehicles 20,000 20,000 Construction in Progress 203,104 Total Property and Equipment 1,469,178 1,266,892 Less: Accumulated Depreciation (403,272) (411,035) Net Property and Equipment $ 1,065,906 $ 855,857 12

15 NOTE 6: Beneficial Interest in Assets Held By Others In August 2007, the United Way of the Big Bend established an Endowment Fund with the Community Foundation of North Florida for the benefit of The Tallahassee-Leon Shelter. The Community Foundation Endowment Fund was established and is maintained in accordance with accounting principles generally accepted in the United States of America. Under the agreement, the Community Foundation has ultimate authority and control over the investments. Deposits and contributions to the fund are recorded at fair market value, and administrative fees charged are expensed as incurred. The balance consists of the following as of September 30: Beginning Balance $ 4,275 $ 4,510 Deposits Made to Fund Administrative Fees (150) (150) Unrealized Gain (Loss) 430 (85) Ending Balance $ 4,555 $ 4,275 The amount available for distribution is based upon the Community Foundation of North Florida's current spending policy, which is 5% of the 20 quarter average market value of the Tallahassee-Leon Shelter, Inc.' s fund beginning with the last quarter ofthe immediately preceding year. Since the fund has been in existence for less than 20 quarters, the quarters available are averaged. NOTE 7: Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following purposes: Emergency Funds $ Community Foundation Endowment Fund Total Temporarily Restricted Net Assets $ 1,868 4,555 6,423 $ 21,975 4,275 $ 26,250 13

16 SUPPLEMENTARY INFORMATION

17 LANIGAN & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS MANAGEMENT CONSULTANTS 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 314 Gordon Avenue Thomasville, GA (229) Facsimile: (229) Centennial Place Tallahassee, FL (850) Facsimile: (850) Piedmont Road, Suite 105 Atlanta, GA (404) To The Board of Directors The Tallahassee-Leon Shelter, Inc. Tallahassee, Florida We have audited the financial statements of The Tallahassee-Leon Shelter, Inc. (a nonprofit organization) as of and for the year ended September 30, 2010 and have issued our report thereon dated December 14, We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Internal Control over Financial Reporting In planning and performing our audit, we considered The Tallahassee-Leon Shelter Inco's internal control over fmancial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the fmancial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal controls over fmancial reporting. Accordingly, we do not express an opinion on the effectiveness of the Organization's internal control over financial reporting. 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 organization's financial statements will not be prevented, or detected and corrected on a timely basis. 15

18 Report on Compliance Page Two Our consideration of internal control over fmancial reporting 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 financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defmed above. Compliance and Other Matters As part of obtaining reasonable assurance about whether The Tallahassee-Leon Shelter, Inc.'s fmancial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants agreements, noncompliance with which could have a direct and material effect on the determination of fmancial 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. We noted certain matters that we reported to management of The Tallahassee-Leon Shelter, Inc in a separate letter dated December 14,2010. This report is intended solely for the information and use of management, Board of Directors, others within the Organization, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Tallahassee, Florida December 14,

19 Bernard Lanigan ( ) Bernard Lanigan, Jr., CPA Franklin J. Mercer, CPA, CFP Robert M. Milberg, CPA C. Bradford Jackson, CPA, CFA D. Mark Fletcher, CPA G. Thomas Harrison, Jr., CPA, CFP John Keillor, CPA Donna N. Reetz, CPA Mark Saussy, CPA, CFP Glenn Townsend, CPA Sherri Rayburn, CPA Joshua Sharp, CPA Michael O. Sills, Jr., CPA T. Garrett Westbrook, CPA LANIGAN & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS MANAGEMENT CONSULTANTS Please reply to: Tallahassee Writer's Direct Dial (850) Ext: 686 Direct December 14, Gordon Avenue Thomasville, GA (229) Facsimile: (229) Centennial Place, Suite 1 Tallahassee, FL (850) Facsimile: (850) tallahassee@lanigancpacom 3343 Peachtree Road, NE Suite 225 Atlanta, GA (404) lanigan@lanigancpa.com Board of Directors The Tallahassee-Leon Shelter, Inc. P.O. Box 4062 Tallahassee, Florida RE: 2010 Management Letter Dear Directors: In planning and performing our audit of the fmancial statements of The Tallahassee-Leon Shelter, Inc. for the year ended September 30,2010 we became aware of some irlformation that should be considered by management for further study. This letter does not affect our report dated December 14, 2010, on the fmancial statements of Tallahassee-Leon Shelter, Inc. The Shelter received an unqualified opinion and the following paragraphs are simply recommendations. We will review the status of these comments during our next audit engagement. We have already discussed many of these comments and suggestions with Shelter personnel, and we will be pleased to discuss these comments in further detail at your convenience, perform any additional study of these matters, or to assist you in implementing the recommendations. Our comments are summarized as follows: Bank Statement Review Observation: It was noted during our audit that the bank statement is currently received, unopened, by the Executive Director, who then reviews the statement before forwarding the statement to the bookkeeper for reconciliation. MEMBERS OF: THE AMERICAN INSITUTE OF CPA'S PRIVATE COMPANIES PRACTICE SECTION THE GEORGIA SOCIETY OF CPA'S, THE FLORIDA INSTITUTE OF CPA'S

20 Board of Directors December 14,2010 Page 2 of2 Recommendation: To provide an additional level of assurance, it is our recommendation that an additional copy of the bank statement be mailed from the bank to a member of the Board of Directors who then should review the statement for unusual or infrequent items. This report is intended solely for the information and use of the Board of Directors, Management, and others within the Organization and is not intended to be, and should not be, used by anyone other than these specified parties. We wish to thank Mel Eby and Charlene Chen for the assistance they provided during our field work. Sincerely, /~ffis~~rp'c.. Lanigan & Associates, P. C.

21 Bernard Lanigan ( ) Bernard Lanigan, Jr., CPA Franklin 1. Mercer, CPA, CFP Robert M. Milberg, CPA C. Bradford Jackson, CPA, CFA D. Mark Fletcher, CPA G. Thomas Harrison, Jr., CPA, CFP John Keillor, CPA DonnaN. Reetz, CPA Mark Saussy, CPA, CFP Glenn Townsend, CPA Sherri Rayburn, CPA Joshua Sharp, CPA MichaelO. Sills, CPA T. Garrett Westbrook, CPA Board of Directors Tallahassee-Leon Shelter, Inc. P.O. Box 4062 Tallahassee, Florida LANIGAN & ASSOCIATES, P. C. CERTIFIED PUBLIC ACCOUNTANTS MANAGEMENT CONSULTANTS Please reply to: Tallahassee December 14, Gordon Avenue Thomasville, GA (229) Facsimile: (229) Centennial Place Tallahassee, FL (850) Facsimile: (850) Peachtree Road, NE Suite 225 Atlanta, GA (404) Dear Directors: We have audited the financial statements of Tallahassee-Leon Shelter, Inc. for the year ended September 30, 2010, and have issued our report thereon dated December 14, Professional standards require that we provide you with the following information related to our audit. Our Responsibility under U.S. Generally Accepted Auditing Standards As stated in our engagement letter dated September 27, 2010, our responsibility, as described by professional standards, is to express an opinion about whether the fmancial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted ~ccountingprinciples and Government Auditing Standards. Our audit of the fmancial statements does not relieve you or management of your responsibilities. Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated to you in our engagement letter about planning matters on September 27, Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Tallahassee-Leon Shelter, Inc. are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during MEMBERS OF: THE AMERICAN INSITUTE OF CPA'S PRIVATE COMPANIES PRACTICE SECTION THE GEORGIA SOCIETY OF CPA'S, THE FLORIDA INSTITUTE OF CPA'S

22 Board of Directors December 14, 2010 Page Two We noted no transactions entered into by the Organization during the year for which the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Accounting estimates are an integral part of the fmancial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements was: Management's estimate of the Depreciation expensed each year as it relates to capitalized assets. We evaluated the key factors and assumptions used to develop the depreciable lives and methods of each capitalized asset in determining that it is reasonable in relation to the financial statements taken as a whole. Difficulties Encountered in Performing tlte Audit We encountered no significant difficulties m dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards defme a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included m the management representation letter dated December 14,2010. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Organization's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our

23 Board of Directors December 14,2010 Page Three professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Organization's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. This information is intended solely for the use of Board of Directors and management of Tallahassee-Leon Shelter, Inc. and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, l..~~~~,f.c. Lanigan & Associates, P.C.