THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM JUNE 30, 2016 AND 2015 BATON ROUGE, LOUISIANA

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1 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM JUNE 30, 2016 AND 2015 BATON ROUGE, LOUISIANA

2 TABLE OF CONTENTS Audited Financial Statements: Independent Auditor's Report... Page 1-2 Statements of Assets, Liabilities and Net Assets-Regulatory Basis... 3 Statements of Revenues, Expenses and Other Changes in Net Assets-Regulatory Basis... 4 Statements of Cash Flows-Regulatory Basis... 5 Notes to Financial Statements Supplementary Information: Schedule of Functional Expenses - Regulatory Basis for the Year Ended June 30, Schedule of Functional Expenses - Regulatory Basis for the Year Ended June 30, Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings... 20

3 2322 Tremont Drive Baton Rouge, LA Del Orleans Avenue, Suite C Denham Springs, LA Poydras Street, Suite 1200 New Orleans, LA Phone: Fax: Independent Auditor s Report To the Superintendent and Diocesan Finance Council The Diocese of Baton Rouge Child Nutrition Program Baton Rouge, Louisiana Report on the Financial Statements We have audited the accompanying financial statements of The Diocese of Baton Rouge Child Nutrition Program (a nonprofit organization), which comprise the Statements of Assets, Liabilities, and Net Assets- Regulatory Basis as of June 30, 2016 and 2015, and the related Statements of Revenues, Expenses, and Other Changes in Net Assets-Regulatory Basis, and the Statement of Cash Flows-Regulatory Basis 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 the financial reporting practices prescribed or permitted by the Louisiana State Department of Education National School Lunch Program; 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. Auditor s 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. 1

4 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 assets, liabilities, and net assets of The Diocese of Baton Rouge Child Nutrition Program as of June 30, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended, on the basis of accounting described in Note 6. Basis of Accounting We draw attention to Note 6 of the financial statements, which describes the basis of accounting. As described in Note 6, these financial statements were prepared in conformity with the accounting practices prescribed or permitted by the Louisiana State Department of Education National School Lunch Program, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedules of Functional Expenses-Regulatory Basis on pages are presented for purposes of additional analysis and are not a required part of the financial statements of the Organization. The accompanying Schedule of Expenditures of Federal Awards, 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, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 7, 2017, on our consideration of The Diocese of Baton Rouge Child Nutrition Program 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 The Diocese of Baton Rouge Child Nutrition Program s internal control over financial reporting and compliance. Respectfully submitted, Baton Rouge, Louisiana February 7,

5 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM STATEMENTS OF ASSETS, LIABILITIES AND NET ASSETS - REGULATORY BASIS AS OF JUNE 30, 2016 AND 2015 ASSETS Current Assets: Cash $ 2,707,112 $ 2,436,612 Accounts Receivable 162,709 3,762 Inventories 123, ,718 Total Assets $ 2,993,296 $ 2,579,092 LIABILITIES AND NET ASSETS Current Liabilities: Accounts Payable $ 38,166 $ 74,936 Accrued Retirement Accrued Vacation 23,406 21,407 Other Accrued Liabilities 23,673 26,194 Deferred Revenue 183, ,603 Total Current Liabilities 269, ,953 Net Assets: Unrestricted 2,723,702 2,290,139 Total Net Assets 2,723,702 2,290,139 Total Liabilities and Net Assets $ 2,993,296 $ 2,579,092 The accompanying notes are an integral part of these financial statements. 3

6 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM STATEMENTS OF REVENUES, EXPENSES AND OTHER CHANGES IN NET ASSETS - REGULATORY BASIS FOR THE YEARS ENDED JUNE 30, 2016 AND Unrestricted Unrestricted Revenue and Support: Meal Sales $ 2,898,249 $ 2,851,874 Sales of Extra Food 599, ,717 Interest Income 14,010 15,392 State of Louisiana Salary Adjustments 1,363,865 1,569,826 Federal Sources: Meal Reimbursements 2,425,258 2,467,984 Commodities 490, ,923 Other Income 10,955 13,080 Total Revenue and Support 7,802,104 7,782,796 Expenses: Program Services: Food Services 6,777,647 7,074,698 Supporting Services: Administrative and General 590, ,599 Total Expenses 7,368,541 7,649,297 Change in Net Assets 433, ,499 Net Assets at Beginning of Year 2,290,139 2,156,640 Net Assets at End of Year $ 2,723,702 $ 2,290,139 The accompanying notes are an integral part of these financial statements. 4

7 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM STATEMENTS OF CASH FLOWS - REGULATORY BASIS FOR THE YEARS ENDED JUNE 30, 2016 AND Cash Flows from Operating Activities: Changes in Net Assets $ 433,563 $ 133,499 Adjustments to Reconcile Change in Net Assets to Net Cash Provided by (Used in) Operating Activities: Changes in Assets and Liabilities: (Increase) Decrease in Accounts Receivable (158,947) 12,354 (Increase) Decrease in Inventory 15, ,254 Increase (Decrease) in Accounts Payable (36,770) 23,797 Increase (Decrease) in Accrued Liabilities (566) (21,295) Increase (Decrease) in Deferred Revenue 17,977 38,820 Net Cash Provided by Operating Activities 270, ,429 Net Increase in Cash and Cash Equivalents 270, ,429 Cash and Cash Equivalents - Beginning of Year 2,436,612 2,136,183 Cash and Cash Equivalents - End of Year $ 2,707,112 $ 2,436,612 The accompanying notes are an integral part of these financial statements. 5

8 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 AND 2015 Note 1 - Summary of Significant Accounting Policies - Prior to May 27, 2009, the Baton Rouge Diocese School Food Service was a department of the Diocese of Baton Rouge School Board which is a division of the Roman Catholic Church of the Diocese of Baton Rouge. The Roman Catholic Church of the Diocese of Baton Rouge is a nonprofit organization and is exempt from income tax under Section 501(c)(3) of the Internal Revenue Code. The purpose of the Child Nutrition Program is to provide food services to the students attending Catholic schools operated by the Diocese of Baton Rouge School Board. On May 27, 2009 the Baton Rouge Diocese School Food Service was incorporated as a separate corporation and changed their name from the Baton Rouge Diocese School Food Service to The Diocese of Baton Rouge Child Nutrition Program ( Child Nutrition Program ). The Child Nutrition Program is exempt from income tax under Section 501 (c)(3) of the Internal Revenue Code, under a group exemption as an agency operated, supervised or controlled by the Roman Catholic Church in the United States. The accounting standard on accounting for uncertainty in income taxes addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, the Organization may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. There were no unrecognized tax benefits identified or recorded as liabilities for the years ended June 30, 2016 and The Child Nutrition Program files an income tax return in the U.S. federal tax jurisdiction. With few exceptions, the Child Nutrition Program is no longer subject to federal income tax examinations by tax authorities for years before Any interest and penalties assessed by income taxing authorities are not significant and are included in general and administrative expenses in these financial statements, as applicable. Basis of Accounting The financial statements have been prepared on the accrual basis of accounting. Accordingly, revenues are recognized when earned and expenses are recognized when incurred. Basis of Presentation The Child Nutrition Program is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets, as applicable. At June 30, 2016 and 2015, there are no temporarily or permanently restricted net assets. 6

9 Receivables The Child Nutrition Program uses the direct write-off method of recognizing uncollectible accounts receivable. Under this method, accounts are charged to operations when they are deemed by management to be uncollectible. Management believes the use of this method does not result in a material difference from the valuation method required by generally accepted accounting principles. All amounts presented are expected to be collected within one year. Inventory Inventory consists of food and supplies purchased by the Child Nutrition Program and commodities granted by the United States Department of Agriculture through the Louisiana Department of Agriculture & Forestry. The commodities are recorded as revenue when received; however, all inventories are recorded as an expense when consumed. All purchased inventory items are valued at cost (first-in, first-out basis), as required by the Louisiana State Department of Education National School Lunch Program, and commodities are assigned values based on information provided by the United States Department of Agriculture. Compensated Absences Cafeteria employees accumulate sick leave monthly but do not earn vacation time. Any sick leave not used at the end of the year is allowed to be carried over not to exceed 30 days. However, these employees are not allowed to receive accrued sick leave when their employment ends. Administrative employees earn vacation based on years of service and accumulate sick leave monthly. Any sick leave not used during the year is carried over not to exceed 60 days. However, administrative employees are not allowed to receive accrued sick leave when their employment ends. Administrative employees are allowed to carry over from one calendar year to the next up to one-half of unused annual vacation leave. Any accumulated unused vacation leave is paid when employment ends. No liability is recorded for non-vesting accumulated rights to receive sick pay benefits. Accumulated unused vacation leave is $23,406 at June 30, 2016 and $21,407 at June 30, Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the Statement of Cash Flows, the Child Nutrition Program considers all unrestricted highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Deferred Revenue Deferred Revenue represents monies collected from students but not used in the current school year for purchases. Therefore, these funds have been applied to the next school year. 7

10 Reclassifications Certain reclassifications have been made to the combined totals for 2015 to conform to the 2016 financial statement presentation. Such reclassifications had no effect on the change in net assets as previously reported. Subsequent Events The Child Nutrition Program evaluated subsequent events and transactions for potential recognition or disclosure through February 7, 2017, the date which the financial statements were available to be issued. The following event has occurred subsequent to June 30, 2016: On August 12, 2016, a significant rain event occurred throughout south Louisiana, spanning several days and resulting in significant flooding in certain areas. At this time, based upon preliminary analysis, management does not anticipate any material adverse effect on the Child Nutrition Program s operations. However, until the full consequences of this rain event are realized, there is uncertainty of the effect, if any, that these events may have on the Child Nutrition Program s future operations. Note 2 - Concentrations - Cash The Child Nutrition Program maintains cash accounts with commercial banks, which are insured by the Federal Deposit Insurance Corporation up to the maximum allowed. Periodically, cash may exceed the federally insured amount. In addition, cash is on deposit with the Diocese of Baton Rouge and funds are secured by the investments in the Deposit and Loan Fund and by guaranty of the Diocese. Revenue Sources A significant amount of the Child Nutrition Program s revenues are generated from program services provided by agencies of the State of Louisiana and grant funds received from federal and state agencies. The current level of the Child Nutrition Program s operations and program services may be impacted or segments discontinued if the funding is not renewed. Note 3 - Retirement Plan - Prior to July 1, 2009 all employees working 3½ hours or more daily were members of the Roman Catholic Church of the Diocese of Baton Rouge Retirement Plan. The Retirement Plan is an employer defined benefit plan, which is administered and controlled by a committee of the Diocese. Contributions of participating agencies are pooled within the plan to fund accrued benefits. Benefits granted by the Retirement Plan are guaranteed by the Roman Catholic Church of the Diocese of Baton Rouge. Effective June 30, 2009, employee benefits under the Plan were frozen and a defined contribution (401(k)) plan was started as of July 1, At that time obligations to employees under the Plan were frozen and employer contributions at the rate of 5% of eligible payroll will be used to fund the obligations which are currently unfunded. Effective January 1, 2013, the employer contribution rate for 8

11 the defined benefit plan increased from 5% to 8% based on an actuarial study performed. Eligible employees in the 401K plan are automatically enrolled after the first three months of employment but may choose to opt out of participation in the Plan. The Child Nutrition Program provides 100% of the first 2% of elective contributions not to exceed 2% of compensation and participants can elect to contribute between 4% and 98% of compensation. The Plan offers both pre-tax and Roth options. The Child Nutrition Program contributed to both plans a total of $255,379 and $265,104 for the years ended June 30, 2016 and Note 4 - Leases - The Child Nutrition Program leases a small number of cafeteria equipment and warehouse space under monthly cancelable operating leases. Rent expense for the years ended June 30, 2016 and 2015 amounted to $24,797 and $21,105, respectively. Note 5 - Related Party Transactions - The Child Nutrition Program rents office space from the Diocese of Baton Rouge. The rent expense totaled $51,000 for 2016 and $50,004 for 2015, respectively. In addition to utilizing the Diocese of Baton Rouge s Retirement Plan, the Child Nutrition Program also utilizes the Diocese of Baton Rouge for the following self insured insurance services: property, liability, and fleet insurance; health and life/disability insurance; and workers compensation insurance. Payments made directly to the Diocese of Baton Rouge for these services totaled $786,248 for 2016 and $822,814 for 2015, respectively. Note 6 - Departure from Generally Accepted Accounting Principles - As required by the Louisiana State Department of Education National School Lunch Program, all equipment is expensed when received rather than capitalized and depreciated. This method represents a departure from generally accepted accounting principles. 9

12 SUPPLEMENTARY INFORMATION

13 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM SCHEDULE OF FUNCTIONAL EXPENSES - REGULATORY BASIS FOR THE YEAR ENDED JUNE 30, 2016 Supporting Program Services Services Administrative Food Services And General Total Salaries and Related Benefits $ 3,452,529 $ 478,928 $ 3,931,457 Food Costs 2,511,607-2,511,607 Commodity Transportation 39,972-39,972 Equipment Repairs and Leases 162,148 1, ,463 Satellite Fleet Insurance 14,292-14,292 Materials and Supplies 263,716 3, ,464 Nonexpendable Equipment 87,425-87,425 Office Expense 1,280 4,117 5,397 Professional Services 114,446 38, ,996 Rent and Purchased Services 10,231 51,000 61,231 Small Equipment 35,321-35,321 Training and Nutritional Education 4,380-4,380 Travel 6,176 7,348 13,524 Utilities 74,124 5,888 80,012 Total Expenses $ 6,777,647 $ 590,894 $ 7,368,541 See auditor's report. 10

14 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM SCHEDULE OF FUNCTIONAL EXPENSES - REGULATORY BASIS FOR THE YEAR ENDED JUNE 30, 2015 Supporting Program Services Services Administrative Food Services And General Total Salaries and Related Benefits $ 3,547,204 $ 462,227 $ 4,009,431 Food Costs 2,621,368-2,621,368 Commodity Transportation 44,812-44,812 Equipment Repairs and Leases 150,299 1, ,027 Satellite Fleet Insurance 15,300-15,300 Materials and Supplies 279,823 5, ,476 Nonexpendable Equipment 138, ,274 Office Expense 872 5,308 6,180 Professional Services 109,526 33, ,176 Rent and Purchased Services 8,418 50,004 58,422 Small Equipment 13,171-13,171 Training and Nutritional Education Travel 6,954 10,909 17,863 Utilities 137,835 5, ,955 Total Expenses $ 7,074,698 $ 574,599 $ 7,649,297 See auditor's report. 11

15 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2016 Pass-Through Federal Grantor/ Federal Entity Pass - Through Grantor/ CFDA Identifying Federal Program Name Number Number Expenditures Child Nutrition Cluster United States Department of Agriculture Passed-Through Louisiana Department of Agriculture and Forestry - Non-Cash Assistance (Commodities) N/A $ 328,109 Passed-Through Louisiana Department of Education: National School Lunch and After School Snack Program N/A 1,399,946 1,728,055 Passed-Through Louisiana Department of Education: National Breakfast Program N/A 178,341 Total United States Department of Agriculture - Child Nutrition Cluster 1,906,396 Other Programs United States Department of Agriculture Passed-Through Louisiana Department of Education - Child and Adult Care Food Program N/A 846,971 Total Federal Grants $ 2,753,367 12

16 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2016 Note A - Basis of Presentation - The accompanying schedule of expenditures of federal awards includes the federal grant activity of The Diocese of Baton Rouge Child Nutrition Program and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Note B - Non-Cash Assistance (Commodities) - Nonmonetary assistance is reported in the schedule at the fair market value of the commodities received and disbursed. At June 30, 2016, the Child Nutrition Program had food commodities totaling $30,433 in inventory. Note C - Indirect Cost Rate Election - The Organization did not elect to use the 10% de minimis indirect cost rate during the year ended June 30,

17 2322 Tremont Drive Baton Rouge, LA Del Orleans Avenue, Suite C Denham Springs, LA Poydras Street, Suite 1200 New Orleans, LA Phone: Fax: Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards To the Superintendent and Diocesan Finance Council The Diocese of Baton Rouge Child Nutrition Program Baton Rouge, Louisiana 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 The Diocese of Baton Rouge Child Nutrition Program (a nonprofit organization), which comprise the statements of assets, liabilities and net assets-regulatory basis as of June 30, 2016, and the related statements of revenues, expenses and other changes in net assets-regulatory basis, and cash flows-regulatory basis for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated February 7, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered The Diocese of Baton Rouge Child Nutrition Program 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 The Diocese of Baton Rouge Child Nutrition Program s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 14

18 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether The Diocese of Baton Rouge Child Nutrition Program 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. We noted certain matters that we reported to management of The Diocese of Baton Rouge Child Nutrition Program in a separate letter dated February 7, 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. Respectfully submitted, Baton Rouge, Louisiana February 7,

19 2322 Tremont Drive Baton Rouge, LA Del Orleans Avenue, Suite C Denham Springs, LA Poydras Street, Suite 1200 New Orleans, LA Phone: Fax: Independent Auditor s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance To the Superintendent and Diocesan Finance Council The Diocese of Baton Rouge Child Nutrition Program Baton Rouge, Louisiana Report on Compliance for Each Major Federal Program We have audited The Diocese of Baton Rouge Child Nutrition Program s (a nonprofit organization) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of The Diocese of Baton Rouge Child Nutrition Program s major federal programs for the year ended June 30, The Diocese of Baton Rouge Child Nutrition Program s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of The Diocese of Baton Rouge Child Nutrition Program s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about The Diocese of Baton Rouge Child Nutrition Program s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. 16

20 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 Diocese of Baton Rouge Child Nutrition Program s compliance. Opinion on Each Major Federal Program In our opinion, The Diocese of Baton Rouge Child Nutrition Program complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Report on Internal Control Over Compliance Management of The Diocese of Baton Rouge Child Nutrition Program 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 The Diocese of Baton Rouge Child Nutrition Program 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 The Diocese of Baton Rouge Child Nutrition Program 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. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Respectfully submitted, Baton Rouge, Louisiana February 7,

21 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2016 (1) Summary of Auditor s Results Financial Statements Type of auditors report issued: Unmodified. Material weakness(es) identified? Yes x no Significant deficiency(s) identified that are 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 weakness(es) identified? Yes x no Significant deficiency(s) identified that are 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 section 510 (a ) of the Uniform Guidance? Yes x no Identification of major program: Federal Grantor/Pass - Through Grantor/ United States Department of Agriculture CFDA Number Child Nutrition Cluster Passed-Through Louisiana Department of Agriculture and Forestry Non-Cash Assistance (Commodities) Passed-Through Louisiana Department of Education - National Breakfast Program National School Lunch and After School Snack The threshold for distinguishing types A & B programs was program expenditures exceeding $750,000. The Child Nutrition Program was determined to be a low-risk auditee. 18

22 (2) Findings Relating to the Financial Statements Reported in accordance with Government Auditing Standards: None (3) Findings Relating to Compliance and Other Matters: None (4) Findings and Questioned Cost Related to Federal Awards: None 19

23 THE DIOCESE OF BATON ROUGE CHILD NUTRITION PROGRAM SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2016 None 20