Covenant House Florida, Inc. Financial Statements and OMB Circular A-133 Financial Report Together With Independent Auditors Report

Transcription

1 Financial Statements and OMB Circular A-133 Financial Report Together With Independent Auditors Report June 30, 2015 and 2014

2 Financial Statements June 2015 and 2014 TABLE OF CONTENTS Page Independent Auditors Report FINANCIAL STATEMENTS Statements of Financial Position 3 Statements of Activities 4 Statements of Functional Expenses 5-6 Statements of Cash Flows 7 Notes to Financial Statements 8-17 SUPPLEMENTAL INFORMATION Schedule of State Actual Expenses and Revenues Schedule of State Earnings 20 Schedule of Expenditures of Local Awards 21 Schedule of Expenditures of Federal Awards 22 Notes to Schedule of Expenditures of Federal Awards 23 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 Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133 Schedule of Findings and Questioned Costs 28 Summary Schedule of Prior Audit Findings 29

3 Independent Auditors' Report Board of Directors Covenant House Florida, Inc. Report on the Financial Statements We have audited the accompanying financial statements of Covenant House Florida, Inc., (the Organization ), which comprise the statement of financial position as of June 30, 2015, and the related statements of activities, functional expenses 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 auditors' 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. O CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Suite 301, Harrison, NY I Tel: I Fax: I O Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

4 Board of Directors Covenant House Florida, Inc. Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Covenant House Florida, Inc., Inc. as of June 30, 2015, 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. Prior Period Financial Statements The financial statements of Covenant House Florida, Inc. as of June 30, 2014, were audited by other auditors whose report dated January 12, 2015, expressed an unmodified opinion on those statements. Other Matters Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of state actual expenses and revenues, schedule of state earnings, schedule of expenditures of local awards and the schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations on pages 18 through 23, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and 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 October 23, 2015 on our consideration of Covenant House Florida, Inc., 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 Covenant House Florida, Inc. s internal control over financial reporting and compliance. Harrison, New York October 23, 2015

5 Statements of Financial Position June 30, ASSETS Cash and cash equivalents $ 962,267 $ 1,299,718 Grants receivable 477, ,033 Bequests and other receivables 186, ,840 Promise of contributed use of building 272, ,041 Prepaid expenses and other assets 122, ,493 Investments 480, ,950 Property and equipment, net 1,595,871 1,669,329 $ 4,096,151 $ 4,884,404 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ 197,006 $ 146,882 Accrued expenses 455, ,993 Capital leases 68,144 83,878 Due to Parent 26,100 93,709 Total Liabilities 746, ,462 Net Assets Unrestricted Undesignated 1,420,931 1,786,784 Invested in property and equipment 1,527,727 1,585,451 Total Unrestricted 2,948,658 3,372,235 Temporarily restricted 400, ,707 Total Net Assets 3,349,274 4,148,942 $ 4,096,151 $ 4,884,404 See notes to financial statements 3

6 Statements of Activities Year Ended June 30, 2015 Year Ended June 30, 2014 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total SUPPORT AND REVENUE Contributions $ 2,013,009 $ 12,219 $ 2,025,228 $ 1,894,089 $ 301,767 $ 2,195,856 Contributed services and merchandise 105, , , ,083 Government grants 2,717,959-2,717,959 2,307,276-2,307,276 Branding dollars from Parent 2,421,000-2,421,000 2,421,000-2,421,000 Special event revenue, net of direct benefits to donors of $201,012 and $203, , , , ,671 Total Support and Revenue 7,581,301 12,219 7,593,520 7,094, ,767 7,395,886 INVESTMENT AND OTHER INCOME Interest and dividends 5,694-5,694 6,458-6,458 Other income ,586-6,586 Net assets released from restrictions 388,310 (388,310) - 394,625 (394,625) - Total Support, Revenues, Investment and Other Income 7,975,305 (376,091) 7,599,214 7,501,788 (92,858) 7,408,930 EXPENSES Program services 7,256,121-7,256,121 7,006,415-7,006,415 Supporting services Management and general 614, , , ,125 Fundraising 528, , , ,957 Total Expenses 8,398,882-8,398,882 8,119,497-8,119,497 Change in Net Assets (423,577) (376,091) (799,668) (617,709) (92,858) (710,567) NET ASSETS Beginning of year 3,372, ,707 4,148,942 3,989, ,565 4,859,509 End of year $ 2,948,658 $ 400,616 $ 3,349,274 $ 3,372,235 $ 776,707 $ 4,148,942 See notes to financial statements 4

7 Covenant House Florida Statement of Functional Expenses Year Ended June 30, 2015 Program Services Supporting Services Community Total Total Cost of Direct Shelter and Mother/ Service Public Rights of Program Management Supporting Benefits Crisis Care Outreach Child Medical Center Education Passage Services and General Fundraising Services to Donors Total Salaries and wages $ 2,273,576 $ 138,688 $ 623,972 $ 99,260 $ 75,346 $ 30,168 $ 566,682 $ 3,807,692 $ 290,410 $ 281,300 $ 571,710 $ - $ 4,379,402 Payroll taxes 195,595 11,931 53,679 8,539 6,482 2,595 48, ,573 24,984 24,200 49, ,757 Employee benefits 351,712 21,454 96,526 15,355 11,656 4,667 87, ,033 44,926 43,516 88, ,475 Total Salaries and Related Expenses 2,820, , , ,154 93,484 37, ,097 4,724, , , ,336-5,433,634 Professional fees ,064-30,800-31,864 63,736 65, , ,700 Supplies 76,229 1,342 9,237 1,703 4, , ,658 4,979 1,676 6,655 2, ,386 Telephone and fax charges 17,700 2,426 2, , ,677 29,003 4,013 2,384 6,397-35,400 Printing, postage and mailing 7,188 2,163 1, ,725 1,594 7,864 9,458 11,716 32,899 Occupancy Fuel and utilities 133,038 2,408 15,761 7,316 7, , ,197 8,785 3,030 11, ,012 Repairs and maintenance 41, ,192 1,546 3, ,521 60,634 2, ,128-63,762 Contributed facilities 182,472 3,589 30,899 7,167-1,466 24, ,993 17,222 4,807 22, ,022 Rent and other 15, , ,520 21,375 1, ,365-22,740 Rent to Parent 37, ,381 1, ,039 51,628 14, ,785-67,413 Equipment, maintenance and rental 23, , , ,105 32,916 6, ,151-40,067 Travel and transportation 26,513 5,754 4, , ,093 46,242 20,072 1,751 21, ,207 Conferences, conventions and meetings 5, , ,489 2, , ,099 Special assistance to individuals 376, ,190 38,346 1, , ,362 1,303 (342) 961 5, ,333 Temporary help 239,249-76, , ,169 Other purchased services 97,242 1,742 9,873 3,813 5, , ,276 11,659 43,706 55, , ,680 Dues, licenses and permits 8, , ,454 12,497 8,657 8,193 16,850-29,347 Subscriptions and publications Staff recruitment 4, , ,924 Insurance 67,667 1,331 11,458 2, ,740 93,398 43,229 1,782 45, ,409 In-kind services 9,228 2,761-7, ,885-8,636 8,636-28,521 Other expenses 8, ,811 12,998 6,748 25,204 31,952 8,667 53,617 Bank charges and fees ,922-22,922-22,922 Interest and loan closing cost ,605-4,605-4,605 Depreciation and amortization 112,591 2,014 12,565 4,302 7, , ,744 7,004 2,510 9, ,258 Total Functional Expenses 4,311, ,506 1,087, , ,037 73,281 1,246,660 7,256, , ,653 1,142, ,012 8,599,894 Less cost of direct benefits to donors (201,012) (201,012) Total Expenses Reported by Function on Statement of Activities $ 4,311,021 $ 201,506 $ 1,087,280 $ 204,336 $ 132,037 $ 73,281 $ 1,246,660 $ 7,256,121 $ 614,108 $ 528,653 $ 1,142,761 $ - $ 8,398,882 See notes to financial statements 5

8 Covenant House Florida Statement of Functional Expenses Year Ended June 30, 2014 Program Services Supporting Services Community Total Total Cost of Direct Shelter and Mother / Service Public Rights of Program Management Supporting Benefits to Total Crisis Care Outreach Child Medical Centers Education Passage Services and General Fundraising Services Donors Expenses Salaries and wages $ 2,331,964 $ 114,183 $ 544,855 $ 98,830 $ 113,651 $ 17,871 $ 475,707 $ 3,697,061 $ 287,815 $ 250,211 $ 538,026 $ - $ 4,235,087 Payroll taxes 202,848 9,932 47,395 8,597 9,886 1,555 41, ,593 25,035 21,765 46, ,393 Employee benefits 326,430 15,983 76,269 13,834 15,909 2,502 66, ,517 40,288 35,025 75, ,830 Total Salaries and Related Expenses 2,861, , , , ,446 21, ,677 4,536, , , ,139-5,196,310 Professional fees ,400-27,058 94,941 71, , ,954 Supplies 72,131 1,224 8,942 2,617 4, , ,901 7,110 2,384 9,494 11, ,637 Telephone and fax charges 26,578 1,883 3, ,955 1,043 5,209 40,669 1,472 3,737 5,209-45,878 Printing, postage and mailing 7,622 2,442 1, , ,462 6,827 9,528 29,324 Occupancy Fuel and utilities 127,969 2,264 14,072 5,107 8, , ,328 7,844 2,819 10, ,991 Repairs and maintenance 34, ,542 1,113 3, ,122 53,414 1, ,872-55,286 Contributed facilities 182,472 3,589 30,899 7,167-1,466 24, ,993 17,222 4,807 22, ,022 Rent to parent 45, ,657 1, ,047 61,953 4,268 1,191 5,459-67,412 Rent - other 15, , ,138 20,747 1, ,408-22,155 Equipment, maintenance and rental 31, , , ,156 44,639 1, ,549-46,188 Travel and transportation 34,602 4,993 5, , ,727 55,273 17,133 1,319 18, ,481 Conferences, conventions and meetings 2, ,375 3,755 7,388 11,143-14,518 Specific assistance to individuals 405, ,413 32,588 1, , , ,369 Temporary help 250,893-78, , ,352 Other purchased services 97,374 1,750 10,815 3,676 4,729 1,045 16, ,678 21,844 49,081 70, , ,009 Dues, licenses and permits 9, , ,962 5,191 18,727 5,296 1,248 6,544-25,271 Subscriptions and publications , ,317-1,683 Staff recruitment 4, ,002 6, ,845 Insurance 91,631 1,804 15,492 3, , ,177 8,657 2,416 11, ,250 In-kind services 16,918 2,650-8, , ,738 Other expenses 23,474 1,360 1, ,073-5,246 33,096 11,901 51,841 63, ,988 Bank charges and fees ,814-24,814-24,814 Interest ,773-3,773-3,773 Depreciation and amortization 109,305 1,954 12,136 4,175 7, , ,135 6,764 2,432 9, ,331 Total Functional Expenses 4,451, , , , ,985 57, ,150 7,006, , ,957 1,113, ,082 8,322,579 Less cost of direct benefits to donors (203,082) (203,082) Total Expenses Reported by Function on the Statement of Activities $ 4,451,693 $ 168,776 $ 973,833 $ 196,482 $ 179,985 $ 57,496 $ 978,150 $ 7,006,415 $ 595,125 $ 517,957 $ 1,113,082 $ - $ 8,119,497 See notes to financial statements 6

9 Statements of Cash Flows Year Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (799,668) $ (710,567) Adjustments to reconcile change in net assets to net cash from operating activities Depreciation and amortization 169, ,331 Provision for bad debts 23,319 44,337 Net unrealized loss (gain) on investments (43) 231 In-kind contribution use of building 272, ,021 In-kind contribution of assets - (9,129) Gain on disposal of property and equipment - (6,683) Net change in operating assets and liabilities Grants receivable (47,380) (54,143) Other receivables 294,299 (149,974) Prepaid expenses and other assets 75,416 70,722 Accounts payable and accrued expenses 94,758 44,373 Due to / from Parent (67,609) 92,587 Net Cash from Operating Activities 14,370 (241,894) CASH FLOWS FROM INVESTING ACTIVITIES Sales and maturities of investments 967,256 1,200,460 Purchases of investments (1,207,543) (1,200,024) Purchase of property and equipment (95,800) (50,601) Net Cash from Investing Activities (336,087) (50,165) CASH FLOWS FROM FINANCING ACTIVITIES Payments on capital lease obligation (15,734) (17,470) Change in Cash and Cash Equivalents (337,451) (309,529) CASH AND CASH EQUIVALENTS Beginning of year 1,299,718 1,609,247 End of year $ 962,267 $ 1,299,718 SUPPLEMENTAL DISCLOSURE OF NONCASH ITEMS Equipment acquired through capital lease $ - $ 91,398 Cash paid for interest 4,605 3,773 See notes to financial statements 7

10 Notes to Financial Statements June 30, 2015 and Organization and Nature of Activities Covenant House Florida, Inc. (the Organization ), a not-for-profit organization, is an operating affiliate of Covenant House (the Parent ), a New York-based organization. The Organization provides shelter, residential services, community services, and outreach services to youth in the Fort Lauderdale and Orlando metropolitan area. The Parent is the sole member of the Organization and is itself a private not-for-profit organization which, through its affiliates, provided shelter, food, clothing, counseling, medical attention, crisis intervention, public education, and other services to more than 51,173 (unaudited) and 57,364 (unaudited) runaway and homeless youths during the years ended June 30, 2015 and The Organization is affiliated with the following not-for-profit organizations through common control. Covenant House Alaska Covenant House California Covenant House Georgia Covenant House Michigan Covenant House Missouri Covenant House New Jersey Covenant House New Orleans Covenant House Pennsylvania/Under 21 Covenant House Texas Covenant House Washington, D.C. Covenant House Western Avenue Covenant House Testamentum Covenant House New York/Under 21 Covenant International Foundation Covenant House Holdings, LLC Covenant House Toronto Covenant House Vancouver Associacion La Alianza (Guatemala) Alianza de Honduras Casa Alianza Nicaragua Casa Alianza Internacional Fundacion Casa Alianza Mexico, I.A.P. The Organization has been determined to be a non-profit organization exempt from federal and state income taxes under Section 501(c)(3) of the United States Internal Revenue Code. 8

11 Notes to Financial Statements June 30, 2015 and Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly actual results could differ from those estimates. Net Assets Presentation The Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. 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 received. All other donorrestricted support is reported as an increase in temporarily or permanently restricted net assets depending on the nature of the restriction. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as assets released from restrictions. There were no permanently restricted assets as of June 30, 2015 and Revenue Recognition Revenue is recognized as services are performed or expenditures are incurred under the Organization s contracts with its clients and funders. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited. Cash and Cash Equivalents The Organization considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Fair Value of Financial Instruments The Organization follows U.S. GAAP guidance on fair value measurements which defines fair value and establishes a fair value hierarchy organized into three levels based upon the input assumptions used in pricing assets. Level 1 inputs have the highest reliability and are related to assets with unadjusted quoted prices in active markets. Level 2 inputs relate to assets with other than quoted prices in active markets which may include quoted prices for similar assets or liabilities or other inputs which can be corroborated by observable market data. Level 3 inputs are unobservable inputs and are used to the extent that observable inputs do not exist. 9

12 Notes to Financial Statements June 30, 2015 and Summary of Significant Accounting Policies (continued) Investment Valuation and Income Recognition Investments consist of certificates of deposit with a maturity date greater than three months from the date of purchase valued at cost plus accrued interest, which approximates fair value. Other investments are valued at fair value. Investment income in the statement of activities consists of interest, dividends, and unrealized and realized gains (losses). Property and Equipment Leasehold improvements are depreciated over the lesser of the life of the asset or the term of the lease. Property and equipment is recorded at cost. Depreciation is recorded using the straightline method over the estimated useful lives of the assets, which ranges from 3 to 40 years. The Organization s policy is to capitalize all purchases of $3,000 or greater at the time of purchase. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, as follows: Asset Recoverability Buildings 31 years Building improvements 31 years Furniture, fixtures and equipment 3 to 5 years Vehicles 3 years Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There is no such impairment for the years ended June 30, 2015 and Contributions and Pledges Receivable Contributions to the Organization are recorded as revenue upon the receipt of an unconditional pledge of cash or other assets. Contributions are considered available for unrestricted use, unless the donors restrict their use. Contributions received that are due in more than one year are discounted at a risk adjusted rate. There were $125,000 and $237,599 in contributions receivable at June 30, 2015 and There were $61,222 and $266,241 in unconditional promises to give at June 30, 2015 and 2014 and are included in the bequest and other receivables in the accompanying statements of financial position. An allowance for uncollectible pledges receivable is provided, using management's judgment of potential defaults, which considers factors such as prior collection history, type of contribution and the nature of fundraising activity. Contribution revenue is recognized based on the present value of the estimated future payments to be made to the Organization. 10

13 Notes to Financial Statements June 30, 2015 and Summary of Significant Accounting Policies (continued) Contributions and Pledges Receivable (continued) $ - $ 114, , , , ,800 Discount to net present value - (14,201) $ 125,000 $ 237,599 The Organization maintains an allowance for doubtful accounts for estimated losses that may result from the inability of its donors to make required payments. Such allowances are based upon several factors including, but not limited to, historical collection experience and financial condition of the respective donor. For the years ended June 30, 2015 and 2014, no allowance was considered necessary by management. Pledges receivable at June 30, 2014 that were due in more than one year have been discounted at a discount rate of 6% to reflect the present value. Special Events Revenues and expenses incurred relative to special events are recognized upon occurrence of the respective event. Revenue are shown net of the cost of direct benefits to donors. Donated Goods and Services and Use of Building The Organization recognizes the fair market value of donated services which create or enhance nonfinancial assets, or require specialized skills provided by individuals possessing those skills and would typically be purchased if not provided by donation. Contributed services which do not meet these criteria are not recognized as revenue and are not reported in the accompanying financial statements. As described in Note 7 under leases, the Organization entered into a five year lease with the Parent. The lease commenced on July 1, 2011, and will expire on July 1, 2016 and requires annual rent of $67,413. The Organization is responsible for all related repairs and maintenance and utility costs. The use of the rented facilities is restricted to accommodate facilities and operations which achieve the Parent s mission. This total amount of the in-kind revenue related to this lease of $1,360,104 was recorded for the year ending June 30, 2011 and was based on the fair market value of similar assets and past appraisals. 11

14 Notes to Financial Statements June 30, 2015 and Summary of Significant Accounting Policies (continued) Advertising Costs Advertising costs are expensed as incurred. Accounting for Uncertainty in Income Taxes The Organization recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Management has determined that the Organization had no uncertain tax positions that would require financial statement recognition and/or disclosure. The Organization is no longer subject to examinations by the applicable taxing jurisdictions for years prior to June 30, Reclassifications Certain accounts in the 2014 financial statements have been reclassified to conform to the current year financial statement presentation. Subsequent Events Evaluation by Management Management has evaluated subsequent events for disclosure and recognition in the financial statements through the date that the financial statements were available to be issued, which date is October 23, Components of Program and Supporting Services Program Services Shelter and Crisis Care The Organization provides a safe haven for runaway and homeless teens under the age of 21 by providing shelter 24 hours a day, 7 days a week. Youth are provided nourishing meals, clean clothes, and a safe place to sleep. The youth are offered comprehensive services - from health services, substance abuse treatment and counseling to education and job readiness assistance. Outreach Trained outreach counselors travel by foot and van to areas where street kids congregate offering: an introduction to Covenant House Florida through informal dialogue that affirms each youth, non-perishable food, clean clothing, hygiene supplies, and first aid, counseling about issues that affect the youth s current situation, referrals to safe shelter, medical care, or other services. If requested by the youth, the team will provide transportation to the Crisis Shelter. 12

15 Notes to Financial Statements June 30, 2015 and Summary of Significant Accounting Policies (continued) Components of Program and Supporting Services (continued) Program Services (continued) Mother/Child Program This program provides emergency shelter, food and counseling to runaway and homeless youth with infants or toddlers, as well as parenting education and pre and post natal care. Medical Services This program provides an on-site health program which recognizes and responds to the actual and potential health and medical problems of the homeless youth residing at its Crisis Shelter. The nurses, supported by a volunteer Medical Director, work closely with CHF Case Management and Clinical staff to help improve and ensure the health, welfare and safety of each youth, their babies/children. Community Service Centers The Community Services Program provides an array of services to homeless youth ages 18 to 21 living on the streets, who feel they are not ready to accept the structure of a residential shelter or for youth who have achieved stable housing but are in need of on-going supportive services in an aftercare environment. Services provided include case management, counseling, food pantry, hygiene supplies, clothing, laundry services, family reunification, transportation assistance, and access to education. Public Education This program informs and educates the public on how to identify potential runaway and throwaway adolescents; public and private resources are available to help such adolescents before they leave home and public support services are also available to these families to improve their home environment. Rights of Passage Rights of Passage ( ROP ) helps older adolescents progress from homelessness to productive lifestyles though stable residency, improved life skills and employment opportunities, and increased self-responsibility for determining their future. Rights of Passage Apartment Living ( ROPAL ) offers youth up to two years of independent living in a furnished apartment with supportive case management. The ROPAL Program consists of 42 beds at scattered sites. Supporting Services Management and General Management and general services include administration, finance and general support activities. Certain administrative costs that relate to specific programs have been allocated to those programs. Fundraising Fundraising services relate to the activities of the development program in raising general and specific contributions 13

16 Notes to Financial Statements June 30, 2015 and Summary of Significant Accounting Policies (continued) Components of Program and Supporting Services (continued) Direct Benefit-to-Donor Costs Direct benefit-to-donor are costs incurred in conjunction with items such as meals and entertainment benefiting attendees of special events. 3. Investments Investments at June 30, 2015 and 2014 consist of certificate of deposits due within one year of statement of financial position dates. 4. Government Grants Receivable Grants receivables of $477,413 and $430,033 at June 30, 2015 and 2014 represent the amounts due from various governmental agencies for the Organization s programs. All grants receivable at June 30, 2015 are expected to be collected within one year. 5. Property and Equipment Property and equipment consists of the following at June 30: Land $ 404,800 $ 404,800 Construction in progress 9,836 10,921 Buildings 1,656,184 1,656,184 Vehicles 264, ,134 Leasehold Improvements 750, ,223 Furniture, fixtures and equipment 806, ,372 3,892,383 3,803,634 Accumulated depreciation (2,296,512) (2,134,305) $ 1,595,871 $ 1,669,329 Construction in progress consists of demolition and plumbing pertaining to a remodeling project for four youth rooms. 14

17 Notes to Financial Statements June 30, 2015 and Capital Leases The Organization has leased equipment under a capital lease. The recorded costs for the assets under the capital leases are reflected as equipment within property and equipment on the statements of financial position. Amortization for the equipment under the capital lease is included in depreciation and amortization expense. At June 30, 2015 and 2014, the Organization s assets under capital leases were as follows: Leased equipment $ 91,398 $ 91,398 Accumulated amortization (27,419) (9,140) $ 63,979 $ 82,258 Future minimum payments for equipment under capital leases for the year ending June 30 are as follows: 2016 $ 20, , , ,253 Total minimum obligations 76,267 Amount representing Interest $ (8,123) 68, Commitments and Contingencies Leases The Organization leases facilities from the Parent under an agreement which requires annual rent of $1. The lease commenced on July 1, 2011, and will expire on July 1, Rent expense related to this lease for the years ended June 30, 2015 and 2014 was $67,413 per year. Since the lease payments are below the fair rental value of the property, the Organization has recorded $272,021 and $544,041 as of June 30, 2015 and 2014 as a promise of contributed use of building, which is being amortized to expense over the term of the lease. For the years ended June 30, 2015 and 2014, the Organization recognized $272,020 and $272,021 of expense per year for the contributed use of the building. The future minimum lease schedule below includes the renewed lease from the Parent and only includes the amount of rent paid in cash. The Organization also leases equipment from unrelated parties under operating leases. The rent expense related to these leases for the years ended June 30, 2015 and 2014 was $9,368 and $8,

18 Notes to Financial Statements June 30, 2015 and Commitments and Contingencies (continued) Leases Future minimum annual lease payments for the years ended June 30, are payable as follows: Government Grants Parent Others Total 2016 $ 1 $ 13,392 $ 13, ,392 13, ,065 8,065 $ 1 $ 34,849 $ 34,850 In accordance with the terms of certain government grants, the records of the Organizations are subject to audit for varying periods after the date of final payment of the grants. The Organization is liable for any disallowed costs; however, management believes that the amounts of disallowed costs, if any, would not be significant. Government grants amounted to $2,717,959 and $2,307,276 for the years ended June 30, 2015 and Temporarily Restricted Net Assets Temporarily restricted net assets at June 30 are available for the following: Time restricted - use of building $ 272,020 $ 544,041 Time restricted - operations 125, ,070 Purpose restricted - education 3,596 3,596 $ 400,616 $ 776,707 Amounts released from restrictions in the years ended June 30, are as follows: Time restricted - use of building $ 272,021 $ 272,021 Time restricted - operations 116, ,604 $ 388,310 $ 394, Related Party Transactions The Parent provides financial support as well as management and organizational support for its affiliated organizations. The Parent conducts fundraising activities for its own programs and the programs of the affiliates. Contributions and promises to give totaled approximately $60.8 million and $57.8 million for the Parent for the years ended June 30, 2015 and Contributions received from the Parent are generally not specifically restricted by donors to specific affiliates.

19 Notes to Financial Statements June 30, 2015 and Related Party Transactions (continued) The Parent combines contributions received from individuals, corporations and foundations plus a Parent subsidy and appropriates funds classified as Branding Dollars or Contributions Received from Parent to each Covenant House affiliate. Total funds allocated to affiliates, based on the Parent s policy, approximated $31.3 million and $33.1 million for the years ended June 30, 2015 and In fiscal both 2015 and 2014, the Organization received $2,421,000 in contributions from the Parent. Use of Building As described in Note 2, Summary of Significant Accounting Policies, Use of Building and Note 7 Commitments and Contingencies, Leases, the Organization entered into a five year lease with the Parent which commenced July 2011 and will expire on July 1, Employee Benefit Plan The Organization participates in the Covenant House, Inc. defined benefit pension plan sponsored by the Parent covering substantially all of the employees of the Parent and its domestic affiliates. Benefits are generally based on years of service and final average salary. For the years ended June 30, 2015 and 2014, the Organization did not make contributions to the defined benefit pension plan. Effective December 31, 2006, Covenant House froze service credits in the defined benefit pension plan. Compensation increases continued to apply within the plan structure for those participants who exceeded certain thresholds of age and years of service to protect the benefits of older and longer tenured employees. The Organization has accrued $68,420 for the years ended June 30, 2015 and Effective January 1, 2007, the Parent adopted a defined contribution 403(b) savings and retirement plan. Employees are immediately eligible to participate in the plan. Employees who work at least 1,000 hours per year are eligible to receive an employer contribution. The Organization makes annual contributions into the plan on behalf of employees ranging from 1% to 9% of employee compensation determined using a formula based on points, which equal the sum of age and years of service. Employer contributions to the plan are 100% vested after employees have completed three years of service. Total expense related to the 403(b) plan was $155,701 and $141,334 for the years ended June 30, 2015 and Concentration of Credit Risk Financial instruments that potentially subject the Organization to concentrations of credit risk consist primarily of cash, cash equivalents and receivables. The Organization maintains its cash in bank deposit accounts which generally exceed federally insured limits. The Organization has not experienced any losses in such accounts. * * * * * 17

20 Covenant House Florida Supplemental Information June 30, 2015

21 DATE PREPARED: 8/25/2015 AGENCY: Covenant House Florida, Inc. BUDGET PERIOD: FROM 7/1/2014-6/30/2015 CONTRACT #: PART I: ACTUAL FUNDING SOURCES & REVENUES STATE-FUNDED Program 1 Program 2 SAMH COVERED SERVICES FUNDING SOURCES & REVENUES Assessment Intervention Outreach Residential II IA. STATE SAMH FUNDING Schedule of State Actual Expenses and Revenues Total for State SAMH-Funded Covered Services Total for Non- State-Funded Covered Services Total for All Covered Services Non-SAMH Covered Services Total Funding (C 1 + +C x ) (D+E) (F+G) A B 1-a B 1-b B 2-a B 2-b D E F G H (1) CMH $ 16,018 $ - $ - $ - $ 16,018 xxxxxxxxx $ 16,018 xxxxxxxxx $ 16,018 (2) ASA - 76,544-30, ,640 xxxxxxxxx 106,640 xxxxxxxxx 106,640 (3) CSA - 22,819 63,612-86,431 xxxxxxxxx 86,431 xxxxxxxxx 86,431 (4) xxxxxxxxx - xxxxxxxxx - (5) xxxxxxxxx - xxxxxxxxx - (6) From Other Districts xxxxxxxxx - TOTAL STATE SAMH FUNDING = $ 16,018 $ 99,363 $ 63,612 $ 30,096 $ 209,089 $ $ 209,089 xxxxxxxxx $ 209,089 IB. OTHER GOVT. FUNDING (1) Other State Agency Funding $ - $ $ $ - $ - $ - $ - $ 59,144 $ 59,144 (2) Medicaid (3) Local Government , , , , ,314 (4) Federal Grants and Contracts ,642,890 1,642,890 (5) In-kind from local govt. only TOT. OTHER GOVT. FUNDING = $ - $ - $ - $ 599,591 $ 599,591 $ - $ 599,591 $ 1,905,757 $ 2,505,348 IC. ALL OTHER REVENUES (1) 1st & 2nd Party Payments $ - $ $ - $ - $ - $ - $ - $ - $ - (2) 3rd Party Payments (except Medicare) (3) Medicare (4) Contributions and Donations 72,691 6,986 15,114 90, , ,925 4,588,384 4,773,310 (5) Other , ,447 (6) In-kind - 4,738 2,761-7,499-7, , ,431 TOT. ALL OTHER REVENUES = $ 72,691 $ 11,724 $ 17,875 $ 90,134 $ 192,424 $ - $ 192,424 $ 5,322,763 $ 5,515,188 TOTAL FUNDING = $ 88,709 $ 111,087 $ 81,487 $ 719,821 $ 1,001,104 $ - $ 1,001,104 $ 7,228,520 $ 8,229,625 See independent auditors' report 18

22 PART II: ACTUAL EXPENSES DATE PREPARED: 8/25/2015 BUDGET PERIOD: FROM 7/1/2014-6/30/2015 CONTRACT #: SAMH COVERED SERVICES AGENCY: Covenant House Florida, Inc. STATE FUNDED Program 1 Program 2 *except IIC & IID EXPENSE CATEGORIES Assessment Intervention Outreach Residential II IIA. PERSONNEL EXPENSES Schedule of State Actual Expenses and Revenues Total for State SAMH-Funded Covered Services Total for Non- State-Funded Covered Services Total for All Covered Services Non-SAMH Covered Services Other Support Costs (optional) Administration Total Expenses (C 1 + +C x ) (D+E) (F+G+H*+I*) A B 1-a B 1-b B 2-a B 2-b D E F G H I J (1) Salaries $ 51,233 $ 52,840 $ 41,574 $ 418,455 $ 564,102 $ - $ 564,102 $ 3,243,590 $ 281,300 $ 290,410 $ 4,379,402 (2) Fringe Benefits 12,333 12,682 10, , , , ,851 67,716 69,910 1,054,233 TOTAL PERSONNEL EXPENSES = $ 63,566 $ 65,522 $ 51,582 $ 519,188 $ 699,858 $ - $ 699,858 $ 4,024,441 $ 349,016 $ 360,320 $ 5,433,635 IIB. OTHER EXPENSES (1) Building Occupancy $ 15,187 $ 4,970 $ 12,215 $ 61,302 $ 93,674 $ - $ 93,674 $ 259,163 $ 7,608 $ 30,882 $ 391,327 (2) Professional Services ,864 65,100 63, ,700 (3) Travel ,543-2,588-2,588 43,654 1,751 20,072 68,065 (4) Equipment , ,818 40,067 (5) Food Services ,360 46,360-46, , ,424 (6) Medical and Pharmacy - 20, ,990-20,990 16, ,482 (7) Subcontracted Services (8) Insurance 1,023 1,889 1,495 16,040 20,447-20,447 72,951 1,782 43, ,409 (9) Interest Paid ,605 4,605 (10) Operating Supplies & Expenses 2,389 4,548 4,880 23,830 35,647-35,647 1,101,261 61,531 28,435 1,226,874 (11) Other ,297 25,398 31,722 77,607 (12) Donated Items - 4,738 2,761-7,499-7, ,267 13,443 17, ,431 TOTAL OTHER EXPENSES = $ 18,599 $ 37,370 $ 23,894 $ 147,532 $ 227,395 $ - $ 227,395 $ 2,144,684 $ 177,127 $ 246,785 $ 2,795,991 TOT. PERSONNEL & OTH. EXP. = $ 82,165 $ 102,892 $ 75,476 $ 666,720 $ 927,253 $ - $ 927,253 $ 6,169,125 $ 526,143 $ 607,105 $ 8,229,626 IIC. DISTRIBUTED INDIRECT COSTS (a) Other Support Costs (Optional) $ $ $ $ $ $ $ $ $ < > $ $ (b) Administration 6,544 8,195 6,011 53,101 73,851 $ 73, ,348 41,906 (607,105) - TOT. DISTR'D INDIRECT COSTS = $ 6,544 $ 8,195 $ 6,011 $ 53,101 $ 73,851 $ - $ 73,851 $ 491,348 XXXXXXXXXXX XXXXXXXXX $ TOTAL ACTUAL OPER. EXPENSES = $ 88,709 $ 111,087 $ 81,487 $ 719,821 $ 1,001,104 $ - $ 1,001,104 $ 6,660,473 $ 568,049 $ 0.00 $ 8,229,626 IID. UNALLOWABLE COSTS $ $ $ $ $ $ $ $ XXXXXXXXXXX XXXXXXXXX $ TOT. ALLOWABLE OPER. EXP. = $ 88,709 $ 111,087 $ 81,487 $ 719,821 $ 1,001,104 $ - $ 1,001,104 $ 6,660,473 XXXXXXXXX XXXXXXXXX $ 8,229,626 IIE. CAPITAL EXPENDITURES $ $ $ $ $ $ $ $ $ $ $ See independent auditors' report 19

23 Schedule of State Actual Expenses and Revenues Year Ended June 30, Total Expenditures $ 1,001,104 2 Less Other State and Federal Funds - 3 Less Non-Match SAMH Funds (75,185) 4 Less Unallowable Costs per 65E-14, F.A.C. - 5 Total Allowable Expenditures 925,919 (Sum of lines 1, 2, 3, and 4) 6 Maximum Available Earnings 694,439 (Line 5 times 75%) 7 Amount of State Funds Requiring Match 133,904 8 Amount Due to Department $ - See independent auditors' report 20

24 Schedule of State Actual Expenses and Revenues Year Ended June 30, 2015 Grantor/Program Title Grantor Number Expenditures Broward County Broward - CHAMP at Ft Lauderdale Shelter 12-CP-CSA /2 $ 599,591 Broward - Family Counseling Project at Ft. Lauderdale Shelter 12-CP-CSA /1 48,954 Broward - Crisis Counseling project at Ft. Lauderdale Shelter 14-CP-CSA /1 67,436 Other Healthy Start - Parenting Project COVCC-FT ,654 Total $ 770,635 See independent auditors' report 21

25 Schedule of State Actual Expenses and Revenues Year Ended June 30, 2015 Federal Federal Grantor/Pass-Though CFDA Pass-through Entity Federal Grantor/Cluster or Program Title Number Identifying Number Expenditures U. S. Department of Housing and Urban Development Direct Program Supportive Housing Program $ 208,225 Pass-through Homeless Services Network of Orange County Supportive Housing Program FL0090L4H ,050 Pass-through Homeless Services Network of Orange County Supportive Housing Program FL0091L4H ,420 Pass-through Broward County Services Supportive Housing Program HUD-2 353,641 Pass-through Broward County Community Development Division ESG Emergency Shelter Grants Program Not Available 66,546 Pass-through Orange County ESG Emergency Shelter Grants Program Not Available 30,154 Pass-through Broward County Community Development Community Development Block Grants (CDBG)/Entitlement Grants Not Available 44,156 Pass-through Orange County Community Development Block Grants (CDBG)/Entitlement Grants CDBGCH 33,115 Total U.S. Department of Housing and Urban Development 963,307 U. S. Department of Health and Human Services Direct Program Transitional Living for Homeless Youth ,000 Pass-through Florida Department of Children and Families Block Grants for Prevention and Treatment of Substance Abuse ,164 Pass-through Florida Department of Children and Families Block Grants for Community Mental Health Services ,940 Pass-through Broward County Healthy Start Coalition Maternal and Child Health Services Block Grant to the States COVCC-FY14/15 2,378 Pass-through Broward County Healthy Start Coalition Medical Assistance Program COVCC-FY14/15 6,769 Total U.S. Department of Health and Human Services 283,251 U.S. Department of Agriculture Pass-through the State of Florida Child Nutrition Cluster School Breakfast Program ,710 National School Lunch Program ,434 Total Child Nutrition Cluster 59,144 U.S. Department of Homeland Security Pass-through EFSP Local Boards Emergency Food and Shelter National Board Program , ,833 U.S. Department of Labor Pass-through Career Source Central Florida WIA/WIOA Youth Activities Not Available 478,602 Total Expenditures of Federal Awards $ 1,826,137 See independent auditors' report and notes to schedule of expenditures of federal awards 22

26 Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (the Schedule ) includes the federal grant activity of Covenant House Florida, Inc. under programs of the federal government for the year ended June 30, The information in this Schedule is presented in accordance with the requirements of the Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Because the Schedule presents only a selected portion of the operations of Covenant House Georgia, Inc., it is not intended to and does not present the financial position, changes in net assets or cash flows of Covenant House Florida, Inc. 2. Summary of Significant Accounting Policies Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-133, Cost Principles for Nonprofit Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement. 3. Agency or Pass-Through Entity Identifying Number Agency or pass-through numbers are programs where the federal funds are received indirectly. Therefore, agency and pass-through numbers are not required when received directly from the federal government, or else there are certain pass-through entities that did not provide identifying numbers. 23

27 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 Board of Directors Covenant House Florida, Inc. Independent Auditors Report 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 Covenant House Florida, Inc., (the Organization ), which comprise the statement of financial position as of June 30, 2015, and the related statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated October 23, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Organization 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 Organization s internal control. Accordingly, we do not express an opinion on the effectiveness of 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 first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. O CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Suite 301, Harrison, NY I Tel: I Fax: I O Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

28 Board of Directors Covenant House Florida, Inc. Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Organization 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. Harrison, New York October 23, 2015

29 Report on Compliance for Federal Each Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133 Board of Directors Covenant House Florida, Inc. Independent Auditors Report Report on Compliance for Each Major Federal Program We have audited Covenant House Florida, Inc. s (the Organization ) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the Organization s major federal programs for the year ended June 30, The Organization s major federal programs are 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 the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of the Organization s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 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 the Organization 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 the Organization s compliance. O CONNOR DAVIES, LLP 500 Mamaroneck Avenue, Suite 301, Harrison, NY I Tel: I Fax: I O Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.