SUNNYSIDE COMMUNITY SERVICES, INC.

Transcription

1 Financial Statements (Together with Independent Auditors Report) Years Ended June 30, 2017 and 2016 And Single Audit Reports and Schedule Required by Office of Management and Budget Uniform Guidance Year Ended June 30, 2017

2 FINANCIAL STATEMENTS (Together with Independent Auditors Report) FOR THE YEARS ENDED JUNE 30, 2017 AND 2016 AND SINGLE AUDIT REPORTS AND SCHEDULE REQUIRED BY THE OFFICE OF MANAGEMENT AND BUDGET UNIFORM GUIDANCE YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS Independent Auditors' Report Financial Statements: Statements of Financial Position... 3 Statements of Activities... 4 Statements of Functional Expenses Statements of Cash Flows... 7 Notes to Financial Statements Singe Audit: Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards 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 Independent Auditors' Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs Summary Schedule of Prior Year Findings Page

3 Marks Paneth LLP 685 Third Avenue New York, NY P F markspaneth.com INDEPENDENT AUDITORS' REPORT The Board of Directors of Sunnyside Community Services, Inc. Report on Financial Statements We have audited the accompanying financial statements of Sunnyside Community Services, Inc. ( Sunnyside ) which comprise the statements of financial position as of June 30, 2017 and 2016, and the related statements of activities, functional expenses and cash flows for the years 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 audits. We conducted our audits 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 audits 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. 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 Sunnyside Community Services, Inc. as of June 30, 2017 and 2016, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

4 Other Matters 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 ( SEFA ) for the year ended June 30, 2017, (shown on page 14) 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 ( Uniform Guidance ), 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 audits 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 February 6, 2018, on our consideration of Sunnyside 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 Sunnyside s internal control over financial reporting and compliance. New York, NY February 6, 2018

5 STATEMENTS OF FINANCIAL POSITION AS OF JUNE 30, 2017 AND ASSETS Cash (Note 8) $ 809,060 $ 1,399,095 Government grants receivable, net (Notes 2C, 2E and 3) 2,121,090 1,200,568 Accounts receivable (Note 2E) 82,684 60,238 Contributions receivable (Notes 2D and 2E) 72,500 80,048 Prepaid expenses and other assets 76,827 68,976 Property and equipment, net (Notes 2F and 4) 230, ,521 TOTAL ASSETS $ 3,393,123 $ 3,087,446 LIABILITIES Accounts payable and accrued expenses $ 928,733 $ 720,445 Advances payable and deferred revenue (Note 2G) 62, ,123 Deferred rent obligation (Notes 2M and 5) 706, ,344 Due to affiliates (Note 9) 425, ,305 TOTAL LIABILITIES 2,122,947 1,759,217 COMMITMENTS AND CONTINGENCIES (Note 5) NET ASSETS Unrestricted: Invested in property and equipment 230, ,521 Operations 424, ,556 Total unrestricted 655, ,077 Temporarily restricted (Notes 2B and 6) 614, ,152 TOTAL NET ASSETS 1,270,176 1,328,229 TOTAL LIABILITIES AND NET ASSETS $ 3,393,123 $ 3,087,446 The accompanying notes are an integral part of these financial statements. -3-

6 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED JUNE 30, 2017 AND 2016 For the Year ended June 30, 2017 For the Year ended June 30, 2016 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total GOVERNMENT AND OTHER SUPPORT: Government and other grants (Notes 2H and 8) $ 8,905,591 $ - $ 8,905,591 $ 6,688,331 $ - $ 6,688,331 Program service fees (Note 2I) 404, , , ,145 Contributions and grants (Notes 2J and 9) 296, , , , , ,438 Special events (net of direct expenses of $9,450 and $13,440, respectively) 95,502-95,502 81,695-81,695 Contributions in kind (Note 2K) 15,205-15,205 23,045-23,045 Rental income (Note 2L) 63,850-63,850 57,525-57,525 Other income 30,568-30,568 58,079-58,079 Net assets released from restrictions (Notes 2B and 6) 419,602 (419,602) - 311,239 (311,239) - TOTAL GOVERNMENT AND OTHER SUPPORT 10,231,682 (10,307) 10,221,375 8,184,680 (39,422) 8,145,258 OPERATING EXPENSES (Notes 2O and 10): Program services Senior service program 4,916,381-4,916,381 3,630,146-3,630,146 Youth service program 3,150,821-3,150,821 2,580,246-2,580,246 Total program services 8,067,202-8,067,202 6,210,392-6,210,392 Supporting services Management and general 1,432,463-1,432,463 1,529,900-1,529,900 Fundraising 388, , , ,773 Total supporting services 1,820,756-1,820,756 1,832,673-1,832,673 TOTAL OPERATING EXPENSES 9,887,958-9,887,958 8,043,065-8,043,065 CHANGE IN NET ASSETS BEFORE NON-OPERATING ACTIVITIES 343,724 (10,307) 333, ,615 (39,422) 102,193 NON-OPERATING ACTIVITIES: Occupancy expense in excess of lease payments (Notes 2M, 5A and 10) (391,470) - (391,470) (315,344) - (315,344) TOTAL NON-OPERATING ACTIVITIES (391,470) - (391,470) (315,344) - (315,344) CHANGE IN NET ASSETS (47,746) (10,307) (58,053) (173,729) (39,422) (213,151) NET ASSETS - BEGINNING OF YEAR 703, ,152 1,328, , ,574 1,541,380 NET ASSETS - END OF YEAR $ 655,331 $ 614,845 $ 1,270,176 $ 703,077 $ 625,152 $ 1,328,229 The accompanying notes are an integral part of these financial statements. -4-

7 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2017 (With Comparative Totals for the Year Ended June 30, 2016) Program Services Supporting Services Senior Youth Service Service Management Total Total Program Program Total and General Fundraising Salaries (Note 9) $ 2,850,662 $ 2,287,943 $ 5,138,605 $ 770,436 $ 230,156 $ 6,139,197 $ 4,925,281 Payroll taxes and fringe benefits (Note 7) 556, , , ,742 42,914 1,193, ,337 Total Personnel Costs 3,407,165 2,685,793 6,092, , ,070 7,332,206 5,920,618 Consultants (Note 2K) 245,448 43, , ,889 24, , ,205 Occupancy (Note 5A) 364, , , ,874 29, , ,908 Communications 39,367 6,904 46,271 14,705 3,975 64,951 64,265 Food 124,527 21, ,367 46,516 12, , ,630 Supplies/printing 99,373 17, ,802 37,119 10, , ,248 Travel/transportation 52,134 9,143 61,277 19,474 5,264 86,015 81,869 Client respite and supplemental expense 221, , ,000 79,921 Insurance 35,796 18,884 54,680 3, ,538 97,146 Repairs and maintenance 92,175 15, ,816 33,313 9, ,134 88,248 Dues and subscriptions 18,298 3,209 21,507 6,835 1,847 30,189 25,718 Postage and shipping 9,257 1,624 10,881 3, ,274 4,834 Advertising expenses (Note 2N) 50,813 8,912 59,725 18,981 5,131 83,837 18,673 Participant expenses - 37,464 37, ,464 19,110 Depreciation and amortization 47,858 7,283 55, ,592 56,297 Bad debt expense 6,100 1,070 7,170 2, ,064 14,611 Other (Note 2K) 102,543 17, ,527 38,304 10, ,185 88,764 TOTAL EXPENSES $ 4,916,381 $ 3,150,821 $ 8,067,202 $ 1,432,463 $ 388,293 $ 9,887,958 $ 8,043,065 The accompanying notes are an integral part of these financial statements. -5-

8 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2016 Program Services Supporting Services Senior Youth Service Service Management Total Program Program Total and General Fundraising 2016 Salaries $ 2,000,688 $ 1,909,944 $ 3,910,632 $ 839,076 $ 175,573 $ 4,925,281 Payroll taxes and fringe benefits (Note 7) 426, , , ,695 39, ,337 Total Personnel Costs 2,426,985 2,171,665 4,598,650 1,106, ,197 5,920,618 Consultants (Note 2K) 202,877 29, ,344 99,088 17, ,205 Occupancy (Note 5A) 326, , , ,139 25, ,908 Communications 39,247 5,700 44,947 15,880 3,438 64,265 Food 143,288 20, ,100 57,977 12, ,630 Supplies/printing 108,856 15, ,667 44,045 9, ,248 Travel/transportation 49,997 7,262 57,259 20,230 4,380 81,869 Client respite and supplemental expense 79,921-79, ,921 Insurance 59,405 31,339 90,744 5,256 1,146 97,146 Repairs and maintenance 53,893 7,828 61,721 21,806 4,721 88,248 Dues and subscriptions 15,706 2,281 17,987 6,355 1,376 25,718 Advertising expenses (Note 2N) 11,404 1,656 13,060 4, ,673 Postage and shipping 2, ,381 1, ,834 Participant expenses - 19,110 19, ,110 Depreciation and amortization 46,083 10,214 56, ,297 Bad debt expense 8,923 1,296 10,219 3, ,611 Other (Note 2K) 54,206 7,874 62,080 21,935 4,749 88,764 TOTAL EXPENSES $ 3,630,146 $ 2,580,246 $ 6,210,392 $ 1,529,900 $ 302,773 $ 8,043,065 The accompanying notes are an integral part of these financial statements. -6-

9 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2017 AND CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ (58,053) $ (213,151) Adjustments to reconcile change in net assets to net cash (used in) provided by operating activities: Bad debt expense 10,064 14,611 Depreciation and amortization 55,592 56,297 Subtotal 7,603 (142,243) Changes in operating assets and liabilities: (Increase) or decrease in assets: Government grants receivable (930,586) (184,115) Accounts receivable (22,446) 29,694 Contributions receivable 7,548 (34,030) Prepaid expenses and other assets (7,851) (23,687) Increase or (decrease) in liabilities: Accounts payable and accrued expenses 208,288 (78,089) Advances payable and deferred revenue (273,754) 250,021 Deferred rent obligation 391, ,344 Due to affiliates 37, ,181 Net Cash (Used in) Provided by Operating Activities (582,002) 298,076 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment (8,033) (45,143) Net Cash Used in Investing Activities (8,033) (45,143) NET (DECREASE) INCREASE IN CASH (590,035) 252,933 Cash - beginning of the year 1,399,095 1,146,162 CASH - END OF YEAR $ 809,060 $ 1,399,095 The accompanying notes are an integral part of these financial statements. -7-

10 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 NOTE 1 ORGANIZATION AND NATURE OF ACTIVITIES Sunnyside Community Services, Inc. ( Sunnyside ) is a not-for-profit organization located in western Queens whose mission is to strengthen the community by providing a continuum of vital services and activities that enrich the lives of individuals of all ages. Founded as a senior center in 1974, Sunnyside has grown in step with community needs. Today, Sunnyside serves approximately 14,000 individuals each year including children, youth, adults, and seniors. Sunnyside s services for youth and families provide holistic support to students from early childhood through to college, and seek to involve parents as full partners in their children s education. Sunnyside s workforce development and training programs prepare members of the community for the job market, and work to connect them with meaningful employment. Sunnyside provides a comprehensive range of services that enables seniors to stay healthy and independent and to remain living safely in their homes for as long as possible and Sunnyside s home care services enable individuals who struggle with the activities of daily living to remain living safely in their homes. Sunnyside s primary sources of revenue are government grants and contributions. The agency is a not-for-profit organization exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. The accompanying financial statements were prepared to present the financial position, changes in net assets and cash flows of only Sunnyside Community Services, Inc., and do not include the financial position, changes in net assets and cash flows of its related organizations: Sunnyside Home Care Project, Inc. ( Home Care ), and Sunnyside Citywide Home Care Services, Inc. ( Citywide ). NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of accounting - The accompanying financial statements of Sunnyside have been prepared on the accrual basis of accounting. Sunnyside adheres to accounting principles generally accepted in the United States of America ( U.S. GAAP ). B. Basis of Presentation - Sunnyside maintains its net assets under the following two classes: a. Unrestricted represents resources available for support of Sunnyside s operations over which the Board of Directors has discretionary control which includes: Operations - consists of unrestricted net assets whose use is available for daily operations. Invested in Property and equipment - consists of unrestricted net assets whose balance is invested in the furniture and equipment held for use in operations, less any liabilities related to those assets. b. Temporarily restricted represents assets that are subject to donor-imposed stipulations. 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 statements of activities as net assets released from restrictions. C. Government grants receivable - Government grants receivable are recorded for expenditures made in accordance with grant agreements. D. Contributions receivable - Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on those amounts are computed using risk-adjusted interest rates applicable to the years in which the promises are received. Amortization of the discounts is included in contribution revenue. Conditional promises to give are not included as support until the conditions are substantially met. Contributions receivable amounted to $72,500 and $80,048 as of June 30, 2017 and 2016, respectively, and are due within one year

11 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Allowance for doubtful accounts - Sunnyside determines whether an allowance for uncollectible accounts should be provided for grants, contributions and accounts receivable. Such estimates are based on management s assessment of the aged basis of its receivables, current economic conditions, subsequent receipts and historical information. Receivables are written off against the allowance for doubtful accounts when all reasonable collection efforts have been exhausted. As of June 30, 2017 and 2016, respectively, Sunnyside determined an allowance of $0 and $5,526, respectively, was necessary for government grants receivable and no allowance was necessary for contributions and accounts receivable. F. Property and equipment Property and equipment and leasehold improvements are recorded at cost. Items with a cost of $1,000 and estimated useful life of greater than one year are capitalized. Property and equipment are depreciated on the straight-line method over their estimated useful lives. Amortization of leasehold improvements is recorded on the straight-line method over the term of the lease or the life of the asset, whichever is shorter. G. Advances payable and deferred revenue - Government grants are recorded as revenues to the extent that expenses have been incurred for the purposes specified by the grantors. To the extent amounts received exceed amounts spent, Sunnyside establishes refundable advances from governmental sources. H. Revenue from Government Sources - Revenues from government contracts are recognized when reimbursable expenses are incurred under the terms of the contract. Such revenues are subject to audit by the governmental funding sources. No provision for any disallowances is reflected in the financial statements, since management does not anticipate any material adjustments. Laws and regulations related to government programs are subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates may change by a material amount in the near term. Additionally, noncompliance with such laws and regulations could result in penalties and exclusion from the government programs. I. Program service fees - Fees from the Organization s adult day and college readiness programs are recognized during the period the related services are provided. J. Contributions - Unconditional contributions, including promises to give cash and other assets, are reported at fair value at the date the contribution is received. The gifts are reported as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the statements of activities as net assets released from restrictions. K. Donated goods and services Donated goods are recorded at their fair value on the date of receipt. Donated services are recognized in the financial statements if the services enhance or create 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. Donated goods and services of $15,205 and $23,045 were received during the years ended June 30, 2017 and 2016, respectively, and are reflected in the financial statements as follows: Consultants $ 15,205 $ 17,000 Other - 6,045 $ 15,205 $ 23,045 L. Rental revenue - Rental revenue is recognized based on rental agreements signed annually

12 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Operating leases - Rent expense has been recorded on the straight-line basis over the life of the lease. Deferred rent, when material, is recorded for the difference between the fixed payment and the rent expense. Occupancy expense in excess of lease payments was recorded as a non-operating item in the accompanying statements of activities. N. Advertising Expenses Advertising costs are charged to operations when incurred. Advertising expenses for the years ended June 30, 2017 and 2016, amounted to $83,837 and $18,673, respectively. O. Functional allocation of expenses - Because Sunnyside is a multi-program/multi-funded organization, certain costs have been allocated on the statements of functional expenses between functional and supporting services as determined by management. Such allocations conform to those made in seeking funds from thirdparty sources. P. Use of Estimates - The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures at the date of the financial statements. Actual amounts could differ from those estimates. Q. Reclassifications - Certain line items in the June 30, 2016 financial statements have been reclassified to conform to the June 30, 2017 presentation. NOTE 3 GOVERNMENT GRANTS RECEIVABLE, NET Government grants receivable consist of the following as of June 30, 2017 and 2016: New York City Department for the Aging ( DFTA ) $ 575,595 $ 295,067 New York City Department of Youth and Community Development 556, ,738 New York State Department of Health 412, ,252 New York State Education Department 253,136 34,827 New York City Department of Education 180, ,782 Department of Health and Mental Hygiene 63,092 35,016 New York City Human Resources Administration ( HRA ) 37,583 - Other receivables 42,693 65,412 Total government grants receivable 2,121,090 1,206,094 Less: allowance for doubtful accounts - (5,526) Total government grants receivable, net $ 2,121,090 $ 1,200,

13 NOTE 4 PROPERTY AND EQUIPMENT, NET NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 Property and equipment consists of the following as of June 30, 2017 and 2016: Estimated Useful Lives Leasehold improvements $ 3,305,078 $ 3,558, Years Furniture and equipment 662,453 1,029,930 5 Years 3,967,531 4,588,025 Less: accumulated depreciation and amortization (3,736,569) (4,309,504) Net book value $ 230,962 $ 278,521 For the years ended June 30, 2017 and 2016, depreciation and amortization expenses amounted to $55,592 and $56,297 respectively. During the year ended June 30, 2017, Sunnyside wrote off $628,527 of fully depreciated property and equipment that were no longer in service. NOTE 5 COMMITMENTS AND CONTINGENCIES A. Lease Commitments Sunnyside is obligated under an operating lease for its office space which expired in June 2015 with an option for a fifth year and another lease for its senior center which expires in May On January 27, 2016, Sunnyside signed an extension on the office space lease through June 30, Rent credits and charges are accounted for on a straight-line basis over the life of the lease (approximately 27 years) which gives rise to a timing difference that is reflected as deferred rent liability in the accompanying statements of financial position, amounting to $706,814 and $315,344 as of June 30, 2017 and 2016, respectively. In addition to base rent, Sunnyside is required to pay its pro rata share of real estate taxes and utilities. Sunnyside may cancel its lease for the senior center as of any July 1 upon at least 120 days prior notice if government funding is terminated. Sunnyside subleases a portion of its office space to Home Care and Citywide under three operating leases which provide for them to pay as additional rent their pro rata share of real estate taxes and utilities. Two of the leases expired on June 30, 2015 and the other expires on December 31, On January 25, 2016, Sunnyside signed an extension of the two expired office space subleases through June 30, In the event that governmental funding is terminated, Home Care and Citywide may cancel the leases upon giving one month s notice to Sunnyside. Rent expense for the years ended June 30, 2017 and 2016 amounted to $729,495 and $702,817, respectively. The future minimum lease payments, subject to cancellation, are as follows: Total Commitments Sublessors Share Sunnyside s Share 2018 $ 737,000 $ 331,000 $ 406, ,000 10, , ,000 5, , , , , ,000 Thereafter 22,665,000-22,665,000 Total $ 26,538,000 $ 346,000 $ 26,192,

14 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 NOTE 5 COMMITMENTS AND CONTINGENCIES (Continued) B. Income Taxes Sunnyside believes it has no uncertain tax positions as of June 30, 2017 and 2016 in accordance with Accounting Standards Codification ( ASC ) Topic 740, Income Taxes, which provides standards for establishing and classifying any tax provisions for uncertain tax positions. NOTE 6 TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets at June 30, 2017 and 2016 are available for the following purposes: Senior services $ 488,087 $ 397,582 Youth services 96, ,491 Other 30,079 25,079 Total temporarily restricted net assets $ 614,845 $ 625,152 Temporarily restricted net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors Senior services $ 177,202 $ 181,188 Youth services 237, ,711 Other 5,000 1,340 NOTE 7 PENSION PLAN $ 419,602 $ 311,239 Sunnyside maintains a 403(b) pension plan which covers all full-time employees. On an annual basis, the Board determines a discretionary contribution for employees who are 21 years of age and have completed two years of service. Sunnyside s contributions amounted to $35,998 and $15,901 for the years ended June 30, 2017 and 2016, respectively. NOTE 8 CONCENTRATION Credit Risk Cash that potentially subjects Sunnyside to a concentration of credit risk includes cash accounts with banks that exceed the Federal Deposit Insurance Corporation ( FDIC ) insurance limits. Cash accounts are insured up to $250,000 per depositor. As of June 30, 2017 and 2016, there was approximately $633,000 and $1,238,000, respectively, of cash held by banks that exceeded FDIC limits. Revenue Sunnyside received grants from various New York City and New York State agencies totaling $8,905,591 and $6,688,331, which represented 87% and 82% of total revenues, during the years ended June 30, 2017 and 2016, respectively. 93% and 90% of total receivables at June 30, 2017 and 2016, respectively, are related to these grants

15 NOTE 9 RELATED-PARTY TRANSACTIONS NOTES TO FINANCIAL STATEMENTS JUNE 30, 2017 AND 2016 As of June 30, 2017, Sunnyside owed $176,651 to Home Care and $248,380 to Citywide. As of June 30, 2016, Sunnyside owed $256,813 to Home Care and $130,492 to Citywide. These represent normal operating expenses and advances, are noninterest-bearing and are due on demand. During 2016, Sunnyside received grants from Home Care in the amount of $181,211 for employee awards. They are included in contributions and grants in the accompanying statements of activities and salaries in the accompanying statements of functional expenses. In addition, Sunnyside subleases a portion of its office space (Note 5) to Home Care and Citywide. In 2017 and 2016, Sunnyside allocated rent and other expenses, as outlined in the table below, to Home Care and Citywide Home Care Rent, real estate taxes and utilities expenses $ 214,874 $ 249,176 Salaries, fringe benefits and other expenses 673, ,141 Citywide Rent, real estate taxes and utilities expenses 136, ,772 Salaries, fringe benefits and other expenses 692, ,724 NOTE 10 FUNCTIONAL EXPENSES Functional expenses inclusive of deferred rent expense for the years ended June 30, 2017 and 2016 are as follows: Senior service program $ 5,091,251 $ 3,771,010 Youth service program 3,289,049 2,691,594 Management and general 1,497,055 1,581,932 Fundraising 402, ,873 $ 10,279,428 $ 8,358,409 NOTE 11 SUBSEQUENT EVENTS Management has evaluated, for potential recognition and disclosure of, events subsequent to the date of the statement of financial position through February 6, 2018, the date the financial statements were available to be issued. On July 28, 2017 Sunnyside CDPAP, Inc. was incorporated under the laws of the State of New York as a for profit business corporation. This corporation is a wholly owned subsidiary of Sunnyside Community Services, Inc

16 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2017 Federal Amounts CFDA Pass Through Entity Federal Provided to Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Identifying Number Expenditures Subrecipients U.S Department of Agriculture Child and Adult Care Food Program Passed-through from New York State (NYS) Department of Health $ 12,938 $ - Total U.S. Department of Agriculture 12,938 - U.S Department of Labor WIOA Cluster: WIA/WIOA Youth Activities Pass- through program from New York City (NYC) ,847 - Department for the Youth and Community Development Total WIOA Cluster 352,847 - Total U.S. Department of Labor 352,847 - U.S Department of Education College Access Challenge Grant Program Passed- through from New York State (NYS) Higher Education Services Corporation A C ,217 - Total U.S. Department of Education 21,217 - U.S Department of Health and Human Services Aging Cluster: Special Programs For the Aging- Title III, Part B - Grants For Supportive Services and Senior Centers Passed-through from New York City Department for the Aging ,253 - Special Programs For the Aging - Title III, Part C- Nutrition Services Passed-through from New York City Department for the Aging ,568 - Nutrition Services Incentive Program Passed-through from New York City Department for the Aging ,116 - Total Aging Cluster 174,937 - National Family Caregiver Support, Title III, Part E Passed-through from New York City Department for the Aging , ,083 Social Services Block Grant Passed-through from New York City Department for the Aging ,006 - Total U.S. Department of Health and Human Services 519,216 - AMOUNTS PROVIDED TO SUBRECIPIENTS $ 124,083 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 906,218 See notes to the schedule of expenditures of federal awards

17 NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2017 NOTE 1 BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the Schedule ) includes the federal award activity of Sunnyside under programs of the federal government for the year ended June 30, The information in the 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 for Federal Awards ( Uniform Guidance ). Because the Schedule presents only a selected portion of the operations of Sunnyside, it is not intended to and does not present the financial position, changes in net assets, or cash flows of Sunnyside. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting except for amounts passed through to subrecipients which are reported on a cash basis. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or limited as to reimbursement. NOTE 3 INDIRECT COST RATES Sunnyside has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance

18 Marks Paneth LLP 685 Third Avenue New York, NY P F markspaneth.com 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 The Board of Directors of Sunnyside Community Services, 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 Sunnyside Community Services, Inc. ( Sunnyside ) which comprise the statements of financial position as of June 30, 2017 and 2016, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements, and have issued our report thereon dated February 6, Internal Control Over Financial Reporting In planning and performing our audits of the financial statements, we considered Sunnyside 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 Sunnyside s internal control. Accordingly, we do not express an opinion on the effectiveness of Sunnyside 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 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 audits 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether Sunnyside 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 audits, 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

19 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 Sunnyside s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Sunnyside s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. New York, NY February 6,

20 Marks Paneth LLP 685 Third Avenue New York, NY P F markspaneth.com INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE The Board of Directors of Sunnyside Community Services, Inc. Report on Compliance for Each Major Federal Program We have audited Sunnyside Community Services, Inc. s ( Sunnyside ) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget ( OMB ) Compliance Supplement that could have a direct and material effect on each of Sunnyside s major federal programs for the year ended June 30, Sunnyside s major federal program is identified in the summary of auditors results section of the accompanying schedule of 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 applicable to its major federal programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of Sunnyside 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 ( GAS ), and the audit requirements of Title 2 U.S. Code of Federal Regulations ( CFR ) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance ). Those standards and 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 Sunnyside 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 Sunnyside s compliance. Opinion on Each Major Federal Program In our opinion, Sunnyside complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30,

21 Report on Internal Control Over Compliance Management of Sunnyside 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 Sunnyside s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Sunnyside s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 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. Purpose of this Report 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 Uniform Guidance. Accordingly, this report is not suitable for any other purpose. New York, NY February 6,

22 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2017 Section I Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unmodified Internal control over financial reporting: Material weaknesses identified? Yes X No Significant deficiencies identified not considered to be material weaknesses? Yes X None reported Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major programs: Material weaknesses identified? Yes X No Significant deficiencies identified not considered to be material weaknesses? 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 Uniform Guidance Yes X No Identification of major programs: U.S Department of Health and Human Services: CFDA # WIA/WIOA Youth Activities Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk auditee? X Yes No Section II Financial Statement Findings No matters were reported. Section III Federal Award Findings and Questioned Costs No matters were reported

23 SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS FOR THE YEAR ENDED JUNE 30, 2017 PRIOR YEAR FINDINGS: No matters were reported